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August 31, 2006

"DDT Saves Lives, Environmentalists Take Lives"


LaiferLanceMalariaFighter.gif  Connecticut hedge-fund trader, and malaria-fighting activist and philanthropist.  Source of image:  online version of the WSJ article cited below.

 

Inside of a year, and working with George Ayittey of the Free Africa Foundation, Mr. Laifer's efforts have spawned five "malaria-free zones" in Ghana, Nigeria and Kenya.  Expansion to Ivory Coast and Benin is in the works.  He adds that he has the financing to roll out additional zones this year but -- ever the searcher -- first wants to assess what's working and what isn't.  If all is going well, "next year I see us doing something like 100 villages."

Mr. Laifer says a future focus will also be DDT, the pesticide used by Americans and Europeans in the 1940s to win domestic fights against malarial mosquitoes.  Indoor spraying of DDT is by far the cheapest and most effective way to control the disease.  One South Africa province employing DDT saw malaria infections and deaths drop 96% over a three-year span.

Yet Rachel Carson-inspired environmentalists have convinced many public health agencies that the chemical is dangerous.  African nations, fearful that lucrative European and U.S. markets might ban their agricultural exports, make do with less-effective DDT substitutes.  Though DDT, like any chemical, can be harmful in high doses, there's no evidence that using it in the amounts needed to combat malaria has any ill-effect whatsoever on humans.

Mr. Laifer's been unable to spray DDT in any of his malaria-free zones.  "It's the best thing in our arsenal," he says.  "We have a prodigious supply, it's cheap and we know it works.  Our world leaders need to legalize DDT, and people in America need to get mad about this. . . . We need to have people walking around with signs that say, 'DDT saves lives, environmentalists take lives.'"

 

For the full commentary, see:

JASON L. RILEY.  "Malaria's Toll."  Wall Street Journal   (Mon., August 21, 2006):  A11.

 

(Note:  the ellipsis is in the original.)




August 30, 2006

Distorted Incentives in Medicine



  Source of book image:  http://www.harpercollins.com/books/9780061130298/The_End_of_Medicine/index.aspx

 

The problem right now, as Mr. Kessler sees it, is that we fight the "big three" -- cancer, stroke and heart attack -- with treatment rather than early detection.  Cancer cells and blood-vessel plaque can be handled much more easily in the early stages, but we spend most of our money on the later ones.  More than 80% of health-care dollars are paid by insurance companies and the government, and neither is especially interested in detecting disease when it first appears.  Doctors, regulators, researchers and payers of all kinds are locked into what Mr. Kessler calls -- a bit ungenerously -- the "cholesterol and cancer conspiracies."

A complicated system of mutual dependency distorts the incentives.  "The FDA is like the FCC and Big Pharma is like the regional Bells" is what Mr. Kessler hears from Don Listwin, a former Cisco executive who now heads the Canary Foundation, a Silicon Valley-based effort to promote preventive medicine.  In other words, in medicine as in telecom, the big players end up exploiting regulations more than opposing them, if only to preserve their monopolies.  The Food and Drug Administration -- understandably but narrow-mindedly -- wants "cures" for cancer and other diseases.  Thus tens of thousands of chemicals are screened, only a handful make it even to Phase I trials, and by the time a new drug is approved a billion dollars has been spent.  Even then the new drug may help only 10% of patients.

Yet if someone were to invent a device with a wide, preventive usefulness -- say, a nanotech implant that would spot the proteins that indicate the first minute presence of cancer -- it would have to go through the same process of billion-dollar testing.  Since the government and insurance companies are reluctant to add anything to their repertoire of coverage -- and since such a device would be targeted at the much broader pool of people who are not sick -- research might well stall in its earliest phases for lack of reimbursement-funding.

 

For the full review, see:

WILLIAM TUCKER.  "Bookshelf; The Art of Navigating Arteries."  Wall Street Journal (Tues., July 18, 2006):  D6.

 

A full reference to the book reviewed, is:

Kessler, Andy.  The End of Medicine:  How Silicon Valley (and Naked Mice) Will Reboot Your Doctor. HarperCollins, 2006.

 




August 29, 2006

Welfare Reform Increases Number Employed


WelfareSingleMotherTrends.gif Source of graphic:  online version of the NYT article cited below.

 

WASHINGTON, Aug. 20 — Ten years after a Republican Congress collaborated with a Democratic president to overhaul the nation’s welfare system, the implications are still rippling through policy and politics.

The law, which reversed six decades of social welfare policy and ended the idea of free cash handouts for the poor, was widely seen as a victory for conservative ideas.  When it was passed, some opponents offered dire predictions that the law would make things worse for the poor.  But the number of people on welfare has plunged to 4.4 million, down 60 percent.  Employment of single mothers is up.  Child support collections have nearly doubled.

“We have been vindicated by the results,” said Representative E. Clay Shaw Jr., Republican of Florida and an architect of the 1996 law who was vilified at the time.  “Welfare reform was one of the most successful policy changes in our nation’s history.”

