Banned GloFish

The new GloFish, genetically engineered to glow in the dark, have been banned in the state of California. Chris Mooney tells us why there is no good reason for this decision. One state official commented:

“For me it’s a question of values, it’s not a question of science,” said commissioner Sam Schuchat. “I think selling genetically modified fish as pets is wrong.”

This argument is weak, and presumably could be used to ban dogs and cats — both the products of selective breeding — as well. The GloFish nonetheless have a deeper symbolic value, and are likely to go down in history as a turning point of sorts. Once we let the market create and promote commercialized products in this arena, it is hard to imagine tough regulations working in the long run. Consumers will demand the products, experimentation will be rampant, and how will you enforce the laws? Will California check the cars entering from Nevada for contraband GloFish? If that is the case, GloFish “coyotes” will cross with their booty only in the day, not the night, a reversal of the classic smugglers’ methods.

The economics of cheese

Free trade is not only good for prosperity, it is also good for fine food shopping. Here are some pithy comments on a recent book on the history of Camembert cheese:

Fifty years ago, or even twenty-five, it was very hard, if not impossible, to get cru Camembert – or gold seal balsamic vinegar, or single-estate Tuscan extra virgin olive oil, or jambon de Bayonne, or Ortiz salt-packed Spanish anchovies, or Ni├žoise olives – if you didn’t live in a world metropolis or in the regions near where they were produced. Now they are all widely available. Thanks to the Internet, Fedex, the food-writers (and their globalised publishing firms), the once-local has become global.

Nor is it just the distant local that has a place in the markets; preferences for the local local are now better catered for than at any time in the recent past: farmers’ markets flourish as never before in both Britain and America; the role of the “forager” – searching out the quality produce of local farmers for top restaurants – has become institutionalised; the formerly resistant Californian wine industry is rediscovering the power of place as against the manipulations of the scientific winemaker; the cheese plates at better American eateries feature increasingly convincing Sonoma County goat cheeses and one of the finest semi-soft goat cheeses in the world, the Cypress Grove Humboldt Fog; the Slow Food movement gathers strength throughout the world and reinforces the revival of the local and the seasonal.

Here is the full book review, from The London Review of Books, the piece is interesting throughout. Here is an earlier post on the corporate origins of Maytag cheese in the United States. Here is a post on using radar to improve the quality of wine.

The bottom line: When I first started going to Europe, in the early 1980s, I was amazed at the quality of the foodstuffs, but America is catching up rapidly. The next steps: lower price supports for dairy products, lower duties on foreign cheese, and free importation of non-pasteurized cheeses, the opposite of what Hillary Clinton wants.

A Romanian liability crisis?

A Romanian pensioner has lodged a complaint against a TV station claiming their horoscope is unreliable.

The woman, from Maramures, says the horoscope repeatedly predicted she would receive a big sum of money but it never arrived although she waited for three months.

Thanks to cronaca.com for the link to Ananova. Here is the clincher:

Officials said they will analyse the complaint and take a decision.

But they advised the broadcasters to include an announcement that the horoscope may not be 100% accurate and that they cannot warrant for the truth of astral predictions.

Perhaps they will consult their horoscope before rendering a final verdict.

Paying for Disability

The number of disabled people in the United States is increasing at a shocking rate – from 1984 to 2000 the number of disabled people more than doubled from 3.8 to 7.7 million. Today, over 5% of adults aged 25 to 64 are disabled. Even more worrying is that disability is increasing especially rapidly among the young. What is responsible for this awful increase? Workplace accidents? Chemicals in the environment? Gun violence? Naahh, it’s incentives of course.

By disabled I mean receiving Social Security Disability Insurance or Social Security Income. In 1984, it become significantly easier to qualify for these programs. Combine this with an increase in the effective generosity of these programs for people of low-income, brought about by increases in mean relative to median income, and you have the makings of an epidemic. Today, “annual disability expenditures exceed that of welfare (TANF), Unemployment Insurance, and the Earned Income Taxed Credit combined” write economists David Autor and Mark Duggan in an important paper that I have drawn from.

