Liberal baiting
Okay, so Obama's not the most liberal senator. But who is? Enquiring minds want to know . . .
« December 2007 | Main | February 2008 »
January 2008 Archives
January 31, 2008
Worst. Article. Ever.
Well, I haven't done an exhaustive study. But this article on counting casualties in Iraq is embarassingly bad, even by the standards of cursory reprints of press releases. As it happens, I've been writing about casualty counts in Iraq (so I'm afraid you're going to be hearing much more about this over the next month or so), and I'm flabbergasted by its bizarre omissions. I don't think that any credible person who has spent any time on the debate would be satisfied with this particular attempt to deal with it.
For starters, it repeats nearly uncritically the results of a survey from ORB which purports to find a million casualties in Iraq. Pretty much everyone I've spoken to regards their numbers--which utilize a murky methodology on a very small sample, and then publish bizarrely tiny uncertainty estimates on a survey in a bloody war zone--as a bit of silliness. It fails to mention that the largest survey using the best regarded methodology, which was just released by the WHO earlier this month, found about a tenth as many deaths.
But the really strange thing is that it drags in the first Lancet study without mentioning the second.
Medical journal The Lancet published a peer-reviewed report in 2004 stating that there had been 100,000 more deaths than would normally be expected since the March 2003 invasion, kicking off a storm of protest.The widely watched Web site Iraq Body Count currently estimates that between 80,699 and 88,126 people have died in the conflict, although its methodology and figures have also been questioned by U.S. authorities and others.
ORB, a non-government-funded group founded in 1994, conducts research for the private, public and voluntary sectors.
It's as if he's unaware of Lancet II--which unawareness is really, really, really hard to achieve, because it's the main thing you get on either a google search or a Nexis of Iraqi casualties, or any plausible variant on those terms. Even Lancet I's authors would say that the study, which was published in 2004 on the cheap and had a very small sample, has been superceded by the larger, better funded, and more recent Lancet II, which found 601,027 violent excess deaths (654,965 total).
Helping the housing bubble along
Regarding the housing crisis, Mr Brian Beutler asks:
Is this crisis truly devoid of any partisan responsibility? In something like a mathematical sense, I'm prepared to pin most of the blame on Greenspan. But isn't at least some of this political and cultural in origin? To me it seems very much as if the Bush administration and Congressional Republicans (and plenty of Democrats) have done everything they can--through bankruptcy legislation and various other regressive policies--to assure creditors of all species that the government stands firmly behind predatory lending, consequences to the poor and uninformed (and, of course, to the economy) be damned. That must have had some impact, yes?
In a word, no.
I wouldn't even pin most of the blame on Greenspan. It's not clear how much of an effect the money supply had on the mortgage bubble; the starring role seems to go to the river of capital pouring in from abroad, mostly courtesy of Asian central banks who were manipulating their exchange rates by buying dollars, and then parking the funds in various asset classes. If interest rates were too low, this should have staunched the flow by making US investments less attractive; they certainly didn't do that. I need to go back and re-read my Monetary History of the United States (where is that box . . . ), but my impression is that the Fed had a similar problem in the 1920s. They actually did raise interest rates quite a bit in an effort to choke off the stock market bubble, but all this did was encourage foreign capital to pour into the United States, to buy stocks and be loaned out on margin.
As for the federal government, I've been wracking my brains, and I've yet to come up with any Bush administration policy that credibly made the housing bubble worse. If anything, his biggest policy achievement should have tamped down the bubble. The Bush tax cuts, by reducing tax rates, also substantially reduced the value of the mortgage interest tax deduction. That should, in turn, have reduce the amount that people were willing to pay for a house (though this is complicated, because of course people might want to spend their extra post-tax income on more housing).
The biggest problems with mortgage lending seem to have occurred during the mortgage brokering process, and mortgage brokers are regulated at the state level. Many of the worst-hit states are controlled by Democrats.
The bankruptcy code, including the recent reform, just doesn't have much effect on mortgages. Bankruptcy is only tangentially concerned with secured debt, like mortgages; that is what the foreclosure process is for. The bankruptcy reform did (in one of its least useless provisions) put a stop to a tactic that people used to use in order to avoid eviction or foreclosure: serially declaring Chapter 13 every time the bailiffs got close. But this wasn't all that common, and at any rate, not even the consumer advocates I interviewed on the topic wanted to defend that particular stunt.
But at any rate, the level of the homestead exemption--which governs whether or not you get to keep your house in a bankruptcy--is also set at the state level. The only major change the recent bankruptcy reform made to this was a small provision aimed at OJ Simpson, which prevents people from moving to states with an unlimited homestead exemption in order to shelter income from criminal and civil recovery. (This being how OJ dodged Ron Goldman's family lawsuit.) In most states you can declare bankruptcy without losing your house, and you can certainly lose your house without declaring bankrutpcy, and neither has very much to do with the Bush administration.
Some people are criticizing the Bush administration for not doing anything about the housing bubble--setting up an agency to keep the banks from lending so profligately, say. (Though I notice very few of them noticed we needed this in, say, 2003.) But I don't think anyone credible has a very good theory whereby something the Bush administration did actually produced the housing bubble. Human beings are natural born speculators. They don't really need all that much help to lose their heads.
