Saturday, January 31, 2009

Intellectual property ≠ free market

The always interesting Robert Darnton has an interesting piece in the New York Review of Books entitled Google & the Future of Books, in which he essentially argues for a reigning of copyrights, combining the ideas of a shorter term (28 years after creation is what Darnton believes is the platonic ideal, as opposed the current 70 years after author's death) with some wishy-washy democratic platitudes that I can't seem to shake much concrete meaning out of.

It's an interesting essay, though he makes a very common mistake, in automatically associating intellectual property rights with free market ideals:

But we, too, cannot sit on the sidelines, as if the market forces can be trusted to operate for the public good. We need to get engaged, to mix it up, and to win back the public's rightful domain.

In a perfectly free market, clearly there would be nobody to enforce intellectual property rights. Though as Boldrin and Levine explain, content creators still have a significant advantage over the imitators, and innovation in an IP-less world doesn't look like it would suffer.

The perils of being an Obama

The story about Obama's half-brother in Kenya getting busted for smoking pot has gotten a lot of play, but the Guardian's article is the first I've read where the author had enough sense to ask why rather than just who, what, where, and when:

Although Kenya is strict about drug possession, there does not appear to be any current police campaign to crack down on usage. The officers who arrested George did not disclose why they searched him, although they are often conducted in the hope of extracting a bribe.

And this certainly isn't the first time that George Obama's been used for his fame:

Last year, during the election campaign, the Italian edition of Vanity Fair claimed to have "found" George Obama, after meeting him at his step-grandmother's home in Kogelo, western Kenya. The report claimed - controversially - that he lived on a dollar a month, and that he was ashamed to be an Obama.

While he is poor and lives in ramshackle accommodation, George is in the same position as well over a million other people who live in Nairobi's slums. Before the US presidential election, he said that he saw no reason why Barack Obama should support him financially; he was content with his life and could provide for himself. That did not stop Jerome Corsi, the right-wing US author of The Obama Nation, from travelling to Kenya in the hope of presenting a $1,000 cheque to George. Fortunately for Corsi, whose stunt was unlikely to have gone down well in Huruma, he was quickly deported.

Friday, January 30, 2009

Reforestation outpacing deforestation?

While most people associate cities with pollution and the material and ecological excess of late capitalism, I've long believed that urbanization has the potential to be a great environmental savior. The NYT has a fascinating article that confirms what I said about cities attracting people who would otherwise live more environmentally profligate lives: the amount of total rain forest is likely growing, due to the reforestation of towns and villages abandoned by people in Latin America and Asia who are moving to cities. Elisabeth Rosenthal, the article's author, explains the reasons that people are abandoning land at a growing pace:

In Latin America and Asia, birthrates have dropped drastically; most people have two or three children. New jobs tied to global industry, as well as improved transportation, are luring a rural population to fast-growing cities. Better farming techniques and access to seed and fertilizer mean that marginal lands are no longer farmed because it takes fewer farmers to feed a growing population.

By some estimates, these demographic and technological shifts mean that forests are growing back far faster than they're being cut down:

These new “secondary” forests are emerging in Latin America, Asia and other tropical regions at such a fast pace that the trend has set off a serious debate about whether saving primeval rain forest – an iconic environmental cause – may be less urgent than once thought. By one estimate, for every acre of rain forest cut down each year, more than 50 acres of new forest are growing in the tropics on land that was once farmed, logged or ravaged by natural disaster.

There are two problems, though, with the new forests: they aren't "old growth" forests, and they aren't necessarily able to support many endangered species. The first part – the fact that they are "secondary" forests and not primeval – might be important in that it means the ecosystem is not as dense and complex as it would be in, say, a rain forest that hasn't been touched since pre-Colombian times. Scientists haven't reached a consensus on how significant this is, though it's comforting to note that as time passes, the now-secondary forests will become denser and older. As for the endangered species, it's a combination of the first point (new growth) and the fact that these new jungles are growing in different places than the forests which are being cut down, and are not reachable by the animals that are endangered within the old growth.

Reading this makes me think of a Wired article from a few years back about the Mayans and the rain forest, and how much of the Yucatán jungles are likely to be feral gardens of the ancient Mayans.

Thursday, January 29, 2009

Google takes a step towards free market net neutrality

In the ongoing net neutrality saga, Google has traditionally been the biggest proponent of legislative action forcing net neutrality onto ISPs and consumers (some wavering notwithstanding). But just recently they've released some easy online tools that negate a key argument for net neutrality: ISPs are often not very transparent with their policies on network neutrality (i.e., when they de-prioritize BitTorrent and things like that, they aren't usually upfront about it). Of course, ISPs can still try to hide the truth, but now that it's so easy to test for these things, consumers are inevitably going to wind up better informed.

Just another way that the steady beat of progress in a free market can upend problems that at the moment we only see legislative solutions to.

Wednesday, January 28, 2009

Where are they now? Ted Haggard edition

Remember Ted Haggard, the evangelical pastor at a Colorado mega-church whose fall from grace involved meth and a gay prostitute? Well, he's resurfaced recently as it's come out that his church has been paying off a boy who had a three-year relationship with Pastor Ted that started when the boy was 18. So, where is he now?

