Friday, March 27, 2009

Harper's Keizer, Right vs. Left vs. Center : All Are Irrelevant

Harper's, Garret Keizer:

The mega-irony of the Republican Party: that of all people conservatives ought to have been the first to grasp the dangers of unregulated markets. If big government is susceptible to the abuses of "sinful" human beings, how much more susceptible is a corporate system that is bigger than any government? The right wing of the party ought to have seen this better than the center, and the religious right ought to have seen it best of all. That they failed to see it bespeaks a spiritual bankruptcy beside which the financial plight of an auto industry is as a gnat unto a camel.

A market is certainly much larger than the government but with that comes certain advantages over government as well.

Government, large or small as it may be, is run by greedy politicians and bureaucrats, and relies on their limited knowledge and preferences to make decisions and allocate resources. They are accountable primarily only to the constraints of elections, and the political environment ( their relationships with other politicians and bureaucrats etc.)

Markets are much larger and consist of millions of greedy individuals. Both markets and governments consist of greedy individuals armed with imperfect information. The difference is that with markets, decisions regarding the allocation of resources are based on the knowledge and preferences of millions of individuals, who are all accountable to one another via the checks and balances of the price system. Markets draw from a much larger pool of knowledge and are subject to much greater constraints than governments.

It would seem then that the institution with the larger pool of knowledge and a greater extent of checks and balances would be the one that is less dangerous.

Confusing the issue with republican vs. democrat vs. religious right vs. center etc. is not an effective framework for ' grasping the danger' of one institutional arrangement vs another.

What we have seen recently is chaos introduced by public private partnerships and a mixed economy, making it difficult to identify the 'dangers' of both government and corporate arrangements. By upsetting the checks and balances of the price system, ( primarily via the federal reserve’s longstanding policy of centrally planned interest rates) and the creation of public private partnerships like the government sponsored enterprises such as Fannie and Freddie, incentive structures favoring greater risk and unaccountability have arisen that would not occur in the context of a free market. The result being a housing bubble, bust, and over leveraged and bankrupt financial institutions.

The question now becomes what is the least dangerous response to this situation, and which institutional arrangement will be best equipped with the knowledge and incentives to bring about recovery? Are more distortionary interventions and public/private partnerships i.e. more government, the solution when they have played such a pivotal role in getting us where we are today? Markets have worked well in allocating resources and bringing about prosperity over the past few decades. Is the solution to our current problem to limit their role and ability to do this in the future?

Saturday, March 21, 2009

Antibiotic Use in Agriculture

Some recent articles:

Comprehensive Reviews in Food Science and Food Safety

"applying interventions to control foodborne pathogens in general, rather than focusing on antibiotic-resistant
strains specifically, would have the greatest impact in reducing overall foodborne illnesses."

And from Pork Magazine here.

Saturday, March 14, 2009

Laying Out The Facts

From a recent issue of Nature Biotechnology:

"Obama is clearly a science buff, and is really, honestly, into knowing the facts, having them laid out, and then making the best choices that can be mustered," says a policy watcher who was close to the transition team but is outside the federal government. "It is a whole different approach compared to the 'How can we spin this information?' approach of the [Bush administration]. Back to 'honest-to-goodness' curiosity, which is, yes, incredibly refreshing."

This sounds like it could be good for biotech, but I’m not so refreshed. It seems that in the past the approach of those favoring larger government and regulation has been only to embrace the science that supports their interventions. This is more of a feigned or disingenuous intellectual curiosity, which really is no different than ‘How can we spin this information.’ Policy makers often pretend to embrace science, but really are ‘invoking the name and mystique of science to override other peoples choices’ to borrow a phrase from economist Thomas Sowell.

Examples that come to mind include aggressive attempts to combat climate change, despite the lack of consensus with regard to the effectiveness of such policies. They may have established a consensus that the earth is warming , but that is only the first step in a long process of determining an optimal policy procedure. If we are going to tax carbon or establish a market based cap and trade solution, then we need to be able to determine the relevance of our carbon foot print and put a price on it. Price ranges are all over the board, from the credulous Stern reports estimate of $300/ton to William Nordhaus more rigorous estimate of $30/ton ( which is still 10 times the implied price via Kyoto).

Currently there are private exchanges allowing producers to sell carbon offsets in a voluntary market. We should start from there. By the time we figure out the ‘optimal policy’ it is likely that the private market will have taken care of the problem for us as it has many times in the past. Markets and technological change have never allowed us to run out of copper, coal, cattle, oil ,or numerous other natural resources, there is no reason to believe they will allow us to run out of clean air. Some interventions may be necessary, to establish property rights ( which is what cap and trade does) but we are a long way from having the science to support them at this time. As Dr. Nordhaous concludes ‘the central questions about global-warming policy--how much, how fast, and how costly—remain open.’

With the current stimulus package flying in the face of everything we have learned from macroeconomic research over the last 60 years we have more reason to wonder just how much of our future polices will be the result of ‘knowing the facts, having them laid out, and then making the best choices that can be mustered.’