Surrender?
If you spend any time watching "technical analysts"1 on the market watch shows--and who can resist?--you'll notice they spend a fair amount of time talking about "capitulation". This is what they call it when everyone decides the market isn't going up any time soon and sells out in the hopes of sheltering in safer investments. It is supposed to be a good time to buy because once everyone has capitulated, the market starts going up again.
I don't hold much faith in technical analysis. But looking at all the "just reduced!" ads in the Washington DC real estate classifieds, I wonder if homeowners aren't finally throwing the towel and trying to sell at any price.
1 A.k.a. "chartists" a.k.a. cranks
How profitable is Pharma?
I'm really busy this morning, and probably won't be blogging much, but there's an interesting debate going on in the comments threads about the return on investment in the pharmaceutical industry. You have to be very, very careful with this stuff, because there's enormous survivor bias in stock screens. A pharma that has a long, bad run of no good drugs disappears from the sample through merger or failure. Sadly, this is pretty common, which is why so many pharmaceutical firms have obviously compound names. If you have relatively binary outcomes--companies are either very profitable, or not profitable at all--then if you drop the non-performers from the sample, being in the pharmaceutical business will look like a license to print money. The fact that so many new entrants find it so hard to actually grow to pharma size indicates that it might be a little harder than it looks.
January 30, 2008
Putting think in the tank
Julian Sanchez and Radley Balko are, to put it mildly, not pleased with Roger Pilon's Wall Street Journal op-ed on FISA. There are only so many topics I can develop an informed opinion on, and national security law is not one where I have tried, so I don't really have anything to add on the substance of the article. But I do think there's an important problem at the heart of Radley's post:
Julian is right, the real impact of Pilon’s op-ed isn’t its persuasiveness (it isn’t, really), it’s the fuel it gives neocons and Bush acolytes to say, “See? Even the libertarian Cato Institute supports warrantless wiretapping…” It also gives Cato’s leftist critics more fuel to say the organization is really no different than, say, Heritage, or AEI.. . .
I do think it’s a credit to Cato that they allow their scholars to have divergent views on contentious issues. That said, Cato is a libertarian organization. It’s one thing to have internal disputes over issues like intellectual property, incrementalism versus absolutism, or even (at least at the outset), the war in Iraq. But it’s something else to have a scholar making a public case for unchecked executive power to spy on U.S. citizens. Cato would never hire a health care analyst who favors a single-payer health care system. They’d never hire a criminal justice scholar who supports the war on drugs. You might hire, say, an education or trade analyst who doesn’t toe the party line on foreign policy. But you wouldn’t hire an education analyst who thinks we should give more money to the public school system, or a trade guy who supports farm subsidies or steel tariffs.
My opinion on this may reflect a difference in what we write about, because legal writing in general is pretty much exclusively about generating an opinion; there's no expectation that anyone is going to generate independent data. But for economics writing, the reliability of the data set matters, and that means that I have to trust that the person who generated it was at least capable of reaching a conclusion other than the one they ultimately published. I'm already reluctant to use all but the most anodyne data from think tanks--either right or left--precisely because I know that most of the scholars there knew what the answer was before they asked the question. Think tanks that fire people for ideological unsoundness do not get their papers mentioned by me.
I'm not ambivalent about what Cato should do: nothing. No matter how appalling Roger Pilon's position, I think it's better for Cato (and libertarianism) to develop a reputation for tolerating a lot of dissension within the ranks. If people can be fired for developing their own opinions, no matter how stupid or ideologically unsound, then we should stop calling them scholars and start calling them stooges.
The best defense is a good offense
My former colleague, Robert Lane Greene, is defending free trade from the Forces of Insufficient Light over at the Council on Foreign Relations website.
Millenium model
Someone from the MCC emails:
Thanks for having our back. For more MCC wonkery, the CGD folks usually have us mostly right.The other thing behind our low disbursement rate that people don't understand (and we explain poorly), besides the fact that the partner countries are responsible for actually spending the money, is that early expenses are for relatively cheap things. Not only are we almost never giving out money for humanitarian/consumption projects, but in the first years of these compacts, much of the money goes to really boring things, like revising land registration/financial sector/other regulatory policies, feasibility studies for infrastructure works, etc (not to mention setting up an administrative structure to manage the whole thing). "Soft infrastructure" investments are less expensive, and also less flashy (to non-economists). We get no pictures of kids with distended bellies smiling about their new cadastral maps. Things that burn money and make good photo ops, like building irrigation systems and roads tend to happen in years 3-4 (of 5 year programs), and the first MCC compacts (Honduras, Nicaragua, Madagascar - all signed in 2005) are only barely starting to get there. Alas, none of this lends itself very well to a snappy elevator speech, which is why we can look like an incompetent bureaucracy if people don't understand how our model is different from traditional aid programs.
You're so good to me!