Well, former Pastor Ted has two things going on in his life. For one, he's the subject of an HBO special. But on a more mundane level, the NYT gives a great one-sentence synopsis of his life since the ordeal:

In an interview with The Associated Press this month, Mr. Haggard said he was selling insurance and debt-reduction software and that his sexual identity was hard to pin down.

Andrew Sullivan at the Atlantic explains why we should all care about the fact that Ted Haggard had to lie about his sexuality:

The countless gay men who are currently running many of the world's leading Christian denominations are threats to themselves, to other gay men, to their wives and their churches because ancient doctrine forces them into twisted shells of human beings. In the Catholic church, this led to a horrifying epidemic of child abuse, protected and enabled by the last two Popes. And their response to this? To ratchet up the psychological pressure even further on the men whose psyches and souls they have already permanently warped.

Pharmaceutical patents: not so necessary after all?

Intellectual property is topic on which it seems that the vast majority of people – economists, politicians, and laymen – agree: patents and copyrights are necessary for innovation, and without copyright or patent protection, people who have no reason to innovate because they could not charge more than the marginal cost of production (i.e., the cost of stamping a CD or producing a pill, as opposed to paying the artist to sing the song or the researchers to discover the drug). The copyright argument is being put to the test right now with the internet making enforcement impossible and forcing music artists, TV creators, and filmmakers to compete in a world with significantly weaker copyright protections out there for creators.

Patents, though, are still alive and kickin', and are even expanding their reach based on international agreements whereby rich countries foist IP laws on developing countries in exchange for access to Western markets. Probably the most beloved of all patents is the pharmaceutical patent. Everybody gets pharmaceutical patents, right?

Wrong. Michele Boldrin and David Levine, in his book entitled Against Intellectual Monopoly (free online!), make the case against pharmaceutical patents based on the historical case of Italy, which was the last major industrialized Western country to institute patents for medicine (here is that chapter). Long story short, not only did the pre-patent area have more innovation (not just imitation, but actual research innovation), but there were many more small firms competing before the institution of patents than after. Boldrin and Levine also make the argument that this diminishing level of competition among pharmaceutical companies is the reason for the steady rise of drug companies marketing to consumers and doctors ("marketing" being a very charitable way of putting it, in the case of doctors). They also cite a study towards the end that's pretty damning to the modern American drug industry's defense of patents, where they find that the costs of these patents in terms of cost and innovation far outweigh the protective benefits of giving the patent holder monopoly power of their invention.

I look forward to reading the whole book, but considering I just read the chapter dealing with the most difficult issue for IP opponents (pharmaceuticals), I expect good things from it.

Rethinking crack babies

Remember crack babies? Yeah, not so much. Turns out that alcohol and tobacco appear to be far worse for fetuses than cocaine, either powder or crack. Cocaine use by mothers during pregnancy does result in lower birth weights, though kids recover the majority of their weight and by age 7 have IQs that are only 4 points lower than that of kids whose mothers didn't do coke or crack.

The author notes that pregnant women who use illegal drugs commonly lose custody of their children, and in earlier years were prosecuted. Presumably the same does not apply to women who drink alcohol or smoke cigarettes while pregnant, despite the fact that they cause more harm to fetuses.

The doctor discussing all of this says something that applies to pretty much everyone when it comes to drug use, and not just "crack babies":

“Society’s expectations of the children,” she said, “and reaction to the mothers are completely guided not by the toxicity, but by the social meaning” of the drug.

Unfortunately I can't find it now, but I remember reading an article recently where the author mentioned that society's lowered expectation of kids whose mothers did drugs while they were pregnant is probably a bigger contributing factor to these kids' development than the drug use itself.

Tuesday, January 27, 2009

US trade policy pushes Cambodian girls into prostitution, US foreign policy causes Cambodia to arrest them

Radio Free Asia has a sad article on young Cambodian girls being pushed into prostitution, made all the more horrific because it seems that US trade and foreign policy is exacerbating the trend. The US is working in a few ways that harm these young girls: they push for labor standards that make employing these girls legally more expensive, and thus they are left to professions not subject to the law. But more directly, they pushed for anti-trafficking laws that the Cambodian government interpreted as a directive to crack down on prostitution, driving prostitutes deeper into the underworld and away from the protection that legal tolerance provides to these most vulnerable of businesswomen.

In his NYT column two weeks ago, Nicholas Kristof did a good job of summing up the ways that US pressure on Cambodia's labor standards has decreased employment opportunities:

Cambodia has, in fact, pursued an interesting experiment by working with factories to establish decent labor standards and wages. It’s a worthwhile idea, but one result of paying above-market wages is that those in charge of hiring often demand bribes — sometimes a month’s salary — in exchange for a job. In addition, these standards add to production costs, so some factories have closed because of the global economic crisis and the difficulty of competing internationally.

The Radio Free Asia article explains how the worsening plight of prostitutes is thanks to US foreign policy, and how NGOs are willing partners in crime:

In February 2008, the Cambodian government began enforcing the new “Law on the Suppression of Human-Trafficking and Sexual Exploitation” after years of U.S. pressure to crack down on sex trafficking.

Human rights groups, however, say the law and its enforcement have made life harder for the women they aim to help.

Prostitutes caught in police raids are made to pay fines of up to U.S. $200 for their release, the 17-year-old girl said.