 

For the full story, see: 

ROBERT PEAR and ERIK ECKHOLM. "A Decade After Welfare Overhaul, a Shift in Policy and Perception." The New York Times (Mon., August 21, 2006):  A12.




August 28, 2006

Money Buys Happiness, and Governments Tax It Away


We are . . . all constantly reminding each other that "money doesn't buy happiness."

Economists aren't so sure.  They note that people with a lot of money tend to express a higher subjective happiness than people with very little.  According data from surveys by the National Opinion Research Center, for example, people in the top fifth of income earners are about 50% more likely to say they are "very happy" than people in the bottom fifth, and only about half as likely to say they are "not too happy."

There is, however, generally very little change in the average level of happiness in populations getting richer over the years.  For instance, the percentage of the U.S. population saying it was "very happy" in 1972 was exactly the same as it was in 2002:  30.3%.  Social critics of "consumerism" explain this by claiming that what makes rich people happy is not money per se, but rather the fact that they have more of it than others -- so if everybody gets richer, happiness remains unchanged.  The critics go on to say that income differences lead to unwholesome feelings of superiority, so taxes can improve our moral fiber simply by bringing us closer to the same income level.

Perhaps you're unconvinced.  In fact there is another explanation for unchanging happiness levels over time which is rather less supportive of income redistribution.  As incomes rise, so generally do levels of government revenues and spending, and there is evidence that these forces work against personal income on the overall level of happiness.  For example, a $1,000 increase in per capita income is associated with a one-point decrease in the percentage of Americans saying they are "not too happy."  At the same time, a $1,000 increase in government revenues per capita is associated with a two-point rise in the percentage of Americans saying they are not too happy.  In other words, not only can money buy happiness, but it may be that the government can tax it away as well.

 

For the full commentary, see: 

ARTHUR C. BROOKS.  "Money Buys Happiness."  The Wall Street Journal  (Thurs., December 8, 2005):  A16. 




August 27, 2006

Power to the People



VogtleCoolingTowers.jpg Cooling towers at the Vogtle nuclear power plant in Georgia.  Source of photo:  the online version of the NYT article quoted and cited below.


A long, and informative cover-story in the NYT, discusses the costs and benefits of nuclear power.  My read is that, on balance, the considerations in the article favor nuclear energy.  Here are a few passages from near the end of the article:


(p. 64)  Gary Taylor, . . ., the C.E.O. of Entergy Nuclear, says he believes a doubling of the number of nuclear plants around the world is inevitable, both to satisfy energy demands and to counter global warming.  As Taylor puts it:  ''The reality is, what is scalable in the time frame that addresses the issues?  If it isn't this technology, I don't know what it would be.''  Diaz, the former head of the N.R.C., told me he sees a similarly bright future for nuclear.  ''The world is going to go nuclear, because they do not have any other real alternatives,'' he says.  I met plenty of other engineers within the industry who went even further.  Their feeling about nuclear power is close to evangelical, in that they seem to approach the technology with moral certitude while being loath to acknowledge any of its many negatives.  Would that include the utility executives who will ultimately decide if -- and what -- to build?  I'm not sure it would.  To those I spoke with in the uppermost ranks, nuclear power isn't a belief system.  It's a business.  And to them, what might come out of, say, Vogtle Units 3 and 4 -- the waste and the power and the profits -- would be nearly identical to what comes out of Units 1 and 2.

At least that was my conclusion in Georgia, where Jeff Gasser, the Southern Company's chief nuclear officer, took me through a long tour of the plant.  He was smart, meticulous and intensely committed to the obscure safety protocols that go on at nuclear power facilities.  Most of all he was forthright about the advantages and disadvantages of the nukes business.  When we went to visit the spent-fuel pool in Vogtle, where the used fuel-rod assemblies are stored under 20 feet of protective water, Gasser let me know that we would die if we pulled one of the fuel assemblies out of the pool.  ''We would receive, before we could get to the exit door a few feet away, a lethal radiation dose,'' he said.  I quickly had to check the radiation dosimeter I was wearing -- another legal requirement of the N.R.C. -- to see if I was already glowing.  (It read zero.)  ''The communications people hate it when I use words like 'lethal' and 'irradiated,' '' Gasser continued.  ''But the fact is, there is no perfect way of generating electricity.  There are byproducts for every type.''  Like many others, he went through the positives and negatives of coal, gas, solar, wind and nuclear.  In his opinion, he added, with Vogtle's engineering, redundancy of safety systems and its trained operators, it was a safe, reliable and efficient way of making electricity.  That was his sales pitch.

We had already passed through the containment buildings, where the reactors heat the pressurized water.  So Gasser took me through the turbine building, an enormous room the size of a soccer field, where the steam turns the fan blades.  Eventually, we went out a back door into the sunlight.  The deafening sounds of turbines and machinery subsided to a dull thrum.  We removed our earplugs and walked over to a small forest of electrical transformers, our backs to the plant.  The electricity from the turbines inside comes out here, Gasser explained, its voltage is transformed, and it is then put into the grid.