John Quiggin is blogging about an under-appreciated aspect of US financial markets: we're much, much nicer to borrowers than any other country in the world. (Yes, even after the bankruptcy reform1.):
As with bankruptcy, however, the high frequency of financial distress is partly offset by the fact that US law and standard contractual arrangements are more friendly than in other countries. Compared to those in other places (at least in Australia) US mortgage contracts have commonly favored borrowers in two important ways. First, they have been fixed rate contracts with no, or limited penalties, for early repayment. That means that borrowers can stick with their fixed rate if market rates rise, but can refinance at lower cost of market rates fall.Second, most mortgages are non-recourse, meaning that the lender can take the house but cannot recover the debt from the borrowers income or other assets. That means that once the value of the house falls below the amount owing (equity becomes negative) the borrower can walk away from the house and the debt. As Felix Salmon notes, the difficulty of pursuing deficiency payments means that most loans are non-recourse in practice even if the contract says otherwise
The mystery, of course, is why American capital markets are so much deeper than places where it is presumably more attractive to lend.
1 I was living in London during the 2005 bankruptcy reform, and I had a lot of difficulty putting across the notion that the new law was a "draconian" reform. The terms were so much more generous than British bankruptcy law (and British bankruptcy law is positively lavish compared to European laws) that they thought the reform was needed to curb the absurdly generous terms of the new law. Indeed, one chap simply refused to believe that I wasn't having him on about the existence of Chapter 7.
Fantasy pharma
The left, of course, has its own fantasy solution set: drugs should be both innovative and cheap.
But clinical trials for a single successful drug cost $500 million, and not because the labs have outrageous administrative overhead. Even if the government were in charge of running them, they would still be on the hook for that $500 million, which would have to come out of taxes. We can get existing drugs on the cheap by essentially stealing the property of shareholders in drug firms, who risked a lot of money on drugs that they reasonably expected to be profitable under existing laws. But that's a one-trick pony. We cannot get new drugs at bargain basement prices.
Many people are holding out the hope that the government can somehow substitute for the pharmas, bolstered by the ludicrous claim that the government really discovers all the drugs. This is arrant nonsense; government-funded research discovers targets that might someday turn into drugs, if the Big Pharma chemists can: find a molecule synthesis can be economically mass produced; keep the molecule from killing rats, mice, dogs, or humans; get the molecule into a form that does not have to be directly injected into the bloodstream; tweak the molecule so that the liver doesn't immediately chew it into pieces that no longer affect your target; and shepherd the entire thing through years of clinical trials. That's just off the top of my head; research chemists will undoubtedly have more.
There is no evidence of a nationalized industry that consistently does cost effective innovation. Yes, you have a list of things invented by the government--but that number is a small fraction of a fraction of one percent of the number of things in the private sector. If the universe of products were your house, the government would have invented one washer inside the tap of your bathroom sink; the private sector would have developed every other thing you use. Even where the government is given credit for "inventing" something, such as DARPANet's invention of the internet; it turns out that 99% of the process of actually turning it into a product that was useful to end-consumers was handled by private actors, most of them corporations like Netscape, Microsoft, and AOL.
This is why when you start to make a list of all the state-run economies that have produced large numbers of innovative products with a high level of consumer satisfaction, you have to throw your privately manufactured gel pen aside in disgust. For whatever reason, the government is just not good at producing innovation.
Before you say it, I know that you are leaning forward in your chair, your eyes alight, preparing to demand "What about the military?!" and lean back triumphantly in your chair. My friend, have you ever taken a close look at the military procurement process? It costs a fantastic amount of money to generate products that often aren't even wanted by the end users--how many times have you read about some military service being forced to buy some gargantuan piece of equipment they don't want because the thing is being manufactured in a key congressman's district? This is how we spend four percent of our national income on something that most of the American public never sees. Forgive me if I'm not excited about applying the same process to health care.
Pharmaceuticals: understanding your solution set
There's an old adage variously attributed to chefs and engineers: "Good. Fast. Cheap. Pick two."
This does not hold all the time, of course; strawberries in season are fast, cheap, and divine. On the other hand, if it doesn't happy to be July, you have to wait months. So usually, the adage holds: you cannot have everything. You have to choose.
A lot of people in my comment threads on pharma are saying "Well, okay, maybe if we forced the drug prices so far down, that would kill off innovation. But it's not fair that Europe is free riding. We need to find some way to force them to Pay Their Fair Share." Interestingly, many of them seem to be conservatives, the same people who applaud when I say, in re other policy issues, that the fact that there is a problem does not automatically imply that there is also a solution.
No one who is a serious policy wonk on this stuff has any sort of workable proposal whereby America persuades Europe to pay more for its drugs. We have no leverage to do so. European governments have extraordinarily strong financial and political incentives to keep the costs of drugs down. Our trade relationship is not exactly harmonious right now. And we cannot forbid pharmaceutical companies to sell into those nations at discount prices, because those countries can break the patents and license generic manufacturers to manufacture the drugs. All we would end up doing is removing a small source of profit from the pharma company's books. This threat seems to be the most plausible reason that Pharma is still selling to Canada at heavily discounted prices, even though this costs them a fair amount of money in the US market. We have the legal ability to force American prices down to European levels. We do not have any way to force their prices up to ours. The fact that you are animated by an angry passion does not magically conjure up a solution out of nowhere.