“They take us to district police headquarters and take our money. If we don’t have the money, we will be kept in custody for two or three days. So we have to run for our lives when we see police approaching us.”

“Police arrest us in the hope that the brothel owners will pay, but if we don’t have anyone to pay for our release we will be sent to one of the nongovernmental organizations (NGOs). It’s o.k. to live at the NGOs, but then our families have nothing to eat,” she said.

“If [the NGOs] want to help me, they should also help my family. Otherwise I can’t quit.”

Crying wolf

One of the things that irritates me the most about libertarians in the West is when they compare their country to the Soviet Union. Here's an example from the Adam Smith Institute's blog, in the UK, which is apparently a pretty influential free market think tank:

According to new research for The Sunday Times by the Centre for Economics and Business Research, state spending as a percentage of GDP has now reached 49% for the UK as a whole.

That's bad enough as it is – the government now controls practically half of the UK economy – but when you look at the regional figures the picture is even worse.

In the Northeast, state spending is 66.4% of GDP. In Wales, it's 71.6%. And in Northern Ireland, it's a whopping 77.6%.

I don't think the Soviet Republics ever managed to achieve quite that degree of state dominance.

Seriously?! You think that Wales is more socialist than the Moldovan Soviet Socialist Republic was? And this is leaving aside the obvious ridiculousness of trying to quantify how statist an economy is, considering that often times regulations that don't show up on the budget are far more consequential and disruptive than actual expenditures.

Monday, January 26, 2009

Dianne not-so-Feinstein

Lest anyone think that Dianne Feinstein – possible future governor of California – is a serious politician, Reason debunks that myth. Her latest shenanigan is co-sponsoring a bill in the US Senate to toughen penalties for purveyors of candy-flavored drugs. You might be thinking – sugar cubes dose with acid? Nope...she's gone on a moral crusade against candy-flavored meth. As Jacob Sullum puts it: "If Grassley and Feinstein had simply paid a visit to, they could have saved their staffs the trouble of writing this stupid bill."

Ethanol fallout: East Africa edition

Thanks to the run-up in world food prices widely attributed to ethanol subsidies in the US and the UK – and the subsequent crash – farmers all over the world have likely made unrealistic calculations about food prices. Prices of course rise and fall all the time, but generally only huge technological leaps or demographic shifts (of which there have been none) will cause prices to vary so much that the majority of entrepreneurs will fail miserably in their investments. The exception to this is government action, which can in an instant blow apart or liberate markets, with the awesome power of the state's legitimacy and implicit threat of violence.

The New York Times documents this phenomenon in Senegal, where ethanol subsidies in the US and Europe indirectly drove the price of rice above its historical level, and now that it's set to fall back down, many small farmers are going to fail miserably.

Something interesting to note is that a previous government malinvestment exacerbated the flight to rice farming:

But the crisis also presented an opportunity to millions of farmers across Africa: high prices could finally make their crops competitive.

In Senegal, farmers eyed the long-neglected Senegal River valley, which snakes along the country’s northern border with Mauritania. A government project in the 1970s built irrigation canals that made more than 600,000 acres of land ready to produce rice, but farmers were too poor to afford the materials to farm the land on a large scale. The project was largely abandoned.

Nevertheless, the dream of creating a rice basket here never really died.

The "dream" never died, and neither did the fixed cost of the investment, unfortunately. Here we have an efficient market mechanism – a large fixed cost in the form of irrigation canals which normally would have prevented the irrational malinvestment in rice – that was destroyed by a government, exacerbating the effects of a bubble.

Also interesting to note is that the proximate government failure – that of America's corn ethanol subsidies – was one that was championed by Barack Obama when he was in the Senate. He later had the good sense to step back from his support of ethanol subsidies, though he's understandably reluctant to mention this failure when he discusses the industries that America's new green energy plan is going to subsidize. Unfortunately, we're already hearing ways that his post-ethanol energy agenda could go horribly wrong for the environment and the world's poorest countries.

Thursday, January 22, 2009

Privacy and targeted advertising in the age of newspaper bankruptcies

Megan McArdle has an interesting post on the future of the media where she brings up what I think are two very important points.

First (and probably most importantly), she notes the reason why the Internet advertising isn't much more targeted than print advertising:

In theory, the web allows heretofore undreamt of targeting ability. In practice, privacy concerns and fear of regulation have held it back.

This is a very important point about privacy that is often missed in media coverage of privacy legislation and supposed privacy breaches (see: Beacon).

And secondly there's this:

And Felix is right on when he points out that for a long, long time, articles on swinging into spring with patent leather have been subsidizing coverage of less-popular-yet-more-vital topics like foreign policy and the Department of Agriculture. The web is rapidly disaggregating the readers, and hence the subsidy. And that's a big problem for society. One for which so far, no one has proposed any very satisfactory solution.

This answer should be obvious: readers of these "high brow" stories are also wealthier readers, and thus are theoretically worth more to advertisers. Of course, only if the paper (and its advertisers) know where these people live and a little bit more about their preferences can they actually monetize these hits.

So basically, it all boils down to the government giving up its job as privacy monitor, and trusting that its citizens can make appropriate choices about who they give what information. Backlashes against the most egregious offenses ("Your friend Jake just bought X – would you like to purchase this too?") would weed out the obviously undesirable advertising, whereas tacit acceptance would allow the non-offensive type ("Some of your friends have bought X – would you like to purchase this too?") to fund newspapers and other online content.