Increases in disability have come mostly in the form of “back pain” and other difficult to verify maladies. One of the elegant ways Autor and Duggan demonstrate that you get what you pay for is the following chart which shows that as the number of disabled increased dramatically their mortality rate declined equally dramatically! (Click on the graph to expand it.)

Workers on disability are not counted as unemployed. Thus, another consequence of the increase in the disabled is that our unemployment statistics are artificially low. (See Austan Goolsbee’s NYTimes op-ed on this also drawing on Autor and Duggan.)

disability.JPG

Who are the uninsured?

As the Democratic candidates call for various versions of national health insurance, we will hear a familiar fact many times, namely how many Americans lack medical insurance. According to one estimate, it is over fifteen percent of the population, which amounts to about 43.6 million people.

But who are these people? In reality many of them are immigrants. Here are two simple facts:

Immigrants who arrived between 1994 and 1998 and their children accounted for an astonishing 59 percent or 2.7 million of the growth in the size of the uninsured population since 1993.

The total uninsured population is one-third larger (32.7 million versus 44.3 million) when the 11.6 million persons in immigrant households without insurance are counted.

Hispanics have by far the lowest rates of being insured, here are some visuals. 41 percent of adult Hispanics are uninsured, of course many of these are recent immigrants, Hispanics as a whole account for over 12 percent of national population.

I am all for a liberal immigration policy, but I do not feel we are obliged to offer health insurance to all comers. In fact I suspect that national health insurance would, in the long run, lead to fiscal pressures to limit immigration, thus damaging the health of potential immigrants.

Nor do immigrants rush to buy their own health insurance, in many cases I suspect they would rather send the money back home, where health care crises are likely more severe:

Lack of insurance remains a severe problem even after immigrants have been in the country for many years. In 1998, 37 percent of immigrants who entered in the 1980s still had not acquired health insurance, and 27.2 percent of 1970s immigrants were uninsured.

Many other Americans lack health insurance because they are out of work. True, a good health care system should be robust to macroeconomic disturbances, but with employment and productivity rising, these people do not represent much of a current case for reform.

It also turns out that many of the uninsured are uninsured for only part of the year. According to the CBO, those uninsured for the entire year amount to somewhere between 21 and 31 million, knocking a full 12 million off the original total.

Some of the uninsured are more accurately a counting error:

According to the National Center for Policy Analysis (NCPA), [a] verification question lowered the estimate of the number of uninsured living in households with annual incomes of $75,000 or more by 16 percent. The verification question lowered by 4 percent the number of uninsured living in households with incomes under $25,000.

Many of the uninsured are in fact college students, who either rely on their parents, or are covered under their parents’ policies, read here. One estimate suggests that one out of seven college students lacks insurance, but it is hard to believe that most of these people have no other resources supporting them.

Finally, the uninsured often have good access to medical care. Consider this:

15 million of the uninsured have incomes of $50,000 or more. The fastest-growing population of uninsured has incomes exceeding $75,000. About 14 million are eligible for Medicaid or the State Children’s Health Insurance Plan but are not enrolled.

The “entire year uninsured” receive about half as much care, in dollar-valued terms, as the fully insured. As a last resort, you can always show up at an emergency room and simply demand care. In the year 2001, uninsured Americans received at least $35 billion in health care treatments.

The bottom line: When you put all the pieces together, the crisis of the uninsured is not nearly as bad as it sounds.

Productivity gains: Can you top this?

The reported rate of productivity growth, for the last quarter, is estimated at 9.4 percent, here is one report. This is following earlier productivity growth rates of 8.1 and 7 percent, obviously this is good news all around.

