STEM CELL SCIENCE

With approaching elections, debates about embryonic stem cell research have been given lots of attention. While issues of ethics have been brought up, weighing the destruction of embryos against possible medical breakthroughs, no one seems to have given much attention to related advancements in stem cell science.

Recently, a team of researchers at Advanced Cell Technology reported in the journal Nature that they have been able to remove singe cells from human blastomeres (cell groupings that result from mitotic divisions of the embryo) and coax these cells into forming embryonic stem cells with no harm to the embryo. If this procedure can be replicated successfully, then one side of the ethics argument may become irrelevant.

A QUIET REPEAL

A colleague, who certainly carries views of the more liberal and left wing flavor commented on how out of bounds our state’s concealed carry laws were. He certainly is of the opinion that these laws do more to endanger the populace than protect it. He criticized the politician who introduced the bill. The politician I’m sure took the opposite view.

Both individuals are confused about where they should focus their criticisms. The 2nd amendment of the constitution makes clear that all people are to have an unfettered right to bear arms, with no exceptions mentioned regarding concealment or otherwise.

While the politician may have felt that he won a victory for the 2nd amendment, the fact that a bill had to be introduced at all is testament of our government not recognizing protected constitutional rights. He should have taken his passion to the Supreme Court, who should simply side on the basis of a literal interpretation of the constitution. My colleague, while disgusted with the politician, should realize that his true focus should be on amending the constitution to restrict the use of guns.

Of course, to the disgust of all of us, this is not likely to happen. It is in the best interest of each legislature to push through every bill necessary to maintain power, and our courts do not have a reputation of standing in the way. This process has been coined ‘ the quiet repeal of the American Revolution’ by economist Thomas Sowell in his book ‘The Quest for Cosmic Justice.’

Why is this relevant to this blog? This blog is devoted to science and economics, and both are heavily influenced by the way we are governed. In fact, many of the things that I have written about are in response to potential governmental and political behaviors.

QUOTES

"Would I prefer that the world was nothing but organic agriculture? Yes. But on the other hand GM crops have a much higher yield per acre and use less pesticides."
-Leslie Hoffman, Director, Earth Pledge

" Over the next 10 years. I predict the mainstream of the environmental movement will reverse its opinion and activism in four major areas: population growth, urbanization, genetically engineered foods, and nuclear power."
-Founder, The Whole Earth Catalog

"You couldn't feed more than 4 billion people on an all organic diet."
-Norman Borlaug, Winner, Nobel Prize for accomplishments in agricultural advances benefiting the 3rd world.

ORGANIC FACADE

While organic foods provide us with a sense of nostalgia for 19th century agriculture, its claims of safety, sustainability, and ‘greenness’ can be distracting. Case in point, the recent recall of E. coli infested spinach, traced to a major organic producer, Earthbound farms. According to the Center for Global Food issues, organic foods are 8 times more likely to be recalled than conventional food. Although organic food makes up less than 1% of diets in the US, it accounts for 8% of all food E coli cases.

According to a University of Minnesota study, researchers determined that produce grown with manure aged 6-12 months was actually 19 times more likely to be contaminated with E. coli than foods grown with manure aged more than a year. USDA organic rules allow manure to be applied after just 3 days of composting—right up to harvest time and raw manure can be applied until 90 to120 days prior to harvest in most cases.

It’s true that conventionally growers may also use manure as part of their fertility program, but in a recent study published in the Journal of Food Protection, organic produce was 6 times more likely to be contaminated with E. coli than conventional produce. Conventional growers always have the option of reducing manure use and supplementing with synthetic alternatives that offer the same nutritional value with less risk and increasingly less damage to the environment as genetics and technology improve.
Perhaps that’s why the founder of The Whole Earth Catalog believes the environmental movement will soon reverse its trend of aversion to GM foods.

ROUNDUP READY GM & ENVIRONMENTAL HEALTH

Roundup Ready technology (GM) has allowed for 5.4 million pounds of glyphosate herbicide to substitute for 7.2 million pounds of other chemistries (ex: imazethapyr,pendimethalin,trifluralin ). What are the public health implications of this?

Let’s look at the properties of these chemicals as they relate to environmental health.

PERSITENCE: Roundup (glyphosate) has a half-life of 47 days vs. the much longer periods of those chemicals it has displaced.

