Ben Muse

Economics and Alaska

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Why are ovulating women less trustworthy?

The emerging science of neuro-economics has the evidence and an answer! Tyler Cowen at Marginal Revolution posts, here: "Neuroeconomics and trust".

Why do we have such large deficits through 2010?

"Kash" at the liberal economics blog Angry Bear looks at how much of the change in Congressional Budget Office (CBO) deficit projections between January 2001 and August 2003 is due to (a) wrong 2001 projections of upcoming economic conditions, (b) 9-11, (c) spending increases, and (d) tax cuts. The analysis is here: "The Birth Tax, Revisited". (The "birth tax" is Kash's term for the change in federal deficits projections under the Bush administration divided by a measure of the population size - "It's Your Children's Money. Quick, Take It!".)

Kash finds that the tax reductions (assuming the sunsets aren't allowed to kick in) account for $2.5 out of the $7.2 trillion deficit over the projection period. Also striking - spending increases account for $1.6 trillion. Spending has been rising rapidly under this administration.

Why does Hollywood bash business?

Asks University of Illinois law professor, Larry Ribstein, here: "Art and Money in the Movies: Why Hollywood Bashes Business". I learned about this from
    "This article seeks to provide a plausible explanation of films’ bias against capital. It is not business itself that filmmakers do not like, but the capitalists who control it. This may sound like Communism, but it is not the classic view of the struggle between capital and labor. Filmmakers display little concern with the problems of the workingman, and they do not usually blame firms’ social irresponsibility on the fact that capital rather than labor is in control. Rather, the filmmakers’ main problem with capital being in control seems to be that the filmmakers are not. The “workers” that are oppressed are often creative types, and middle managers who stand in for them, who are being denied adequate opportunity to display their creativity. The point of displaying the evil that firms do seems not to stop it, but to show how much we need the artists and seekers among us to do the finding..."

Newsweek article on Vernon Smith

Newsweek has an article this week on Vernon Smith. Smith won the Nobel prize last year for his work on experimental economics. The full text of the article is here: "An Experimental Mind". I learned about this at Marginal Economics.
    "...Experimental economics is the brainchild of an iconoclastic academic named Vernon Smith, who had an epiphany a half century ago that has since “changed the direction of economic science.” Those were the words used by the Royal Swedish Academy of Sciences when it awarded Smith the Nobel Prize last year. With his silver ponytail and heavy Native American jewelry, Smith has shaken up establishment economists by proving that their theories are best tested not in their heads, where they are most at home, but with live experiments involving real people.

    "Even before the Nobel, Smith’s ideas had spread through his preachings and those of his acolytes to transform the thinking of government, producing some of the most creative policy innovations of recent decades. Since the early 1970s experimental economists have changed the way the U.S. government sells wireless spectrum, packs a space probe, regulates the price of gas, allots airport landing slots and battles smog. They hit the headlines this summer as the inspiration behind the Pentagon’s “terror-futures market,” which was killed for being politically tone-deaf before it could prove its ability to forecast the next big Qaeda attack..."

The environmental case for genetically modified foods

Jonathan Rauch makes the environmental case for genetically modified foods, in the October Atlantic magazine. The article is online, here: "Will Frankenfood Save the Planet?". Genetically modified foods may help us use fewer pesticides, less fertilizer, use soils that have become salty through irrigation, and reduce pollution from agricultural runoff.
    "...Gene transfer poses risks, unquestionably. So, for that matter, does traditional crossbreeding. But many people worry that transgenic organisms might prove more unpredictable. One possibility is that transgenic crops would spread from fields into forests or other wild lands and there become environmental nuisances, or worse. A further risk is that transgenic plants might cross-pollinate with neighboring wild plants, producing "superweeds" or other invasive or destructive varieties in the wild...

    "What is much less widely appreciated is biotech's potential to do the environment good. Take as an example continuous no-till farming
    [Farming without ploughing. No-till farming is meant to reduce pollution from agricultural runoff of pesticides and fertilizers, erosion of the soil, and to preserve the richness and organic vitality of the soil - Ben], which really works best with the help of transgenic crops. Human beings have been ploughing for so long that we tend to forget why we started doing it in the first place. The short answer: weed control. Turning over the soil between plantings smothers weeds and their seeds. If you don't plough, your land becomes a weed garden—unless you use herbicides to kill the weeds. Herbicides, however, are expensive, and can be complicated to apply. And they tend to kill the good with the bad.

    "In the mid-1990s the agricultural-products company Monsanto introduced a transgenic soybean variety called Roundup Ready. As the name implies, these soybeans tolerate Roundup, an herbicide (also made by Monsanto) that kills many kinds of weeds and then quickly breaks down into harmless ingredients. Equipped with Roundup Ready crops, farmers found that they could retire their ploughs and control weeds with just a few applications of a single, relatively benign herbicide—instead of many applications of a complex and expensive menu of chemicals. More than a third of all U.S. soybeans are now grown without ploughing, mostly owing to the introduction of Roundup Ready varieties. Ploughless cotton farming has likewise received a big boost from the advent of bioengineered varieties. No-till farming without biotech is possible, but it's more difficult and expensive, which is why no-till and biotech are advancing in tandem..."
The article isn't long, but is awfully interesting.

In connection with this, today's New York Times has a report by Larry Rohter on a policy change in Brazil, to allow farmers to plant genetically modified soybeans, here: "Hard Realities: Brazil Drops Resistance to Genetically Altered Crops". This has apparently been a very controversial decision in Brazil, "a bastion of global opposition to genetically modified organisms." The story implies the decision was driven by Brazil's desire to increase agricultural exports. The story also notes that,
    "...many small farmers affiliated with the landless movement have also been clandestinely planting their own fields with genetically modified soy seeds smuggled across the border from Argentina. They justify that contradiction by arguing that they have lower production costs with these seeds and have complained that they will be driven into bankruptcy if the Brazilian government continues to ban them."

The Road to War in Iraq

The Bush Administration waged war effectively in Iraq, but its diplomacy before the war was a disaster, and its planning for the post-war seems to have been problematic. On March 17 I posted links to some material on pre-war diplomacy, here: "What went wrong? Why didn't we get the second U.N. resolution?"

The current issue of Foreign Affairs has an article on pre-war diplomacy by James Rubin, and has put the full text to the web, here: "Stumbling Into War". The author is a Visiting Professor of International Relations at the London School of Economics and was a Clinton Administration Assistant Secretary of State for Public Affairs from 1997 to 2000.
    "...What went wrong? Why, when the leader of the free world went to war with a brutal and hated dictator, did so many countries refuse to take America's side? How much collateral damage was caused in the process? And what lessons can be learned from this debacle? After extensive debriefings of key participants in Europe and at the United Nations, as well as of a number of informed American diplomats, some important lessons from the recent crisis are starting to emerge.

    "First, the fact that Washington's justification for war seemed to shift as occasion demanded led many outside observers to question the Bush administration's motives and to doubt it would ever accept Iraq's peaceful disarmament. Second, the United States failed to synchronize its military and diplomatic tracks. The deployment of American forces in the Middle East seemed to determine American policy, not the other way around, and diplomatic imperatives were given short shrift. Third, the failure to anticipate Saddam's decision to comply partially with UN demands proved disastrous to Washington's strategy. Fourth, the belated effort to achieve a second Security Council resolution could still have succeeded, had the United States been willing to compromise by extending the deadline by just a few weeks. But such a compromise was not forthcoming, which leads to the last lesson: the Bush administration's rhetoric and style alienated rather than persuaded key officials and foreign constituencies, especially in light of Washington's two-year history of scorn for international institutions and agreements..."

Benefit of environmental regulations exceed costs...

...according to a new study by the federal Office of Management and Budget (OMB). The Washington Post has a story by Eric Pianin, here: "Study Finds Net Gain From Pollution Rules. OMB Overturns Past Findings on Benefits".
    "A new White House study concludes that environmental regulations are well worth the costs they impose on industry and consumers, resulting in significant public health improvements and other benefits to society. The findings overturn a previous report that officials now say was defective.

    "The report, issued this month by the Office of Management and Budget, concludes that the health and social benefits of enforcing tough new clean-air regulations during the past decade were five to seven times greater in economic terms than were the costs of complying with the rules. The value of reductions in hospitalization and emergency room visits, premature deaths and lost workdays resulting from improved air quality were estimated between $120 billion and $193 billion from October 1992 to September 2002..."
CalPundit posted on this yesterday, and has a link to the OMB report itself, here: "YES, VIRGINIA, REGULATIONS DO HAVE BENEFITS....ABOUT 150 BILLION OF THEM".

Appendix D to the report contains the OMB's new guidelines for the conduct of regulatory analysis under Executive Order 12866. These are the new and revised guidelines for conducting cost and benefit analyses of regulations.

Who pays the income tax?

The top 1% of income earners paid 37.4% of federal income taxes in 2000 and 33.9% in 2001, according to IRS figures released yesterday. Fluctuations in their incomes have a disproportionate impact on income tax revenues. Here's today's New York Times story David Cay Johnston: "Top 1% in '01 Lost Income, but Also Paid Lower Taxes"
    "The incomes of the top 1 percent of Americans fell 18 percent in 2001, as did their income taxes, shaving $66 billion off revenues and showing how dependent the federal government has become on its wealthiest citizens.

    "Over all, Americans had 2.8 percent less income in 2001 than in the previous year. But federal tax revenues fell 9.4 percent because the incomes of those at the top, who pay the highest tax rates, dropped so much more than the average...

    "...The minimum income to reach the top 1 percent was $293,000 last year, down from $313,500 in 2000, but almost identical to the threshold in 1999."


Boom in Baghdad

Daniel Drezner reports on Iraqi National Council plans for economic liberalization, including 100% foreign ownership of Iraqi concerns in most sectors, and on increasing consumption by Iraqi consumers, here: "The Iraqi free trade zone".

The Economist reports on the reforms, here: "Let's all go to the yard sale".
    "A SHOCK programme of economic reforms signals a radical departure for Iraq. The changes, announced by the country's provisional rulers at the annual World Bank/IMF jamboree in Dubai, could see its battered economy transformed abruptly into a virtual free-trade zone.

    "If carried through, the measures will represent the kind of wish-list that foreign investors and donor agencies dream of for developing markets. Investors in any field, except for all-important oil production and refining, would be allowed 100% ownership of Iraqi assets, full repatriation of profits, and equal legal standing with local firms. Foreign banks would be welcome to set up shop immediately, or buy into Iraqi ventures. Income and corporate taxes would be capped at 15%. Tariffs would be slashed to a universal 5% rate, with none imposed on food, drugs, books and other “humanitarian” imports..."

Why is Gray Davis in trouble?

