In Defense of Mercenaries

by  Alex Tabarrok in

The Gurkhas have been active in the British military since 1817 but they are not British citizens they are Nepalese hired by the British.  In recent years the Gurkha brigades have served in the Falklands, Kosovo, Afghanistan and now Iraq.  The Indian army and Singaporean police force also hire many Gurkhas.

The Gurkhas are unusual but not unique.  The United Arab Emirates, where Tyler is now, relies almost exclusively on mercenaries.  The French Foreign Legion continues to attract a small number of mercenaries from around the world.  During the Vietnam war the United States paid the South Korean, Philippine and Thai governments for the use of troops – these were mercenaries paid by proxy.

Should we hire more mercenaries today?  Our military already has hired more than thirty thousand non-citizens.  Why not bypass residency entirely and go straight to Mexico,  India and elsewhere to hire soldiers?  If outsourcing is good for US firms then surely it is good for the US government. 

Outsourcing the military has a number of advantages.  The supply of labor is nearly limitless and the price is low.  Some people will object that quality is low too but if Indians can be trained to do US tax returns they can be trained to fight US wars.   

One reason the Gurkhas are among the most highly regarded troops in the world is that the entrance exam is extremely difficult – only 1 in 30 applicants makes the cut.  The British can pick and choose because wages are high relative to the next best alternative (the Indian army picks up many of the British rejects).  Meanwhile, we are so desperate for troops in the United States that we are forcing old men and women, people who haven’t seen active duty in forty years, back into service.  At US wage rates we could easily hire many thousands of Mexicans.  Many Mexican noncitizens are already
serving honorably in the US military so there is no reason for quality to decline. 

Mercenarism may seem unusual today but in the 18th century a typical European army contained 20-30 percent
foreign troops – mercenarism was the norm.  It’s hard to see how the United States has a comparative advantage in military labor so the future may resemble the past more than it does the present.

Comments are open.

Do airplanes make weird people stick out less?

by  Tyler Cowen in

When you live in a small village, or hunter-gatherer society, everyone knows that a weird person is weird.  You stick out like a sore thumb.  But when I fly to, say, Dubai, hardly anyone knows I am weird.  Perhaps I dress differently, talk differently, and spend too much time reading books, but to them I appear weird in any case.  The proverbial "Aunt Millie from Peoria" also would come across as strange.  The differences in weirdness are blurred, and the truly weird can pass for simply being "foreign."

I recall my time in Yemen: all the women wore veils, and all the men carried daggers and chewed qat.  Just don’t ask me who the weirdos were.

This suggests that airplanes lower the costs of being weird.  Of course, with enough globalization — especially mass market images — this relationship can cut the other way.  Perhaps the people in Dubai are wondering why I don’t act more like Tom Cruise.  Alternatively, we might send them some more Johnny Depp movies.

Does this mean that weird men are more likely to have foreign wives?

My favorite things Dubai

by  Tyler Cowen in

Brazil_1 No, I can’t afford to stay here, but surely this is my favorite Dubai hotel.  I am told they pick you up at the airport in a white Rolls Royce and then the bridge to the hotel spouts a burst of flame to welcome you.  Supposedly from the water it looks like a cross, which makes it a controversial structure with the local Muslims.  I am going there shortly to eat lunch, if I can believe my guidebook this adventure will involve the use of a submarine.

So far, the Pakistani food here is excellent…and, um…they have a few green median strips along the road, albeit not at social marginal benefit = social marginal cost.  As to my favorite Dubai novel or film, I’ll have to get back to you.

I can tell you one thing, my favorite Dubai blog is Emirates Economist. 

Addendum: Chris Masse points me to this link of Duba’s mega-projects, take a look.  Here is an overview photo.  Here is the story.  By the way, the UAE just had its first race with the robot camel jockeys.

Dubai – shareholder state?

by  Tyler Cowen in

Here are a few facts of note:

1. Dubai is expected to run out of oil by 2010.  Oil is already less than seven percent of gdp.

2. The city diversified by creating low-tax, low-regulation, free trade zones.

3. The three most trusted associates to the Sheikh are also the city’s three leading businessmen and three leading real estate magnates.

4. Dubai is constructing what will be the world’s tallest building, and perhaps also the world’s second tallest building.  The city claims to have the world’s largest shopping center (disputable).

5. The city is growing about fourteen percent a year.

6. Eighty percent of the population is expats.

7. UAE (Dubai is a part of it) is ranked 137th in the world on press freedom.

See The Financial Times, 13 July 2005.  And did I mention that I am here in Dubai now?  It is, after all, on the way to Singapore.

The economics of podcasts

by  Tyler Cowen in

We can expect

…a massive dilution in the audience size of the early entry podcasters. EVERYONE’s audience will fall as the marginal listeners find something they like better. Yes, there will be some podcasts that get more listenership than others, but most of them will be repurposed content that already has demand.

…when those formally known as podcasters do an accounting of the net dollars they earned and compare it to the time they invested, they will realize they made about 17 cents per hour all in.