As your mother repeatedly told you, the only person whose behavior you can control is your own. Screwing up our pharmaceutical industry because it's so damn unfair that Europe gets the benefit too is cutting off our noses to spite our faces, as long as we're still getting good value for money. As anyone, including me, who is taking a newly invented drug will tell you, we're getting pretty good value for money. (And if you're not getting good value for money, you can just not take the drug! Problem solved.)
January 29, 2008
Dinner is served
Today's my birthday, so I spent the evening at dinner with loved ones, rather than watching television like the rest of you. This did give me some time to poll a representative sample of the non-wonketariat. My mother, whom I have dubbed The Swing Voter because her vote has correctly called every presidential election since I was sentient, has announced that if Hillary is the nominee, she's voting Republican--regardless of who the Republican is.
Meanwhile, the gay Republican vote is apparently going for McCain, with a margin of error of 100%.
G is for gone
Giuliani concedes. The bit of the speech I saw was classy. Like most New Yorkers, I kind of think he's a maniac, but I was touched.
Okay, best line of the night
Fox News anchor: McCain won among men, and among women, and that'll usually do it.
But who won the all-important transgender Republican vote?
Mitt-tastic
Mitt Romney's concession speech is actually pretty good, except for when he starts talking about the Federal government teaching girls to get married before they have babies. Let me channel P.J. O'Rourke for a moment: they can't even deliver my mail, and it's got my name right on it and everything. I misdoubt that the Department of Education has the mojo to keep impulsive 15 year olds on the straight and narrow.
Nonetheless, this is a better effort than I've so far seen. For the first time, Romney seems to be more dynamic than his hair. This is probably a little late to break out the dynamism, though.
Favorite line: "the source of America's greatness is the American people." One can only imagine what a campaign issue this would be for the Democrats if we'd already shifted the production of American greatness to China . . .
Measuring success
Matt takes issue with my praise of the Millenium Challenge Corporation, noting this article complaining about the slow pace of aid.
Actually, as I understand it, this is a feature, not a bug. The idea of the MCC was to change the traditional "Don't just stand there: do something!" approach to disbursing aid. The MCC projects are large and very carefully designed, which is taking a lot of time. This may not turn out to make a difference. But the general approach of measuring aid by the amount of cash you managed to pump out, rather than the results generated thereby, was a very bad idea that the MCC was designed to challenge. It makes little sense to declare the project a failure on the ground that it's not spraying dollars over Africa like a firehose.
Why can't we just fund R&D from pharmaceutical advertising budgets?
Even if companies could, they won't, for reasons I just explained. But mostly because pharmaceutical advertising budgets aren't really very big. People who think that there is a gigantic pool of capital that could be sucked out of the pharmaceutical advertising budget are being misled by accounting terminology. People who rail against the pharmaceutical industry are fond of noting that about 20% of industry revenues go to marketing, with the implication that this is all wasted on advertising baldness cures during Golden Girls reruns. But just the top ten firms in the pharmaceutical industry took in about $350 billion in revenue in 2007, 20% of which is $70 billion. The entire US expenditure on advertising by all companies in all media forms totaled something like $150 billion in 2007. I know it seems like every other commercial you see is for Botox, but most advertising is not done by pharmaceutical firms.
In fact, advertising is only a small fraction of that marketing expense. Over half of it expense consists of free samples, the offering of which seems to me like an unalloyed public good.
Prophets of profit
Yesterday I wrote:
So the most probable outcome of introducing monopsony power here [in the U.S.] is that the market for drugs shrinks to the point where it will support few-to-no new drugs.
Not to put too fine a point on it, Tom responded:
This seems crazy.
He is not the only one for whom this seems a little nuts. But it is not. Let me explain.
People who think that there will be continuing R&D in the pharmaceutical industry are basically thinking of it as a budgeting problem. They think of the pharmaceutical industry's gross income as a budget to be allocated between various functions, such as marketing and R&D. They may concede that by changing the size of the budget, you may shrink the amount of money to fund R&D, because there will be less money in the kitty. (Though many or most hope that shrinking the size of the pie will force pharmaceutical companies to transfer money from the advertising budget to R&D1). But, their reasoning goes, there will still be money in the kitty; if you allow pharmaceutical companies 1/3 as much gross income, you will get 1/3 as much R&D. Or perhaps they will cut their advertising budgets to zero, and then you will get 2/3 as much R&D. But still, you will get something.
I don't think of R&D as a budgeting problem; I think of it as an investment problem. After all, even if the pharmaceutical industry has no profits right now, they can borrow the money in the financial markets at fairly attractive rates.
The main obstacle to R&D, then, is not the current state of pharmaceutical industry profits; it is the potential return on the investment in R&D. After all, Merck doesn't have to make drugs; it could generate a nice, safe return of 5% a year in government bonds. Or it could get into some other business, such as making soap. If you drive down the profits on new drugs too far, it stops making sense to invest in new drugs, even if there is a small profit to be made on current production.
Developing new drugs is very, very risky. Depending on what you think constitutes a drug candidate, somewhere between one in one thousand, and one in ten thousand drug candidates makes it from a lab bench to clinical trials. Each of the failed drugs was very expensive, particularly if it got partway through clinicals, which run about $500 million per course.