Gasser made a pushing motion toward the green hills before us.

''Once the power is sent out of here, it can go everywhere,'' he explained.  And I could see that it did go everywhere.  The high-tension wires stretched away from where we stood, in several directions, through deep cuts in the pinelands, as far as I could see.

 

For the full article, see:

JON GERTNER.  "Atomic Balm? '   The New York Times Magazine, Section 6  (Sunday, July 16, 2006),  36-47, 56, 62 & 64.





August 26, 2006

Canon Prospers By Ignoring the 'First Mover Advantage'


CanonHV10.jpg  Canon's new HV10 high definition camcorder.  Source of image:  the NYT article cited below.

 

In the dot-com era, many believed that in each niche, the future belonged to the company that got-in, and got-big, first.  Sometimes this was called the 'first mover advantage.'  There are many counter-examples.  Here is one more:

(p. C1)  Next month, Canon will release the world’s smallest and least expensive high-definition tape camcorder, a one-handable beauty called the HV10.

. . .

This image-quality business, as it turns out, is the new Canon’s specialty.  Talk about being blown away the first time you play back your recordings — let’s hope you have a sturdy couch.

Several advances are responsible for the brilliant picture quality.  First, Canon has paid extra attention to two of the most important aspects of HD recording:  focus and stability.  Because the high-def picture is so sharp and so wide, moments of blur-(p. C11)riness or hand-held jitters are far more noticeable and disturbing than in regular video.

So the front of the HV10 bears a special external sensor that, when you change your aim, handles the bulk of the refocusing extremely rapidly.  A standard through-the-lens focusing system does the fine tuning after that.  Together, these two mechanisms nearly eliminate the awkward moment of blurry focus-hunting that mars other camcorders’ output.

. . .

. . . , by entering the high-def camcorder market a year and a half after its rivals, Canon has played the same conservative waiting game it once used with digital cameras and camcorders.  Its goal, of course, is to watch and learn as the pioneers get all the arrows in their backs.

If the HV10 is any indication, the company is off to a very good start.

 

For the full review, see:

DAVID POGUE.  "A Head Start On the Future Of High-Def."  The New York Times  (Thurs., August 10, 2006):  C1 & C11.

 




August 25, 2006

"Al Gore's Penguin Army"


Source of screen capture: http://www.youtube.com/watch?v=IZSqXUSwHRI

 

"Al Gore's Penguin Army," a funny satire of Al Gore's movie "An Inconvenient Truth," has been posted to the popular YouTube web site.  A bee's nest of folk are agitated that this satire may have been created by someone with some tie to an oil company.  My response:  who cares?  (Don't those who produce oil for us, have the same right to free speech that the rest of us have?)

View the video at:

http://www.youtube.com/watch?v=IZSqXUSwHRI

 

 

 




August 24, 2006

"Financial Incentives Can Change the Way Medicine is Practiced"



        An angioplasty being performed in Eyria, Ohio.  Source of photo:  online version of the NYT article cited below.

 

Medicare patients in Elyria receive angioplasties at a rate nearly four times the national average . . .

. . .

. . . some outside experts say they are concerned that Elyria is an example, albeit an extreme one, of how medical decisions in this country can be influenced by financial incentives and professional training more than by solid evidence of what works best for a particular patient.

“People are rewarded for erring on the side of an aggressive, highly expensive intervention,” said Dr. Elliott S. Fisher, a researcher at Dartmouth Medical School, which analyzed Medicare data and found Elyria to be an outlier.

Medicare pays Elyria’s community hospital, EMH Regional Medical Center, about $11,000 for an angioplasty involving use of a drug-coated stent.

The cardiologist might be paid an additional $800 for the work.  That is well above the fees for seeing patients in the office.  And with the North Ohio doctors performing thousands of angioplasties a year — about 3,400 in 2004, for example — the dollars can quickly add up.

Some medical experts say Elyria’s high rate of angioplasties — three times the rate of Cleveland, just 30 miles away — raises the question of whether some patients may be getting procedures they do not need or whether some could have been treated just as effectively and at lower cost and less risk through heart drugs that may cost only several hundred dollars a year.

. . .

Experts know that changing the financial incentives can change the way medicine is practiced.

For example, Kaiser Permanente, the big health system that employs its own doctors, says its patients in Ohio, including some in Elyria, are slightly less likely than the national average to undergo the type of cardiac procedures the North Ohio Heart Center doctors perform so prolifically.

Kaiser’s cardiologists, who work on salary instead of being paid by the procedure, typically treat patients in that region at the Cleveland Clinic, where they have hospital privileges.  And they follow established protocols about when a patient should undergo an angioplasty, when drugs might suffice and when bypass surgery might be the best resort.