All that will be left of profit motivated individual podcasters will be the few and far between and probably less than half of a percent of all podcasters (and please don’t anyone post a comment saying…if there are a million podcasters, 1 pct is 10k, half of that is 5k. That’s a ton. I’m making up these numbers to prove a point, not to be literal…Ok?).

And like personal blogs, tens of thousands if not more will stay on as labors of love that we enjoy because of their creativity.

So in about 3 years, the Podcast phenomena will have run its course and will just be a normal part of the digital media landscape.

Just like streaming.

That is Mark Cuban, read the whole post.  Here is his earlier take on podcasting.

My take: The key question is what kind of aggregators will take off.  Some people find blogs through Google, but most find them (I suspect) through other blogs.  Podcasting may not work this way.  The relative returns to "portal podcasts" will be lower than for portal blogs.  Glenn Reynolds can read and process material faster than most people, but no one can hear a two-minute comedy routine in much less than two minutes (no need to write me about speeding up the tape, cutting out the dead space, etc., you get the point).  So you won’t find good podcasts through other podcasts to the same degree, since it is harder to serve as an effective portal.  The sorting will work less well, and the categories will be harder to describe and communicate.  Advertising will matter more, and institutions such as iTunes will have more influence over selection and content.  Podcasting will be more in hock to MSM than are blogs.

Aid for Liberia

by  Lee Coppock in

In the wake of the G8 summit in Gleneagles earlier this month, it seems appropriate to comment on the possible uses of aid to Liberia.  At the very least, it would be nice to be able to examine the use of past official aid to Liberia.  Unfortunately, any efforts in this direction are merely speculation. 

The World Bank’s Africa Quick Query indicates that very little official international aid made its way to Liberia over the last 5 years of the Taylor regime.  From 1999 to 2003, the aid figure ranges from $12 to $32 per capita.  After spending a week in Liberia in each of the past two summers, it seems obvious to me that any aid received by former "President" Charles Taylor was mis-appropriated to his own use of physically and militarily mitigating opposition.  For obvious reasons, this cannot be proved.  Clearly, the funds were not spent on infrastructure.  Electricity has yet to be restored (it has been out since Taylor took over in 1989), and all "roads" are painfully in disrepair.

Dcp_0239_2On the other hand, private aid to Liberia has been and remains a significant source of help to Liberian citizens.  If you are interested in contributing to Liberia, the organization that I have worked with is African Christians Fellowship International (ACFI).  ACFI is an indigenous religious organization that provides orphanages, medical clinics and tuition-free schools to the indigent and physically handicapped.  For example, the only deaf school/orphanage in the entire nation of Liberia is provided by ACFI, as deaf children are social outcasts in Liberia.   

James Surowiecki on foreign aid

by  Tyler Cowen in

…it’s a myth that aid is doomed to failure. Foreign aid funded the campaign to eradicate smallpox, and in the sixties it brought the Green Revolution in agriculture to countries like India and Pakistan, lifting living standards and life expectancies for hundreds of millions of people. As for the Asian nations that Africa is being told to emulate, they may have pulled themselves up by their bootstraps, but at least they were provided with boots. In the postwar years, South Korea and Taiwan had the good fortune to become, effectively, client states of the U.S. South Korea received huge infusions of aid, with which it rebuilt its economy after the Korean War. Between 1946 and 1978, in fact, South Korea received nearly as much U.S. aid as the whole of Africa. Meanwhile, the billions that Taiwan got allowed it to fund a vast land-reform program and to eradicate malaria. And the U.S. gave the Asian Tigers more than money; it provided technical assistance and some military defense, and it offered preferential access to American markets.

Coincidence? Perhaps. But the two Middle Eastern countries that have shown relatively steady and substantial economic growth–Israel and Turkey–have also received tens of billions of dollars in U.S. aid. The few sub-Saharan African countries that have enjoyed any economic success at all of late–including Botswana, Mozambique, and Uganda–have been major aid recipients, as has Costa Rica, which has the best economy in Central America. Ireland (which is often called the Celtic Tiger), has enjoyed sizable subsidies from the European Union. China was the World Bank’s largest borrower for much of the past decade.

Read more here.  The quality of this debate has improved markedly in the last ten years.  I’ll predict that most MR readers are skeptical about foreign aid, but I still regard this as an open question.  The key question is whether the above favorable conditions can be replicated by policy or foreign aid formula.

James Glassman changes his mind on Social Security

by  Tyler Cowen in

…the president’s rhetoric is unconvincing. Yes, he’s made the case that Social Security is headed for insolvency — tax receipts from workers and employers won’t cover benefits for retirees starting in 2018. But he has not managed to connect insolvency with his idea of personal accounts.

No wonder. These are two completely separate issues. Personal accounts won’t prevent Social Security’s impending bankruptcy. Personal accounts are great for other reasons: they will encourage savings, provide a more comfortable retirement, give people a nest egg they can own and increase personal responsibility. But the accounts won’t solve the insolvency problem.

Bush should stop talking about these two issues — insolvency and personal accounts — as though they are connected. He needs to concentrate on one or the other to start.

Which?

