The problem with democracy
No matter who you vote for the government always gets in.
Rating the agencies and departments
How does the Bush administration rate its own agencies, in terms of management performance?
The “Executive Branch Management Scorecard” rates agencies in terms of human capital, competitive sourcing, financial management, e-government, and budget/performance. Eight of the twenty-six agencies earned the lowest possible score in all categories, see here, and then click on the top scorecard link to get to the evaluations. These agencies include the Department of Justice, Homeland Security, and the Treasury Department. Out of a possible 130 grades, 87 fall into this lowest category.
Education, Labor, and the Office of Personnel Management do the best, but this is little consolation if you, like me, would be inclined the abolish the first two of those.
It is nice to see the Bush Administration be frank about problems in government management. The scorecard claims the problem is getting better, but note two things. First, good management is not an end in itself, policy must also be good. Second, I expect little in the way of real reform as long as budgets jack up domestic spending for most of these agencies, regardless of their performance.
And you think we economists are tough…
Barlow’s method for treating anxiety disorders is surprisingly simple, although its philosophical and clinical implications are anything but. He aims to reduce anxiety not by teaching customary relaxation techniques involving calming mantras or soothing imagery, but by doing just the opposite: forcing the patient to repeatedly face his most dreaded situation, so that, eventually, he becomes accustomed to the sensation of terror. Barlow claims he can rid some people of their symptoms in as little as five to eight days. His treatment promises to be psychotherapy’s ultimate fast track, but while many clinicians praise its well-documented results, others take a dimmer view of what one clinician calls ”torture, plain and simple.”
The economic rationale for this, is, of course, straightforward. Make some form of thought, feeling or behavior more costly, and people will do less of it.
And does it work?
…his success in ameliorating anxiety is by his reckoning as high as 85 percent. David Tolin, the director of the Anxiety Disorders Center at the Institute of Living in Hartford, says: ”Barlow’s program is an ideal toward which other clinicians should strive. It is the most rigorously tested and documented treatment for anxiety. Most practitioners don’t teach his approach because the field of psychology is relatively slow to adapt to evidence-based treatment.” Reid Wilson, a professor of psychiatry at the University of North Carolina School of Medicine and an ardent Barlow supporter, adds that Barlow’s work hasn’t completely caught on because, as he puts it: ”We’re still on the uphill climb. We haven’t had the manpower to train enough people. Only a very small number of clinicians know about this. They don’t understand that relaxation training could actually slow treatment instead of speed it up.”
For the full, and fascinating, story, click here. Here is another article on Barlow. Here is Barlow’s home page.
I don’t have the clinical or medical expertise to evaluate this, but surely it deserves a closer look. The economist, however, should not spring to any quick conclusions. Yes, the “substitution effect” favors a cure, but in the meantime the “income” or “portfolio” effect may drive the individual to very low and possibly counterproductive levels of despair.
By the way, our colleague Bryan Caplan offers this extreme, economistic perspective on mental illness. I think Bryan’s view is crazy; he probably thinks you would be crazy not to read such a short, entertaining polemic.
Bad news about trade policy
The Democrats are turning increasing to protectionism, and moving away from the (relative) free trade legacy of Bill Clinton. When Richard Gephardt speaks, heads start nodding in the audience. Daniel Drezner offers very useful, and sad, commentary.
Policies toward wildfires
…the disdain for (and, in recent years, sometimes legal banning of) human “management” of the woods plays a role in the rising of dangerous wildfires. Time to drop the illusion that everything can be natural in a society of 285 million citizens. People are here and we’re not going to go away; people and forests and brushlands are in closer contact all the time; this leaves us little choice but to return to some version of managing lands to exert power over natural fire.
…Note that, since it is fashionable to deride George W. Bush’s environmental policies, the president’s “healthy forest” initiative, unveiled months ago, contains many provisions aimed at exactly the sort of pragmatic management that would reduce wildfires. The “healthy forest” bill was blocked in the Senate by Democrats and enviro lobbyists, who expressed horror at the thought of artificial intervention in the forest. Wednesday, as San Diego burned, the Senate passed the legislation 97-1. Bush’s plan is far from perfect, but will move forest management back toward realism.