Hal Varian looks for the explanations for the California electricity crisis of 2001 and for its current budget shortfall and asks if Gray Davis was to blame, in this New York Times column: "Lessons From California’s Budget". Lots to learn here. Among other things some advice on what to tax:
    "...Fundamentally, the deficit is a hangover from the days of irrational exuberance. California was the epicenter of the dot-com boom of the late 1990's, and tax receipts flowed to Sacramento. Tax revenue from stock-option grants and capital gains alone rose from $7.5 billion in 1998-9 to $12.7 billion in 1999-2000 to $17.6 billion in 2000-1.

    "When money flows in, governments find it hard not to spend it...

    "Then the house of cards came tumbling down. Revenue from options and capital gains fell to $8.6 billion in 2001-2, and $5.2 billion in 2002-3.

    "Reversing those spending decisions was not as easy as putting them in place: much of the increased revenue went for education, tax cuts and other long-term commitments.

    "This brings us to the second lesson in economics: don't spend transitory income on permanent commitments..."
I learned about this from Lynn Kiesling: "VARIAN ON CALIFORNIA". Arnold Kling focuses on another part of Varian's article, here: "California Reality"

The economics of discrimination

Tyler Cowen at Marginal Revolution has a neat post on the economics of discrimination: "Why did it take so long to integrate baseball?".
    "The Chicago/UCLA approach has long suggested that if black or minority workers are underpaid, for reasons of discrimination, an employer would find it profitable to hire them and bid up their wages. I have long since wondered why it took major league baseball so long to play African-Americans. The "Negro Leagues" had been around a long time, with many talented players, but Jackie Robinson did not debut for the Brooklyn Dodgers until 1947..."

Changing North Korean economy

ParaPundit reports evidence of some increasing use of markets in North Korea: "Windows Into North Korea's Economy". Last summer, before North Korean nuclear proliferation became an issue, there were stories of movements towards markets in North Korea. See these two Economist articles from last July 27: "Stitch by stitch to a different world" and "Open sesame".

Doe the WTO increase world trade, or not?

Peter Gallagher provides references to both sides of the debate, here: "WTO trade benefits: more evidence ".

Short biographies of great economists

The Federal Reserve Bank of Dallas publishes a series of Economic Insights leaflets, with "commentary on people and issues that lie at the heart of a free-market economy." The entire archive may be found here: "Economic Insights Archive". Each of the Insights leaflets has a short intellectual biography, with four or five boxed quotes. Subjects are economists or popularizers of economic ideas. There are leaflets on Bastiat, Adam Smith, Hayek, Mises, Knight, Buchanan, Coase, and others. I learned about this at Truck and Barter.

Measuring the burden of taxation

Benjamin Zycher, at Tech Central Station, compares percent of income taken in taxes and tax rates as measures of state tax burden, here: "Two Tax Myths".
    " revenue as a proportion of income is the wrong measure [of the tax burden - Ben]. In order to see that, suppose that California imposed truly onerous tax rates on individuals with higher incomes and on successful businesses, so that many left the state. Total tax revenue would plunge, and tax revenue as a proportion of income would decline; but the true economic burden of taxation would be high.

    "Accordingly, the relevant parameter is the rate at which incomes and sales are taxed..."
As a bonus, Zycher discusses the fairness and burden of property taxation under California's Proposition 13 regime. I learned about this from Virginia Postrel's blog: "Dynamist".

Nobel prize winning economist Franco Modigliani dies

From the Washington Post obituary by Adam Bernstein ("Franco Modigliani Dies; Won Nobel in Economics"):
    "...His employer for the last 41 years was MIT, but the work that would win him the Nobel began in the early 1940s, shortly after he immigrated to the United States from his native Italy to escape the fascist policies of Benito Mussolini. He said he focused on savings because it "permits investment and capital formation, which is in turn what is behind growth and well-being."

    "Working off the earlier ideas of John Maynard Keynes and others, Dr. Modigliani's major contribution to the field of savings was the "life-cycle hypothesis." His idea, which helped countries formulate pension and retirement systems, held that people at all levels of society generate savings with retirement in mind -- but for their own final years and not for their descendants. That meant, he said, that one saved or spent money according to their income stream at different stages of life and their projected life span..."
The New York Times obituary, by Louis Uchitelle, is here: "Franco Modigliani, 85, Nobel-Winning Economist, Dies".
    "...The Nobel he received in 1985 also honored him for his insights into corporate financing. Working with Merton H. Miller, who won a Nobel in 1990 for his contribution, Mr. Modigliani demonstrated that leveraging a company through a lot of debt did not in itself affect a corporation's value.

    "Until Mr. Modigliani and Mr. Miller came along, much attention had been devoted to determining just the right mix of debt and equity. But the payoff from expansion through debt, for example, is offset by the risk that the company might not be able to repay the debt. What investors focus on, in fact, is profitability, and they offset the risk of purchasing stock in a leveraged company by holding safer investments in their portfolios..."
Elsewhere, here is the Modigliani page at the Nobel site: "Franco Modigliani " (autobiography, Nobel prize lecture); An IdeaChannel archive of online Modigliani items: "Franco Modigliani"; Amazon carries Modigliani's autobiography, Adventures of an Economist, here: Adventures of an Economist (with 22 pages of browsable text); the MIT obituary is here: "Nobel laureate Franco Modigliani dies at 85 ". The Boston Globe obituary, by Louise Story and Laura Levis, is here: "Franco Modigliani, 85, MIT teacher, Nobel laureate in economics".
    "Dr. Modigliani and one of his students, Richard Brumberg, were awarded the Nobel Prize for their analysis of personal savings, known as the life-cycle theory. The two asserted that individuals save money during the early part of their working lives to build up savings to be consumed in their own old age -- not to pass wealth along to their children, as Milton Friedman and other economists suggested. The theory helped explain different rates of saving in societies with relatively older or younger populations, and proved useful in predicting the behavior of various types of pension plans. Dr. Modigliani also conducted research on financial markets with fellow Nobel laureate economist Merton H. Miller. The Modigliani-Miller theorems, proposed in 1958, hold that the market value of a stock depends primarily on expectations of what the company will earn in the future. By the 1970s, the techniques Dr. Modigliani developed for calculating the value of expected future earnings became a basic tool in corporate decision-making and finance."

Light blogging

Sorry for the lack of posts since Tuesday - I've had a heavy workload the last few days.

The pros and cons of price gouging

Tyler Cohen, at "Marginal Revolution", posts on state "price gouging" laws, here "Why don't we see more price gouging?".
    "I survived hurricane Isabel, but couldn't buy a flashlight or the right size batteries, the night before the storm was to come. Merchants let supply run out rather than raise the prices. C.C. Kraemer at tells us that half of all states have anti-gouging laws. More significantly, merchants fear that customers will resent price increases during times of trouble. The testable prediction is that wandering "umbrella merchants," as I have encountered in Manhattan, will raise their prices when it is raining. They have little reason to fear long-run negative effects on their reputation. I have found this to be true but can cite only two data points in its favor, twice I bought umbrellas for $10 rather than for the usual price of $5, and I paid more when it was raining...."
This Washington Post story by Kenneth Bredemeier, instances some of the price increases following Hurricane Isabel: "Those With Power Set the Price In Hurricane Isabel's Wake, Many Complain of Gouging "
    "Yesterday in Takoma Park, parts of which were still without power, Darryl Williams poked his head into the 4th Street Market and announced he had a $600 generator for rent.

    " "It's $100 an hour for a friend," said the 24-year-old D.C. man. "If I don't know you, it's $200 an hour."

    "The store's owner, Quacy February, counted himself as a friend. But he still balked at the price. "That's a rip-off," he said.

    "Across the street, Tim Jones, a 48-year-old Takoma Park resident, priced an hour with his generator -- which he bought for $400 -- at $200 an hour.

    "So far, he said, there are three takers.

    "I hate to say it," he said, "but it's not a fair price." "
As an economist I'd argue that the price increases serve a useful function by rationing available resources in short supply to their most valuable uses and by, by creating high short run profits, encouraging the production and delivery of additional supplies of necessary goods to the hard hit areas.

It's interesting that even people who receive the high price don't interpret the the prices are "fair." This implies that they feel the value from the availability of the resource (for instance, the generator above) should be made available to the person who wants to rent it, rather than to the person who owns it.

Perhaps this falls out of the "coding" of a loss as more valuable than an equal benefit - the result of the cognitive psychologist's asymmetric value function. The person whose power has gone out has suffered a loss - equal maybe to $200/hour. The ability to rent the generator at the old price ($25/hour?) lets the person minimize that loss, reducing it by $175 an hour. If the owner of the generator could rent it for $200 an hour, the owner would receive that $175 in value. However, people might instinctively view avoiding a loss of $175 an hour as more important than a gain of $175 an hour. This may be why they see the price increase as unfair.

The article points to the political reponse - the governor and the attorney general are calling for an "anti-gouging" law. This would essentially be a system of price controls imposed to prevent prices from rising in the new supply and demand conditions. This would exacerbate the conditions of excess demand, at least temporarily - lots of lines and waiting lists for access to goods and services. This would encourage efforts to obtain the needed items outside the region in which the price controls were in effect - but efforts by consumers rather than by the normal suppliers. If price competition were not used for allocating goods and service, people would compete for them in other ways. Alternative rationing systems might include discrimination by merchants on the basis of personal preferences for different people, trade at controlled prices with exchanges of favors or barter on the side, and under the table bribes and payments. Opportunities would be created to purchase at the controlled prices for resale at illicit, but uncontrolled prices, as below:

The article ends by pointing to the experience of a firm that continued to sell ice at pre-Hurricane prices, even after the demand shifted:
    "Stuart Levin, general manager of Talbert's Ice & Beverage Service in Bethesda, said, "I can't get wet ice or dry ice fast enough. People started buying dry ice when the forecasts first showed a hurricane was coming."

    "But he said the price his firm is charging is still the same as before the storm...

    "Walk-in customers have streamed into the firm's Bethesda store, Levin said, but he soon became suspicious of one customer's need for dry ice.

    " "He bought 400 pounds of dry ice [for $640] and he waited till my last truck pulled out and started selling it in my parking lot," Levin said..."
More price gouging posts available this morning. Tyler Cowen updates his discussion here: "More on price gouging". "Truck and Barter", here: "Costs and Benefits of Stable Prices " "Agoraphilia," here: "In Defense of Gouging" (you may have to scroll down to find this one (9-23-03) - Ican't seem to link directly to the specific posting). C.C. Kraemer at "Tech Central Station," here: "In Defense of Price Gouging". Arnold Kling, here: "The Case for Price Gouging". All of these links courtesy of the Tyler Cowen post leading off this paragraph.

