Media concentration
It is commonly alleged that media concentration is on the rise. Ben Compaine, in the January issue of Reason magazine (not yet on-line), debunks this myth. In the mid 1980s, the top ten media companies accounted for 38 percent of total revenue. In the late 1990s the figure was higher, but only barely, up to 41 percent. More importantly, different companies shape our media experiences. Where was Comcast, now the largest cable company, twenty years ago? Bertelsmann, now a giant, was barely visible in American markets. Amazon.com and other Internet-related enterprises are new on the scene as well. If media companies are monopolies, their market power is extremely fragile.
Nor are smaller media outlets necessarily better than the larger conglomerates. The larger outlets are much more likely to win awards for their quality, nor are they obviously more biased. Clear Channel radio is now a poster boy for media critics, but its 1200 stations comprise only slightly more than ten percent of a total of 10,500 American stations. Note also that there were only 8000 radio stations in 1980. We now have satellite radio and Internet radio as well.
Compaine makes a nice point in closing:
It may indeed be that at any given moment 80 percent of the audience is viewing or reading or listening to something from the 10 largest media players. But that does not mean it is the same 80 percent all the time, or that it is cause for concern.
The bottom line: When it comes to media, we have more choice and more competition than ever before.
What would it cost to send a man to the moon?
Recently the Bush administration has been making noises about sending a man to the moon again. Gregg Easterbrook offers some cogent critical points:
A rudimentary, stripped-down Moon base and supplies might weigh 200 tons. (The winged “orbiter” part of the space shuttle weighs 90 tons unfueled, and it’s cramped with food, oxygen, water, and power sufficient only for about two weeks.) Placing 200 tons on the Moon might require 400 tons of fuel and vehicle in low-Earth orbit, so that’s 600 tons that need to be launched just for the cargo part of the Moon base. Currently, using the space shuttle it costs about $25 million to place a ton into low-Earth orbit. Thus means the bulk weight alone for a Moon base might cost $15 billion to launch: building the base, staffing it, and getting the staff there and back would be extra. Fifteen billion dollars is roughly equivalent to NASA’s entire annual budget. Using existing expendable rockets might bring down the cargo-launch price, but add the base itself, the astronauts, their transit vehicles, and thousands of support staff on Earth and a ten-year Moon base program would easily exceed $100 billion. Wait, that’s the cost of the space station, which is considerably closer. Okay, maybe $200 billion.
What can a man do on the moon that automated vehicles cannot? Virtually nothing, and of course he requires far more maintenance and protection.
Given all that, where should we go from here?
NASA doesn’t need a grand ambition, it needs a cheap, reliable means of getting back and forth to low-Earth orbit. Here’s a twenty-first century vision for NASA: Cancel the shuttle, mothball the does-nothing space station, and use all the budget money the two would have consumed to develop an affordable means of space flight. Then we can talk about the Moon and Mars.
Mostly I agree, though I expect private enterprise can beat NASA in this latter project, at least provided we allow the privatization of space.
Queer Eye and the Future of Television
Queer Eye for the Straight Guy, the latest reality-tv show, features five gay men who remake a “style-deficient and culture-deprived straight man from drab to fab.” The show is a huge success and has created much commentary on the changing nature of social mores in America.
Less noticed is that the show is artfully disguised product placement. Each week the fab five carefully name each and every product that they use to remodel the straight guy – like Polo jeans, Ray Ban eyewear, KMS Hair care products, Benjamin Moore paint and Hold Everything furniture, to name a few recently featured items. Love that desk but miss the item number? Got to the website and you can find each product categorized by the show it appeared in.
As usual, a Ralph Nader connected group, Commerical Alert, is complaining that consumers are being ripped off. They want every paid product placement to be overlaid with an on-screen “advertisement” sign. The shift to within-show product placement, however, is a natural response to Tivo and other similar technologies that are making it easier to skip the commercials. I hope that within-show product-placement eliminates commercials altogether – this is the future of television.
What does a signed Beethoven score cost?
Right now over two million dollars, an auction was held recently. On one hand, it was the String Quartet Op.127, on the other hand it was only the Scherzo movement. Earlier this year a working manuscript for the 9th Symphony fetched over two million British pounds, or over 3.46 million dollars.