Read Gregg Easterbrook for the full and very thoughtful analysis.
US Sperm Exports Explode; Canadians Upset
The US is a world leader in sperm exports primarily because sperm banks in the U.S. are run on a for-profit basis. As a result, US sperm is reckoned to be of high quality (we always knew this didn’t we?) particulary because the US version comes with a background on the vitals of the donor. Denmark also exports a lot of sperm because of high standards and demand for that blond, blue-eyed look.
Exports to Canada have increased in recent years because of a scandal involving poorly screened Canadian sperm. Canadians also import a lot of US eggs. The Canadian government, however, is apparently miffed as a new law is being readied that would forbid donations involving a paid donor. The law would not only make paid donation illegal in Canada it would make it illegal to use any paid-for sperm. Canadian couples seeking fertility options will suffer and who will benefit? I cannot think that this law is anything but spiteful and ridiculous. Is paying for sperm an original sin? As with other areas of Canadian medicine (see Tyler’s posts here and here), the rich will now travel to the United States for treatment.
Aside: The Canadian Health Official quoted here is ignorant or disengeneous when she says “We don’t buy or sell blood, or organs or tissues.” In fact, Canada also imports a lot of US blood plasma. Plasma takes longer to donate than straight blood and as a result altruistic donation rates are low and much of the world relies on paid-for US plasma for its life-saving properties. Similarly, donating eggs is not nearly as much fun as donating sperm so altruistic donation of Canadian eggs is unlikely to make-up for restrictions on the import of paid-for US eggs.
Thanks to Eric Crampton for the seminal email.
The alternative minimum tax
Here’s a nice summary of the Alternative Minimum Tax:
Let’s devise a politically inept income tax policy. We’ll begin by eliminating tax breaks people have been accustomed to for decades, such as those for qualified retirement accounts, and state and local taxes. Next, we’ll negate the child tax credit so that families with young children will be hit especially hard. Then, we won’t adjust for inflation, so that our tax will affect more people each year as their incomes grow along with the economy and inflation. We’ll tell people that they must calculate their taxes twice, using two different formulas — and finally we’ll add insult to injury by requiring them to pay whichever amount is higher.
The full story, available here, is chilling but worth reading in its entirety. Even the IRS has criticized the AMT:
Nina Olson, the IRS’s National Taxpayer Advocate, made this declaration last month: “It’s a horrible provision. We are really sorry about the impact of this tax, but it is not for us to rewrite the laws; it’s for Congress to act.”
It is estimated, however, that outright repeal would cost the Treasury $1 trillion between 2003 and 2012. So get ready for some ongoing tax increases, even if you hear that your taxes are being cut you might have to pay the AMT instead.
Hey, wait a minute…
Iraq is getting a flat tax of 15 percent, here is the full story. I’m all for this, but note that under Saddam very few Iraqis paid any income taxes at all, despite a published marginal rate of 45 percent.
You might now ask who will be exempt from the new taxes:
The 15 percent rate does not take effect until January. In the meantime, Bremer has abolished all taxes except for real estate, car sales, gasoline and the pleasantly named “excellent and first class hotel and restaurant tax.” Even while leaving these Hussein-era levies in place, Bremer exempted his coalition authority, the armed forces, their contractors and humanitarian organizations. Exempting occupation personnel leaves only the Iraqis to pay taxes, as well as journalists, business people and other foreigners.
I don’t mean to show lack of appreciation for those who are putting their lives on the line. But, symbolically speaking, I doubt if this is a worthwhile way to avoid additional expenditures.
Crony Statism
Johan Norberg provides some depressing information about the situation in Russia.