You probably think I’ll say "personal accounts." I might have, but a few months ago I took the administration’s position in a debate in Reason magazine with innovative economist Tyler Cowen of George Mason University. Sometimes, you learn something from such an encounter. I now see that Tyler was right [TC: thanks!], and what follows is adapted from his argument.

I believe the president should focus on putting Social Security on a sound footing. The best way to do that is to adjust benefits by increasing the retirement age, cutting back payments further for those who choose to retire early and indexing the growth in benefits to the consumer price index (that is, inflation) rather than to wages. Raising payroll taxes — or increasing the ceiling below which those taxes are collected — should be off the table. Such a hike would have a disastrous effect on the economy.

Should we give up on personal accounts?

Not at all. Those accounts will grow organically as Social Security withers.

The inevitable result of benefit adjustments will be to reduce, slowly over time, the importance of Social Security in the overall retirement scheme. The system would become more of a safety net. Retirees would, very naturally, fill in the gap by saving more.

The vehicle for those savings would be personal stock and bond accounts — which already exist!

Here is the TCS link.  Here is Robert Barro’s change of heart.

Dollars for Guns

by  Lee Coppock in

When the UN entered Liberia in September 2003, they instituted a voluntary disarmament program.  The program specified that ex-combatants could turn in their guns for $300 and a free education (completion of high school or a choice between various trade schools).  The $300 alone is a significant figure, as it is more than double the per capita gross national income.  From outside Liberia, this program appeared to be successful.  Kofi Annan ended the voluntary disarmament in June 2005. 

With no official data to support their claims, many Liberians feel that the program was a disaster, and that all of the significant factions still have plenty of arms.  The problems they cite are not surprising to an economist:

  1. Many guns were imported to Liberia to cash in on the $300, a price well above market-clearing.

  2. UN military personnel, enjoying their immense power, actually declined guns in several parts of the country, in order that their assignment in Liberia might last longer.

Will the violence return after the elections in October?  Liberians seem to be split on this.  Given that there are currently 52 candidates for President, most citizens will be disappointed with the outcome.

John Roberts

by  Tyler Cowen in

A Googling of "Judge John Roberts economics" turns up little real, his paper trail is thin.  Here are the useful Scotus links.  The very smart Juan Non-Volokh likes him.  He is a member of The Federalist Society.  The Washington Post reports:

On the D.C. Circuit, Roberts voted with two colleagues to uphold the arrest and detention of a 12-year-old girl for eating french fries on a Metro train, though his opinion noted, "No one is very happy about the events that led to this litigation." In another case, Roberts wrote a dissenting opinion that suggested Congress might lack the constitutional power to regulate the treatment of a certain species of wildlife.

And Tradesports.com nailed it one hour in advance, read more here.

Rx for OTC

by  Alex Tabarrok in

I went to the doctor yesterday.  I told him that to avoid altitude sickness in Peru I wanted a prescription for Diamox.  He used to be surprised when I self-diagnosed but he knows me now.  He wrote the prescription and I was done in less than four minutes.  I like my doctor but this visit took an hour of my time and probably cost the insurance company at least $100, my deductible was $25.  No big deal for me but a non-trivial expense for someone without insurance.

Why aren’t more pharmaceuticals available over the counter?  In other words, why must we pay the priestly caste known as physicians for the right to treat ourselves?  "Safety," we are told (second only to "for the children" as an excuse for giving up liberty).  But, as Sam Peltzman pointed out long ago, safety runs both ways.  Not getting a pharmaceutical because it’s too expensive and time consuming to go through a doctor has adverse safety consequences and there is no evidence that the costs of potential mistreatment outweigh the costs of undertreatment.  (In anycase, politics not safety is often the reason for restrictions on OTC drugs e.g. the morning after pill.)

In fact, there are many countries where prescriptions are not required for legal medicines and they appear to do just fine.  Writing in Reason, Kerry Howley points out (online version, the print version is longer and I am quoted) that in this respect if no other Myanmar is a bastion of rationality and liberty compared to the United States.

Last year, while living in the Southeast Asian nation of Myanmar,
my phones were tapped, my journals were read, my work was censored, and
for the first time in my life, I was given the authority to care for my
own body.

There is no prescription drug system in Myanmar, but there are plenty of illnesses waiting to befall an effete Western immune system.  My expatriate colleagues and I were free to treat our ailments as we saw fit.
We staved off food poisoning and bouts of malaria with frequent trips to
the local pharmacy, consulting doctors when necessary, but ultimately
responsible for our own medical decisions. We formed doctor-patient
relationships that were partnerships rather than paternalistic
hierarchies, and each of us lived to tell the story.

Coming back to the States in the midst of hand-wringing about direct-to-consumer advertising, the restriction of life-saving cholesterol drugs, a wrenching process to make the morning-after-pill readily available, and now a push to put Sudafed behind the counter, it’s increasingly hard to understand why Americans cede crucial health decisions to the bureaucratic dithering of the FDA. In an age of empowerment through information, it is mind-boggling that patients are still willing to be silent spectators while their doctors call the shots.