The problem is, once you've developed a drug, it's easy to copy. It's also usually trivially cheap to produce. And your patent is rapidly running out. This gives a monopsony buyer a lot of leverage to force down your price--you're almost always better off taking something. This is particularly true if the monopsony buyer has the power to break your patent and license its generic manufacturers to turn out cheap but near-perfect imitations of your product2. This is, in fact, what Europe has done; they make pharmaceutical firms sell to them at cost plus. The lion's share of the profits on any drug come from the United States; what they get in Europe and Canada and the rest of the world is (thin) gravy, a price that is just a little bit better than not selling any drugs there.
Now imagine that America drives drug prices down to that sort of "cost+10" or "cost+20" level. The pharmaceutical firms will keep making the drugs they already have, because there will still be a little profit there. But they would have to be psychotic to invest billions of dollars over a 20 year time horizon in exchange for a one in a thousand chance of making that small a profit. Would you put 20% of your income now into an investment that might yield a profit of 10% of your income--in thirty years?
But they have to invest in R&D, say my interlocutors; otherwise they won't have any drugs to sell! This makes the odd assumption that they can't do anything else. But history is full of companies that used to do something else entirely--and also, of companies that went out of business when their market collapsed.
1 This belief is wrong, for reasons I will explain in another post.
2 The patent threat seems to be the most plausible reason that pharmaceutical firms do not raise Canadian prices to US levels.
It's hard to be rich
The trials of a successful investor:
A few months ago I had dinner with an old friend who told me an amazing story.Two years before, a nice guy with no experience at all in real estate had come to him and said that there was a fortune to be made betting against the U.S. housing market. This fellow hoped to raise money for a hedge fund whose sole purpose was to do this, by shorting the subprime mortgage market. He asked my friend to invest with him but my friend turned him down. Now my friend felt foolish.
``It all happened exactly like he said it would happen,'' he said. ``In every single detail.''
The hedge fund creator's name was John Paulson. And -- as Bloomberg News's Jenny Strasburg and Anthony Effinger and the Wall Street Journal's Gregory Zuckerman laid out recently -- by making between $3 billion and $4 billion for himself in 2007, he appears to have set a Wall Street record.
In the long history of money-making, no one has ever made so much so fast. As the Journal story also showed, Paulson's instincts now tell him to lay low and avoid calling attention to his fantastic triumph over his fellow Wall Street man.
He got lucky. One of the reasons there are so few short selling hedge funs is the old trader's adage: the market can stay irrational longer than you can stay solvent.
Markets in everything
The manufacturing of beautiful Russian women:
Whatever you may say about the Soviet Union in the 1970s and '80s, it was not widely known for feminine pulchritude. Whatever you may say about women's professional tennis in the 1970s or '80s, it did not feature many players who looked like Maria Sharapova, the latest Australian Open victor.Where were they all before?
Though this is a fairly frivolous question (OK, extremely frivolous), I am convinced it has an interesting answer. To put it bluntly, in the Soviet Union there was no market for female beauty. No fashion magazines featured beautiful women, since there weren't any fashion magazines. No TV series depended upon beautiful women for high ratings, since there weren't any ratings. There weren't many men rich enough to seek out beautiful women and marry them, and foreign men couldn't get the right sort of visa. There were a few film stars, of course, but some of the most famous—I'm thinking of Lyubov Orlova, alleged to be Stalin's favorite actress—were wholesome and cheerful rather than sultry and stunning. Unusual beauty, like unusual genius, was considered highly suspicious in the Soviet Union and its satellite people's republics.
This doesn't mean there weren't any beautiful women, of course, just that they didn't have the clothes or cosmetics to enhance their looks, and, far more important, they couldn't use their faces to launch international careers. Instead of gracing London drawing rooms, they stayed in Minsk, Omsk, or Alma Ata. Instead of couture, they wore cheap polyester. They could become assembly-line forewomen, Communist Party bosses, even local femmes fatales, but not Vogue cover girls. They didn't even dream of becoming Vogue cover girls, since very few had ever seen an edition of Vogue.
Those were the good old days . . .
There's less demand than there used to be for prose stylings that read like Benjamin Barber after a three-day coke bender in Macao. -- Dan Drezner
January 28, 2008
Liveblogging the State of the Union
I am sitting in my apartment with a few other journalists, eating chips and watching the State of the Union. Bush looks like he has been preserved in formaldehyde; the Democrats look as if he is a particularly disgusting specimen they are being forced to examine, like a fetus with two heads. Hillary Clinton is, one can't help but notice, making sure the cameras catch her hugging every minority in the room. Barack Obama is staring at the ceiling as if he were actually planning to rise above all of this.
9:15 Handshaking over! Now speech
9:17 Grave danger that tax relief will not be made permanent! Not very specific about what the danger is, exactly, other than George W. Bush's taxes going up.
9:18 Republicans leap to their feet. Barack studiously sitting down and looking serious, with two fingers pressed over his pursed lips. One of the other journalists wonders if this is some sort of signal. Perhaps "Beam me up, Scotty".
9:24 Okay, I love me some trade deals. But even I find it hard to believe that the greatest threat to human liberty today is the specter that Panama may not be able to sell us handmade hats.