TOXICIY: The chemistries roundup has displaced are 3-16 times more toxic.

So we have a GM crop that enables producers to use chemicals that are less toxic and less persistent in the environment than conventional crop production systems.

Perhaps this is why 73% of consumers say they are willing to accept GM products because of their potential for improving safety and environmental impact.

Source: Agricultural Outlook ERS/USDA Aug 2000

GREEN GOUGING

Many pundits try to characterize global warming as a golem created by greedy corporations. Much environmental policy is developed under this guise. Unfortunaltey, giving the federal government the power to regulate commerce in the name of soaking the rich leads to ‘rent seeking’ that in the end benefits large corporations and hurts the poor. In the name of ‘green’ and responsible refining, Unical successfully lobbied for tight restrictions on refining in California during the 90's. Once the standards were passed it was revealed that noone could refine gas and remain compliant without violating Unical’s patented refining technology. This resulted in windfall profits for Unical, restricted gasoline supplies, and higher prices at the pump.

Restrictive environmental laws that decrease the incentive for oil exploration, the building of refineries, and expanding our electrical grid all lead to ( at least to some degree) increased market power for incumbent corporations. If anyone complains about ‘price gouging’ and ‘abnormal profits’, these are the polices that help make it possible.

Free markets, growth, and investment are perhaps the best solutions for achieving energy stability that is in the interest of everyone as opposed to just politicians and big business.

GLOBAL WARMING POLICIES

Just as many of the models that are predicated on anthropogenic global warming are built on poor assumptions, many of the policies proposed to mitigate the effects of global warming are also based on bad assumptions.

It is assumed that the benefits we will reap from ‘preventing’ global warming will outweigh the costs of the polices themselves. If it were possible to stop global warming via human oriented policies this might be true in theory. Because human influence on the climate is likely trivial, policies that try to subvert human behavior to prevent global warming are not likely to be successful. Once this is realized, the costs to economic growth and human welfare really stand out.

According to a researcher at Wesleyan University, stabilizing emissions at 1990 levels could reduce US per capital growth by 5% per year. ( an entry on the importance of economic growth soon to follow). The infrastructure problems that currently are causing high gas prices would only be exasperated by piling on more regulations that can only restrict supply and exasperate the problem. While research and development of alternative energy sources may be a better alternative, technology development and adoption is made possible in conjunction with investment and economic growth. Policies that impede this in the name of preventing global warming will certainly minimize private sector incentives in this area despite any funding from government.

The best solution for dealing with climate change is to develop resilient economies that are able to invest in the technology necessary to adapt to ever chaining resource constraints.

GLOBAL WARMING: MODELING FARCE

Many of the projections that the media, rock stars, and grant greedy academics are using to build a ‘consensus’ on human influenced (lets call it anthropogenic global warming) global warming are based on mathematical models. As a student of economics I have a great appreciation of mathematical models. They are very compact and precise ways to express ideas with logical consistency. However, they are not necessarily scientific, and like any logical argument, they are only as good as their assumptions.

Many of the models that ‘predict’ or ‘explain’ anthropogenic global warming include parameters that are essentially assumptions about which we have little firm data to be certain about. These include the effects of cloud formations, precipitation, the role of oceans, and the sun.

Inherent in almost all dialogue and reporting about what these models imply is the assumption that human behavior is a large contributor to global warming. Although the climate has been warming over the last century, most of the warming occurred before 1940 (when temperatures in the arctic were actually just as warm or warmer than they are today). This was in the very early stages of modern industrialization and hence human production of greenhouse gases and CO2 on a large scale. This assumption about human influence is not supported by any empirical evidence, despite its widespread use as anecdotal support for what is implied by mathematical models.

WHAT'S UNNATURAL ABOUT GM

According to the European Union, food classified as GM contains genetic material that has been altered in a way that does not occur naturally by mating or recombination.

Their premise is that it is not natural to take genes from one organism and implant them in another. What are we talking about when we say 'genes'? Heuristically speaking, genes consist of a specific sequence of DNA base sequences (guanine,cytosine,adenine,and thymine) that lead to the expression of traits.