Wal-Mart in Mexico
Wal-Mart is now the largest private employer in Mexico, with over 100,000 workers on its payroll there. Only the United States has more Wal-Mart outlets (3,499) than does Mexico (633), Britain is next with 266 outlets. Last year Wal-Mart did $11 billion of business a year in Mexico, more than the entire tourism industry. That is two percent of Mexican gdp, about the same as the percentage in the U.S. The influence of Wal-Mart alone has lowered Mexico’s inflation rate, read here for more details.
A Wal-Mart cashier in Mexico makes about $1.50 an hour. This may not sound generous, but a significant portion of the country does not make that much in a day. Wal-Mart is also a boon to poor and rural Mexicans, who can afford to buy more at the store’s low prices, or who receive goods that were otherwise unavailable or required a trip to Mexico City. If you are looking for an example of how globalization benefits the world’s poor, go no further than Wal-Mart.
A good idea for my university
Students are making voluntary contributions to increase the pay of their favorite professors, to prevent those professors from leaving for another university. Here is one story:
When Brian Cannon, a 21-year old senior at the College of William and Mary, learned that one of his favorite government professors was leaving for a higher-paying job at Princeton University, he was a little upset.
But when the student body president learned that in the past year, 13 professors have left the prestigious public university in Williamsburg — many of them headed to public universities in other states — he knew he had to do something.
He organized a student referendum, adopted overwhelmingly this week, to raise next year’s student activity fee by $5, to about $80. The extra money would be used to boost the salaries of professors who might leave because state budget cuts have frozen faculty raises.
The fees are usually used to bring bands to campus and help out the debate team and other clubs. But now, three professors, to be chosen by the provost with student input, will each receive $10,000 bonuses, to be funded by the fee increases.
This is but one example of a growing gap in salaries between private and state universities. I expect that over time, for better or worse, many state universities will in effect become privatized. They will remain under nominal state control, but their finances will rely increasingly on private sources of support.
I smell a rat?
The World Bank very recently held a contest to award innovative ideas for fighting poverty. One of the winning ideas involved the use of rats to smell and detect disease:
One of the winners was a scheme to use rats as a cheap diagnostic tool for tuberculosis in Tanzania.
Rats are already being used by the Apopo organisation to detect landmines in Mozambique using their acute sense of smell.
Apopo’s Bart Weetjens told BBC News Online that the rats could also be trained to sniff out TB from saliva samples.
A group of rat detectives could process more than 2,000 samples a day compared with just 20 for a human technician with microscope, he said. Using a set of rats should mean 100% accuracy and a quick diagnosis, he added.
“The TB problem in Tanzania is very widespread… but when it’s detected early it can be treated and it makes a big difference.”
To read about the other winning ideas, click here for a BBC news report.
Medicare and Perverse Incentives
Medicare does little to reward service providers for quality improments, and in fact often punishes them. Friday’s New York Times provided a blistering indictment:
By better educating doctors about the most effective pneumonia treatments, Intermountain Health Care, a network of 21 hospitals in Utah and Idaho, says it saves at least 70 lives a year. By giving the right drugs at discharge time to more people with congestive heart failure, Intermountain saves another 300 lives annually and prevents almost 600 additional hospital stays.
But under Medicare, none of these good deeds go unpunished.
Intermountain says its initiatives have cost it millions of dollars in lost hospital admissions and lower Medicare reimbursements. In the mid-90’s, for example, it made an average profit of 9 percent treating pneumonia patients; now, delivering better care, it loses an average of several hundred dollars on each case.
“The health care system is perverse,” said a frustrated Dr. Brent C. James, who leads Intermountain’s efforts to improve quality. “The payments are perverse. It pays us to harm patients, and it punishes us when we don’t.”
Intermountain’s doctors and executives are in a swelling vanguard of critics who say that Medicare’s payment system is fundamentally flawed.
Medicare, the nation’s largest purchaser of health care, pays hospitals and doctors a fixed sum to treat a specific diagnosis or perform a given procedure, regardless of the quality of care they provide. Those who work to improve care are not paid extra, and poor care is frequently rewarded, because it creates the need for more procedures and services.