Revisions at 7 AM, 9-23-03

NYT Story today on state Medicaid cutbacks

Medicaid is the joint federal-state program providing medical assistance to the poor. Budget crises, high recession induced unemployment levels, and rapidly rising medical costs have increased the demands on the program while making it much harder for the states to meet them. In response, states forced to cut back on their Medicaid programs. The New York Times carried a survey story by Robert Pear yesterday: "Rising Costs Prompt States to Reduce Medicaid further".
    "WASHINGTON, Sept. 22 — Struggling through a third consecutive year of fiscal distress, states have again squeezed Medicaid, the nation's largest health insurance program, by scaling back eligibility, cutting benefits, increasing co-payments and freezing or reducing payments to doctors and hospitals.

    Vernon K. Smith, former Medicaid director of Michigan, said today that soaring health costs and plunging state revenues had forced virtually every state to take action to slow the growth of Medicaid, the health program for 51 million Americans..."
The Times story is built on the findings of several studies on states and Medicaid released yesterday by the Kaiser Commission on Medicaid and the Uninsured (a Kaiser Family Foundation commission). The web page for the studies is here: "State Fiscal Conditions and Health Coverage: An Update on FY2004 and Beyond".

"What a revolting development this is!"

The Washington Post account

Apparently the steel tariffs have backfired politically on the administration - the political gains in West Virginia and Pennsylvania have been more than offset by losses elsewhere. The administration is looking for a face-saving way to back off. That's the thrust of a story in today's Washington Post by Mike Allen and Jonathan Weisman: "Steel Tariffs Appear to Have Backfired on Bush Move to Aid Mills and Gain Votes in 2 States Is Called Political and Economic Mistake " Allen and Weisman provide a fly-on-the-wall look at administration economic policy making:
    "But among Bush's economic team, opposition to the tariffs has hardened substantially. Administration officials said Commerce Secretary Donald L. Evans, one of Bush's closest friends, thinks the tariffs should be lifted as a way of showing that the administration has heard the pain of manufacturers, who account for 2.5 million of the more than 2.7 million jobs lost during Bush's presidency. Treasury Secretary John W. Snow, chief economic adviser Stephen Friedman and N. Gregory Mankiw, chairman of the White House Council of Economic Advisers, are said to agree.

    "That marks a significant change from 18 months ago, when R. Glenn Hubbard, then chairman of Bush's Council of Economic Advisers, drafted detailed analyses against the tariffs, including state-by-state job losses that he forecast for manufacturing.

    "But the economic team was fractured. Evans was torn between the steel industries and the steel users. He ultimately decided against the tariffs, but with caveats that the White House political team took as a sign of weakness, former administration economic officials say. Likewise, then-Treasury Secretary Paul H. O'Neill expressed philosophical opposition to tariffs, but he was more interested in opening talks with allies on limiting steel production capacity abroad.

    "At a crucial meeting of the economic team, tariff opponents said they were abandoned. O'Neill sent his undersecretary for international affairs, John Taylor. Then-Budget Director Mitchell E. Daniels Jr. told Hubbard, who also has since left the administration, that he would back him, but left the meeting before Hubbard's presentation. And Lawrence Lindsey, the famously opinionated chairman of the White House National Economic Council, decided his role was to facilitate the discussion, not express an opinion.

    "Perhaps most importantly, former Bush economic advisers said, Robert B. Zoellick, the U.S. trade representative, supported the tariffs, figuring that backing them would win congressional votes to give Bush "fast track" trade negotiation powers. Indeed, Congress did hand the president that win. Zoellick also calculated that the lucrative subsidies backed by Bush that year in the massive farm bill would help the cause of free trade, by giving the United States a chip to bargain with at the World Trade Organization's upcoming round of talks to eliminate farm subsidies."
Karl Rove is missing from this quote, but he appears elsewhere in the article as a proponent of tariffs for political purposes.

Brad Delong critiqued the Allen and Weisman account, here: "The "He Said, She Said" Disease" ("...So why do Allen and Weisman turn what appears under their byline into a platform for White House officials to say things they know are lies? Why do they confuse their readers by pretending that there is a debate over the economic effects of the steel tariff?...")

The New York Times account

Elizabeth Becker paints the picture a little differently in Friday's New York Times, here:"Bush Weighs Fate of Steel Tariffs". In Becker's article, job losses in steel using businesses don't appear as large as the tend to be in the Post article. Becker cites to two International Trade Commission (ITC) studies:
    "It will take trade and industry experts days to analyze the data, but the findings offered a counterpoint to growing complaints from small- and medium-size American manufacturing companies that use steel. They say the tariffs, or safeguards, have raised their costs, cut their profits and forced them to delay expansion and lay off employees.

    "One report, however, concluded that many companies "had difficulty distinguishing between the effects of the safeguard measures and other changes in market conditions."

    "While overall employment of steel-consuming industries generally fell or remained flat in the year after the tariffs were imposed, compared with the two previous years, according to the report, "in many cases employment fell by a greater amount (and percentage) in the year before the safeguard measures were implemented than in the first year after they were implemented."

    "As for maintaining the tariffs, "a majority of steel-consuming firms indicated that neither continuation or termination of the safeguard measures would change employment, international competitiveness, or capital investment," the report said.

    "The report noted that results varied by industry and that companies in the the auto parts and steel fabrication businesses reported a greater effect from the measures..."
euphemism: In Becker, the ITC and administration sources refer to the steel tariffs as, "the safeguard measures" while a Gephardt representative refers to "the steel industry relief program." In Becker, politics will likely drive the President's decision, but the issue isn't as clear cut.

The International Trade Commission reports

Access the ITC reports, here: "ITC Steel reports page"

DeLong critiques these reports, here: "The International Trade Commission Should Be Ashamed" ("...Do you think that the unfavorable macroeconomic conditions--the "recession," it is called--in the year before the tariffs had something to do with steel-user job losses in that year? If so, you're a lot smarter (or at least a lot more honest) than the hacks who write reports for the International Trade Commission...")

Aging European populations

The Washington Post has an article on the fiscal problems created in Italy by the aging population, here: "Older, but Not Better, in Italy Despite TV Show's Celebration of Aging, Pensions Draining System ". The entire developing world faces similar problems. Longer life spans, earlier retirement ages, declining birth rates, all reduce the ratio of workers to retirees, increasing the pension or social security burden on each worker.
    "...But Italy as a whole is not so much celebrating the elderly as ruefully trying to figure out how it is going to care for and feed a population that is Europe's oldest. With birthrates low and life spans growing longer, more and more people are entering Italy's generous pension system -- and money is running out. Already, more than 40 percent of income tax revenue is spent on supporting Italians in retirement.

    "It is a pan-European problem. The more money spent on pensions, the less is available for other social service outlays, not to mention defense and infrastructure. To try to make ends meet, France has raised the number of years government workers must stay on the job to receive a full pension from 35 years to 40, like most workers in private enterprise. By 2012, this number will rise to 42 years for everyone.

    "In Germany, Chancellor Gerhard Schroeder wants to increase the minimum retirement age from 65 for men and 60 for women to 67 for both sexes. Austria's parliament has passed a complex series of reforms that will raise both the minimum number of work years required to get a pension and the minimum age for pensioners. Austria is also gradually abolishing systems that permit workers to retire early; the average retirement age in Austria is 59 for men and 57 for women..."
I learned about this from Regions of Mind.

Trading Spaces

My wife and I enjoy the TV show Trading Spaces.

As described in a Washington Post article ("Trading In Trading Spaces When the Facelift Flops, The Homeowners Take Action ") last spring,
    "...The "Trading Spaces" format, modeled on a popular BBC show called "Changing Rooms," features two pairs of neighbors -- each duo led by one of the show's eight regular designers -- who are given 48 hours and $1,000 to make over a room in the others' home. At the end, each pair, eyes closed, is led into the new space for the climactic "reveal." Happy homeowners shriek and leap about. The disgruntled do nothing of the sort..."
One possible outcome:
    "...But nothing tops Jessie Stephens's explosive reaction to designer Hickson Smith's handiwork in Las Vegas in March. Before the first change was made, Stephens told relentlessly perky host Paige Davis, "If I had to walk into our living room and see brown, I would probably be sad."

    Sad? Try homicidal. During the reveal of newly cocoa walls, she grimaces to avoid weeping, then briefly leaves the room. She returns and is greeted by her smiling neighbor, which "made me mad. I didn't want to hit her. She went to hug me and I said 'It is not funny, it is not funny.' "

    In a blink, Stephens is shown wrestling the woman to the ground. "I just kind of went a little crazy for a second," she concedes.

    And what of the offending walls? "Much as we still hate it -- my husband more so -- we are leaving it up because we both have big families who live far away. They told us, 'Before you change it, we want to come see it.' "
The different interior decorators, their personalities and decorating styles are central to the show. Here's a recent blog review, focusing on the regular decorators: "Trading Spaces and the Apotheosis of the Expert"
    "...but the meat of the show is the conflict between Good, represented by Vern and Laurie, and Evil, represented by Hildi and Doug..."

Garrett Hardin reported dead

Garrett Hardin author of the well known paper on common property, "Tragedy of the Commons," apparently died on September 14. Marginal Revolution carries a brief notice, with links to an obituary and on online version of his famous paper, here: "Tragedy of the tragedy of the commons".

TRIPS and trade

As a part of the Uruguay Round of trade negotiations, countries joining the World Trade Organization (WTO) were required to agree to enforce intellectual property rights (patents, copyrights) standards. These standards were called TRIPS, for Trade Related Intellectual Aspects of Intellectual Property Rights.

Daniel Drezner argues that the decision to include the TRIPS agreement with the other trade agreements negotiated in the Uruguay Round was a mistake. Here is his Tech Central Station column: "What Might Trip Up the WTO"
    "...Until TRIPS, there was a very clear dividing line between what the global trade regime covered and what it didn't. The trade rules were designed to liberalize barriers to the exchange of products. Except for extreme circumstances, those rules said nothing about the processes through which products are made. It was generally accepted that if the global trade body intervened in such questions, it would constitute an unwarranted intervention into the national regulations of member countries. And for good reason -- it's relatively costless for countries to remove border-level barriers to trade, but relatively expensive to enact and enforce new domestic regulations over production processes. TRIPS, however, was expressly designed to regulate production processes -- namely, whether firms respected intellectual property rights in their operations.