But do these figures capture all the relevant productivity gains? Graham Tanaka, the author of Digital Deflation, argues that we do not measure all relevant improvements. He cites better medical technology and information technology, as embedded in standard goods and services, as two undermeasured components of true productivity. Or consider cell phones, which today are better than a year ago, maybe by as much as twenty percent in value terms. Yet not all such quality changes show up in the official statistics. For 1998 he estimates that the real but unmeasured gains would add another 2% to productivity growth. In his view the future will bring very rapid growth and low inflation.

The potential for nanotechnology may be much more amazing, read Brad DeLong’s excellent post on the topic. He writes:

The computer-and-communications technology revolution we have been living through transforms twice as large a share of the economy as did the British Industrial Revolution, looks to last three times as long, and proceeds at a pace three times faster than the revolution in spinning and weaving: it is, relative to the size of the economy, eighteen times a bigger deal than the original.

Brad calls for greater investment in education, and an immigration policy aimed at taking in highly skilled labor.

But might Brad’s view be overly modest as well? In a recent paper, Robin Hanson considers the possibility of exponential growth modes. He argues:

World product history since two million B.C. is reasonably described as a CES combination of three distinct exponential growth modes: “hunting,” “farming,” and “industry.” Each mode seems to have grown over one hundred times faster than the relevant previous mode.

In other words, every now and then you get a discrete change in technology that sends the growth rate through the ceiling, relative to the past. Read this summary as well. If we get another such explosion, Robin mentions the extreme possibility that someday gdp could double in less than three weeks’ time, see this graph. It would have to be something like nanotechnology. In my view, long before this could happen, I would sooner say that growth rates had lost their meaning, they work best for relatively small comparisons across time and space. The point remains, however, that we have seen notable great transformations in the past, and they may recur in the future.

How does it matter?: I second Brad’s call for greater skilled immigration. A more interesting question is whether the U.S. government can get away with huge deficits, if mega-growth is on the horizon. I say we still ought to control spending. Future growth will not come evenly across the board, and unpriced quality improvements will not translate into capturable revenue for either the private or public sector. Imagine a cell phone that gave you immediate and wonderful orgasms, as well as other services, this would be a huge quality boost of sorts. But at the end of the day, stable institutions still will require our government to equalize long-term inflows and outflows. Furthermore we want to make sure we are stable enough to last until this future boom, which again suggests a measure of fiscal responsibility.

Flu Shots II

I won’t scold you again but Robert Bazell writing in Slate reminds us of the positive externality:

Even if spending a week violently sick and bedridden doesn’t worry you, by immunizing yourself you vastly lessen the chances you will spread the virus to some child or older person (family member, friend, or stranger) who might die from it….An experiment in Japan proved that immunizing school-age children could cut deaths in the elderly by many thousands.

…Most appalling of all, only 34 percent of health-care workers got flu shots. The very people who are most at risk themselves and most likely to spread the virus to others are for the most part not getting their shots.

For those afraid of needles, Bazell notes that you can now get a flu mist instead of a shot.

What do public choice economists believe?

Two researchers took a poll of public choice economists, defined as those who belong to the Public Choice Society, this includes 201 economists and 125 political scientists. The response rate was 29.6 percent, and here are some of the results:

1. Voters vote out of a sense of civic duty – 80 percent said yes. 54.5 percent said voting is rational.

2. Political rights and civil liberties promote economic growth – 79.8 percent said yes.

3. The size of government has grown due to the proliferation of special-interest groups – 67.8 percent said yes. When asked whether voters are the cause — my view — 53.8 percent said yes.

4. Bureaucrats are budget-maximizers – 65.9 percent said yes.

5. Government does more to protect and create monopoly power than it does to prevent it – 63.7 percent said yes.

6. Most politicians are solely office-seeking vote maximizers – 51.1 percent said yes.

7. Most government programs are driven by rent-seeking – 50.6 said yes.

Here is the source paper, by Jac Heckelman and Robert Whaples of Wake Forest.