Does the Bush Medicare bill make any serious attempt to address problems like this? No. Paul Krugman, in his column, described the Medicare bill as “a huge subsidy for drug and insurance companies, coupled with a small benefit for retirees.” If we are to improve America’s health care system, no matter what your political stance, the first order of business is to get incentives working for us, not against us. That fight has yet to begin, nor does it currently have much of a constituency behind it in either political party.
Regulation by Litigation
Elliot Spitzer, New York’s Attorney General, apparently misunderstands so let me make it clear – it’s the rule of law not the rule of lawyers. As I feared, a real but relatively minor scandal in the mutual fund industry, is becoming the excuse for grandstanders promoting their own agendas that have little do with the original issues. Professor Bainbridge lays it out here (I recommend following up on his links but of course ignore any criticism you might find of my arguments! :)).
Against screen quotas
France, Brazil, Pakistan, Mexico, China, and South Korea are among the countries that set screen quotas for their domestic films. An astute reader/blogger Tony referred me to the following Korean opinion piece, critical of such quotas. The English is at times choppy, but the author is on the mark:
What the screen quota system provides is a shelter without any competition. But it is an age-old truth that true competitiveness is only bred through competition. If the Korean movie industry really wanted the kind of international competitiveness that could take on Hollywood movies, it should break out of its protective shelter and meet the challenge straight in the eye. We will never see the day when our industry will leave behind the danger of being dominated by foreign movies if it keeps on being obsessed with the screen quota system.
Second, supporters of the screen quota system claim that it is the last bulwark protecting Korean culture. Who on earth bestowed the sacred duty of protecting the culture of Korea to the movie industry? Culture is the form of life that every one of us takes part in creating. It is found in our mountains and streams, our cities, our history, culture, art and crafts. This writer finds it hard to believe that the Korean culture has become more refined because a few domestic gangster movies outdid foreign movies at the box office.
The author asks why we should not have comparable quotas for womens’ fashion or for alcoholic drinks, both areas where Korean culture competes against foreign imports. The author also complains of the “the self-righteous and exclusivist advice of the French,” the whole (short) piece makes for lively reading.
The blogosphere as a spontaneous order
Read Jonathan Wilde’s insightful analysis of how blogs serve as an unplanned order, a’ la Hayek. Lynne Kiesling offers excellent commentary and further links.
What does the American public believe?
Many things that ain’t so, according to our colleague Bryan Caplan. They believe that protectionism creates jobs, and they think that big corporations, rather than supply and demand, set the price of gasoline. See the link for a longer discussion and some citations of specific questionnaire evidence.
Here is my favorite bit:
The only category of spending that the public invariably wants to cut is foreign aid–which amounts to about 1% of the federal budget!
Believe it or not, it is not unusual for a member of the general public to think that foreign aid consists of forty percent of the United States government budget. Of all the biases we observe in voters, “suspicion of foreigners” appears to be the most pronounced. Bryan, who has done the relevant work here, is writing a book on how and why democracy can go astray through irrational voters, I await its release eagerly.
Here are some broader polls on NAFTA and free trade, compiled by AEI. Even the people who favor free trade, presumably for its benefits to consumers, think it costs us jobs. Given how the public feels, I am always surprised that we have as much free trade as we do.
There is Plenty of Room at the Trough Also
Nanotech gets $3.7 billion to, among other things, formulate “strategies for transferring nanotechnology into the marketplace.” My pants say this is just more corporate welfare.
For more on Nanotech see Richard Feynman’s visionary speech and Eric Drexler’s book, Engines of Creation.
The Commanding Heights
PBS has put the entire Commanding Heights television series on the net. Wisely, in addition to longer sections, they have broken the series down in a variety of ways so that you can find short clips on people, countries or ideas. Here is a quicktime video about the the day the tide turned.
A Bit of Talmudic Commentary
The Wall Street Journal’s David Wessel featured Marginal Revolution as one of the five best econ blogs/web sites. Wessel cited our wide ranging interests accompanied by bits of “Talmudic commentary.” Brad DeLong, Stephen Roach, John Makin, and Venture Blog were also cited. Welcome to all the new WSJ readers!