9:29 Calling for bans on the patenting of human life. Thank God, because after what the Patent office has done with computer algorithms, I'm afraid I'd find myself paying royalties to some guy in Idaho every time I take a deep breath.
9:32 The speculation on who tonight's SOTU special guest stars will be is growing to a fever pitch here at Stately McArdle Manor. Best guess so far: Heath Ledger's family.
9:34 President Bush says that illegal immigration is complicated, but it can be resolved, and must be resolved. But illegal immigration is probably the least complicated issue out there. The 3-10X wage differential across the US-Mexico border draws people here to work; it's hard to patrol more than a thousand miles of border. Unlike almost any other issue, there aren't really any complicated, wonky proposals out there that ordinary citizens have a hard time wrapping their brain around. The main proposal is a wall. Walls are not really very hard to understand.
9:39 Don't forget to play along at home
9:41 Thoughtfully, from one of my guests: "It's hard to differentiate between cheers and boos sometimes.
9:42 President Bush says that 80,000 Iraqi citizens are fighting the terrorists. This implies something disturbing about the other 25,920,000 Iraqi citizens.
9:46 The segment on Iraq is problematic: he wants to reassure Americans that they won't have to sacrifice much more, and scare the bejeesus out of the terrorists with our steely resolve. These are mutually exclusive goals.
9:51 Peace in Israel/Palestine. And a pony! Why does every American president with a grim-looking prognosis for their legacy try to salvage everything at the 11th hour by swashbuckling into Jerusalem with no political capital to spend and praying for a miraculous resolution of the least tractable conflict of the last 50 years?
9:55 Making fun of State of the Union speeches feels a little cheap. These speeches always have the informational content of a Highlights Rebus, and they're never more vacuous than in the last year of a presidency. George Bush isn't going to do anything in the next 12 months; the biggest achievement he can hope for right now is to veto a whole bunch of earmarks. And that isn't even his fault; no president gets anything done in their last year. So why make fun of him? Well, because if you want less of something, you should raise the price of it. Me, I want fewer vacuous political speeches.
9:58 Oh. My. God. As soon as the Bush says the word "African", CNN cuts to apparently specially staged woman in full African gear, with a child wrapped in a leopard print throw. "Cue human props!"
9:59 And yet, he's talking up the Millenium project, which is actually one of the great things this administration has done. This doesn't get nearly enough good press.
10:01 Bush sounds like he's telling the little nations that if they drink their milk, some day they will grow up to be just like America.
10:02 Let us go forth to do their business? Was that seriously the last line of his final State of the Union speech? Are we toilet training them? Who's writing his speeches these days--the copywriters for Charmin?
10:04 Wolf Blitzer ponderously declares "The state of the union will, he says, remain strong" as if this were somehow remarkable. Was he thinking that George Bush might come out and recite The Second Coming?
10:06 The commentators are discussing the possibility that George Bush will achieve piece in Israel/Palestine as if this were remotely feasible. Personally I think it would be even more remarkable if he suddenly developed the ability to heal the blind.
10:17 There's something really odd about being in the middle of a hotly contested Democratic primary involving two sitting senators, and having the Democratic response to the State of the Union be delivered by . . . the governor of Kansas.
10:22 She is asking the President to "join them". This seems unlikely. Also, even if he did, having a lame duck president with low double-digit approval ratings on your side is not all that helpful.
10:24 "I know government can work, Mr President, because like you, I grew up in a family devoted to public service." This makes it sound as if the purpose of government is providing jobs for every politician's child. Oh, wait . . .
10:26 A friend reminds me of the time I fell asleep in mid-sentence--my sentence. Apparently, the governnor is causing flashbacks.
10:28 Yes, snark is beneath me. But what else can you do? The speeches are totally content-free.
10:40 t-t-t-t-t-t-t-t-hat's all folks!
We're no experts
In the newly launched Washington Independent, Spencer Ackerman has an article arguing that, surprisingly, the CIA had no real interrogation capacity prior to 9/11. Worse, after 9/11 they botched the job of building their capabilities:
Despite having nearly no off-the-shelf experience, the CIA was tasked by President Bush to come up with a robust interrogation program for the most important al-Qaeda captives. So the agency turned to its partners for assistance in designing its interrogation regimen: Israel, Egypt, Saudi Arabia—all countries cited by the State Department for using torture—among others. Additionally, as Mark Benjamin has reported for Salon, two psychologists named Bruce Jessen and James Mitchell, who worked as contractors for CIA, helped the agency "reverse-engineer" the military and CIA training on resisting torture for use on detainees. Suddenly, waterboarding, an illegal practice of simulating or in some cases inducing drowning, became an American-administered practice.Interestingly, one place that the CIA didn’t look for help was the place where interrogations have been performed, lawfully, for decades: the Federal Bureau of Investigation. "In terms of actual interrogations, when you have a suspect in custody, the FBI does that hundreds of times a day, 365 days a year, for 90 years," said Mike Rolince, who spent over three years as Special Agent in Charge of counterterrorism at the FBI’s Washington field office before retiring in October 2005. "The FBI brought serious credibility and a track record to the table. That said, the U.S. government decided to go about [interrogations] in a different way. The results speak for themselves. I don’t think we need to be where we are."