With traditional plant breeding, we develop plants with superior arrangements of DNA base sequences via the transfer of thousands of genes from one plant to another. These arrangements represent drastic changes in plant characteristics that would not have occurred naturally. (for example, modern corn scantly resembles its ancestor teosinte) Since the 1960's scientists have also been engaged in what is referred to as mutation breeding. In this procedure plant cells are attacked with gamma rays inducing ‘unnatural’ new combinations of DNA base sequences. Much of the pasta consumed in the world today is derived from wheat developed via mutation breeding. These changes to plant DNA are much more extreme than what molecular biologists are doing in the laboratory today.

Unlike traditional plant breeding methods, the laboratory techniques of molecular biology that are used to create ‘transgenic’ or GM plants induce very specific and precise changes in plants. The rearrangement of DNA base sequences is known and controllable. While these combinations would not have occurred naturally, the base sequences are common to all organisms and are as natural as can be. One could argue that the risk associated with these modern techniques is much less than with traditional crop improvement methods.

FALSE DICHOTOMIES

The debate over president Bush's possible veto of legislation regarding federal funding of stem cell research has been falsely characterized as a conflict between those who are ‘pro science’ and those who are ‘religious’ and ethics centered.

In this case it is the position of the media and other critics is that we should divorce ethics from science with regards to public policy. Science is a pure and objective standard upon which public policy decisions should be based, while ethics (especially Judao-Christian ethics) are equated with irrational biases and ignorance.

This hypocrisy, inconsistency, and intellectual dishonesty becomes apparent when the debate shifts from stem cell research to genetically modified foods. In this case science is equated with corporate greed and exploitation. It follows that science has been corrupted by the profit motive and is no longer objective, so we must rely on ethics or theories of environmental justice and social justice to guide our decisions.

Scientific solutions to problems always have implications for human welfare. It follows that in every case questions of ethics (often influenced by religious beliefs) arise. An honest media will portray these issues as two separate debates and steer away from the false dichotomy of science vs. ethics. One debate should be framed in terms of empirical facts regarding the soundness of the science involved. The other should encompass ethical considerations whether they involve theories of social justice, religion, or normative economics. It is irresponsible for the media, academia, or politicians to choose sides in a debate and then present it as a contest between enlightened scientists and religious nuts.

BIOTECH SAFETY

Why are groups like CSPI and Green Peace so opposed to transgenic crops? Perhaps the most egregious perception that they try to perpetuate among the public is that GM crops are unsafe. We have been consuming foods derived from what most people consider to be GM crops(GM referring to gene-spliced or transgenic crops in laymen's terms) for over 10 years without any adverse effects to human health. Currently more than 70% of the products we find on the grocery store shelves are derived from GM crops. 90% of all enzymes used in large scale food processing result from using gene spliced microorganisms. Most people fear the laboratory techniques involved in producing GM foods. What we must remember is that the same free market incentives and regulatory system that has ensured that our water and air have been clean (with improving numbers) over the last 30 years provide no exception with regards to biotechnology.

We have more than a 40 year track record for safety with regards to more drastic crop improvement techniques such as chromosome doubling and mutation breeding. Some believe that we have taken our concern for safety too far, leading to hampered long term advancements in public health.

BETTER LIVING VIA BIOTECH

CSPI and groups like them are very hypocritical to go after agribusiness the way they have KFC. Our food would be much healthier if these groups did not instill fear and ignorance in the population regarding transgenic/GM foods. Just as GM crops with altered fatty acid profiles can provide healthier cooking oils there are GM potatoes that have altered protein solids that absorb less saturated fat during cooking. McDonalds refuses to use these potatoes because of the GM factor.

Transgenic/GM crops must go through multiple layers of testing before they can be approved for production and especially for human consumption. This costs millions of dollars, and creates a barrier to entry for new biotech startups and universities- all of which could be producing the science necessary for improved and sustainable healthy living.

The same regulatory agencies involved in ensuring that our food is free from pathogens, allergenic, mad cow disease, and that our medicines are safe as well- are responsible for the safety of biotech crops. The opportunity cost to our health and the world that we are bearing in the name of 'safety' in nutrition is huge.

BETTER LIVING VIA LITIGATION

The Center for Science in the Public Interest is after KFC for using hydrogenated oils in their food products (resulting in trans-fatty acids). Hydrogenation makes polyunsaturated fatty acids ( like linoleic acid) more stable food ingredient.