“It’s not just individual doctors making up their minds,” explained Dr. Ronald L. Copeland, the executive medical director for Kaiser’s medical group in Ohio.  With no financial reason to perform expensive procedures, the Kaiser doctors frequently choose to manage the patients’ heart disease with drugs only.  “Our doctors have no disincentive to do that,” Dr. Copeland said.

. . .

For many cardiologists, the natural tendency when they see a patient with heart disease is to perform a procedure to try to clear arterial blockages.  And patients, cardiologists say, tend to rely on their doctors’ judgment.

“It’s sort of like, you go to a barber and ask if you need a haircut,” said Dr. David D. Waters, chief of cardiology at San Francisco General Hospital, who is currently studying the effectiveness of different kinds of treatment for heart disease.  “He’s likely to say you do.”

. . .

Experts say it can be difficult to detect cases in which doctors cross a medical line and are clearly performing unnecessary treatments.

“A lot of decisions are discretionary,” said Dr. Harlan M. Krumholz, a cardiologist and professor at Yale.

“It’s about where the thermostat is set,” he said, arguing that doctors in a particular geographic area tend to be unaware if the way they are treating their patients is markedly different from the practices of their peers in other areas.

Traditional measures of medical quality are not set up to detect whether patients are being treated too much, he said, unlike the kinds of safeguards that prompt credit card companies to call their customers to discuss unusual spending activity.  “Right now there are no ‘smart’ systems in place,” Dr. Krumholz said.

In the absence of any real monitoring or oversight, doctors in most places, including Elyria, have few incentives not to favor the treatments that provide them the most reimbursement.  Dr. Waters, the San Francisco cardiologist, said that the way physicians are typically paid — more money for more procedures — results in too many decisions to give a patient a stent.

“You can’t be paying people large sums of money to do things without checks and balances,” he said.

 

For the full story, see:

REED ABELSON.  "In Ohio City, a Heart Procedure Is Off the Charts; SIDE EFFECTS; A Stent Epidemic."  The New York Times  (Fri., August 18, 2006):  A1 & C4.

 

Source of graphic:    online version of the NYT article cited above.




August 23, 2006

Cuban Bureaucrats Fooled by Castro Impersonator


CastroImpersonator.jpg  Castro impersonator Eddy Calderón.  Source of photo:  online version of WSJ article cited below. 

 

(p. A1)  Mr. Calderón says the work can be risky.  Once, he recalls, a woman whose relative had been executed by the revolution hurled a dinner plate at his head.  At a recent gig, a tiny, white-haired lady shouted at him:  "Why did you ruin the country?" Mr. Calderón, as Fidel, answered that she should thank him because if it hadn't been for him, she'd be stuck in Cuba instead of living well in Miami, "where you can buy hair dye and dentures."

After the Aug. 13 performance, a ballroom attendant, Armando Montes de Oca, approached Mr. Calderón while he was still in his Castro beard and told him:  "If I didn't know you were Calderón behind that beard, you would never leave (p. A9) this room alive."

"Thank you," Mr. Calderón replied.

Mr. Calderón has been doing his imitation of Fidel for about a dozen years.  He became a local superstar two years ago when a cable-TV channel started weekly broadcasts of a skit called "La Mesa Retonta," or "The Idiots' Table," a takeoff on a weekly "Meet the Press"-style show Mr. Castro has done in Cuba, called "La Mesa Redonda," or "The Roundtable."

Mr. Calderón's Fidel voice is so good that on about 50 occasions, he has telephoned Cuban bureaucrats in Havana or Cuban diplomats abroad and fooled them into thinking they were on the line with the man himself.  Mr. Calderón taped the calls, which he still often plays on a Miami radio show.

Two years ago, Mr. Calderón held a 12-minute conversation with Cuba's deputy construction minister, ordering him to build a giant retractable roof over Havana's Latin American stadium, as a way to improve conditions for Cuban baseball players and dissuade them from defecting.

"We need a revolutionary roof to uphold the pride of the Cuban Revolution," said Mr. Calderón during the taped telephone call, in a dead-on imitation of Mr. Castro's edgy, high-pitched, nasal voice.

"I am your unconditional soldier," replied the hapless minister, who promised to get the job done.

That same year, Mr. Calderón telephoned a luxury hotel at Cuba's Varadero beach resort and ordered the hotel manager to provide a week-long all-expense-paid vacation for one of Cuba's leading dissidents, whose movements are shadowed by the secret police, to show the government's good will.  Before hanging up, the hotel manager, Mr. Calderón says, promised to make the reservation.

A year earlier, Mr. Calderón as Fidel told transport official Gumersindo Gómez to round up 200 scarce buses for an outing of some 700 priests of the Afro-Cuban religion Santería, and to find room for their sacrificial goats and chickens.  Make sure the buses don't have any graffiti saying "down with You-Know-Who," he added.

"Fatherland or death," Mr. Calderón said.