Russian President Vladimir Putin’s chief of staff, Alexander Voloshin, is said to have resigned. This is another sign that the so called power clan, “siloviki”, with its base in the FSB (former KGB) is strengthening its grips on power, and that both the liberal economists and the allies with former President Yeltsin are losing out. This is bad news for Russia. It all began with the brutal arrest of the oil magnate Mikhail Khodorkovsky this Saturday. The difference between Khodorkovsky and other oligarchs is not that he is more corrupt or unscrupulous, on the contrary, his oil company Yukos is renowned for being relatively transparent and law-abiding for a Russian company. The difference is that he has challenged Putin by supporting democratic forces, like the parties Yabloko and SPS. Before the arrest FSB also made a raid on Yabloko’s headquarters and stole their servers with their planning for the parliamentary election on December 7th. First the destruction of the free media in Russia and now this. It is no longer possible to call Putin’s Russia a democracy. It is more like a “democtorship” (“demokratur”), as the Swedish novelist Vilhelm Moberg once called a dictatorship with democratic rituals….
Addendum: More on the rise of the siloviki.
Choice theory and the devil: a puzzle
You are in hell and facing an eternity of torment, but the devil offers you a way out, which you can take once and only once at any time from now on. Today, if you ask him to, the devil will toss a fair coin once and if it comes up heads you are free (but if tails then you face eternal torment with no possibility of reprieve). You don’t have to play today, though, because tomorrow the devil will make the deal slightly more favourable to you (and you know this): he’ll toss the coin twice but just one head will free you. The day after, the offer will improve further: 3 tosses with just one head needed. And so on (4 tosses, 5 tosses, ….1000 tosses …) for the rest of time if needed. So, given that the devil will give you better odds on every day after this one, but that you want to escape from hell some time, when should accept his offer?
From CrookedTimber.org.
I haven’t worked through this one formally, but I have the sinking feeling that the correct answer is to choose an awfully long (infinite?) period of torment. Think about it. Waiting another day adds only slightly to suffering, viewed as part of a potentially very large total. But you improve your odds of escape by a considerable amount. Your best chance of getting out of the paradox is to have a very high discount rate and a very low level of risk aversion, noting of course that under some utility functions this combination of features cannot be made to fit together.
By the way, if you are into this kind of thing, Will Baude has an excellent post explaining the St. Petersburg Paradox.
Radar improves the quality of wine
Yup, that”s right. And yes, new ideas do come first to California, at least in this case.
Scientists at the University of California at Berkeley are using ground penetrating radar (GPR), a tool better known for its military uses, to help winemakers create tastier, more uniform wines.
“GPR is an electromagnetic signal that travels in the ground. What we do is try to understand how fast that signal travels and that tells us a lot about the moisture content of the soil,” said Susan Hubbard, a hydrogeophysicist at University of California, Berkeley, and staff scientist at Lawrence Berkeley National Laboratory.
Understanding soil moisture is a critical part of the art and science of winemaking. Cabernet Sauvignon and other red wine grapes prefer drier soil. Chardonnay and other white wine grapes do better in moist soil. But growers say the timing, and the amount of water given to the vines can make the difference between an average and an outstanding crop.
Read here for the full story.
Let’s not forget, the initial French advantage in winemaking was based on technology, albeit of a more informal sort. If the French don’t keep on innovating, they will be left behind.
Newspapers in small countries
Consider this list of newspapers per capita. This is the number of papers, not how many people read papers. Here is the top ten:
1. San Marino 108.19 per 1000000 people
2. Gibraltar 36.08 per 1000000 people
3. Andorra 29.24 per 1000000 people
4. Macau 21.65 per 1000000 people
5. Greece 19.45 per 1000000 people
6. Norway 17.9 per 1000000 people
7. Bermuda 15.63 per 1000000 people
8. Estonia 11.3 per 1000000 people
9. Switzerland 11.09 per 1000000 people
10. Latvia 10.99 per 100000 people
Rounding out the top fifteen are Iceland, Cyprus, and Malta, along with such giants as Sweden and Finland. And note the gap between the frontrunner, San Marino, and number two; San Marino has almost three times as many newspapers per capita.