Not to mention that consumers would likely be pleased to see advertising for things they'd actually buy – what's more annoying and useless than watching ads for things you don't want?

And the tunnels are rebuilt

Just a few days after the cease-fire and already the tunnels are being rebuilt between Egypt and Gaza. The tunnels began sprouting like Saudi princes after Israel imposed a blockade on the Gaza Strip and Egypt followed suit (remember: it takes two to tango). Though it appears that most of the goods moving from Egypt to Gaza through the tunnels are commercial, there does seem to have been weapons smuggling.

Though Israel supposedly went to war partially to destroy the tunnels (and destroy them they did), they must realize that they don't actually want the smuggling to come to an end. If the tunnels supply even close to 90% of the imports into Gaza as some claim, their total abandonment would result in starvation on a scale that Israel could never tolerate. Egypt has little incentive to close the tunnels because of the brisk trade that it brings to the Egyptian side of the Rafah crossing, and likely doesn't want the vilification that it would receive from its own population if it were complicit in starving Gaza into Hamas' surrender (an unlikely scenario to begin with). I predict that the "heavy international pressure" on Egypt to prevent smuggling will turn out to be not heavy enough, and that the tunnels will be there as long as the blockade will be there.

Tuesday, January 20, 2009

Dying on the floor of the Senate

So I know that when two old geezers almost die during an inaugural luncheon you're supposed to act solemn and respectful, but my only feeling is contempt for people who feel so entitled to their job that they remain in office so long after their health has clearly precluded them from serving effectively. Do they honestly think that they – with their seats guaranteed to their parties – are really so indispensable that some other toe-the-line Democrat couldn't do it just as well?

It's ridiculous that they're still in office, but not at all surprising. Each successive wave of Kennedys seems to feel more entitled than the last, and all the pre-death eulogies and paeans to the glory of the Kennedy dynasty aren't making Ted Kennedy's ego any smaller. And then there's Robert Byrd, former Exalted Cyclops in the Ku Klux Klan, who as late as 2001 was on Fox News talking about "white niggers."

Funny foreign press about Obama's coronation

Not that I looked very hard, but here are two headlines on foreign newspapers' websites about the Obama victory.

Ségolène Royal : "J'ai inspiré Obama et ses équipes nous ont copiés from; the headline on the (East Coast) evening of January 19.

Translation: "Ségolène Royal: I inspired Obama and his team copied us"

Ségolène Royal was the losing socialist candidate in the 2007 French presidential election, in case you forgot. Here's an excerpt from the first paragraph:

Il a envoyé une équipe à Paris étudier son site Désir d'avenir. "Chez nous ils ont enregistré les idées de 'gagnant-gagnant', de 'citoyen-expert'" Ensuite, M. Obama a adapté sa "démocratie participative" à la mode américaine, "fort différente de l'européenne". Aux Etats-Unis, tout n'est que "communautés" – ethniques, religieuses, culturelles, urbaines, même les quartiers d'habitations s'intitulent "communities". En Europe, on parlerait de collectivités, de mouvements, d'associations, de réseaux. Mais l'idée, dit-elle, lundi 19 janvier, à Washington, est la même : refonder la manière de faire de la politique, la relation entre les élites et le peuple.

My very liberal/bad translation: Barack Obama sent a team to Paris to study Ségolène Royal's campaign site Désir d'avenirs. "When he was here they picked up the ideas of "win-win" and "citizen expert" (???). Then, Obama adapted her "participative democracy" to suit American audiences, "very differently from the European model." In the United States, it's all about "communities" – ethnic, religious, cultural, urban – they even have neighborhoods with "community" in their names. In Europe, we would talk about collectives, movements, associations, and networks. But the idea, Ségolène says on the eve of inauguration in Washington, is the same: to remake politics, and to change the relations between the elites and the common people.

By the way, I think the "citoyen-expert" refers to a sort of Joe the Plumber ethic of deferring to the "peuple," which is a word that (I think?) connotes a sort of populism. This is a great example, though, of typical French bullshit.

Barack Obama a stat o oră în Bucureşti / Noul preşedinte al SUA, care s-a declarat marţi, după jurământ, prieten al tuturor naţiunilor, a stat în Bucureşti o oră, în 2005, când era doar senator de Illinois.

Translation: Barack Obama spent an hour in Bucharest / The new US president, who declared himself on Tuesday, according to his oath, to be a friend of all nations, spent an hour in Bucharest in 2005, when he was just a US senator from Illinois.

This was the most prominent headline at, a Romanian newspaper. I probably don't appreciate it enough, but the Romanian media has always struck me as really bad and unprofessional.

Monday, January 19, 2009

Uncomfortable truths about the progressive legacy

Yesterday I was listening to the pre-inaugural concert at the Lincoln Memorial on the radio, and one of the speakers said something that struck me as emblematic of the challenges that Barack Obama faces, though I doubt she realized the ironic significance. She was praising Theodore Roosevelt's conservationist legacy as a model for Obama, though she only touched on a small sliver of Roosevelt's environmental legacy. He definitely did cherish the environment; a timeline of his life shows that in early April 1903 he "communes with deer while writing letters in Yellowstone, WY." He was indeed a conservationist, as were many progressives at the time.