    "Whatever the valid reasons for linking IPR to trade, the negative effects of TRIPS have been substantial. First, the agreement imposed a significant burden on developing countries to adhere to more rigorous standards. Second, the agreement's effect on the provision of AIDS drugs had a polarizing effect on the global politics of trade, prompting anti-globalization activists to make absurd and disgusting claims about the WTO's responsibility for the deaths of millions of Africans. Third, in creating TRIPS the members of the WTO erased the dividing line between the liberalization of trade in products and the regulation of processes..."
P.S. September 21Peter Gallagher responds to Drezner here: "Stumbling over the TRIPS agreement "The argument that TRIPS takes the global trade regime beyond regulating barriers to trade and into regulating national production processes is crucial to Drezner's column. Gallagher argues that this argument is wrong:
    "...TRIPS is not about the regulation of production processes or even about 'whether firms respected intellectual property rights in their operations.' TRIPS is about the uniform global adoption and enforcement by governments of certain standards in the existing international IP treaties (the "WIPO" treaties on patents, trademarks, copyright etc). It also marginally extends some aspects of those treaties on matters such as the term of patents and it provides a multilateral disputes process through the WTO.

    "In other words TRIPS is an agreement about which laws the member governments of WTO have on their books and how governments enforce those laws: it does't directly regulate any firm or production process. Only national governments can do that.

    "This difference is crucial. Because TRIPS is about creating a 'floor' for the IP standards that national governments must enforce, it leaves a lot of the decisions about whether the actual standards adopted nationally are 'strong' or 'weak'..."

I'll never be able to watch Northwest Passage again...

New evidence indicates that Nathan Hale was trapped by Major Robert Rogers of Rogers' Rangers fame: "Nathan Hale Blundered Into a Trap, Papers Show".
    "...According to the Tiffany manuscript, Rogers observed Hale for some days, suspecting that Hale was in disguise, and decided to engage him in conversations about the war.

    Rogers led Hale to believe that he himself was "upon the business of spying out the inclination of the people and motion of the British troops," Tiffany wrote.

    Hale then told Rogers of his mission, and Rogers invited him to dinner at his quarters, where he and several friends began the same kind of talk, the manuscript said.

    "But at the height of their conversation, a company of soldiers surrounded the house, and by orders from the commander, seized Captain Hale in an instant," Tiffany wrote..."
A short Rogers biography is here: "The French and Indian War. Robert Rogers. 1731-1795". Rogers' Ranging Rules may be found here: "A 'Plan of Discipline' Extracted from Journals of Major Robert Rogers". The Rules are part of a French and Indian War Reenactment site: "Rogers' Rangers". Northwest Passage, about the exploits of Rogers' Rangers in the French and Indian War, is actually a very good movie, based on a very good book of the same name by Kenneth Roberts. The Blockbuster site has a synopsis of the movie: "Northwest Passage (1940)".
    "...The script, by Laurence Stallings and Talbot Jennings, utilizes only the first part of Kenneth Roberts' novel, bypassing Rogers' eventual descent into madness (though there's a rather unsettling glint in Spencer Tracy's eyes throughout the film..."
Newsday tells the Nathan Hale story, here: "Nathan Hale: Failed Spy, Superb Patriot". Hale's mission and execution described, here: "The Execution of Nathan Hale, 1776 " The "Official Nathan Hale Website" is here: "Welcome to the Official Nathan Hale Website".

Decision making by phone vs instant messaging

Stephen Bainbridge, in his "Corporation Law and Economics" blog, posts on requirements in Delaware law that corporation boards of directors conduct meetings in which directors can actually hear each other. This implies that a conference meeting would have to be conducted with a phone conference line, even if the directors also had Internet communication capacity - email or instant messaging. Drawing on research into meeting dynamics, he argues that this is a good idea, here: "Applied Economic Analysis: Can a Board Meet Online?"
    "...The requirement that members be able to “hear” one another seems quaint in an era of electronic mail, instant messaging, and internet chat capabilities. Yet, when Delaware recently amended its corporation statute to permit much greater use of electronic forms of communication, it retained the requirement that board meetings be conducted in such a way that all members may hear one another. As it turns out, this appears to have been the right choice. Research on decision making has found that groups linked by computer make fewer remarks and take longer to reach decisions than do groups meeting face to face. Kiesler and Sproul, for example, not only found that meetings conducted through computers result in greater delays, but also that the decisions made in such meetings were more likely to exhibit the risky shift phenomenon. Sara Kiesler and Lee Sproul, Group Decision Making and Communication Technology, 52 Org. Beh. & Human Decision Processes 96 (1992). They also found that time-constrained groups exchanged much less information when meeting electronically than when meeting face-to-face..."

Congestion pricing in London

In June the Victoria Transport Policy Institute published a short report by Todd Litman on the London traffic congestion pricing program. You can find the report here: "London Congestion Pricing. Implications for Other Cities".

In mid-February the city of London began to charge a congestion fee of five pounds to cars entering core downtown areas during the day on weekdays. A variety of discounts and special arrangements were provided for certain classes of travelers (the disabled for example).

Fees could be paid at retail outlets, street kiosks, over the internet, or cell phone text messaging. Fees could be paid in advance or within a few hours of entry into the congestion fee zone. Video cameras scattered throughout the zone monitored license plates. Plate numbers were compared to lists of numbers for which fees had been paid, and fines were assessed when fees had not been paid.

Litman, publishing in June, probably reflects the impacts of the program through April or May (the first 3.5 months at a maximum - an internal statement suggests it was written after two months, in mid-April). He finds:
  • traffic has dropped

  • non-compliance is under control

  • traffic dropped more than expected, so program revenues are less than expected

  • shift to public transport
  • greater use of motorcycles, bicycles, mopeds

  • increased travel speed in central London
  • program has been generally accepted by the public

  • bulk retailing selling to customers in private cars may shift location out of central London

  • traffic diversion through areas around the periphery of the congestion zone has had a minimal impact

  • program costs are likely to take 80% of revenues over the first five years
This is a brief survey report. Two attractive features: (a) color photos give a good feel for various implementation details (payment kiosk, video cameras, signage); (b) a wealth of live internet links.

London's transport authority, "Transport for London" maintains a number of web pages for the program. The main page for people who have to live with the program daily (what areas are covered, how to pay, how to get a discount, etc.), is here: Congestion Charging...".

The overall Transport for London congestion charge page is here: "Congestion Charging Introduction".

Transport for London is monitoring the impacts on the congestion pricing program, and maintains a web page, here: "Congestion Charging Monitoring".

Smaller classes aren't all that great

Joanne Jacobs posts on a recent Organization for Economic Co-operation and Development (OECD) study finding "that class size is less important than other factors when it comes to learning. Reducing class size from 28 to 20 students was found to have a minimal impact on student achievement." Here: "Small, schmall" Tyler Cowen at Marginal Revolution posts on the story and suggests a reason for the outcome: "Class size doesn't matter much"

Economics at the IMF

Marginal Revolution posts on new IMF Chief Economist, Raghuram Rajan, here: "New Chief Economist at the IMF". With useful links.

Working together

The Economist has a review of a new book on the politics and diplomacy leading up to the creation of the U.N. in 1945, here: "Flags of convenience". I was struck by these paragraphs from the review:
    "...The most striking aspect of this tale is that in 1945 America's global dominance was even greater than it is today. All other great powers lay in ruins, while America itself was unscathed by bombing or invasion. America's factories were working at full tilt. Its armed forces were the most powerful in the world by far, and it was only months from unveiling a terrible new weapon, the atomic bomb, which no other country possessed. America's economic output, by some estimates, was half of the world's total.

    At the peak of America's powers, in other words, its leaders were determined to create a multilateral institution involving as many nations as possible as a primary mechanism for ensuring American, as well as global, security. In his speech before the San Francisco conference, Truman was explicit about the price of doing so. “We all have to recognise—no matter how great our strength—that we must deny ourselves the licence to do always as we please.” For America itself, Truman argued, this was a price well worth paying. The contrast with the attitude of most subsequent American governments, and especially the current one, could not be more stark. Many Bush administration officials seem to view the UN either as an irrelevance or as a dangerous constraint..."

More post-Cancun posts

The Economist has an overview, here:"Tequila sunset in Cancún".

Geitner Simmons posts on the different editorial stances taken by the New York Times and the Washington Post, here: "The scold vs. the diplomat".

Simmons also posts on the agricultural subsidy debate in Nebraska, here: "A pro-WTO farm voice in Nebraska".

Urban moose

Doug O'Harra in the Anchorage Daily News reports on a part of Anchorage life, here: "Male moose wage war on local hammocks, swing sets. Cranky critters risk injury, death when antlers become entangled"
    "Itchy to rub antlers and aroused for fall mating season, bull moose have been tangling with hammocks on the Anchorage Hillside this week...

    "At least three hapless moose have been caught since Sunday, and another four have been reported snarled in hammocks or swing set chains over the past two weeks, said Jessy Coltrane, assistant area biologist with the Alaska Department of Fish and Game...

    "The situation happens every fall when adult males bang and rub their antlers against objects to remove summer velvet. With hormones starting to rage, the bulls also become more rambunctious as they start following cows and confronting other males..."
Friends in Anchorage tell me that moose are common in some neighborhoods. A year ago on a visit, I passed a moose about a block away while I was walking about a half mile from downtown. I was happy to see him move away from me, through a convenience store parking lot.

Nina, here's Kevin Drum's Krugman interview:


Does the U.S. current account deficit end with a bang (Krugman) or a whimper (DeLong)? DeLong reacts to Krugman's Drum interview: "The Endgame for the U.S. Current-Account Deficit".
    "...The U.S. current account deficit is unsustainable, and as Herb Stein used to like to say, if things are unsustainable they will stop. I used to think it would stop as demand in the rest of the world grew and demand for U.S. exports grew along with it. That's becoming less and less likely. So I have to agree with Paul that the current-account deficit will end one day when foreigners decide that the U.S. is not a good place to put their money, and the dollar falls in value by somewhere between 25% and 50% in a relatively short period of time. If Bush is reelected and continues his feckless fiscal policies, my bet is that this dollar crisis comes between three and five years from now.

    What consequences does such a shift in capital flows and a collapse in the dollar entail? I do find myself much more optimistic than Paul Krugman..."
But take a look at where DeLong sees the big crunch coming.

Daniel Drezer comments on the Drum-Krugman interview, here: "Paul Krugman opens up"
    "...I was entranced by the interview's mix of defensible economic critiques and wild-eyed political paranoia (and a hat tip to Drum for doing a great interview)..."

Post Cancun post


Suicide protest at Cancun

Today's New York Times carries a James Brooke profile of the South Korean farmer who killed himself in Cancun last week to protest negotiatiosn to reduce agricultural tariffs, here: "Farming Is Korean's Life and He Ends It in Despair".
    "JANGSU, South Korea, Sept. 15 — Before Lee Kyung Hae left for Mexico on his final mission to defend South Korean farmers, he climbed a hill behind his old apple orchard here. In the quiet solitude of his former farm, he cleaned up around his wife's tomb.

