Results for “reciprocity”
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Why Doesn’t the United States Have Test Abundance?!

We have vaccine abundance in the United States but not test abundance. Germany has test abundance. Tests are easily available at the supermarket or the corner store and they are cheap, five tests for 3.75 euro or less than a dollar each. Billiger! In Great Britain you can get a 14 pack for free. The Canadians are also distributing packs of tests to small businesses for free to test their employees.

In the United States, the FDA has approved less than a handful of true at-home tests and, partially as a result, they are expensive at $10 to $20 per test, i.e. more than ten times as expensive as in Germany. Germany has approved over 50 of these tests including tests from American firms not approved in the United States. The rapid tests are excellent for identifying infectiousness and they are an important weapon, alongside vaccines, for controlling viral spread and making gatherings safe but you can’t expect people to use them more than a handful of times at $10 per use.

We ought to have testing abundance in the US and not lag behind Germany, the UK and Canada. As usual, I say if it’s good enough for the Germans it’s good enough for me.

Addendum: The excellent Michael Mina continues to bang the drum.

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What I’ve been reading

1. Russ Banham, The Fight for Fairfax: Private Citizens and Public Policymaking.  A well-informed story of the great men and women who built up Fairfax County, Virginia, including Til Hazel, Sid Dewberry, Earle Williams, Jack Herrity, George Johnson, Dwight Schar, and others.  WWNN: “We were never NIMBY!”  It is striking how much the key builders were not born as elites.

2. Dan Levy, Maxims for Thinking Analytically: The wisdom of legendary Harvard professor Richard Zeckhauser.  How many of us will end up getting books such as this in our honor?  If you are curious, Zeckhauser’s three maxims for personal life are: “There are some things you just don’t want to know,” “If you focus on people’s shortcomings, you’ll always be disappointed,” and “Practice asynchronous reciprocity.”  Zeckhauser, by the way, was on my dissertation committee.

3. Adeeb Khalid, Central Asia: A New History from the Imperial Conquests to the Present.  Could this be the best history of Central Asia?  The author takes special care to tie the region to the histories of Russia and China, the author seeming to have a specialization in Russian history, and for me that makes the entire enterprise far more intelligible.  Useful for Xinjiang history as well, here is one useful review of the book.

4. Paul Greenhalgh, Ceramic: Art and Civilisation.  Picture book!  Need I say more?  And a big one.

Edward J. Watts, The Eternal Decline and Fall of Rome: The History of a Dangerous Idea.  How has the decline of Rome been discussed and analyzed throughout the ages, including by the Romans themselves?

Loyd Grossman, The Artist and the Eternal City: Bernini, Pope Alexander VII, and the Making of Rome.  Has all the virtues of a picture book, but the price of a regular book.  With the common educated public, Bernini is still probably underrated.

Michael S. Malone, The Big Score: The billion dollar story of Silicon Valley is the new Stripe Press reprint.

Seth David Radwell, American Schism: How the Two Enlightenments Hold the Secrets to Healing Our Nation.  This is not a book written for me, but it is nonetheless good to see someone putting forward Enlightenment ideals as a solution to our problems.

Hungary’s Vaccine Approval Rule

AP: Hungarian health authorities were the first in the EU to approve the Sinopharm jab for emergency use on Jan. 29. That came after a government decree streamlined Hungary’s vaccine approval process by allowing any vaccine administered to at least 1 million people worldwide to be used without undergoing review by the country’s medicines regulator.

The country expects to receive 5 million total doses of the Sinopharm vaccine over the next four months, enough to treat 2.5 million people in the country of nearly 10 million.

Authorize any vaccine already used by at least 1 million people is a type of reciprocity or peer-review rule in which you speed up approval in your country based on data from another country. As with all such rules, it’s imperfect–new and extensive use will reveal common, serious side effects and many uncommon ones as well but extensive use is not a guarantee of safety or efficacy. Nevertheless, when time is of the essence the 1 million+ rule is a smart rule.

Hat tip: Bart Madden.