There has certainly been a problem in the past with closed mindedness and fact spinning with regard the environmental and health benefits of biotechnology ( although I would say that this was likely due more to environmental hypochondriacs and those that are averse to capitalism and technology on the left , as opposed to the Bush administration’s policies) However, if the current administration is open minded and curious about the science of agriculture and willing to embrace the evidence and communicate that to others, that will be a great thing. As stated later in the article:

"The EU approach has helped keep African countries from adopting GM [genetically modified] crops," agrees De Greef of EuropaBio. "We hope if the EU and US become less adversarial, it could remove pressure from Africa, which feels forced to choose between US or EU regulations."

The current administration may warm up much better to the Europeans, and as a result win some influence that could be beneficial to the biotech industry. That would be refreshing, as long as we are not selling them on our policies in exchange for some of their more troubling ideas regarding healthcare , taxes, and unemployment.

Source: Nature Biotechnology 27, 237 - 244 (2009)

Thursday, March 05, 2009

National Health Care Links

Markets generate prices which reflect trade-offs based on the knowledge and preferences of millions of individuals, and provide incentives to act on that knowledge to allocate resources. Eliminating the price mechanism through national health care only takes the information and coordination problem away from markets, and places it in the lap of government. With government, decisions are based on the limited knowledge and preferences of a few bureaucrats.

From the Journal of Physicians and Surgeons
Here, ( JPANDS)

"When the government denied Mr. D. the new medicine on the
grounds that the subsidies would cost too much, he offered to pay
the full cost of the medicine himself. He was denied the option to
pay full cost out of his own pocket because, the bureaucrats said, it
would set a bad precedent and lead to unequal access to medicine."

"discoveries of this magnitude are ruled out in Sweden:
In our budget-governed health care there is no room for
curious, young physicians and other [medical]
professionals to challenge established views. New
knowledge is not attractive but typically considered a
problem [that brings] increased costs and disturbances in
today’s slimmed-down health care…. Primarily the system
endorses health care regions and administrative directors
who can show a surplus in their budget. Quality of care and
patients’well-being are second-tier goals."



"Overcrowding in the emergency ward at Royal Columbian Hospital in New Westminster has become so bad that patients are being forced to sleep in closets, says a senior surgeon."

"There are patients that are literally in closets. They're in the nurses' lounge, where the nurses go to have coffee, there are patients in there," said Dr. Bertrand Perey, the hospital's deputy chief of surgery."

"In other words, we have an acute shortage of beds in all wards, surgeries have been cancelled because of this overcrowding and it's becoming a much worse problem than it ever was before."


“It’s becoming clearer that Canada’s current health-care system cannot meet the needs of Canadians in a timely and efficient manner, unless you consider access to a waiting list timely and efficient,” Esmail added.


From the BBC :

"Dr Rustin said that before he sees a patient he has to check their postcode to see which health authority pays for their treatment. He says he can only then prescribe the drug if he knows the authority will fund it.

He said authorities have to make a crude calculation.

"They want to show that we can improve duration of life with a new drug and they then try to calculate the extra duration of life," he said.

"If you get an extra year of life for less than £10,000 then it is generally considered that that is a reasonable buy."

From the Telegraph, here ,

From a Patient in the UK:
"In two hours time I have to attend a clinic in a town 15 miles away for follow up mammography. There is no mammography available in the borough where I live,pop 380,000.I worked hard to raise funds for a breast cancer unit in our DGH, that has all now been shipped out to a PFI hospital in another town. This despite a petition of 50,000 names asking for this and various other departments not to be closed"

here ,

"THE controversy over hospital waiting lists will continue to dog the Government in the forthcoming election campaign, a study by mathematicians claims"


"To commemorate the 60th anniversary of the founding of the NHS, Gordon Brown plans to introduce a "constitution" setting out the rights and responsibilities of our healthcare system"

What this seems to amount to in practice are the Government's rights to refuse treatment, and the patient's responsibilities to live up to what the state decides are model standards.

UK Daily Mail

"plans by NICE, the Government's drug rationing body, mean no life-extending therapies will be available to new patients because the cost of the most expensive exceeds its threshold of £30,000 per head"

Sunday, March 01, 2009

Hold on to your wallets, and your cell phone!

Back in September Peter Wallison wrote a piece debunking the myth that deregulation was the cause of our financial shortfalls these past couple of years. One thing that he noted was :

"It is correct to say that there has been significant deregulation in the U.S. over the last 30 years, most of it under Republican auspices. But this deregulation--in long-distance telephone rates, air fares, securities-brokerage commissions, and trucking, to name just a few sectors of the economy where it occurred--has produced substantial competition and innovation, driving down consumer costs and producing vast improvements and efficiencies in our economy."

Today I found this piece from Reuters affirming that the current administration is ready to reverse these trends. It's important to remember during this period of zeal for re-regulation that one of the effects of deregulation has been to bring prosperity to the masses. One of the most liberating technologies of the last decade has been affordable telecommunications and internet access.