    "He cut all the grass before departing," Lee Kyang Ja, his older sister, said with surprise today, coming upon the site after climbing a dirt road behind the farm. On Wednesday in Cancún, Mexico, Mr. Lee, a 55-year-old farm union leader, scaled a barricade outside a meeting of the World Trade Organization and then fatally plunged his old Swiss Army knife into his heart...

    " rural communities like this one in southern South Korea, Mr. Lee, a three-time member of the provincial assembly, was seen as a heroic figure, a defender of debt-ridden farmers struggling to maintain an age-old agrarian tradition in a fast-developing country where manufacturing is king..."
Today's (Tuesday Sep 16) Washington Post has a column by Jefferson Morley on developing world media reaction to the failure of the Cancun ministerial meeting (with links to seven or eight papers):"After Cancun, Rich Man's 'Debacle' Is the Poor Man's 'Moral Victory'.. The column indicates general satisfaction with the outcome among the cited newspapers. The satisfaction seems to stem not so much from the failure of the trade talks, as from a perceived ability of the developing world to stand together against "unfair" set of developed world practice and an unfair agenda.

Geitner Simmons at Regions of Mind posts on barriers to trade between developing countries, here: "Not so selfless.
    "Some of the developing countries that led the fight against the United States and the EU on the farm subsidy issue are themselves guilty of heavy protectionism against fellow developing countries -- in some instances, against their very neighbors.

    "I got a hint of this when I saw an article from last weekend in The Hindu Times, a newspaper in India, about proposals being considered at the WTO negotiations in Cancun over reductions in farm subsidies:

      "The new draft puts India in considerable difficulty since it would require the country to eventually make substantial reductions in import duties on agricultural products..."
Simmons also links to a Progressive Policy Institute report on developing country trade barriers, and cites generously from it.

Kieran Healy points out that Cancun fell apart over investment and capital control issues rather than agriculture, and points to a paper by Pierre-Olivier Gourinchas and Olivier Jeanne’s on “The Elusive Benefits from International Financial Integration" (and to one of his earlier posts on it), here: "Capital Mobility".

Daniel Davies argues that Cancun fell apart over investment and capital control issues it shouldn't even have been discussing, here: "High Noon in Cancun"
    "...The WTO is the World Trade Organisation, which was set up in order to facilitate trade in goods and services, something which more or less everyone agrees to be a general good. Free mobility of capital and investment is a much more controversial topic..."

What happened in Cancun

Jacob Levy links to post-mortems on the trade talk collapse at the Volokh Conspiracy, here: "Trade".

Medicare utilization rates in Boca Raton

Gina Kolata reports on Medicare utilization in Boca Raton, in this New York Times article from last Friday: "Patients in Florida Lining Up for All That Medicare Covers".
    "BOCA RATON, Fla. — It is lunchtime, and the door to Boca Urology's office is locked. But outside, patients are milling about, calling the office on their cellphones, hoping the receptionist will let them in. To say they are eager hardly does them justice.

    " "We never used to lock the door at lunch, but they came in an hour early," said Ellie Fertel, the office manager. "It's like they're waiting for a concert. Sometimes we forget to lock the door and they come in and sit in the dark."

    "Yet few have serious medical problems, let alone emergencies. "It's the culture," said Dr. Jeffrey I. Miller, one of four urologists in the practice.

    "Doctor visits have become a social activity in this place of palm trees and gated retirement communities. Many patients have 8, 10 or 12 specialists and visit one or more of them most days of the week. They bring their spouses and plan their days around their appointments, going out to eat or shopping while they are in the area. They know what they want; they choose specialists for every body part. And every visit, every procedure is covered by Medicare, the federal health insurance program for the elderly.

    "Boca Raton, researchers agree, is a case study of what happens when people are given free rein to have all the medical care they could imagine..."
This is a serious story about the mechanism for setting Medicare reimbursements:
    "... Medicare in Boca Raton pays $52.46 for a routine visit, in which a doctor sees a patient with no new problem. That is not enough, doctors say; it costs about $1,500 a day to run an office there, they explain. Payments in other states are different, adjusted for cost of living, but doctors say, and Mr. Scully agrees, that they are generally inadequate. Doctors who try to make a living seeing only Medicare patients for routine visits, he said, "have a very rough time."

    "Medicare bases its payments on a system in which each kind of service is assigned a "relative value," Mr. Scully said. To increase the payment for routine office visits and stay within its budget, Medicare would have to decrease the relative value of other services.

    "A committee of doctors meets each year to suggest relative values, he said, but "the most aggressive and active groups tend to be the specialists."

    " "Year after year," Mr. Scully went on, "the specialists come in and make a very strong argument for higher reimbursements. There's eventually a squeeze on the basic office visit." "
The "culture" referred to in the opening quotes is in part an involuntary response to the odd price structure created by this system. General practitioners can't earn a living from extended office visits - they have to do lots of short ones, and pass patients on to specialists. The specialists can't make a living from office visits either; they make theirlivelihoodd off of tests and treatments. The culture apparently emerges as the patients find themselves spending a lot of time in doctors offices.

I learned about this from Virginia Postrel, here: "Entitlement Mentality".

Here's how it ended:

Peter Gallagher fills in some of the details about the collapse of the Cancun trade talks: "It's over ... for now ". The actual collapse wasn't triggered by the disagreements on the agricultural issues:
    "The failure point was the four so-called 'Singapore issues': specifically the objections of a broad coalition of Asian, Carribbean and African countries to proposals for further work on Trade Facilitation (improving the regulations affecting the movement of goods through ports, and regulations surrounding financial transactions and customs clearances)..."

Rationing Intensive Care

Today's Boston Globe has a story by Liz Kowalczyk on the rationing of care in intensive care units (ICUs), here: "Rationing of medical care under study"

Rationing methods now

When people face prices for a good below market clearing prices, people will want more of the good than will be supplied. You need another way to decide who is going to get the good, that is, another way to ration access to the good. Kowalczyk's medical contacts described a wide range of current mechanisms for rationing for access to ICU treatment:
  • witholding "care from patients who would benefit the least"
  • "rationing decisions based on their [the doctors - Ben] own biases or their hospital's financial condition"
  • "In an informal national poll of 620 intensive care physicians last year, 55 percent of doctors said they've withheld medication, tests, or services because they felt the cost outweighed the potential benefits to the patient..."
  • "Some hospitals, for example, deny Xigris, which costs about $7,000 for several days of treatment, to patients with less than three months to live. But Charles Inlander, president of the People's Medical Society, a national nonprofit medical consumers' organization, said he disagrees with that approach. "What if the person is an official who has a huge and important foreign policy decision to make in the next three months," he said. "Should you still make the decision not to treat them even if they don't have long to live?"
  • " executives shouldn't be the ones to decide how to ration care. Since they must earn a profit, they have an inherent conflict of interest. "My fear is that care will go to people who can pay," he said. "Rationing these days is built around age, race, and economic status. It's done under the table. It's a very important issue to face head-on. But any standards they set up still have to be accepted by the public."
  • "...He said that often the most care goes to the patient whose family "pushes the hardest." "
  • "...they acknowledge that they do consider cost when patients don't have long to live."
  • "...Should a patient's age matter? Should doctors use more resources on a terminally ill 12-year-old than on a terminally ill 80-year-old?"
Although she doesn't mention it, it seems to me that doctors would be only human if they sometimes made decisions partly on the basis of who they liked.

The rationing work group

Kozalczyk reports on a new working group of doctors and medical ethicists (the Values, Ethics, and Rationing in Critcal Care Task Force) that is trying to develop a set of national guidelines for rationing ICU care. The effort is being supported by a $1.8 million grant tof Eli Lilly and Co.
    "The group is gathering data for a series of journal articles, to be published within the next year, defining rationing and discussing models for it. The task force will also conduct focus groups with doctors and nurses and develop a computer program that will allow hospitals to plug in various treatments and compute how many lives their expenditures will save...

    "But the second step will be far more difficult: How does the group decide how much money saving a life is worth? Levy said that question will be answered by ethicists, economists, physicians' patients groups, and politicians at a series of conferences. Hospitals and doctors can develop rationing policies on their own and don't need federal approval.

    "Federal officials, debating whether Medicare should cover dialysis, first assigned a dollar figure to a year of life during the 1970s, said Peter Ubel, author of the pro-rationing book "Pricing Life." They arrived at $50,000, the cost of a year's worth of dialysis for a patient with advanced kidney disease. As a result, policy-makers and researchers have used this number to advise doctors, hospital administrators, and state and federal Medicaid and Medicare officials about whether particular treatments are worth paying for.

    "Ubel, who is at the University of Michigan, believes that number is too low. Based on public opinion surveys, he thinks a year of life is worth closer to $150,000 to $200,000. But, he said, using a hard and fast number is "just so cold." Society should consider emotional factors too, he said, such as whether we want to provide all possible care to veterans because they defended the country."

What's the best inflation rate, and what is it worth to achieve it?

Brad DeLong: "Note: Strong Views Weakly Held"

Where will it all end?

CalPundit interviews Paul Krugman. Krugman is concerned about U.S. fiscal policy and sees three possible outcomes, none attractive: "Why Paul Krugman Is Depressing".

Cancun trade talks collapse

The Washington Post says the Cancun talks have collapsed:
    "CANCUN, Mexico -- Talks designed to change the face of farming around the world collapsed Sunday amid differences between rich and poor nations, the second failure for the World Trade Organization in four years...."
("World Trade Organization Talks Collapse in Cancun"). Evidently much of Sunday's discussion was spent on non-agricultural issues:
    "Before the talks collapsed, delegates spent Sunday debating not the key changes to farming policy that they have spent much of the conference negotiating, but instead four proposals about foreign investment and competition from the European Union and Japan.

    "Delegates said the Europeans agreed to back off on three of the proposals, but insisted they be granted one. That was unacceptable to many developing nations...

    "...Many of the poor nations were frustrated that officials delayed discussion of agricultural reform on Sunday. Delegates had hoped to slash the subsidies rich nations pay their farmers and lower the tariffs many countries charge for importing farm goods."
Elizabeth Becker at the New York Times says the breakdown was precipitated when a group of developing nations walked out (agreements are by consensus):
    "CANCUN, Mexico, Sept. 14 — Trade talks dissolved today when a group of developing nations walked out of the final session saying wealthy nations had failed to offer sufficient compromises on agriculture and other issues...

    "...Richard L. Bernal, a delegate from Jamaica, said that a group of African, Caribbean, Asian and Latin countries felt they had little choice. The United States and Europe, he said, were not generous enough on reducing their agriculture subsidies, on helping poor African countries dependent on cotton, or understanding their difficulties in taking on such new trade responsibilities as investment."
See "World Trade Talks End in Failure, Delegates Say".