Fashion signals
I look at this kind of thing, and the only explanation I can come up with is that certain fashion items are intended to send a signal about the wearer. D'uh! you will say, but the signal these items send is a little odd. That signal is: I am so young and pretty that it doesn't matter *what* manner of ugliness I put on my body; you will still think I am hot.
Unfortunately, a number of people are emboldened by fashion magazines to wear these sorts of items even when their bodies are aggressively countersignalling.
Supply, meet demand. Demand, meet supply. I just knew you two are going to hit it off!
There's an argument about pharmaceutical prices on parts of the center-left through right in America that goes roughly like this: It is true that high pharmaceutical prices provide both the capital and the incentive for innovation. However, Europe is free-riding on our pharmaceutical spending. Therefore (it usually continues), we must get tough with the pharmaceutical companies in order to force them to force Europe to pay their full share.
This is rife with economic error. It imagines that there is some basket of drug money that the pharmaceutical companies need to recoup--if we pay more, that allows them to charge Europe less.
I, however, assume that there is a demand side as well as a supply side to the equation. That is, the pharmaceutical companies are charging Europe about as much as they are able to for drugs; they are also charging about as much as they can charge us. If Europe raised the price that they were willing to pay for drugs, this would not lower the price they charged us--any more than Citibank lowers your interest rate here because they just had record profits in Canada. What we are losing through Europe's refusal to pay higher prices for drugs is not help covering the cost of the drugs that our buying funds; it is the never discovered drugs that a larger and more lucrative market would have supported.
The main constraint on prices in Europe is that the buyers have monopsony power. Changing what America pays will not alter the demand side of the equation. European governments might realizing that they have been free riding on our drug payments, and decide to raise the prices that they pay in order to support more R&D. But the political incentives all run the other way, and I see no evidence that the EU governments are excited about spurring private sector innovation by offering high profits on life-saving drugs. So the most probable outcome of introducing monopsony power here is that the market for drugs shrinks to the point where it will support few-to-no new drugs. This result will be sufficiently removed in time from the decision to monopsonize purchasing that the politicians will escape most of the responsibility. And even if the public realizes that it has forgone future discoveries for the sake of a few dollars now, and wants to undo this, the fact that everyone is monopsonizing will make it difficult to enact such a change: no one wants to be the patsy, even if they themselves are made better off by paying higher prices and getting new drugs in return. Witness the insistence on multilateral trade deals, even though all the evidence suggests that unilaterally lowering your trade barriers makes your nation unambiguously better off.
Derek Lowe, a toiler in the bowels of Big Pharma, has more thoughts on this.
January 27, 2008
VP!=VIP?
Cactus muses on how Edwards should position himself to eventually run for president again:
If you do become kingmaker, what do you want for it? The obvious slot is the VP slot. But, in recent decades, the only veep to go on to get an upgrade (without the president dying or being forced out of office, which isn't something you can count on happening) was GHW, and it didn't hurt that he ran against Michael Dukakis.
The VP slot seems to be a lot less important than it used to be. Thoughts on why this is?
Tee hee!
Jim Henley on his new book review in Reason:
Eventually the review should make it online, but if you buy the newsstand version you get:1) A tiny picture of my head;
2) The awesomest table-of-contents blurb ever, which goes like this:
“How do you defend a country against small stateless bands of terrorists? Jim Henley“
And such reasonable rates too!
Ever since I switched to Jim Henley, my whites are whiter, my brights are brighter, and I've got 45% percent less terrorist activity in my bathtub.
January 26, 2008
Don't get too excited about that rebate
Notes Thoreau:
I don’t really mind the feds giving us some money back, but if they’re just going to borrow in our name then it’s not much of a win. If your spouse came home and said “Look, I just got $600 from the credit card company!” would you give a high-five or note that you’ll have to pay interest on it?
To be fair, the government interest rates on long-term debt are a lot more attractive than those offered by Mastercard.
Liberal!=Fascism
Jonah Goldberg protests my take on the title of Liberal Fascism. Some of his argument is a misreading of my post, perhaps because I was unclear--when I said that
The fascist ideal, which I'd liken to the dream of making every citizen behave like a cell within a mighty body, driven by a Great Leader functioning as the brain, was in many ways a new and pernicious vision. But the constituent parts, such as ferocious group loyalty, xenophobia, an antipathy to individualism, and the hunger for a charismatic strongman, were certainly not.
I was not listing those elements as specifically right, or left, wing, but merely as general human tendencies which became major elements of Fascism. The point is that when Goldberg says that militarism preceded fascism, and that therefore it is somehow not characteristic of fascism, I don't think this works as a defense. Any element that is characteristic of fascism will have preceded it; human nature just doesn't undergo that many rapid innovations.
I think Goldberg is actually making a valid point, which is that Fascism!=Conservatism. Fascism was a compendium of left and right wing ideology; part of what gave the movement its power was its co-option of (to my mind) some of the most appalling elements of each. The liberals who think that "Liberal Fascism" is somehow more definitionally stupid than "Conservative Fascism" are, I think, patting themselves on the back a little too hard. They didn't call themselves "National Socialists" for no reason, and pointing this out is, so far as I am concerned, God's work.