But the progressives were also something else – something that today's progressives would do well to remember: ardent planners whose plans often had grave unforeseen consequences. Just after his time communing with the deer at Yellowstone, Roosevelt traveled to St. Louis to address the 1903 Good Roads Convention. The "good roads" movement dated back to before the automobile rose to prominence, and was formed to agitate for improved roads for bicyclists and farmers. But around the time of Roosevelt's speech, the movement was hijacked by the automobile industry. Unwilling or unable to compete on their own against mass transit, the automakers sought for the government to clear and pave the roads they needed in order to sell their cars – an advantage the streetcars and railroads did not generally have. Not wanting to appear to be too blatant in their rent seeking, the automobile industry lobbied the government indirectly, giving organizations like the AAA money in exchange for influence and seats on their boards.

The nascent auto industry was not the only booster of subsidized roads – even the private railroads were not immune to the siren song of the great new progressive future. They joined the cause in the 1890s with the idea that improved roads would mean more business for railroads, unaware of the threat that the long-haul trucking industry would come to pose to their business. This new semi-public, semi-private corporatist transportation model suited the progressives as well, who believed in a statist future where "private" enterprise was directed and controlled, though not outright owned, by the government.

In the years since the 1903 Good Roads Convention, the idea that government ought to be providing "good roads" has fundamentally altered the landscape of the country in ways that Theodore Roosevelt never could have imagined. The highway lobby gathered strength throughout the early half of the 20th century, eventually culminating in the Interstate Highway System, the widespread suburbanization of America, and the deterioration of once-great American cities. Urban planners like Robert Moses razed neighborhoods and blighted the remaining barren expanses with highways that have become increasingly congested ever since. In order to stave off this inevitable overuse, planners flattened America with zoning laws and parking regulations that forced America to sprawl ever farther from its city centers, to areas reachable only by cars and trucks. A century later it's hard to imagine it happening any other way, and it's often forgotten that there was a workable free market urbanism before there was unsustainable sprawl.

Theodore Roosevelt might be more commonly remembered for his conservationist work, but it's important for people today to remember the unforeseen consequences of the progressives' other grand plans. The "good roads" path that he helped put America on has shown itself to be an enabler of global climate change and belligerent petrostates, encouraging Americans to live farther apart, travel longer distances each day, have bigger houses, and fill those houses with more things. The common telling of the roading of America is that it greased the wheels of commerce and is an integral part of the "American dream," but it's impossible to know what sort of advances in mass transit technology would have come about and how we'd be living had the government not favored the automobile and the truck over the streetcar and the train. Theodore Roosevelt's conservationist efforts are indeed praiseworthy, but might both the environment and the economy be in better shape today had the progressives not interrupted the rail-based urbanization of turn-of-the-century America and put us on the car-based sprawling sub- and exurbanization that characterizes America today?

In calling for the government to fund mass transit and urban projects, Barack Obama has shown that he recognizes the problems of America's land use configuration. But in doing so, he shows himself to be ignorant of the root causes of the crisis: government meddling in the transportation and land use industries. Just as the progressives and futurists failed to use the government to direct a more efficient transportation scheme, Obama will likely fail in using the government to fix America's energy problems. Unless he renounces the legacy of the progressives and admits to America that it needs to return to its market-based roots – at least with respect to transportation and land use policy – his campaign promises of reversing our unsustainable ways will go unfulfilled.

Wednesday, January 14, 2009

Obama on gay marriage: for it 'fore he was 'gainst it

Via the Huffington Post, Barack Obama told reporters for the Windy City Times during his 1996 Senate seat campaign that he "favor[s] legalizing same-sex marriages, and would fight efforts to prohibit such marriages."

Funny, because he told MTV during the election that he is "not in favor of gay marriage." There's not even room for linguistic weaseling – he didn't just say that he wouldn't support it politically, he said that he outright does not favor it.

Also, back in 1996 he said that not only does he support gay marriage, but that he would fight those who oppose it. Which leaves me a bit puzzled as to where he was when California was debating Proposition 8, whose anti-gay marriage outcome was at least in part influenced by the votes of Obama's most loyal constituency, African-Americans.

Tuesday, January 13, 2009

Worst since the Great Depression?

From the Minneapolis Fed via MR, these charts should thoroughly debunk all those ridiculous claims that the current crisis is the worst since the Great Depression.

Serious journalism: unprofitable, but sustained by the free market

Fun fact about "serious" news magazines in the United States: few of them even pretend to make any profit, and yet all of them are private, free market creations. This applies across the political spectrum, from Rupert Murdoch's neoconservative $1 million-a-year charity project The Weekly Standard to the hard left's bastion The Nation, which is supported by donations has never really made any money in its 140+ year history. Ditto with The National Review and The New Republic. Reason, both the magazine and the foundation, along with a huge swath of the libertarian-oriented intellectual industry, is supported by the über-sugar daddy Koch Family Foundations (aside from the blatant and unhelpful left-wing bias of Source Watch, it is pretty cool). But those magazines are either officially or de facto non-profits – what about those bought with the intention of profitability? Not much success there either – The Atlantic is still unprofitable despite its enviable circulation numbers, and The New Yorker just attained mild profitability after over two decades of losses incurred by the Newhouse family. And The New Yorker's profit is likely due to cross-subsidization by the magazine's cartoon and poster business.