The United States is not in the top sixty-seven and does not stand on the list at all, it appears not to be in the database. A separate data source lists America as having 1,228 daily newspapers, which if correct would put us in per capita terms at number 28, between Mauritius and Bolivia. Why so low? Well, we rely on TV more, we have more concentrated media (most cities have only one daily paper, and perhaps smaller countries like the gossipy element that follows from a large number of small circulation newspapers.
Note: I have modified the initial version of this post, due to helpful comments from Frank Quist.
Drug reimportation
Most libertarian economists oppose drug reimportation, on the grounds that the resulting lower prices would harm the incentives for R&D. Richard Epstein provides a good statement of this case, with links to the relevant debates, including some libertarian dissenters, such as Ed Crane and Roger Pilon, both of Cato.
I have wondered, however, whether libertarians ought to reconsider their opposition to reimportation. Recall that the libertarian position paints the FDA as a significant obstacle to drug research.
I suspect that allowing drug reimportation would, in the long-run, break down the authority of the FDA. Once Americans are looking to abroad for medicines, the flood gates will be opened. They will want to buy medicines from Mexico, Europe, and indeed from all over the world. These medicines, of course, will not have met with FDA approval. It is not a matter of pure logic that legal reimportation would lead to this broader class of imported drugs, but I think it is what the political equilibrium would look like. Illegal drug importation is already on the rise; legal reimportation would legitimize and publicize the overall idea of getting drugs from other countries.
So, if we allow reimportation, the FDA will either have to become much stronger, and more intrusive (in conjunction with other governmental agencies, such as customs perhaps), or the FDA will cede much of its effective power, while likely keeping its nominal powers. But in the long run it is hard to see how to enforce restrictions on drug importation, especially once reimportation is legal. Drugs don’t take up much space, and the exact nature of their content is not easily tested. You can have a customs dog sniff for pot, but that same dog cannot tell whether a drug is of pure quality of adulterated, or is something else altogether. If libertarian think that the FDA does more harm than good, perhaps they should welcome reimportation as moving us toward a greater reliance on markets.
Musical evening, based on trade
Last night my wife and I saw Cesare Evoria in concert, she is the closest today’s world has to a Billie Holiday or Ella Fitzgerald. Here is one of her best CDs.
As you may know, Evoria is from Cape Verde, one of the most musically creative spots on the planet. Cape Verdean music draws from traditions of Portuguese song, Brazilian samba, and American jazz, among other styles. Bittersweet and lovely at the same time. Note that this unique musical culture draws on remittances for its finance; remittances constitute more than 20 percent of Cape Verde’s gdp. Cape Verdeans migrate to Massachusetts, Portugal, France and the Netherlands. According to some estimates, there are 500,000 Cape Verdeans abroad, and about 350,000 in Cape Verde. This is yet another example of the cultural benefits of trade and migration.
Addendum: Here is an update on what is going on in Cape Verde, with respect to economic development.
I don’t make macroeconomic predictions myself
Ray Fair is a prominent macroeconomic forecaster. He tells us:
Real Growth and the Unemployment Rate: The predicted growth rates for the next four quarters are 4.1, 3.6, 3.5, and 3.4 percent, respectively. The unemployment rate is predicted to fall to 5.6 percent by the middle of 2004.
Inflation: Inflation as measured by the growth of the GDP deflator (GDPD) is predicted to rise to 2.5 percent by the middle of 2004.
Here is the whole memo. The link is from Econopundit.com. Here is Paul Krugman telling us not to be too happy about today’s announced quarterly 7.2 growth rate, Brad Delong adds to Krugman’s concerns. Andrew Sullivan gets his digs in on Krugman.
Here is a thoughtful defense of macroeconomic forecasting. Here is a more critical view of forecasting, closer to my own view.
My take: You can squabble about the numbers all you want, at this point the Bush people have to be pretty happy.