The biggest mistake listed is #4, the view that bureaucrats budget maximize. Here is one survey of various critiques. Most generally, Congress and the President monitor the bureaucracy, which as a result pursues complex incentives, and responds to both carrots and sticks. Budget maximization is unlikely to result as a dominant motive. As I understand a talk I once had with Bill Niskanen, founder of the budget maximization hypothesis, even he has moved away from this theory.

And how is this for a striking comparison?

When you ask (a broader group of) economists whether markets, in the absence of transactions costs, achieve efficient outcomes, 57.1 percent say yes. This is itself odd, since I would interpret the proposition as a tautology, but it appears some people simply can’t bring themselves to praise the market. 70.3 percent of the public choice economists say yes, showing that this group has a stronger belief in markets. 22 percent of the surveyed political scientists say yes, showing a far greater skepticism about the market economy from those quarters.

Why do women read more fiction?

Yesterday I asked why women buy and read more fiction than do men, and whether there might be an evolutionary explanation for this phenomenon. In response, Fabio Rojas writes:

(a) It’s sometimes thought that dreaming, play and story telling are opportunities for people for practice their emotional/interpersonal skill without danger. They’re all about fictional social worlds that you can explore and relate to without endangering real world relationships.

(b) Women seem to specialize in cooperative, social interactions. I’m sure there’s an Evolutionary explanation for this.

(c) As specialists in social interactions, women would be more likely to refine and practice that skill, through engagement with literature/story telling.

John Paschetto notes:

…when I used to commute by train to Philadelphia, almost all the men read newspapers, and almost all the women read paperbacks.

My student Erte suggests that men have a greater evolutionary need to be physically stronger, which induces them to read less and be more active, perhaps they play more sports instead.

My take: All of these are noteworthy ideas. I might add that when men do buy books, they often prefer stories of adventure, such as Tom Clancy novels. Furthermore men may invest more effort in potentially high status activities, which presumably does not include reading novels. It remains a puzzle, however, why women start reading more toward the latter part of their childbearing years. True, they are busier when they have young children, but if we are going to use an evolutionary explanation, it would be nice to explain the timing as well. Do older women have some special interest in understanding social networks?

2, raised to the 20,996,011, minus 1.

That number is unlikely to ring a bell:

A 26-year-old graduate student in the US has made mathematical history by discovering the largest known prime number.

The new number is 6,320,430 digits long. It took just over two years to find using a distributed network of more than 200,000 computers.

Prime numbers are positive integers that can only be divided by themselves and one. Mersenne primes are an especially rare type of prime that take the form 2 p-1, where p is also a prime number. The new number can be represented as 2 raised to the 20,996,011, minus 1 [I have changed the presentation here, in lieu of upper case power notation]. It is only the 40th Mersenne prime to have ever been found.

Here is the full story, from NewScientist.com. George Woltman adds: “There are more primes out there.”

The saga is also an account of the voluntary private production of public goods, given the large number of computers whose “spare processing power” was donated toward this end. If you want to contribute toward this sort of endeavor, sign up here.

Two things that you don’t want to see made

Hint: both contain a lot of pork. Senator John McCain has a list (link via Bruce Bartlett’s Talking Points.)

Here are a few of my favourites from recent legislation:

$1.5 million for the University of Nevada-Las Vegas to conduct safety and risk analysis. (I did some risk analysis in Las Vegas once, but not on taxpayer money).

$278,000 for asparagus technology and production (WA)

$2,000,000 for exotic pet diseases (CA)

$300,000 for future foods (IL)

Not less than $2,300,000 for the International Fertilizer Development Center. (Hmmm…Nahh, too easy.)

$1,000,000 for the Amanut Society.

Bear in mind that these projects have not been through any sort of peer-review process – these are pet projects of particular members of Congress that are inserted into larger bills.