Against Regulatory Nationalism

I’ve long argued that if a drug or medical device is approved in another country with a Stringent Regulatory Authority it ought to be approved in the United States. But, of course, the argument is even stronger in the other direction. Drugs and devices approved in the United States ought to be approved elsewhere. Indeed, this is how much of the world actually works because most countries do not have capability to evaluate drugs and devices the way the FDA or say the EMA does. Although it’s the way the world works, few will admit it because that would violate pretensions of regulatory nationalism. Moreover, keeping up with pretenses means transaction costs and unnecessary delays.

The price of such regulatory nationalism can be very high as indicated in this interview with Adar Poonawalla, chief executive of the Serum Institute of India (SII), the world’s largest producer of vaccines.

Some people think the reason that rollout has been slow in many countries is because the developers who hold the patents on the vaccines have licensed too few manufacturers to make them. Do you agree?

No. There are enough manufacturers, it just takes time to scale up. And by the way, I have been blown away by the cooperation between the public and private sectors in the last year, in developing these vaccines. What I find really disappointing, what has added a few months to vaccine delivery – not just ours – is the lack of global regulatory harmonisation. Over the last seven months, while I’ve been busy making vaccines, what have the US, UK and European regulators been doing? How hard would it have been to get together with the World Health Organization and agree that if a vaccine is approved in the half-dozen or so major manufacturing countries, it is approved to send anywhere on the planet?

Instead we have a patchwork of approvals and I have 70m doses that I can’t ship because they have been purchased but not approved. They have a shelf life of six months; these expire in April.

Did you get that? Regulatory nationalism has added months to vaccine delivery and now threatens to put to waste millions of stockpiled doses.

Addendum: See also Scott Sumner on the costs of regulatory nationalism.

Scott Sumner on Vaccine Nationalism

EconLib: Experts in the UK have looked at the AstraZenaca vaccine and found it to be safe and effective. And yet Americans are still not allowed to use the product. So if paternalism is not the actual motive, why do progressives insist that Americans must not be allowed to buy products not approved by the FDA?  What is the actual motive?

The answer is nationalism. The experts who studied the AstraZenaca vaccine were not American experts, they were British experts. Can this form of prejudice be justified on scientific grounds? Obviously not. There has been no double blind, controlled study of comparative expert skill at evaluating vaccines. We have no way of knowing whether the UK decision is wiser than the FDA decision. Instead, the legal prohibition is being done on nationalistic grounds. We are told to blindly accept the incompetence of British experts, without any proof.  (And even if you believed there was solid evidence that one country’s experts were better than another, it would not explain why each developed countries relies on their own experts.  They can’t all be best!)

These debates always end up being like a game of whack-a-mole. Shoot down one argument and regulation proponents will simply put forth another. Their minds are made up.  You say people shouldn’t be allowed to take a vaccine unless experts find it to be safe and effective? OK, the UK experts did just that. You say that only the opinion of US experts counts because our experts are clearly the best? Really, where is the scientific study that shows that our experts are the best? I thought you said we needed to “trust the scientists”?  Now you are saying we must trust the nationalists?

…what’s wrong with the following three-part system of regulation as a compromise solution:

1. FDA approved drugs can be consumed by anyone in America.

2. Drugs approved by any of the top 20 advanced countries (but not the FDA) can be consumed by anyone willing to sign a consent form indicating that they understand the FDA has not approved this product. I’ll sign for AstraZeneca. (The US government puts together a list of 20 reputable countries.)

3. Drugs approved by none of the top 20 developed economies will still be banned.

This is what regulation would look like if paternalism actually were the motivating factor. But it’s not. It’s Trump-style nationalism that motivates progressives to insist that only FDA approved drugs can be sold in America. They may look down their noses at Trump, but they implicitly share his nationalism.

I agree, of course, and have long supported Pharmaceutical Reciprocity.

David Henderson needs a reboot

David is repeatedly writing critiques of my writings on Covid-19.  (Google to them if you wish, they are so off base and misrepresentative I don’t think they deserve a link, and furthermore I find it almost impossible to track down EconLog archives under their new system.)  Virtually all of his points revolve around simple or it seems even willful misunderstandings.  For instance, David wrote:

But he’s willing to sacrifice the well-being of 50 million school-age children. Remember his casual “It just doesn’t seem worth it” remark about allowing kids to go back to school. He handles the tradeoff by not mentioning it.