Alaskana: the Joe Vogler story

Sam Bishop tells the story of Alaska Independent Party figure Joe Vogler, in this Fairbanks Daily News-Miner story: "Vogler death: Conspiracy or robbery gone bad?"
    "...After growing up poor in Kansas, Vogler graduated from the state university and then earned a law degree, but never practiced. During World War II, his strong opinions led him to curse the president and got him fired from a job, so he headed for Alaska in 1942.

    "He homesteaded, logged, fished and mined.

    "Through it all, he continued cursing, literally. It was mostly aimed at the bureaucrats who were trying to bend Alaska habits to the new ways of land, water and air management..."

Cancun trade meetings drawing to a conclusion

Today is the last day of the Cancun trade meetings.

I posted yesterday (here: "What's the 'Group of 22' ") on the status of the agricultural negotiations.

Today Peter Gallagher brings the story of the negotiations up to date through Saturday afternoon, here: "Battle at the buffet table ".

The New York Times website has a Reuters story filed today: "Clock Ticks Down at Tough Cancun Trade Talks"
    "CANCUN, Mexico (Reuters) - Deeply divided and running out of time, world trade ministers made a final push on Sunday to bring rich and poor countries together and rescue troubled talks on freeing up global markets.

    The trade talks on Mexico's Caribbean coast are laboring to bridge a North-South split on issues ranging from rich nations' massive farm subsidies to many developing countries' refusal to negotiate new rules on foreign investment...

    Many delegates believed they would walk away from this beach resort with some kind of agreement but some questioned whether it would amount to a major breakthrough...

    Ministers need to find enough common ground in Cancun to keep negotiations alive on new trade liberalization pact by the end of next year. The World Bank says a good deal would add more than $500 billion a year to global incomes by 2015 and lift 144 million people out of poverty.

    Diplomats say failure in Cancun could kill off hopes for such a deal until way beyond 2004..."

Wireless messaging in the lecture hall

Belmont Blog Central carries a post on wireless instant messaging in lectures and seminars, here: "Instant Messaging in the Lecture Hall" Laptops and wireless messaging make private conversations possible in these public settings.

Why defense purchases tend to cost more than expected

Intel Dump posts on the incentives faced by defense contractors as they prepare their bids: "Trimming the fat at the Pentagon".
    "...The real problem with weapons programs it that their cost tends to balloon as they age. Retired Pentagon analyst Franklin "Chuck" Spinney has done some brilliant work (see this data too) investigating weapons programs over the past 30 years, and his work indicates that every major weapons program winds up costing much more than we thought when we bought it. The reasons are simple. Defense contractors push a lot of their costs to the back end so that they can get the Pentagon to buy in when a project looks cheap. As the costs balloon, the contractors can file a claim for the costs, usually based on some sort of constructive change in the contract. The result is that large procurement programs have a deceptively small cost in the short-term, and a larger cost in the long-term, and an overall cost that's much higher than anticipated..."
You can access the Spinney links through the Intel Dump link.

Ken Rogoff, former Chief Economist at the IMF

Tyler Cohen pulls together some materials on former International Monetary Fund Chief Economist Kenneth Rogoff, here: "Liberalization of capital markets". Cohen has pulled together a handy set of links to Rogoff's thoughts on capital market liberalization and developing economies, Joseph Stiglitz's book on globalization, and chess.

What's the "Group of 22"

Reports from Cancun suggest that much of the week has been spent reacting to the proposals of the "Group of 21." (apparently the G22 by now, according to Friday's Economist). This Financial Times story by Guy de Jonquieres and Frances Williams on Thursday, Sep 11 is great: "Third World alliance hits at trade rules". Peter Gallagher has been describing events all week on his blog, here: Peter Gallagher. The Economist covered the G22's proposals on Friday, here: Economist: "The sword and shield"

What is it?

The "G22" is a group of developing countries seeking developed world agricultural trade concessions at the Cancun ministerial meetings of the World Trade Organization's Doha Round.

Who's in it?

The group started with 16 members and has reached 22 by now. Leading members include Brazil, China, India and South Africa. The remainder of the original 16 include Argentina, Bolivia, Chile, Colombia, Costa Rica, Ecuador, Guatemala, Mexico, Paraguay, Peru, Philippines, Thailand. One of the group's selling points is the claim that its members include over half of the world's population.

These countries have common interests, but they also differ in important ways. The Financial Times story below notes, that:
    "Brazil, one of the world's most efficient food producers, wants the round to succeed and has traditionally been willing to negotiate pragmatically. But India, which exports few agricultural products, is far less enthusiastic and has consistently adopted a hardline defensive stance."
Why do they want?

They want reductions in developed world (European Union (EU), Japanese, and U.S.) agricultural subsidies and agricultural trade barriers. They also want to avoid corresponding reductions in agricultural trade barriers within the developing world.

They are pressing to substitute their own agenda for the EU-US agricultural proposals advanced a couple of weeks ago, and for the agricultural agenda prepared by Perez del Castillo, the Chairman of the WTO's Trade Negotiations Committee.

Peter Gallagher has provided the text for the G22 proposals here: "G21 Text on Agriculture", the text of Perez del Castillo's draft, here: "No-one happy with draft Cancun decision ", and the text of the EU-US proposal, here: "Trans-Atlantic trade deal ".

How did it form?

From the Financial Times:
    "The new alliance reflects developing countries' growing self-confidence after their recent success in bulldozing US objections to a WTO deal on the supply of medicines to the poorest nations. Its formation was also provoked by the US-EU proposals.

    Brazil, India and other members were enraged by the two trade superpowers' demands that they limit subsidies to peasant farmers and that developing countries which were large net food exporters be required to lower their import barriers."
The medicine and EU-US agreements were reached in the last month, so it sounds like the G22 came together in the last couple of weeks.

What is going to happen?

From Cancun yesterday (Friday, Sep 12) Peter Gallagher reported that negotiations on all other issues - and there are many non-agricultural issues - is held up by the conflicts over the agricultural issues: "The agriculture 'crisis' ".
    On agriculture, "...there is still a wide gap. Meetings...among the main protagonist groups (US-EU, G21, Cairns Group) have been difficult to arrange and have collapsed quickly when they took place. One of the key problems is that the G21 has very limited internal cohesion on some key issues such as the degree to which developing countries (its members) must open their own markets. This means that the Group can't effectively negotiate compromises on its own proposals and no-one wants to deal with them on that basis ..."
This short, readable post then goes on to discuss some of the maneuvering.

According to the Financial Times: (a) there is a question about whether or not the G22 will hold together (note above the differences between members); (b) the EU may be pressed to reduce its subsidies further than many EU nations will accept, (c) the US Congress is only likely to go along with large agricultural support reductions if other countries do so - and it is an explicit part of the G22's program not to do so; (d) success in Cancun will energize the developing countries in future trade fora.

Giving the Economist the last word:
    "The poor countries may be in danger of overplaying their hand. Within the multilateral system of the WTO, where each member, regardless of size, is formally equal, the poor world can stand up to the traditional trading blocks. But what is to stop the big trading powers going outside the multilateral system? American and EU leaders hold the keys to the richest markets in the world. If they do not get a multilateral deal they like at the WTO, they can always sign bilateral deals or regional deals with countries of their choosing. President George Bush, it sometimes seems, is as committed to the FTAA (the Free Trade Area of the Americas) as he is to the WTO. And some members of the EU would probably sooner see the WTO incapacitated than the CAP pulled apart."

Bad Economic Reporting Exposed

Brad Delong takes apart a New York Times story on (a) the impacts on working people and their communities as manufacturing jobs are lost, (b) the villains identified by the victims, and (c) the potential political implications.

The problem is, the story's author shares the same crude reductionist explantion ("its the foreigners") as his interviewees. DeLong provides the broader perspective that should have been in the original. Worth reading: (a) for the lesson in "back of the envelope" economics in DeLong's first paragraph, (b) for the context it provides for thinking about manufacturing jobs issue, and (c) (as is often the case in a DeLong posting) for the lessons it has to teach about how to read something carefully and critically.

If you only have time to read a few words from DeLong's posting, I'd suggest these:
    "...But just as only 1/4 of the decline in manufacturing jobs is due to trade (and that is offset by jobs generated in other sectors), only 1/4 of the decline in manufacturing jobs is due to the recession and slow recovery (which better fiscal policy could have alleviated somewhat, but could not have completely offset). The big factor is that productivity in manufacturing is growing rapidly but American consumer demand for manufactures as opposed to services is not. Productivity in manufacturing outstripping demand is the big story..."
The thing isn't long and its all worthwhile.

How are things going in Cancun?

Arnold Kling surveyed various Cancun sites and postings on Tuesday the 9th, here: "Cancun Trade Talks". Kling is skeptical that these trade talks matter much.

Kling points out that free trader Ronald Bailey is reporting from Cancun for Reason magazine. Bailey incorporates reporting into essentially editorial columns. He's done three so far:
  • "BioPiracy and Other Myths":(Sep 12) "Cancun—"No Patents on Life," is one the most frequently heard slogans among anti-globalization activists at the World Trade Organization's 5th Ministerial meeting. It is part of a fierce fight over intellectual property rights. Who has the right to make pharmaceuticals and who has the right to grow genetically enhanced crop plants are hotly in dispute at the WTO conference."

  • "Poor Substitutes":(Sep 11) "...Today, the poor gathered in Cancun mainly at the behest of NGOs from the rich countries did storm barricades. Atleast one protestor died: a Korean who committed suicide to bring attention to the injustices that he believed are being wrought by the developed world and the WTO. It is horrible and sad to think that he died believing that his sacrifice might help the world's poor people to live better lives..." But, according to Bailey, the poor are being misled by NGO "fair traders" advancing social and environmental agendas which will actually slow developing country growth.

  • "Cancun Delusions":(Sep 10) "Cancun, Mexico—The World Trade Organization's fifth ministerial meeting will get under way tomorrow here in this Caribbean resort fringed with white sand beaches. Hopping off of the airplane, I immediately rushed through police blockades to get to the anti-globalization "teach-in" being run by the International Forum on Globalization (IFG). I was anxious to hear what these passionate anti-globalizers would have to say about agricultural subsidies. Why?

    "Because the most important achievement of this WTO ministerial would be substantial progress toward truly free trade in agricultural goods..."
    Bailey was disappointed by what he heard.
The Economist reports (here: "The sword and the shield") on the emergence of the "Group of 22" (the group is growing, a Financial Times story on Thursday said it was initially a group of 16, had grown to 21):
    "THE European Union and the United States between them account for about half the world’s trade. In the past, world trade talks, however many countries chipped in, came down in the end to a tête-à-tête between these two giant trading blocks. But at this week’s crucial meeting of the World Trade Organisation (WTO) in Cancún, Mexico, both America and the EU are contending with the new block on the block: a growing coalition of developing countries—once dubbed the G20, now grown into the G22—which demands that America and Europe do more to free trade, while the poor world does less.