Society without a State

Understanding how criminal markets work is important if we want to understand the power and the limits of markets in the absence of state-enforced property rights. A recent Wired magazine article written by a mafia computer expert has some revealing information. The anonymous author writes:

…there’s the misconception that if you don’t pay your debts, the mob will break your legs. I’ve seen that on TV but never in real life. Sure, some agents make their collection runs with a bodyguard, but wouldn’t you want some muscle around if you were carrying tens of thousands of dollars in cash? Breaking people’s legs is bad business. If somebody doesn’t pay their debts because they’re broke, maiming them isn’t going to put cash in your bank account. Still, the threat of pain remains a valuable deterrent. Tell your customers that you’re breaking people’s legs and there’s no reason to actually do it. Truth is, when people don’t cover their debts, we put them on a payment plan. If that doesn’t work, we spread the word that they’re a bad risk. Basically, we fuck up their underground credit rating.

Surprisingly,

The whole business of taking bets and paying out is based entirely on trust. The wagers are a form of credit, advanced on trust between the agent and the players. The people placing the bets trust that they’ll get paid if they win. Everyone trusts that nobody is going to call the cops.

In this context, markets appear very robust. In other areas, however, especially in the drug markets we don’t see cooperation and trust but terrible violence – we get anarchy instead of anarcho-capitalism. Why the difference? I don’t think anyone has written much on this but it strikes me that an imporant clue is that the first market is between a buyer and seller with largely compatible interests while the latter interaction is between competitors with less compatible interests. We may need the state more to govern the actions of competitors vis a vis one another than vis a vis their customers. (Alas, this does not speak well for the anarcho-capitalist dream of competitive private-defense firms.)

Which economists is Howard Dean listening to?

Joseph Stiglitz, Alan Blinder, and Jeffrey Sachs, in short, here is the brief story. Sachs is more market-oriented than the first two names, so this makes for a slightly odd pairing. It is hard to imagine him advising Dean to “re-regulate” the economy, as the candidate has called for. Stiglitz and Blinder are not the two names I would have chosen myself, but at least he is opting for smart economists. By the way, Dean’s primary advisors on domestic policy are Harvard law professor Christopher Edley, a well-known proponent of affirmative action, and Maria Echeveste, deputy chief of staff from the Clinton administration.

Addendum: The first link is now corrected. And here is another article on Dean’s inner circle.

Credit cards under your skin

Read Randall Parker on this new innovation:

Advanced Digital Solutions has announced their Veripay embedded radio frequency ID (RFID) cash and credit card technology.

Some day we may be able to walk into a store and be completely alone and not have to see a living person in sight, imagine walking out holding the items you want and being billed instantly just as you leave the store. No confrontations, no customer service, no cute check-out girl, isn’t our future grand…The chip is embedded in the arm.

Parker also quotes this more formal descrption of the technology:

VeriChip is a subdermal, radio frequency identification (RFID) device that can be used in a variety of security, financial, emergency identification and other applications. About the size of a grain of rice, each VeriChip product contains a unique verification number that is captured by briefly passing a proprietary scanner over the VeriChip. The standard location of the microchip is in the triceps area between the elbow and the shoulder of the right arm. The brief outpatient “chipping” procedure lasts just a few minutes and involves only local anesthetic followed by quick, painless insertion of the VeriChip. Once inserted just under the skin, the VeriChip is inconspicuous to the naked eye. A small amount of radio frequency energy passes from the scanner energizing the dormant VeriChip, which then emits a radio frequency signal transmitting the verification number. In October 2002, the US Food and Drug Administration (FDA) ruled that VeriChip is not a regulated device with regard to its security, financial, personal identification/safety applications but that VeriChip’s healthcare information applications are regulated by the FDA. VeriChip Corporation is a wholly owned subsidiary of Applied Digital Solutions.

By the way, the first 100,000 registrants to be “chipped” get $50 off.

My take: I don’t see this product taking off as a useful means of buying things, though of course it would no longer be a problem if you forgot your wallet at home. Too much talk about “mark of the beast” and all that, plus the general creepiness of the idea. As Parker suggests, more likely applications are for people at risk of having heart attacks (the device could send a signal, much like a cell phone call), diabetics, epileptics, Alzheimer’s patients, and children at risk of kidnap or running away from home.