Here is what I wrote:

…the value of reopening schools. It is an inarguable point, and Sweden seems to have made it work. But schools cannot and should not be reopened unconditionally. Amid high levels of Covid-19, a successful reopening very often will require social distancing, masks and a good system for testing and tracing. It would be better to focus on what needs to be done to make school reopenings work. Reopened schools in Israel, for instance, seem to have contributed to a significant second wave of Covid-19.

And my remark about “It just doesn’t seem worth it”, cited by David as me dismissing school reopenings?  Here is what I actually wrote:

Indoor restaurant dining and drinking, for example, is probably not a good idea in most parts of the U.S. right now.

Yes, many of the Covid cases spread by such activity would be among the lower-risk young, rather than the higher-risk elderly. Still, practically speaking, given America’s current response capabilities, those cases will further paralyze schools and workplaces and entertainment venues. It just doesn’t seem worth it.

I am worried about reopening indoor bars and restaurants because I want to keep schools (and other venues) open.  At my own school, GMU, I very much argued for keeping it open, which indeed we have done with success but also with great effort.  My whole point is one about trade-offs.

I’ve also linked regularly to evidence that school reopenings are often possible and desirable, but still there is a right and wrong way to do it and they are not in every case a good idea.  It is not just up to the policy analyst, you also have to keep the teachers and various other parties on board, whether you like that reality or not.

One issue here is that likely more students would end up in functioning schools under a Tyler Cowen regime than under a David Henderson regime.  David’s sum of recommendations would, in practice, if we were to trace through their full consequences, lead to more schools being shut and more teachers refusing to show up.  And more deaths and panic and overflowing medical facilities.  Now that’s a trade-off.

I could point to numerous misunderstandings in David’s recent posts, pretty much in every paragraph.  (I also think he is quite wrong on substance, allying himself with a few eccentric thinkers that hardly anyone agrees with, and who have not acquitted themselves well in debate, or made good predictions as of late, but that is another matter for a different time.  He should pay greater heed to say Scott Gottlieb, who knows what he is talking about.)

In the meantime, David is failing the ideological Turing test badly and repeatedly.

Addendum: David’s Russian vaccine post does not misunderstand me, but I don’t think it shows a very full grasp of the issue.  I very much favor regulatory reciprocity for pharmaceuticals, vaccines, and more, but I strongly believe adding Russia to the reciprocal list would “poison the well” and doom the whole idea.  In the meantime, they are not nearly as far along for a major vaccine rollout as they claim, so probably we are not missing out on very much, even if the quality were fine.  The slightest problem with the vaccine would be blown out of proportion, most of all with DT as president and Russian conspiracy theories circulating.  If your goal is to nudge and push the FDA to move more quickly across the board, starting them off with the approval of a Russian vaccine is bad tactics and is risking the entire apple cart.  Maybe try for Mother England first?  So I think David here is quite wrong, and applying market liberalization ideas in a knee-jerk rather than a sophisticated fashion.  He called the post “Tyler Cowen’s shocking post on the Russian vaccine,” but I wonder who he thinks is really supposed to be shocked by that one.  If you read David’s comment on his own post you will see he is genuinely unable to imagine that such an argument as I present above might exist.

New addendum: Note that one of the earlier comments was under the name of David Henderson but was not in fact by him, read here.  And a response by the real DRH here.

The FDA Burns

If you think the FDA has been slow at approving new coronavirus tests just look at their process for approving sunscreen products.

EWG: The FDA first began working to update sunscreen regulations more than 40 years ago. In February 2019, the agency at long last issued a proposed set of final rules, but they were never adopted.