    "The G22 is led by poor but populous countries such as China, India, Brazil and South Africa. While this group cannot claim to do half the world’s trade, it can claim to represent half of the world’s population. On Tuesday night, it tabled a set of radical proposals on agriculture to rival the much more cautious plans agreed last month between the EU and America. India, one of the leaders of the G22, has accused the rich countries of negotiating with “a sword and a shield”. But the description is perhaps more apt for the G22’s own proposals. It wants America and the EU to dismember their lavish systems of agricultural protection, whilst it shields its own."
They want to keep their own trade barriers while pressing the developed world to reduce or eliminate its barriers. The problem with this, as the Economist points out, is that most of the trade benefits accruing to developing countries would accrue from trade within the developing world. A "World Bank analysis suggests that 80% of the benefits reaped by poor countries from farm reform [trade reform - Ben] would come from reductions in the barriers between poor countries themselves."

The mining engineers who built so much of Alaska

Today's Juneau Empire has a local color story by Anne Chardonnet on the engineering that went into Juneau's large gold mines: "Southeast Sagas: A Tale of Two Tunnels". The story of one of the tunnels is the story of engineer Ben Stewart:
    "The Gold Creek Tunnel was brought to fruition by Ben Stewart (1878-1976), an engineer and the father of Juneau resident Judge Thomas Stewart.

    "In 1910, my father was hired... to re-survey the Alaska Juneau mining claims," Judge Stewart said... It was supposed to be a one-season job, but then they hired him to survey the main tramming tunnel for moving the ore from the glory hole on the flanks of Gastineau Peak in Perseverance Basin to the mill... It was drilled simultaneously from both ends. It has a one-percent grade (from start to finish) to make it easier for the trains."

    " "My father told me that at 2 o'clock one morning he had a call from the man who was running the drilling crews that he expected to break through soon," Stewart added. "And indeed they did - and the floors were only one inch apart."...

    "...To survey the tunnel route accurately, Ben Stewart had to chain level from sea level up over Mount Roberts and down into the basin. Conscientiously, he did this three times to check his figures, Tom Stewart said.

    " "The terrain was so steep that he would sometimes get three feet of chain out, and the plumb bob would be hanging down eight feet."

    "The Gold Creek Tunnel was begun in August 1911 and finished two years later... It measured nine feet high by seven feet wide and was driven 6,538 feet into Mt. Roberts..."
So, over a mile through a mountain, tunneling from both ends, surveyed and engineered so well that the floors were only one inch apart when the tunnels met!

Why is Greenspan so good?

Brad DeLong wonders what makes Alan Greenspan so good, here: "What Does Alan Greenspan Know That I Do Not?"
    "Eight times since his appointment to his post as Chair of the Board of Governors of the Federal Reserve, I have thought that Alan Greenspan has made a significant monetary policy mistake. Eight times. And at least six of those eight times, I have been wrong.

    I conclude that Alan Greenspan knows things--important things--about macroeconomics, about monetary policy, and about the relationship between economic structure and macroeconomics that I do not...

    [List of eight times follows - Ben]

    ...I would dearly, dearly love to find out what Greenspan knows that I do not."
In a second post DeLong wonders if it may have to do with Greenspan's relative freedom from thought-shackling theory: "Notes: On the Advantages of Not Having a Theory".

Who will replace Fed Chair Alan Greenspan?

Tyler Cohen posts on potential Greenspan replacement Martin Feldstein, here: "The next Fed chairman?", at the blog Marginal Revolution

How negotiations happen

Peter Gallagher explains the six steps in a typical "Cancun-style" international negotiation, here: "How to run a Ministerial trade negotiation ".

The U.S. Marines at the World Trade Center on 9-11

Slate "retells" the story, here: "An Unlikely Hero".
    "Thursday marks the second anniversary of the Sept. 11 terrorist attacks. Last September, on the first anniversary, Rebecca Liss wrote about one of Ground Zero's less-heralded rescue workers. Dave Karnes was neither a cop nor a firefighter, but when the Twin Towers collapsed, the former Marine from Connecticut donned his uniform, drove to Ground Zero, walked onto the burning pile, and, with the help of another Marine, located two trapped survivors long after the professional rescuers were pulled back out of legitimate caution."
From the original story:
    "...Together Karnes and Thomas [the two marine heros of the story - Ben] walked around the pile [the debris of the collapsed World Trade Center - Ben] looking for a point of entry farther from the burning buildings. They also wanted to move away from officials trying to keep rescue workers off the pile. Thick, black smoke blanketed the site. The two Marines couldn't see where to enter. But then "the smoke just opened up." The sun was setting and through the opening Karnes, for the first time, saw clearly the massive destruction. "I just said 'Oh, my God, it's totally gone.' " With the sudden parting of the smoke, Karnes and Thomas entered the pile. "We just disappeared into the smoke—and we ran."

    They climbed over the tangled steel and began looking into voids. They saw no one else searching the pile—the rescue workers having obeyed the order to leave the area. "United States Marines," Karnes began shouting. "If you can hear us, yell or tap!"..."

U.S. agricultural subsidies and rural third-world poverty

An article in yesterday's New York Times brings it home in the context of Ugandan cotton farming - here: "Africans' Burden: West's Farm Subsidies".

    "There are a host of reasons for Mr. Thembo's [a small scale Ugandan cotton farmer - Ben] poverty. For one, he works hard, but his time-honored methods are by no means efficient. Then there is the collapse of Uganda's cotton industry, partly attributable — like so much else that is wrong in this country — to Idi Amin, the dictator who brought Uganda to ruin.

    But the most critical factor? World cotton prices. Although his costs are low, far lower than those of Western farmers, he earns far less than he would if every farmer were paid based simply on how much they produced.

    African farmers can produce cotton at less than 50 cents a pound, compared with 73 cents for American farmers and even higher costs in Europe, according to data gathered by Burkina Faso.

    But cotton is one of the most heavily subsidized agricultural products in the United States. Washington doled out $2 billion in cash subsidies to cotton farmers over the past year and another $270 million to exporters. By propping up the industry, the United States government keeps the world price low: in late 2002, it was a meager 35 cents a pound.

    "Our farmers just can't compete against a Western farmer who's getting subsidies," said Hans W. Muzoora, a monitoring officer with the Cotton Development Organization in Kampala, Uganda's capital. "It's like our farmers have one of their hands tied behind their backs. The best thing for Ugandan farmers would be an end to those subsidies."
I learned about this from Jacob Levy at the Volokh Conspiracy.

Meanwhile, from Cancun, Peter Gallagher reports on the agricultural trade negotiations: "The story so far...". Gallagher has a useful summary of the events during the runup to Cancun, with a status report as of Wednesday morning.

Trade protests: light to moderate

The Wall Street Journal carried a short story yesterday speculating that anti-globalization protests at Cancun would be "toned down" compared to those in Seattle in 1999. While the numbers of protesters may be at Seattle levels (50,000), there is apparently little talk of shutting down the meetings. The Journal speculates that activists may have come to see disruptive tactics as counter-productive. It points out that Mexican farm laborers are expected to make up a larger proportion of the protesters and that they are "known for the orderliness in mass demonstrations." Finally, it notes that limited access (two causeways) to the meeting area itself, coupled with a large police presence, would make it difficult for demonstrators to be disruptive if they wanted to.

Today's Seattle Times says that "...Few if any Seattle organizations made the trek to Cancun."
    "Jeremy Simer, director of the Community Alliance for Global Justice, a Seattle group active in 1999, said the group decided to skip Mexico and focus on a November meeting in Miami of the Free Trade Area of the Americas (FTAA), which would extend NAFTA-type rules to 34 Latin American countries. "We thought it was more strategic" to get the word out about FTAA, he said."
Speaking of violent protests, Cronaca reports today on new excavations near Cancun that are shedding light on Yucatan's 19th Century Caste War, here: "Caste War excavations". The Caste War was horrific - in the 1840s, after years of oppression, the Maya swept north and almost took back the entire peninsula. Merida, the capital was in a panic. But then, suddenly, the threat evaporated as the Maya went back to their farms. Even so, the rebellion wasn't completely crushed until the early 20th Century. Both sides were ruthless and cruel. Cronaca's story reports on archeological excavations at a massacre site.

Reporting from Cancun

Here's the view from Peter Gallagher's hotel room: "Sunny days in Cancun ".

Daniel Drezner explains why outsourcing is good

"Who benefits from outsourcing? Who could benefit from outsourcing?".

The argument that the Bush Administration has a good macroeconomic policy

Arnold Kling makes it at Tech Central Station, here: "The President's Macroeconomic Report Card" Kling says the President deserves a B+ or an A-.
    "...Orthodox Keynesian policy in a recession would be to cut taxes. The Bush Administration has done that. Orthodox policy would be to increase government spending over what had been planned. The Bush Administration has done that, too. When a student hands in an exam that repeats almost exactly what the professor was saying in class, but the student still gets a low grade, then one can only conclude that the professor has something personal against the student..."
I learned about this from Cold Spring Shops

California's recent budget is no good

Says former California state controller Kathleen Connell in an op-ed piece:
    "While we're off being entertained by recall theater, the perfect economic storm may soon hit the shores of California. It turns out that the recently passed state budget isn't much of a budget at all. It's the equivalent of you and me sitting down at the dinner table and figuring out which credit card we should use to buy groceries and pay the rent..."
Virginia Postrel has links to the Connell piece and other California budget materials, here: "CALIFORNIA'S BUDGET CRISIS".

Trade meetings at Cancun this week

The World Trade Organization's Doha Round of trade talks - a round that is meant to give special attention to the trade needs of developing nations - starts this week in Cancun. Jacob Levy at the "Volokh Conspiracy" has a useful roundup of links, here: "Trade roundup".

For a second round-up on trade related links, see Daniel Drezner's post, here: "The state of play in world trade"

Likely federal deficit trend through 2013

Max Zawicky makes his own projection of federal deficits through 2013 by adjusting from the Congressional Budget Office (CBO) August estimates, here: "HOW CAN I BE OUT OF MONEY? I STILL HAVE MORE CHECKS". CBO deficit estimates are likely to turn out to have been optimistic for very plausible reasons. Although the CBO projects a surplus by 2012, Zawicky suggests that the deficits may well persist through the end of the projection period even if the current sunsets in the tax reduction laws are maintained.

I learned about this from Brad DeLong's web site, here:"How Can I Be Out of Money? I Still Have More Checks".