Friday, January 9, 2009

The perverse economics of toy safety regulation

The Christian Science Monitor has an article about the unintended consequences of toy safety legislation passed in the wake of everything-from-China safety scare. Like many regulations intended to protect the public, this one has the all-too-predictable practical effect of driving small manufacturers out of business. The economic explanation is thus: product testing is a fixed cost, and so a company that produces more of a good will encounter an economy of scale, and thus average costs will be relatively unaffected by a mandatory testing regime compared to a small business that produces a smaller quantity of the same good. In essence, it harms small American-based businesses and gives large toy manufacturers an upper hand.

So who's benefited the most from a law intended to keep out low-cost Chinese manufacturers? Low-cost Chinese manufacturers:

"Once again, here's a situation where it's the small business that suffers the most," says Kathryn Howard, an environmental and consumer expert with the New York State Pollution Prevention Institute at Rochester Institute of Technology. "Mattel can easily afford to test every one of their Barbie dolls. The smaller guys are the ones that manufacture in the US – as opposed to China and other parts of the world.

Given that the toy scare was limited to one company – Mattel – and one toy – Barbies – you'd figure that the intense publicity around the whole thing would keep consumers from buying the toys and retailers from stocking them. In fact, without the government supposedly ensuring that all our children's toys are safe, we might have been a little more vigilant and the Barbies might not have been sold in the first place. Too bad American jobs had to be lost to perpetuate a failed regulatory regime.

Thursday, January 8, 2009

Microsoft's new groove

I think Microsoft is on the verge of making somewhat of a comeback. Windows 7, the successor to the much derided Vista, has been getting a relatively warm reception as versions have surfaced on BitTorrent. Some have even accused Microsoft of leaking the beta version intentionally. That seems much more likely now that Microsoft has dropped somewhat of a bombshell: they'll released a Windows 7 beta download free to the public in the coming days.

I think this is a case where traditional ideas of monopoly sort of break down. Normally, a market dominated by one player to the extent that Microsoft would tend to be highly uncompetitive. And yet, competition from Firefox, Safari, and Chrome on the browser front and Mac OS X and netbook Linux on the operating system fronts seem to have driven Microsoft from their complacency as of late. They've gone from duds like Windows ME, Windows Vista, and Internet Explorer 6 to imminent versions "7" versions of both Internet Explorer and Windows that look like they might be very successful. Maybe a serious mobile OS contender is in the works?

Wednesday, January 7, 2009

Possible Surgeon General Sanjay Gupta's tortured logic on marijuana prohibition

Word on the street is that Obama's choice for surgeon general is CNN medical journalist Sanjay Gupta, which is an interesting twist on an otherwise irrelevant cabinet position. The criticism of him on his Wikipedia page ain't too shabby – he's angered The Nation over his healthcare policy coverage and pissed off Michael Moore in his criticism of Sicko.

But reading this article that he wrote for Time in 2006 on marijuana legalization makes me doubt the man's competence. Despite the fact that I know he's not an expert on marijuana, either scientifically or politically, the fact that he would put his name to such an article is disheartening.

First of all, why does he feel that simply stating reasons why marijuana is harmful to your health – not something in and of itself illogical – is enough reason to endorse a political program of prohibition? Why has he not endorsed alcohol prohibition, too? I presume his answer would be that it's been tried and the consequences were too great. But if he's willing to consider the broader social and political consequences of alcohol prohibition, why is "Perhaps." the only thing he has to say to those who argue that marijuana prohibition has similar consequences?

And then there are the factual errors. Quite a number of them, actually. First he states that marijuana can "lead to long-lasting depression or anxiety." This is a very straightforward example of confusing correlation with causation. Many people have noted that while marijuana use and depression are definitely correlated, there is little evidence to believe that marijuana causes depression in otherwise happy people. In fact, even Fox News has acknowledged a study that indicates that some doses of marijuana might be beneficial to depressed people.

Next, he says "smoking anything, whether it's tobacco or marijuana, can seriously damage your lung tissue." He's obviously alluding to the possibility that you'll get some lung-related disease, but the facts don't indicate that marijuana causes lung-related illnesses. A landmark study established that smoking cannabis, "even regularly and heavily," does not lung cancer. Ditto with emphysema and chronic bronchitis. Marijuana might actually have curative effects on asthma and cancerous tumors.

But at the end comes the biggest doozy, when he declares: "And if you get high before climbing behind the wheel of a car, you will be putting yourself and those around you in danger." This is made all the worse as its the last line of the article, giving you the impression that it's the biggest thing you should take away from this all. But marijuana intoxication causing car accidents is an outright falsehood, as reports by the governments and state universities of the United States, the United Kingdom, and Australia have all shown.

Between his picks of Joe "drug czar" Biden as vice president, über-drug warrior Eric Holder as attorney general, and reformed addict anti-medical marijuana drug warrior Jim Ramstad as drug czar, Obama is proving Marsha Rosenbaum right when she said that he won't "use any political capital" on reforming America's drug laws.

(HT: The Agitator.)