According to EWG, the Environmental Working Group, the FDA has been too slow to test old ingredients for safety and too slow to allow new ingredients on the market thus leaving us with sunscreen products which are neither as safe nor as effective as they should be. In particular, Europe has better sunscreen protection than the United States. Here’s EWG:

Americans have fewer choices and notably poorer protection than Europeans do from ultraviolet A rays in their sunscreen options. Although most U.S. sunscreens prevent sunburn effectively when used correctly, they aren’t as good as European sunscreens at preventing the more subtle skin damage produced by lower-energy UVA radiation. UVA rays have less energy and don’t burn the skin, but they can cause the skin to age, suppress the immune system and contribute to the development of melanoma.

…Between 2003 and 2010, sunscreen makers applied for FDA permission to use eight sun-filtering chemicals developed by European companies. Four of these – Tinosorb S, Tinosorb M, Mexoryl SX and Mexoryl XL – appear to be more effective than avobenzone, the most common UVA filter permitted by the FDA. The FDA’s failure to respond to these applications prompted Congress to pass the Sunscreen Innovation Act of 2014 (FDA 2014). This act requires the FDA to review new applications for sunscreen active ingredients within 300 days, but it doesn’t relax the standards companies must meet to prove new ingredients are both safe and effective.

In 2015, the FDA responded that the companies involved had not submitted enough information to prove their chemicals were, in fact, safe and effective for use (FDA 2015). The agency asked for more data, including complete study results, measurements of ingredient levels in people’s blood, and long-term studies on systemic toxicity and potential endocrine system disruption. The FDA has also proposed that all sunscreen ingredients, including those already in use, need to have adequate safety testing data.

Some information the FDA wants, such as complete copies of studies, might be easy for sunscreen makers to produce. But in other cases, the companies could take years to satisfy FDA requests. In the meantime, Americans are being shortchanged.

I first wrote about this issue in 2013 and seven years later, despite Congress passing a law in 2014, the FDA still has not acted.

My rule is very simple. I don’t think the FDA is better than the EMA so if any drug or device is approved in Europe it ought to be available for purchase in the United States with a label saying “Approved by the EMA. Not approved by the FDA.” (By the way, we do have reciprocity type agreements with Canada and New Zealand for food so this would not be unprecedented.)

Hat tip: John Thacker.

Addendum: You should actually get more sun to avoid vitamin D deficiency which is bad for a variety of reasons including, in my estimation, greater susceptibility to COVID.

Why is there so much suspicion of big business?

Perhaps in part because we cannot do without business, so many people hate or resent business, and they love to criticize it, mock it, and lower its status. Business just bugs them. After I explained the premise of this book to one of my colleagues, Bryan Caplan, he shrieked to me: “But, but . . . how can people be ungrateful toward corporations? Corporations give us everything! Corporations do everything for us!” Of course, he was joking, as he understood full well that people are often pretty critical of corporations. And they are critical precisely because corporations do so much for us. And do so much to us.

Does my colleague’s outburst remind you of anything? Well, immediately he followed up with this: “Hating corporations is like hating your parents.”

And:

There is another reason it doesn’t quite work to think of businesses as our friends. Friendship is based in part on an intrinsic loyalty that transcends the benefit received in any particular time and place. Many friendships also rely on an ongoing exchange of reciprocal benefits, yet without direct consideration each and every time of exactly how much reciprocity is needed. In addition to the self-interested joys of friendly togetherness, friendship is about commonality of vision, a wish to see your own values reflected in another, a sense of potential shared sacrifice, and a (partial) willingness to put the interest of the other person ahead of your own, without always doing a calculation about what you will get back.

A corporation just doesn’t fit this mold in the same way. A business may wish to appear to be an embodiment of friendly reciprocity, but it is more like an amoral embodiment of principles that usually but not always work out for the common good. The senior management of the corporation has a legally binding responsibility to maximize shareholder profits, at least subject to the constraints of the law and perhaps other constraints embodied in the company’s charter or by-laws. The exact nature of this fiduciary responsibility will vary, but it never says the company ought to be the consumer’s friend, at least not above and beyond when such friendship may prove instrumentally valuable to the ends of the company, including profit.

In this setting, companies will almost always disappoint us if we judge them by the standards of friendship, as the companies themselves are trying to trick us into doing. Companies can never quite meet the standards of friendship. They’re not even close acquaintances. At best they are a bit like wolves in sheep’s clothing, but these wolves bring your food rather than eat you.