Better information on Gettysburg Address PowerPoint Presentation

On Sept 1, I posted a reference to a PowerPoint version of the Gettysburg Address, here: "PowerPoint isn't always appropriate" I've since learned that the presentation was prepared by Peter Norvig, the Director of Search Quality at Google. You can also link to it here: Gettysburg Address PowerPoint. There was a short article on this in the June/July American Heritage magazine. This is a funny piece on the misuse of PowerPoint.

Mike Doogan's obituary for Lew Dischner

In today's Anchorage Daily News: "Dischner was not just a scoundrel". I posted on the News' obituary Tuesday, here: "Lew Dischner, Alaska labor leader, businessman, lobbyist, dies at 85". Doogan writes,
    "The verdict of history is that Dischner was a scoundrel. I won't dispute that. In 1989, he was convicted of more than 20 counts of racketeering, fraud, bribery and accepting kickbacks from contractors working for the North Slope Borough...

    "But history is not just black and white. History is life written down, and life is too full of contradictions and detours and false turns to be captured in straight, narrow lines..."
Dischner made important contributions to Alaska's political and economic development - Doogan captures these.

What will the Bush Administration do to promote manufactures?

Max Zawicky predicts a tax reduction "bait and switch": "And Now For Something Completely Similar".
    "...We will soon be hearing that to help manufacturing, we must ease the tax burden on corporations. Actually, this burden has been easing for some time, but never mind that.

    As we speak, Republicans in Congress are writing up more tax cuts, this time for corporations. They will sail under the flag of "fixing" the foreign sales corporations (FSC) loophole that has been found to be illegal by the World Trade Organization. This petard-hoisting is especially heart-warming to free trade-skeptics. The free trade regime crunches a pet corporatist bonbon under its heel.

    "A small problem is that the FSC can't be fixed in a way that will be WTO-legal because the fault is in the basic structure of the corporate income tax. This dispute has been festering for decades. But not to worry, attached to the FSC fix will be all sorts of peripheral tax breaks that will survive, even as the FSC component remains in ever-lasting international legal limbo."

The deficit and U.S. savings

John Quiggen finds that the U.S. currently has a negative savings rate, and points out that the current federal deficits don't help: "Negative savings in America"

Run-up to Cancun

The World Bank is about to weigh in on how developed countries can restructure their agricultural and trade policies to help lower income countries. Angry Bear has the scoop: "Doha Update"

How the decision to seek greater U.N. involvement in Iraq was made

Dan Drezner comments on a Washington Post article on the administration's decision to see greater U.N. involvement in securing and rebuilding Iraq: "There's micromanaging and then there's not managing at all" Interesting for the inference he teases out about the President as a manager, and for its insights into how to read a newspaper story.

A warning about storing files on CD-R disks, from Cronaca

"CD-R life expectancy"

Roman board games

Try out some Roman board games at this web site: "Roman Board Games". I learned about this site from: "Cronaca".

Students of public administration may want to check out the blog of noted public administrator Julius Caesar: "Bloggus Caesari".
    "May 13, 2001

    "I'm heading up to Geneva. One of the Gaul tribes is planning on cutting through Roman territory, in an attempt to go and fight some other tribe. I'm the governor of Gaul now, so I have to stop them... I'm caught a little off guard – there's only one legion up there, so I'm trying to raise some more at the same time.

    "Well, it looks like I might be away more than I'd like, so I decided to set up this blog. My friends in Rome can keep track of what I'm up to amongst the barbarians..

    "Posted by Julius Caesar at 04:09 PM

    "May 14, 2001

    "Just got in. Desperately trying to raise some more legions. The Gauls that are threatening to cross are called the Helvetii. They live up in the Alps, and there are only two ways out – they've chosen the easier one, through Roman territory. There's a bridge here that they would take, so I had it destroyed. I'm having some fortifications built. And tomorrow I meet with the Helvetii ambassadors.

    "Posted by Julius Caesar at 06:52 AM


    "September 03, 2003

    "Across Gaul the embers of rebellion are finally going out. Peace and prosperity will soon flourish in their place, even as Rome's great Republic withers. Responsible men will now look to the workings of the Republic, to cure the ills no matter how harsh the medicine. We must not shy away from extreme measures - Rome must be purified of all poisons. If the heart fails, there's no reason to try and fix the hand. Just so, if Rome fails, why worry about the provinces?

    "The remaining skirmishes and battles in Gaul will not be blogged live. This site will take a break from updates until the first day of Octobris, your time, at which point I'll bring you up to speed. Curate ut valeatis.

    "Posted by Julius Caesar at 11:01 AM"

The new Assistant Commerce Secretary for Manufacturing

Arnold Kling posts to Tech Central Station on the "manufacturing crisis" (dropping numbers of U.S. jobs in manufacturing), here: "Manufacturing a Crisis".
    "The 2004 election season has started, and apparently the first order of business is to solve the manufacturing crisis. Or to manufacture a crisis for government to solve.

    "This week, President Bush appointed one bureaucrat to deal with the manufacturing crisis. Perhaps eventually we will have an entire department -- like the Department of Agriculture -- doling out subsidies to an ever-shrinking population that claims to be of the manufacturing sector..."
Concerns over the loss of manufacturing jobs are overblown:
    "...What is happening to manufacturing is the same thing that happened to agriculture during the industrial revolution. From 1850 to 1950, resources were released from the agricultural sector to meet new consumer needs -- for transportation, appliances to increase the comfort and reduce the work of the household, and electronic entertainment.

    "In any given sector, when productivity increases faster than demand, employment declines and workers move into other fields. That is what has been happening in manufacturing. As Bruce Bartlett and others have pointed out, manufacturing output remains high. However, we can produce the same output with less input, and the workers not needed in manufacturing are going into other sectors, primarily services, where demand is increasing more rapidly than productivity."

Agency spending at the end of the fiscal year

Government agencies often rush to spend unspent balances at the end of the fiscal year. Failure to spend everything might be interpreted as evidence that everything wasn't needed in the first place, leading to smaller appropriations in a future fiscal year. Arnold Kling draws attention to "the "busy season" for GTSI, a company that sells technology products to government agencies": "Government Incentives"

Dan Drezner doubts the Bush Administration's commitment to free trade

In this online New Republic article: "Protection Racket":
    "Evaluating the Bush administration's international economic policy is the political equivalent of diagnosing a schizophrenic. Every step forward in Robert Zoelllick's grand strategy for trade liberalization--getting fast-track authority, launching the Doha round of world trade talks--is matched by a blatantly protectionist measure contained in Karl Rove's master plan for reelection, such as the steel tariffs and the farm bill. ..."
Drezner argues the administration is torn between its desire to use trade access to the U.S. market as an instrument of national security policy, and its interest in pandering to key constituencies to obtain reelection. Although the cost of protection to the nation outweight the benefits, it directs subsidies to key interest groups and provides the appearance of vigorous action. The prognosis:
    "The most likely outcome for the next 18 months is a policy of "hypocritical liberalization." The Doha round will proceed, as will the Middle East Free Trade Area. But the administration will take advantage of every exception, escape clause, and loophole at its disposal to protect vital constituencies from the vicissitudes of the global market. This will hurt the broad majority of American consumers and a healthy share of producers that rely on imported raw materials. But hey, there's a rosy future awaiting West Virginia steelworkers."
I learned about this from AngryBear, here: "Even the Conservative Dan Drezner". AngryBear is a liberal blogger with no high opinion of the current administration. The title of his post, "Even the Conservative...", refers to the conservative Drezner's skepticism about administration motives.

P.S. 10:30 PM, 9-3 Drezner supplements his New Republic column on his blog, linking to background materials and some of his other writings on trade issues, here: "Protecting myself with some useful links" Drezner is a political scientist at the University of Chicago, and has a book on trade sanctions as a policy tool (The Sanctions Paradox : Economic Statecraft and International Relations) published by Cambridge University Press. He describes the key question driving his research program as, "To what extent does economic interdependence alter the patterns of world politics?" Drezner's home page is here: "Daniel W. Drezner (home page)" His blog is here: "Daniel W. Drezner (blog)"

Anne Applebaum on government acronyms

Anne Applebaum has a column in today's Washington Post on the proliferation of federal acronyms, here: "Talking the Talk Of the Town".
    "...But abbreviations are also a sign of our times, and not a good one either. A half-century ago George Orwell warned that the proliferation of acronyms heralded the advance of the totalitarian state. An acronym, after all, is a word whose full meaning is concealed by its pronunciation. Think Gestapo, for example, or Gulag -- both acronyms of Orwell's era. The increasing acronym use in Washington may not be totalitarian but it isn't exactly democratic either. Thanks to acronyms, neologisms, euphemisms and other forms of government jargon, small groups of people in the nation's capital now speak, in effect, private languages that are incomprehensible to the rest of the country -- and, yes, there are implications for real life..."
I learned about this from Stuart Buck, here: "Acronyms".

Fannie Mae and Freddie Mac

Robert Samuelson explains what they are, where they came from, and potential policy issues in this Washington Post column: "Fixing Fannie and Freddie".
    "Fannie Mae and Freddie Mac, the two giant mortgage companies, ain't broke -- but they ought to be fixed.

    "They have grown so large that if they ever experience serious financial problems, they will almost certainly have to be rescued by the government at immense cost. The potential exposure reflects their huge debt. At the end of 2002 Fannie's and Freddie's combined debt totaled $1.5 trillion. This is equal to almost half the publicly held federal debt, $3.7 trillion..."
I learned about this from Tyler Cowen, here: "The next financial scandal?".

Lew Dischner, Alaska labor leader, businessman, lobbyist, dies at 85

The Anchorage Daily News has the story: "Ex-lobbyist, deal maker Lew Dischner dies at 85. A FORCE: Criminal conviction overshadows successes for working people.":
    "Lew Dischner, one of Alaska's most powerful lobbyists until he went to prison in the 1980s North Slope corruption scandal, died at his home in Portland, Ore., early Monday morning of a heart attack...

    "Dischner, a trained carpenter and born deal maker, arrived in postwar Alaska when opportunities -- and inequities -- abounded. He became a force for organized labor, the Inupiat people of the North Slope and the Filipino communities in Southeast Alaska. An old-school, rough-edged, blue-collar working man, he was still giving advice to government officials late last year..."

Upcoming trade protests

Nathan Newman suggests there will be another "Seattle-Style" protest at the late November Miami "Free Trade Area of the Americas ministerial meeting: "The Next Seattle-style Protest "

PowerPoint isn't always appropriate

From the Web page of Stuart Russell at Berkeley: "Gettysburg Cemetery Dedication"

I learned about this from Donald Sensing, here: "If Lincoln had used PowerPoint".