Of course the resulting trans-fatty acids are unhealthy. And of course CSPI is once again behind on their awareness of the current state of science and technology. "The beans are already in the ground." Low-lin beans that is. PioneerHi-Bred International, Inc( a subsidiary of DuPont) is now marketing and farmers are now planting soybeans with altered fatty acid profiles with lower levels of linoleic fatty acids that obviate the need for hydrogenation.

In a few years time, with more genetic and supply chain improvements they will likely be the norm for food ingredients. This is the market's response to both consumer desires and the uncertainty created by frivolous litigators like CSPI. Why waste everyone's time and money with a long drawn out lawsuit, or worse a government intervention, when we have the technology and incentives to correct the problems through institutions and forces already in place.

Of course the low-lin trait is stacked with other positive environmental health traits like glyphosate resistance. (i.e. Genetically Modified), which I am sure CSPI or other anti science and anti freedom gainsayers will oppose.

TEACHING THE WRONG LESSON

Currently there is a school in Pennsylvania that is entertaining making it against the rules for parents to have lunch with their kids on the school premises if they bring in unhealthy fast food.

Of course, their logic is that schools should teach students to live healthy lifestyles and make healthy choices. But this is not what is being taught by example. By example, this ruling would be showing children that the state defines what a good choice is and has the power to ensure that we make that choice. It teaches that experts are better able to decide what is better for the lowly pedestrian subject who claims ownership to his own body. (and by extension his family and property)

This approach would however work better teaching a subject like mathematics. Even though math is a very important subject, in my high school they did not force everyone to learn algebra. Instead they re-invented pre-college mathematics through storytelling and arts and crafts. How can we give students a free hand to make their own choices about the correct answer to a math problem through creative writing( which many modern high school math courses emphasize opinion over fact as mine did), and then act like tyrants when it comes to personal choices where opinion actually matters.

The role of the school in this matter should be EDUCATION. Teach mandatory courses about nutrition and the possible consequences of lifestyle choices. Maintain a mandatory year-round physical education curriculum. Let the life they live be the final exam.

Oil Profits

According to Energy Secretary Samuel Bodman, oil and gas prices have increased because supply has been unable to keep up with demand. He also said that it might take a couple of years before they can close the gap. He has sighted increased worldwide demand, Middle East instability, and environmental compliance as chief reasons for the shortfall.

Ultimately these firms need to invest in increasing their capacity. The high costs of environmental compliance have reduced profitability and have acted as barriers to entry, resulting in decreased supply, competition and higher prices.

Now both republicans and democrats have entertained the idea of ‘recapturing’ big profits by windfall profit taxes or repealing tax credits for ‘big oil.’ Part of their rationale is that oil companies have done nothing to ‘earn’ these profits and therefore do not ‘deserve’ them.

They forget the role of profits is not only to reward those producers who do the best job filling our most urgent needs, but they also have an essential role in directing resources to where they are in need most. And to relieve the oil markets we need those profits to encourage investment, competition, and ultimately increased supply of oil and gas. Recently Shell has proposed plans to build the biggest refinery in the US.

The idea that oil companies have done nothing to ‘earn’ high profits is farce. It is fuel that makes it possible to get our food safely to the table, provide medical care, deliver goods and services, and exercise our greatest freedom to come and go as we please. By definition profits represent the net contribution a firm makes to society. When it comes to energy, oil companies have a lot to contribute.

Smoking Ban - Cat’s Paw (University of Kentucky)

If individuals do not want to be exposed to cigarette smoke, then they have the choice not to patronize places that allow smoking. This is no different than avoiding hard rock concerts if you don't want to expose yourself to the potential threat of wild fans, possible fights, bottle throwing etc.

If workers don't want to be exposed to cigarette smoke, then they can choose other work. This is no different than avoiding other hazardous jobs in agriculture, mining, or high rise construction.

If consumers and workers are willing to bear these costs at first and if the choices of FREE individuals (the market) dictate then smoke free facilities will arise to meet their needs. We have already seen this with restaurants like McDonalds and many other family restaurants.

With each choice there is a cost that must be borne by the consumer or worker. They may have to choose a different restaurant or job. . The effort to ban smoking is a pusillanimous attempt by such interested parties to force others to bear these costs, and to get quick results overnight. Also if you assume that the air in the restaurant that you own is part of the bundle of property rights associated with owning the establishment, then such a ban on smoking should be considered a "taking" of this property. The owners of these establishments should be compensated for the loss of property rights and financial damages that result.