Those are both excerpts from my final chapter “If business is so good, why is it so disliked?”, from my book Big Business: A Love Letter to an American Anti-Hero.

Will Trump Appoint a Great FDA Commissioner?

As someone who has written about FDA reform for many years it’s gratifying that all of the people whose names have been floated for FDA Commissioner would be excellent, including Balaji Srinivasan, Jim O’Neill, Joseph Gulfo, and Scott Gottlieb. Each of these candidates understands two important facts about the FDA. First, that there is fundamental tradeoff–longer and larger clinical trials mean that the drugs that are approved are safer but at the price of increased drug lag and drug loss. Unsafe drugs create concrete deaths and palpable fear but drug lag and drug loss fill invisible graveyards. We need an FDA commissioner who sees the invisible graveyard.

Each of the leading candidates also understands that we are entering a new world of personalized medicine that will require changes in how the FDA approves medical devices and drugs. Today almost everyone carries in their pocket the processing power of a 1990s supercomputer. Smartphones equipped with sensors can monitor blood pressure, perform ECGs and even analyze DNA. Other devices being developed or available include contact lens that can track glucose levels and eye pressure, devices for monitoring and analyzing gait in real time and head bands that monitor and even adjust your brain waves.

The FDA has an inconsistent even schizophrenic attitude towards these new devices—some have been approved and yet at the same time the FDA has banned 23andMe and other direct-to-consumer genetic testing companies from offering some DNA tests because of “the risk that a test result may be used by a patient to self-manage”. To be sure, the FDA and other agencies have a role in ensuring that a device or test does what it says it does (the Theranos debacle shows the utility of that oversight). But the FDA should not be limiting the information that patients may discover about their own bodies or the advice that may be given based on that information. Interference of this kind violates the first amendment and the long-standing doctrine that the FDA does not control the practice of medicine.

Srinivisan is a computer scientist and electrical engineer who has also published in the New England Journal of Medicine, Nature Biotechnology, and Nature Reviews Genetics. He’s a co-founder of Counsyl, a genetic testing firm that now tests ~4% of all US births, so he understands the importance of the new world of personalized medicine.

The world of personalized medicine also impacts how new drugs and devices should be evaluated. The more we look at people and diseases the more we learn that both are radically heterogeneous. In the past, patients have been classified and drugs prescribed according to a handful of phenomenological characteristics such as age and gender and occasionally race or ethnic background. Today, however, genetic testing and on-the-fly examination of RNA transcripts, proteins, antibodies and metabolites can provide a more precise guide to the effect of pharmaceuticals in a particular person at a particular time.

Greater targeting is beneficial but as Peter Huber has emphasized it means that drug development becomes much less a question of does this drug work for the average patient and much more about, can we identify in this large group of people the subset who will benefit from the drug? If we stick to standard methods that means even larger and more expensive clinical trials and more drug lag and drug delay. Instead, personalized medicine suggests that we allow for more liberal approval decisions and improve our techniques for monitoring individual patients so that physicians can adjust prescribing in response to the body’s reaction. Give physicians a larger armory and let them decide which weapon is best for the task.

I also agree with Joseph Gulfo (writing with Briggeman and Roberts) that in an effort to be scientific the FDA has sometimes fallen victim to the fatal conceit. In particular, the ultimate goal of medical knowledge is increased life expectancy (and reducing morbidity) but that doesn’t mean that every drug should be evaluated on this basis. If a drug or device is safe and it shows activity against the disease as measured by symptoms, surrogate endpoints, biomarkers and so forth then it ought to be approved. It often happens, for example, that no single drug is a silver bullet but that combination therapies work well. But you don’t really discover combination therapies in FDA approved clinical trials–this requires the discovery process of medical practice. This is why Vincent DeVita, former director of the National Cancer Institute, writes in his excellent book, The Death of Cancer:

When you combine multidrug resistance and the Norton-Simon effect , the deck is stacked against any new drug. If the crude end point we look for is survival, it is not surprising that many new drugs seem ineffective. We need new ways to test new drugs in cancer patients, ways that allow testing at earlier stages of disease….