But though I am very much all for the goal of stopping people from deploying the term fascist against any conservative they happen to disagree with--and particularly libertarians, who, will their horror of both state intervention in the economy and nationalism, are literally as far from fascism politically as it is possible to get--ultimately, I just don't like inflammatory titles. I find things like "a politics of meaning" creepy, but calling it fascist isn't going to do anything except give a flutter of satisfaction to people who already hate Hillary Clinton, and alienate her sympathizers.
Political pragmatism
Of all the arguments in favor of putting a food stamp provision into the stimulus package, rather than a cash transfer, possibly the most bizarre is "Well, it is perhaps less than ideal, but it was the only way we could get it passed."
You may have noticed that it didn't, in fact, pass. Politically, increasing food stamps has been exactly as successful as increasing cash transfers, which is to say, not at all.
In fact, the EITC is the only major program for the poor that has been expanded in the last ten years--and yes, that last expansion would be in 2001, under President George W. Bush.
Update I stand corrected: the farm bill expanded food stamps in 2002. The larger point stands: there's no reason to think that cash transfers are politically impossible, because they self-evidently aren't; and trying to use food stamps to funnel money, however inefficiently, to the poor, clearly failed in this instance.
Poison pill
Matt and Mark Kleiman are right that we shouldn't shut down Narcan, a nasal spray that can counteract the effects of a heroin overdose. The Feds want to control access to it, apparently on the grounds that this will make it easier to be a heroin addict. As the good professor says:
Why not just go all the way and poison the heroin supply? If withholding Narcan in order to generate more overdoses in order to scare addicts into quitting were proposed as an experiment, it could never get past human-subjects review. But since it's a failure to act rather than an action, there's no rule to require that it be even vaguely rational.
I completely agree, of course, since I favor drug legalization. But isn't this the logic of keeping drugs illegal, a policy Mark favors? We make it dangerous and illegal and costly to be a heroin addict, in order to deter other people from becoming heroin addicts; as a result of this, some people undoubtedly die.
I imagine that poisoning the heroin supply would, in fact, be a pretty effective way to deter future heroin addicts. That doesn't make it good policy, even if the net effect is many saved lives. But our current drug policy seems to me to ground itself, though more obliquely, of the same crude utilitarian calculus.
Those kids!
With a town in California looking to keep people from smoking in their own homes, this blast from the past has a particularly poignant oddity:
Protect them from themselves
A number of people in my commenters have come out in favor of food stamps not as a political expediency, but as a first best policy option because they force people to spend money on food that might otherwise have gone somewhere else. This comes in two varieties:
1) If I'm giving you my money, I damn well get to determine how you spend it2) Poor people might make bad decisions with cash, so better force them to use it on food.
Both of these arguments are somewhat undone by the fact that food stamp recipients can always monetize their grants to some extent, by buying food and then exchanging it for cash. It's just that the process is extremely inefficient, and the sale will net much less than the full value of the food stamps.
More broadly, do I get to attach strings to the money you get from the government? If you have a mortgage, and deduct the mortgage interest, thus getting a hefty government benefit paid by those of us who are not homeowners, does this entitle me to go over to your house and make sure that you're not spending the money on something I disapprove of?
As to the second argument, I recognize an obligation to ensure that those who are genuinely incapable of earning a minimally decent living for themselves have the ready needed to secure the basics. I do not recognize an obligation on my part to ensure that they actually do so. Nor do I think that I am the best judge of what people need.
If people are genuinely so screwed up that when given enough money to buy what they need, they fail to purchase enough food to sustain life, then what they need is not food stamps, but 24 hour supervision. If people will buy alchohol or some other unnecessary instead of feeding their children, then they are probably neglecting their children in other ways requiring a stronger intervention than an EBT card. One could argue that right now, incomes are not high enough to purchase basic necessities (and indeed, I think the EITC should be increased, as I've said numerous times.) But that still doesn't make the case for food stamps for me; if the poor take money out of their food budgets to buy something else, it is presumably because they think they need that something even more than they need their next meal. Who am I to second guess them?
This has nothing to do with the appropriate level of spending on the poor, or even the structure. But assuming a basic basket of cash that we are prepared to spend on improving peoples' lives, it seems clear to me that none of that cash should be handed out in the form of food stamps.
Interesting
Favorite books and average IQ. I find it most amusing that a web page titled "Books that make you dumb" has labeled Tuesdays with Morrie and The Five People You Meet in Heaven as works of philosophy.
Timeless music
Tom Ewing doesn't care whether its a timeless classic:
Here's Dave Marsh, circa 1984, on the Smiths: "You can take all those sad cafe ballads, and I'll take [Lionel Richie's] 'Penny Lover'. Meet you on the corner of the centuries, and we'll see which one has lasted." While tinkering with my own end-of-year lists this winter I spent some time reading other people chat about how they were making their own choices. I kept noticing this line of argument, though rarely phrased as boldly as the Marsh quote. Even so it stood out because it annoys me. "I think people will still be listening to this in 20 years time," or conversely, "I don't think it will stand the test of time." Whenever I encountered that phrase I couldn't help think of my friend Mark Sinker, who gave a paper at last year's Experience Music Project conference called "B-but what about the test of SPACE?"