"Onwards to victory," replied Mr. Gómez, according to the tape of the phone call.

 

For the full story, see:

JOSÉ DE CÓRDOBA.  "Fidel Castro's Illness Has Impersonators Scrambling to Adapt In Miami; Mr. Calderón Does El Jefe's Voice Perfectly; New Role for Brother Raúl."  Wall Street Journal  (Fri., August 18, 2006):  A1 & A9. 




August 22, 2006

Eleven-Year-Old Crippled for Life by Mao Supporters



  Source of book image:  http://www.holtzbrinckpublishers.com/henryholt/Search/SearchBookDisplayLarge.asp?BookKey=1524294


(p. B29) This improbable journey, from Maoist orthodoxy to the entrepreneurial quasicapitalism officially described as “socialism with Chinese characteristics,” is the main theme of “Chinese Lessons,” but Mr. Pomfret, a reporter for The Washington Post, gives his tale a twist.  He tells it not only through his own experiences as a student and journalist but through the life stories of five university classmates, who suffered through the Cultural Revolution as children, found inspiration and hope in the growing democracy movement and lived to see a China that neither they nor their parents could have imagined.  . . .

All the lives Mr. Pomfret explores are extraordinary, and each sheds its own light on recent Chinese history.  Perhaps the most endearing of his characters is Guan Yongxing, better known as Little Guan, who as an 11-year-old suffered social ostracism after accidentally using a piece of paper with “Long Live Chairman Mao!” on it to wipe herself in the bathroom.

After classmates threw her to the ground, no doctor would treat her dislocated shoulder, leaving her crippled for life.  Her father’s job as a schoolteacher made the Guan family a prime target for abuse, and Little Guan, rather than endure ridicule and torment at school, picked cotton and sprayed fertilizer on the fields, her back constantly burned by chemicals leaking from the tank on her back.  Tough, determined and highly intelligent, she survives and eventually prospers in the new China.

. . .

Zhou Lianchun, called Book Idiot Zhou by a contemptuous Communist Party official, meted out insults and torture as part of a Red Guard brigade.  “I did what I was told and, being 11, I liked it,” he tells Mr. Pomfret.

. . .

More even than sex, students want just a little bit of the good life that seems to be in reach as China’s rulers relax their economic policies.  To get it they master a strange kind of doublethink, pledging allegiance to the party and Communist ideals while scheming to start a business.

Book Idiot Zhou, a history teacher by day, jumps into a business partnership to process urine for the pharmaceutical industry.  “Several days a week, he taught Marxism, Leninism and Maoist thought and railed against the exploitation of the capitalist class,” Mr. Pomfret writes.  “The rest of the time he spent as a budding entrepreneur, employing dozens at rock-bottom wages, working the system to enrich himself, his partners and his family.”

. . .

His classmates have done well.  But their lives, and the China described in “Chinese Lessons,” bear a heavy load of suppressed grief, terrible compromises and boundless cynicism.  At a new drive-in called the Happy Auto Movie Palace, Mr. Pomfret notices something strange about the concrete slabs underneath his feet.  They show the marks of tank treads.  The drive-in owner bought them after the government repaved Tiananmen Square.

This strikes Mr. Pomfret as bizarre, but not the owner.  “It was a good deal,” he says.

 

For the full review, see: 

WILLIAM GRIMES. "Books of The Times; Twisting Along China’s Sharp Curves." The New York Times (Fri., August 4, 2006):  B29.

(Note: ellipses added.) 





August 21, 2006

Big Business Is Often Bashed, But Is Not Always Bad


(p. 4) BUSINESS bashing by politicians in America has a long history, including rhetoric far more inflammatory than the denunciations being directed at Wal-Mart this year by some Democrats, who sometimes sound as if they are running against the company instead of another politician.

. . .

The company may not appreciate the honor, but its place in the political debate reflects its revolutionary effect on the American economy.

Put simply, the big winners as the economy changes have often been scary to many, particularly those with a stake in the old economic order being torn asunder.

“Twice as many Americans shop at Wal-Mart over the course of a year than voted in the last presidential election,” said H. Lee Scott Jr., the company’s chief executive, in a speech to the National Governors Association in February.

Wal-Mart’s success reflects its ability to charge less for a wide range of goods.  That arguably has reduced inflation and made the economy more efficient.  It has introduced innovations in managing inventory and shipping goods.

. . .

But the fact that Wal-Mart has more shoppers than any politician has voters shows that many of those workers — and many people higher on the income scale — find its prices irresistible.  That group no doubt includes some of the company’s critics.

Previous business targets of politicians have similarly been both popular and reviled.  The railroads enabled much of America to prosper, but to many people in the late 19th century they were viewed as villains.

They upset old economic relationships by making it possible to ship goods over much longer distances, thus introducing competition for local businesses and farms.

 

For the full commentary, see:

FLOYD NORRIS.  "THE NATION; Swiping at Industry From Atop the Stump."  The New York Times, Section 4  (Sun., August 20, 2006):  4.