DeVita is correct. One of the reasons we see lots of trials for end-stage cancer, for example, is that you don’t have to wait long to count the dead. But no drug has ever been approved to prevent lung cancer (and only six have ever been approved to prevent any cancer) because the costs of running a clinical trial for long enough to count the dead are just too high to justify the expense. Preventing cancer would be better than trying to deal with it when it’s ravaging a body but we won’t get prevention trials without changing our standards of evaluation.

Jim O’Neill, managing director at Mithril Capital Management and a former HHS official, is an interesting candidate precisely because he also has an interest in regenerative medicine. With a greater understanding of how the body works we should be able to improve health and avoid disease rather than just treating disease but this will require new ways of thinking about drugs and evaluating them. A new and non-traditional head of the FDA could be just the thing to bring about the necessary change in mindset.

In addition, to these big ticket items there’s also a lot of simple changes that could be made at the FDA. Scott Alexander at Slate Star Codex has a superb post discussing reciprocity with Europe and Canada so we can get (at the very least) decent sunscreen and medicine for traveler’s diarrhea. Also, allowing any major pharmaceutical firm to produce any generic drug without going through a expensive approval process would be a relatively simply change that would shut down people like Martin Shkreli who exploit the regulatory morass for private gain.

The head of the FDA has tremendous power, literally the power of life and death. It’s exciting that we may get a new head of the FDA who understands both the peril and the promise of the position.

The FDA Fails to Prevent Traveler’s Diarrhea

I’ve been getting lots of vaccinations in preparation for my sabbatical in India. A Canadian friend recommended Dukoral. Dukoral is a vaccine for cholera, a very serious disease although one that’s rare for travelers even in undeveloped countries. (It’s roughly comparable in prevalence to Japanese encephalitis, however, which most travel physicians recommend vaccinating for.) As a side-effect, however, Dukoral is also quite effective (60%) against the most common cause of traveler’s diarrhea, that caused by enterotoxigenic E. coli.

Dukoral was approved in the European Union in 2004 but it has not been approved in the United States (a different cholera vaccine was approved late last year but it is not yet widely available). Moreover, Dukoral is available without a prescription in Canada (and also I believe in New Zealand). It’s a big seller in Canada and widely used by Canadians abroad.

It has long been my position that if a medical drug or device has been approved in another developed country then it ought to be approved in the United States. If it’s good enough for the Canadians then it’s good enough for me.

Never let it be said that I don’t follow through on my beliefs. I arranged for someone to buy me some Canadian Dukoral and ship it over the border. Unfortunately, my “connect” is not as practiced in the art of evading U.S. customs as would be ideal and in a fit of regrettable honesty wrote “gift, diarrhea medicine” on the package. The ever-vigilant U.S. Customs intercepted and confiscated my package, thus saving me from the dangers of FDA-unapproved medicine. So I am out $150 (2 doses) and will be less than fully protected on my trip.

If my son or I become “indisposed” in India, I will know who to blame.

Making American Great Again–The FDA

Does Donald Trump want to streamline the FDA and speed new drugs to patients? The Washington Post thinks that it can read the tea leaves:

A single sentence in President-elect Donald Trump’s health-care platform sends a strong hint to the drug and medical device industry that they may have an easier time getting their products on the market under his administration.

“Reform the Food and Drug Administration, to put greater focus on the need of patients for new and innovative medical products,” his health plan states.

On the face of it, the bullet point may seem almost bland, but efforts to integrate patients’ preferences and encourage innovation often result in proposals aimed at speeding up the process for getting new medicines on the market by easing regulations. Critics argue that such efforts can erode standards that are in place to protect patients from drugs that don’t work and might even be harmful.

“The language … is industry code for deregulation and reducing of safety standards,” said Robert Weissman, president of Public Citizen, a consumer watchdog.

There is plenty of evidence that the FDA is too slow (see, for example, here, here, here and here) so I would support such a move. Senators Cruz and Lee proposed a reciprocity bill last term under which drugs approved in other developed countries would quickly be approved here; perhaps such a bill could find renewed interest in a Trump administration (Economists also support the idea of reciprocity.)