If our own well being and safety in such small matters are reason enough for such an intrusion on our liberty, then such government policies will not stop with cigarettes. They are only the most obvious starting place. Fast foods, buffets, baking goods, and genetically modified foods could be next.

As Thomas Jefferson said long ago: “The issue today is the same as it has been throughout all history, whether man shall be allowed to govern himself or be ruled by a small elite.”

PRICE GOUGING III

Review: In my first article regarding price gouging I discussed how fuel markets are characterized by a Nash Equilibrium strategy that prevents long term 'price gouging.' In the second article I discussed how the Clean Air Act has increased capital expenditures by nearly 400% and reduced ROI by 42% between 1996 and 2001. This I explained has reduced investment and production capacity.

What happens when we take both of these effects into account? The decreased profitability acts as a barrier to entry preventing competitors from entering the market or increasing capacity. In fact there hasn't been a new refinery built since 1972. When demand exceeds supply, prices rise but there is very little supply response. As a result prices remain high for longer periods of time.

With barriers to entry, there are fewer 'players' in the price gouging game. With fewer players, it takes longer for the market to converge to the lower priced Nash Equilibrium.

Although environmental regulations have reduced return on investment, the resulting barriers to entry have increased the market power of existing firms. In essence, it is environmental regulations that make it possible for firms to ‘price gouge’ because of the increased market power that these laws create for oil companies.

PRICE GOUGING II

Are oil companies really that profitable? Not when it comes to refining. Between 1977 and 2002 net margins per barrel have averaged about 2.00. In 2001 they reached 2.78, then fell back to .19. From 1988-1992 environmental compliance costs went from an annual 560 million to 2.69 billion (400%).

As result return on investment dropped 42% per year between 1996 and 2001. With reduced ROI, refining capacity is severely limited, and the profitability of expansion is greatly reduced.

The recently hailed 'record profits' that oil companies have posted since last summer are in effect an anomaly. Instead of being an indication of future profitability and expansion, they simply are a reflection of scarcity produced by increased usage, instability from hurricane Katrina and the Middle East, and environmental policy.

In essence, what policy makers should focus on are policies that will allow refining to become a more profitable venture. Profits help direct resources to where they are needed most, and we are in desperate need for refining capacity.

PRICE GOUGING

Are oil companies price gouging? If you can define price gouging as charging a price greater than what competitive market fundamentals would support, then I wish I could say YES!

Ologopolistic markets (like fuel markets) are characterized by a non-cooperative Nash Equilibrium for defection. This means that if all of the oil companies are 'price gouging' now then there is a revenue increasing incentive for discounting.

The previous analysis indicates that with price gouging, the high prices at the pump are unsustainable, and cannot be maintained for long.

However, if the high prices we are now experiencing are related to fundamentals, like increased demand from China and India, Middle Eastern instability, reduced refining capacity due to EPA standards, and hurricane setbacks, then it is likely that we will see gas prices remaining near 3.00/gallon and oil at 70.00/barrel.

Of course, much of the 3.00/gallon is still artificially inflated. (the real price of gas since 1950 not adjusting for tax differences across time has ranged 1.90-2.00) While our gas prices are not artifially inflated nearly to the extent as in Europe, we still pay a significant portion of taxes at the pump.

In addition, provisions of the Clean Air Act make it impossible to reduce shortages in one market with surpluses from others. As a result supply fluctuations lead to price spikes.

While technological progress will lead to alternative fuels in the future, a more immediate solution can be found via changes in tax and regulatory policy.

BIOTECH A BOON TO 3RD WORLD

MYTH: Biotechnology only benefits wealthy western economies.

Currently there are over 21 countries with major biotech production. For the last 10 years we have seen the percentage of biotech crops planted double each year.

In fact >90% of farmers that plant biotech crops are in developing countries-many of which would be considered at the subsistence level.

Biotechnology is actually a size neutral technological advancement. Unlike advances in mechanization, GPS, or inputs that may require a large scale of production, biotechnology can be adopted by the smallest of producers.

Drought resistance, disease resistance , and insect resistance are all examples of traits that are size neutral. Advancements in genomics, quantitative genetics, and molecular biology will only perpetuate this trend.