(Note:  ellipses added.)

 

   Illinois protesters bashing Wal-Mart during the summer of 2006.  Source of photo:  online version of the NYT article cited above.

 




August 20, 2006

Perverse Incentives Lead to Useless Heart Surgeries



The old idea was this:  Coronary disease is akin to sludge building up in a pipe.  Plaque accumulates slowly, over decades, and once it is there it is pretty much there for good.  Every year, the narrowing grows more severe until one day no blood can get through and the patient has a heart attack.  Bypass surgery or angioplasty -- opening arteries by pushing plaque back with a tiny balloon and then, often, holding it there with a stent -- can open up a narrowed artery before it closes completely.  And so, it was assumed, heart attacks could be averted.

But, researchers say, most heart attacks do not occur because an artery is narrowed by plaque.  Instead, they say, heart attacks occur when an area of plaque bursts, a clot forms over the area and blood flow is abruptly blocked.  In 75 to 80 percent of cases, the plaque that erupts was not obstructing an artery and would not be stented or bypassed.  The dangerous plaque is soft and fragile, produces no symptoms and would not be seen as an obstruction to blood flow.

That is why, heart experts say, so many heart attacks are unexpected -- a person will be out jogging one day, feeling fine, and struck with a heart attack the next.  If a narrowed artery were the culprit, exercise would have caused severe chest pain.

Heart patients may have hundreds of vulnerable plaques, so preventing heart attacks means going after all their arteries, not one narrowed section, by attacking the disease itself.  That is what happens when patients take drugs to aggressively lower their cholesterol levels, to get their blood pressure under control and to prevent blood clots.

Yet, researchers say, old notions persist.

''There is just this embedded belief that fixing an artery is a good thing,'' said Dr. Eric Topol, an interventional cardiologist at the Cleveland Clinic in Ohio.

In particular, Dr. Topol said, more and more people with no symptoms are now getting stents.  According to an analysis by Merrill Lynch, based on sales figures, there will be more than a million stent operations this year, nearly double the number performed five years ago.

Some doctors still adhere to the old model.  Others say that they know it no longer holds but that they sometimes end up opening blocked arteries anyway, even when patients have no symptoms.

Dr. David Hillis, an interventional cardiologist at the University of Texas Southwestern Medical Center in Dallas, explained:  ''If you're an invasive cardiologist and Joe Smith, the local internist, is sending you patients, and if you tell them they don't need the procedure, pretty soon Joe Smith doesn't send patients anymore.  Sometimes you can talk yourself into doing it even though in your heart of hearts you don't think it's right.''

Dr. Topol said a patient typically goes to a cardiologist with a vague complaint like indigestion or shortness of breath, or because a scan of the heart indicated calcium deposits -- a sign of atherosclerosis, or buildup of plaque.  The cardiologist puts the patient in the cardiac catheterization room, examining the arteries with an angiogram.  Since most people who are middle-aged and older have atherosclerosis, the angiogram will more often than not show a narrowing.  Inevitably, the patient gets a stent.

''It's this train where you can't get off at any station along the way,'' Dr. Topol said.  ''Once you get on the train, you're getting the stents.  Once you get in the cath lab, it's pretty likely that something will get done.''

 

For the full story, see: 

GINA KOLATA.   "New Heart Studies Question the Value of Opening Arteries."  The New York Times   (Sun., March 21, 2004). 





August 19, 2006

Minimum Wage May Destroy Jobs Overall, In Spite of Card and Krueger


The economists' consensus about the job-destroying aspect of the minimum wage is less strong than it used to be.  In the late 1970s, 90% of economists surveyed agreed or partly agreed with the statement, "a minimum wage increases unemployment among young and unskilled workers."  By 2003, this percentage had fallen to 73.  Still a strong consensus, but a weaker one than previously. What happened?

The answer:  One major study and a book by economists David Card, now at the University of California, Berkeley, and Alan Krueger of Princeton.  In a 1994 study of the effect of a minimum wage increase in New Jersey, they found higher growth of jobs at fast-food restaurants in New Jersey than in Pennsylvania, whose state government had not increased the minimum wage.  This study convinced a lot of people, including some economists.  It was almost comical to see Sen. Edward Kennedy hype this study when he had never before mentioned any economic studies of the minimum wage.

Based on criticism of their data from David Neumark and economist William Wascher of the Federal Reserve Board, Messrs. Card and Krueger moderated their findings, later concluding that fast-food jobs grew no more slowly, rather than more quickly, in New Jersey than in Pennsylvania.  But they never answered a more fundamental criticism, namely that the standard economists' minimum-wage analysis makes no predictions about narrowly defined industries.  As Donald Deere and Finis Welch of Texas A&M University, and Kevin M. Murphy of the University of Chicago, pointed out, an increased minimum wage help expand jobs at franchised fast-food outlets by hobbling competition from local pizza places and sandwich shops.