On the other hand, Trump has expressed support for Medicare being allowed to negotiate drug prices which is tantamount to price controls given the size of Medicare and that is potentially a disaster. Price controls could significantly reduce research and development in the pharmaceutical industry and end up greatly adding to the invisible graveyard. Trump’s advisers would seem to lean towards streamlining the FDA process rather than imposing price controls but it’s difficult to be certain.

The FDA and the EpiPen Shock

I haven’t written much about the massive increase in the price of the EpiPen because I’ve said it all before–mostly this about FDA costs and delay and some bending of various laws to favor cronies and, as with the infamous Shkreli and Daraprim case, one solution would be a reciprocity system that allowed importation of epipen-like devices approved abroad.

I’m glad, however, that I didn’t go into this in detail because SlateStarCodex has knocked one out of the park on this issue:

…when was the last time that America’s chair industry hiked the price of chairs 400% and suddenly nobody in the country could afford to sit down? When was the last time that the mug industry decided to charge $300 per cup, and everyone had to drink coffee straight from the pot or face bankruptcy? When was the last time greedy shoe executives forced most Americans to go barefoot?

…[lots of stuff about FDA and EpiPen specifically]…

Imagine that the government creates the Furniture and Desk Association, an agency which declares that only IKEA is allowed to sell chairs. IKEA responds by charging $300 per chair. Other companies try to sell stools or sofas, but get bogged down for years in litigation over whether these technically count as “chairs”. When a few of them win their court cases, the FDA shoots them down anyway for vague reasons it refuses to share, or because they haven’t done studies showing that their chairs will not break, or because the studies that showed their chairs will not break didn’t include a high enough number of morbidly obese people so we can’t be sure they won’t break. Finally, Target spends tens of millions of dollars on lawyers and gets the okay to compete with IKEA, but people can only get Target chairs if they have a note signed by a professional interior designer saying that their room needs a “comfort-producing seating implement” and which absolutely definitely does not mention “chairs” anywhere, because otherwise a child who was used to sitting on IKEA chairs might sit down on a Target chair the wrong way, get confused, fall off, and break her head.

(You’re going to say this is an unfair comparison because drugs are potentially dangerous and chairs aren’t – but 50 people die each year from falling off chairs in Britain alone and as far as I know nobody has ever died from an EpiPen malfunction.)

Imagine that this whole system is going on at the same time that IKEA donates millions of dollars lobbying senators about chair-related issues, and that these same senators vote down a bill preventing IKEA from paying off other companies to stay out of the chair industry. Also, suppose that a bunch of people are dying each year of exhaustion from having to stand up all the time because chairs are too expensive unless you have really good furniture insurance, which is totally a thing and which everybody is legally required to have.

And now imagine that a news site responds with an article saying the government doesn’t regulate chairs enough.

Read the whole thing.

Addendum: Steve in the comments reminds me that there is a case of a big increase in the price of chairs. Of course, it proves the rule.

Not exactly St. Francis talking to the birds, in fact it is more useful

This is remarkable:

Now scientists have determined that humans and their honeyguides [a kind of bird] communicate with each other through an extraordinary exchange of sounds and gestures, which are used only for honey hunting and serve to convey enthusiasm, trustworthiness and a commitment to the dangerous business of separating bees from their hives.

The findings cast fresh light on one of only a few known examples of cooperation between humans and free-living wild animals, a partnership that may well predate the love affair between people and their domesticated dogs by hundreds of thousands of years.

Claire N. Spottiswoode, a behavioral ecologist at Cambridge University, and her colleagues reported in the journal Science that honeyguides advertise their scout readiness to the Yao people of northern Mozambique by flying up close while emitting a loud chattering cry.

For their part, the Yao seek to recruit and retain honeyguides with a distinctive vocalization, a firmly trilled “brrr” followed by a grunted “hmm.” In a series of careful experiments, the researchers then showed that honeyguides take the meaning of the familiar ahoy seriously.