Edit: It looks like NORML has written a pretty extensive article on Gupta's ignorance when it comes to marijuana. However, I don't think they had the strongest possible rebuttal against Gupta's driving-while-stoned argument. They made the mistake of mentioning that a certain input to good driving (lab-measured reaction time) is inhibited by marijuana, without mentioning that the outcome (actual crash rates) remains the same as when the driver is sober.

Hamas' war crimes go unreported

Noah Pollak at Commentary says it best:

Allow me to propose a metric for evaluating whether a journalist is behaving responsibly or not: If he reports that Israel bombed a UN school and killed 30 civilians, he is irresponsible. If he reports that Hamas used a UN school as a weapons cache and base of operations for launching mortars at the IDF, and the IDF’s return fire killed the Hamas cell along, tragically, with a yet-unspecified number of civilians, then he is behaving responsibly. If he wishes to be particularly scrupulous, he might additionally note that Hamas had rigged the school with explosives which detonated after the IDF took out the mortar team, killing a large additional number of civilians. And he might add that you can go to the IDF’s Youtube channel to view footage from 2007 of Hamas using the very same school as a mortar-launching base.

HT: Michael Totten.

Tuesday, January 6, 2009

Why do we really go to college?

George Will had an op-ed in the Washington Post on Sunday where he summarized a paper written by Richard Vedder and Bryan O'Keefe, in which they argued that the 1971 Supreme Court case Griggs vs. Duke Power effectively made the higher education market what it is today partly by proscribing general intelligence tests given by employers.

In the Griggs case in 1971, the Supreme Court interpreted the 1964 Civil Rights Act pretty "creatively," making it very difficult for employers to give any sort of test as a prerequisite for employment that wasn't a narrow application of the duties of the job. Congress codified the ruling the next year, and when a more conservative Supreme Court in 1989 narrowed the scope of Griggs, Congress and a reelection-seeking George H. W. Bush passed a 1991 law that undid that 1989 ruling.

Vedder and O'Keefe suggest that contrary to the popular belief that globalization, the new knowledge economy, other buzzwords were the primary cause of rising college enrollment and costs, the Griggs ruling was also a key factor. Their argument rests largely on the fact that the differential between high school- and college-educated workers started to grow and move outside of the 30-40% range around 1978, up until now when it's approaching 100% (see page 18 of their paper for those graphs). In the paper they explain why they chose 1978, seven years after Griggs and six after the subsequent legislative reaffirmation:

We have marked 1978 as a dividing point, on the assumption that the impact of Griggs started to be really felt around seven years after the decision. There likely is a lag of several years between the time a court decision is made and the time it significantly affects labor markets. And if the Griggs decision affected the demand for college, we should expect an additional lag of four or five years, the time between deciding to go to college and actually obtaining a degree and entering the labor market.

The creepiest part of this is that it suggests that Americans are spending four years of their lives out of the job market and spending up to $200,000 on a degree not because it's the most efficient way to signal good job performance, but rather because it's the second best option where the first best (more extensive testing on the part of employers) is proscribed by law. Though if you've been to college, you probably had an inkling that something was a bit off.

But there's one question I have about this proposition: why then do other advanced industrialized countries have similarly high college enrollment rates? Or do they? Though I suspect that even if these other countries lacked laws that encouraged employers to use college degrees as proxies for intelligence and capability, the almost 100% subsidized higher education in every other wealthy nation in the world has something to do with what seems like an over-allocation of higher education.

Saturday, January 3, 2009

The Irish real estate bubble

One thing that I've wondered about the global credit meltdown is why did the crisis affect so many countries outside of the US? Obviously there would be some spillover effects considering the increasingly globalized nature of the world's economy, but I don't think globalization by itself hasn't been extensive enough to cause what we're seeing today. One possible explanation is that other countries were doing the same things that America was doing, by pumping up their own housing bubble. The NYT today gives a hint that this happened to some extent in Ireland, Europe's biggest success story and a country where real estate tycoons acquired the wealth and cachet that hedge fund managers had in the US:

Irish banks, unlike those in the United States, didn’t dole out that many subprime loans. Rather, they lent furiously to big property developers who themselves were liberated to build pell-mell by government-imposed tax breaks.

The Times takes a stab at free market economics by saying that such tax breaks "liberated" developers, but a consistent free marketeer believes in a broad tax base and low rates – that is, no preferential treatment to particular industry.

I've been trying to find information on the web that corroborates the NYT's story about the real estate industry paying lower taxes than other Irish industries, but I'm coming up short. Anybody know anything about this?

Who sent those arms to southern Sudan?

A few months ago, when a Ukrainian freighter carrying tanks and arms was hijacked off the coast of Somalia, I discussed the destination of the weapons (likely rebels in southern Sudan) and proposed that the Russians might have been the source of the weapons:

Which brings us to last question: where did the weapons come from? According to the VOA article, southern Sudan receives weapons from both the US and Russia, though given that the US isn't going along with the Kenyan story about the destination of the weapons, it seems likely that the Russian weapons aboard the Ukrainian ship came instead from Russia. Given that they were destined for an oil-filled region brimming with instability, it seems likely that this is part of the Kremlin's broader plan to destabilize oil- and gas-producing regions in order to raise the price of energy and feed the Russian petrostate's need for high oil prices.