 

For the full commentary, see:

DAVID R. HENDERSON. "If Only Most Americans Understood." The Wall Street Journal (Tues., August 1, 2006): A12.

 

The citation for the article by Deere, Murphy and Welch:

Deere, Donald, Kevin M. Murphy, and Finis Welch. "Sense and Nonsense on the Minimum Wage." Regulation 18, no. 1 (1995).

 

 




August 18, 2006

French Slow Innovation By Violating Apple's Intellectual Property Rights


THE French take pride in their revolutions, which are usually hard to miss -- mass uprisings, heads rolling and such.  So, with the scent of tear gas in the air this past month from the giant protests against a youth labor law, it was easy to overlook the French National Assembly's approval of a bill that would require Apple Computer to crack open the software codes of its iTunes music store and let the files work on players other than the iPod.  While seemingly minor, the move is actually rather startling and has left many experts wondering (as ever):  What has possessed the French?

. . .  

If the French gave away the codes, Apple would lose much of its rationale for improving iTunes.  Right now, after the royalty payment to the label (around 65 cents) and the processing fee to the credit card company (as high as 23 cents), not to mention other costs, Apple's margin on 99-cent music is thin.  Yet it continues to add free features to iTunes because it helps sell iPods.

Opening the codes threatens that link.  Apple would need to pay for iTunes features with profits from iTunes itself.  Prices would rise.  Innovation would slow.

Even worse, sharing the codes could make it easier for hackers to unravel Apple's FairPlay software.  Without strong copy protection, labels would not supply as much new music.

 

For the full commentary, see:

Austan Goolsbee.  "ECONOMIC SCENE; In iTunes War, France Has Met the Enemy. Perhaps It Is France."  The New York Times  (Thurs., April 27, 2006):  C3.




August 17, 2006

Over-regulating Lenders is a Recipe for Stagnation


MICROFINANCE is based on a simple idea: banks, finance companies, and charities lend small sums — often no more than a few hundred dollars — to poor third world entrepreneurs. The loan recipients open businesses like tailoring shops or small grocery stores, thereby bolstering local economies.

But does microfinance, in fact, help the poor?

To help answer this question, I visited Hyderabad, India, in June.  . . .

. . .

My visit suggested that microfinance is working, but it is often more corporate, more commercial and under more attack than I had expected.

. . .

Near Hyderabad, in the state of Andhra Pradesh, political opposition to microfinance has begun. State officials have fed negative stories to the media. They charge that microfinance debts have driven some people to ruin or perhaps suicide. They call Spandana’s programs “coercive” and “barbaric.” They question whether the “community pressure” behind repayment is sometimes too severe.

The motives behind this campaign are twofold. The state is not a neutral umpire but rather has its own “self-help group” banking model, which lends at the micro level. Spandana and some of the other private microfinance groups are unwelcome competition. More generally, opposition to money lending has been frequent in the history of both India and the West. Not every loan will have a positive outcome, and it is easy to focus on the victims. Not all Indians have accepted the future of their country as an open commercial society with winners and losers.

. . .

The Indian political authorities must decide whether they will allow new businesses to spread, even when commercialization leads to some disappointments or competes with a state interest. The stipulation that no one can be harmed by progress is a sure recipe for stagnation.

 

For the full commentary, see: 

Tyler Cowen.  "ECONOMIC SCENE; Microloans May Work, but There Is Dispute in India Over Who Will Make Them."  The New York Times  (Thurs., August 10, 2006):  C4. 

 




August 16, 2006

Doctors Face Perverse Incentives and Constraints



Kevin MD's blog provides an illuminating discussion of how hard we make it for good people to practice medicine.  The case discussed involves an MD who is successfully sued for not performing a heart cath on a patient, even though two previous treadmill tests did not reveal any problems.  (The heart cath procedure itself has a nontrivial risk of death and other serious complications.)   

The discussion in the Kevin MD illustrates the difficult incentives and constraints faced by the conscientious physician. In terms of a patient's health, a cost/benefit analysis may imply that a medical test should not be performed, but in terms of an MD's income, and legal liability, a cost/benefit analysis may imply that a medical test should be performed. 

Something is wrong with our reward structure and legal institutions, when MD's who make the right medical call for the patient, are "rewarded" by earning less, and by increasing their chances of being sued.

 

Read the full discussion at:

http://www.kevinmd.com/blog/2006/06/liable-for-not-doing-heart-cath-on-49.html

 

For convenience, here is the opening entry in the discussion:


Saturday, June 03, 2006

Liable for not doing a heart cath on a 49 year-old
Interesting case with an unfortunate outcome:
Daniel Bettencourt was 49 when he suffered a fatal heart attack while working as a manual laborer at E.&J. Gallo Winery on Jan. 15, 2003.

An autopsy determined that the Modesto man had more than 90 percent blockage in an artery that supplies blood to the left side of the heart.