…Researchers have identified a couple of other examples of human-wild animal cooperation: fishermen in Brazil who work with bottlenose dolphins to maximize the number of mullets swept into nets or snatched up by dolphin mouths, and orcas that helped whalers finish off harpooned baleen giants by pulling down the cables and drowning the whales, all for the reward from the humans of a massive whale tongue.

But for the clarity of reciprocity, nothing can match the relationship between honeyguide and honey hunter. “Honeyguides provide the information and get the wax,” Dr. Spottiswoode said. “Humans provide the skills and get the honey.”

Here is the full NYT story.

Occupational Licensing Reduces Mobility

Brookings has a good memo on four ways occupational licensing reduces both income and geographic mobility. Here is point 1:

Since state licensing laws vary widely, a license earned in one state may not be honored in another. In South Carolina, only 12 percent of the workforce is licensed, versus 33 percent in Iowa. In Iowa, it takes 16 months of education to become a cosmetologist, but just half that long in New York. This licensing patchwork might explain why those working in licensed professions are much less likely to move, especially across state lines:

mobility-and-occ-licThe graph, is from the excellent White House report on occupational licensing. The first blue column says that workers in heavily licensed occupations are nearly 15% less likely to move between states than those in less licensed occupations–this is true even after controlling for a number of other variables that might differ across occupations and also influence mobility such as citizenship, sex, number of children, and education.

The orange column provides another test. An occupational license makes it difficult to move across states but not within a state. If workers in licensed occupations had lower rates of mobility for some other reason than the license then we would expect that workers in heavily licensed occupations would also have lower rates of within state mobility. The orange bars show that workers in heavily licensed occupations do have slightly lower rates of within state mobility but not by nearly enough to explain the dramatically lower rates of between state mobility.

Lower rates of worker mobility mean that workers are misallocated across the states in a similar way that price controls or discrimination misallocate resources and reduce total wealth. Lower rates of workforce mobility also increase the persistence of unemployment.

To its credit, the Federal government is investing in efforts to make licenses more portable including encouraging “cross-State licensing reciprocity agreements to accept each other’s licenses.” Cross-state reciprocity agreements sound like an excellent idea.

The Top Ten MR Posts of 2015

Here are the top ten MR posts from 2015, mostly as measured by page views. The number one viewed post was:

  1. Apple Should Buy a University. People really like to talk about Apple and this post was picked up all over the web, most notably at Reddit where it received over 2500 comments.

Next most highly viewed were my post(s) on the California water shortage.

2. The Economics of California’s Water Shortage followed closely 4) by The Misallocation of Water.

3. Our guest blogger Ramez Naam earned the number 3 spot with his excellent post on Crispr, Genetically Engineering Humans Isn’t So Scary.

5. My post explaining why Martin Shkreli was able to jack up the price of Daraprim and how this argued in favor of drug reciprocity was timely and got attention: Daraprim Generic Drug Regulation and Pharmaceutical Price-Jacking

6. What was Gary Becker’s Biggest Mistake? generated lots of views and discussion.

7. Tyler’s post Bully for Ben Carson provided plenty of fodder for argument.

8. The Effect of Police Body Cameras–they work and should be mandatory.

9. Do workers benefit when laws require that employers provide them with benefits? I discussed the economics in The Happy Meal Fallacy.

10. Finally, Tyler discussed What Economic Theories are Especially Misunderstood.

Posts on immigration tend to get the most comments. The Case for Getting Rid of Borders generated over 700 comments here and over 1700 comments and 57 thousand likes at The Atlantic where the longer article appeared.

Other highly viewed posts included two questions, Is it Worse if foreigners kill us? from Tyler and Should we Care if the Human Race Goes Extinct? from myself.

The Ferguson Kleptocracy and Tyler’s posts, Greece and Syriza lost the public relations battle and a Simple Primer for Understanding China’s downturn (see also Tyler’s excellent video on this topic) were also highly viewed.

I would also point to Tyler’s best of lists as worthy of review including Best Fiction of 2015, Best Non-Fiction of 2015 and Best Movies of 2015. You can also see Tyler’s book recommendations from previous years here.