Though this isn't new, I've found some corroborating information, also suggesting the arms came from Russia:

In response to the seizure of the Faina, Admiral Viktor Mardusin, commander of Russia's Baltic fleet, ordered a Russian missile frigate to Somali waters for more than two months "in order to guarantee the safety of Russian ships". That suggests the tanks and weapons aboard the Ukrainian vessel are of Russian origin.

The MV Faina is still held by Somali pirates awaiting a ransom, though the West's worst fear – that the pirates would offload the weapons and sell them in the Somali arms markets – doesn't appear to have panned out.

The economics of khat prohibition in the West

Khat is a plant that is widely used in Ethiopia, Somalia, and Yemen, where it is chewed for its mild stimulant qualities, and recently it's been confounding anti-drug warriors in the West. The East African and Yemeni diaspora has brought the drug to immigrant communities through the US, the UK, and Northern Europe. While technically illegal in most of these places (the UK being the notable exception), its use is limited to immigrant communities and hasn't appeared on the streets alongside heroin and cocaine, and so it's been a relatively low law enforcement priority. As always, though, the US is the most eager to stamp out the drug, with DEA agents arresting Somali immigrants in places like Seattle and San Diego for conspiracy to import the drug from East Africa.

Diaspora communities in the US themselves are apparently divided on the issue, with many supporting the use of the drug as an integral part of their culture, and others (often women, who are by custom less likely to chew khat) wishing their adopted homelands would crack down on the use of khat. Many of the criticisms coming from within and outside of the community are the standard anti-drug arguments – it destroys your mind, turns you into an idle drug user, etc. But one bizarrely paradoxical argument is that it costs too much:

In fact, within the East African community in the U.S., there are many who welcome the khat restrictions.

"I have seen what it does," Mohamud said. "Families who are trying to make ends meet on a daily basis cannot afford it. It just creates so many problems between a husband and wife to the point where a broken family is going to be the result."

But why does it cost so much? In East Africa, the plant is cheap – only $1 per kilogram according to the Seattle PI. But across the Atlantic, in the United States where the plant is illegal, the price shoots up to as much as $700 per kilo. Some of this difference can be attributed to the cost of shipping the plant from East Africa to the United States, as it needs to be consumed soon after harvest or it will lose its potency (in contrast to most illegal drugs, which can be stored for long periods of time). But that's only part of the story – the lion's share of the price differential is eaten up by the black market, as shippers and sellers take larger profits to compensate for the risk of trafficking in this illegal substance.

Compare this to the UK, where the plant is legal, and prices are low in comparison – less than £20 per kilo retail (pdf). And it's not just the law that makes the price shoot up, but rather the degree of enforcement. For example, in Sweden, where the plant is technically illegal but enforcement is minimal, retail prices range from about $100 to $250 per kilo – high, but not as high as in the US. (Some other reasons for Sweden's high khat prices could be its relatively small East African/Yemeni population as compared to that of the UK, as well as its lack of direct air connections to the regions where khat is produced.)

Those who don't like the drug because of its cost to poor immigrant families would be smarter to simply legalize the drug and watch prices plummet, rather than adding another substance to the quixotic and dangerous war on drugs.

It takes two to tango/besiege Gaza

Anshel Pfeffer has a take on the Gaza "siege" which, embarrassingly enough, I never considered: Israel cannot unilaterally impose a siege on the Gaza Strip, as it shares a land border with Egypt as well as with Israel.

In all the talk of the siege, blockade and humanitarian disaster of Gaza, one small inconvenient detail almost always goes unmentioned. Gaza has a second border in addition to the one with Israel: a small but potentially useful border with its Arab sister, Egypt. [...]

A well-regulated and secure crossing at Rafah could have solved most of the current problems. It could have let through normal food and medical supplies for the Palestinians, allowed them travel and made a mockery of the claims that Israel and its allies have turned the Strip into a gigantic prison.

But despite signing the Philadelphi Agreement that allowed it to station many more troops in the demilitarised Sinai peninsula, and receiving European assistance to control the border-crossing, Egypt has failed to police it. Instead it sealed the border and forced back Palestinians who tried to break through. This was also a misguided policy on the part of Israel, which urged and supported the Egyptian blockade.

Friday, January 2, 2009

Afghanistan's unprecedented corruption

From the NYT, more evidence that the Brits were right earlier this year when they said that the best hope for Afghanistan at this point is to leave an "acceptable dictator" in power:

On the streets here, tales of corruption are as easy to find as kebab stands. Everything seems to be for sale: public offices, access to government services, even a person’s freedom. The examples mentioned above — $25,000 to settle a lawsuit, $6,000 to bribe the police, $100,000 to secure a job as a provincial police chief — were offered by people who experienced them directly or witnessed the transaction.

People pay bribes for large things, and for small things, too: to get electricity for their homes, to get out of jail, even to enter the airport.

Governments in developing countries are often riddled with corruption. But Afghans say the corruption they see now has no precedent, in either its brazenness or in its scale. Transparency International, a German organization that gauges honesty in government, ranked Afghanistan 117 out of 180 countries in 2005. This year, it fell to 176.

“Every man in the government is his own king,” said Abdul Ghafar, a truck driver. Mr. Ghafar said he routinely paid bribes to the police who threatened to hinder his passage through Kabul, sometimes several in a day.