Last week, a jury found that Gould Medical Group doctors had failed to diagnose Bettencourt's heart condition.
A 49 year-old male has recurrent chest pain. He was referred to a cardiologist and had two negative stress tests. That sounds like reasonable standard of care to me, although I probably would have done a more detailed second stress test - such as a stress-echo or MIBI. As the defense stated, you can't cath everybody with chest pain (although if they had, this lawsuit would have been avoided - score another point for defensive medicine).





August 15, 2006

More and Better Jobs Gained by 'Insourcing' than are Lost to 'Outsourcing'


  N. Gregory Mankiw, former chair of W.'s Council of Economic Advisors. The media, most Democrats, and some Republicans, skewered Mankiw in 2004 for simply and clearly stating the truth about outsourcing. Source of photo:  online version of the NYT article cited below.

 

In December 2005, the McKinsey Global Institute predicted that 1.4 million jobs would be outsourced overseas from 2004 to 2008, or about 280,000 a year.  That’s a drop in the bucket.  In July, there were 135.35 million payroll jobs in the United States, according to the Bureau of Labor Statistics.  Thanks to the forces of creative destruction, more jobs are created and lost in a few months than will be outsourced in a year.  Diana Farrell, director of the McKinsey Global Institute, notes that in May 2005 alone, 4.7 million Americans started new jobs with new employers.

What’s more, the threat of outsourcing varies widely by industry.  Lots of services require face-to-face interaction for people to do their jobs.  That is particularly true for the biggest sectors, retail and health care.  As a result, according to a McKinsey study, only 3 percent of retail jobs and 8 percent of health care jobs can possibly be outsourced.  By contrast, McKinsey found that nearly half the jobs in packaged software and information technology services could be done offshore.  But those sectors account for only about 2 percent of total employment.  The upshot:  “Only 11 percent of all U.S. services job could theoretically be performed offshore,” Ms. Farrell says.

Economists have also found that jobs or sectors susceptible to outsourcing aren’t disappearing.  Quite the opposite.  Last fall, J. Bradford Jensen, deputy director at the International Institute of Economics, based in Washington, and Lori G. Kletzer, professor of economics at the University of California, Santa Cruz, documented the degree to which various service sectors and jobs were “tradable,” ranging from computer and mathematical occupations (100 percent) to food preparation (4 percent).

Not surprisingly, Mr. Jensen and Professor Kletzer found that in recent years there has been greater job insecurity in the tradable job categories.  But they also concluded that jobs in those industries paid higher wages, and that tradable industries had grown faster than nontradable industries.  “That could mean that this is our competitive advantage,” Mr. Jensen says.  “In other words, what the U.S. does well is the highly skilled, higher-paid jobs within those tradable services.”

There is evidence that within sectors, lower-paying jobs are being outsourced while the more skilled ones are being kept here.  In a 2005 study, Catherine L. Mann, senior fellow at the Institute for International Economics, found that from 1999 to 2003, when outsourcing was picking up pace, the United States lost 125,000 programming jobs but added 425,000 jobs for higher-skilled software engineers and analysts.

 

For the full commentary, see:

DANIEL GROSS. "Economic View; Why ‘Outsourcing’ May Lose Its Power as a Scare Word." The New York Times, Section 3 (Sun., August 13, 2006):  5. 




August 14, 2006

25% Increase in Oil by 2015


OilPriceGraphic.gif  Source of graphic:  online version of the WSJ article cited below.

 

Despite fears of "running out" of oil, Cambridge Energy Research Associates' new analysis of oil-industry activity points to a considerable growth in the capacity to produce oil in the years ahead.  Based upon our field-by-field examination of current activity and of 360 new projects that are either underway or very likely, we see capacity growing from its current 89 mbd to 110 mbd by 2015, a 25% increase.  A substantial part of this growth reflects the advance of technology, i.e., the rapid growth in "non-traditional" hydrocarbons, such as from very deep offshore waters, Canadian oil sands, and liquids made from natural gas.  (We are not counting in this increase the additional supplement that will come from ethanol and other fuels made from plants.)

There are important qualifications, however.  First, this is physical capacity to produce, not actual flows, which, as we have seen over the last year, can be disrupted by everything from natural disasters to government decision, to conflict and geopolitical discord.  Second, while prices are going up rapidly, so are costs;  and shortages of equipment and people can slow things down.  Third, greater scale and technical complexity can generate delays.  Still, a 25% increase in physical capacity by 2015 is a reasonable expectation, based upon today's evidence, and that would go a long way to meeting the growing demand from China, India and other motorizing countries.

Admittedly, it may be hard to conceive of this kind of increase when oil prices are climbing the wall of worry, when each new disruption reverberates around the world, when Iranian politicians threaten $100 or $250 oil in the event of sanctions, and when so many geopolitical trends seem so adverse.  All this underlines the fact that while the challenges below ground are extensive, the looming uncertainties -- and risks -- remain above ground. 

 

For the full commentary, see:

Daniel Yergin.  "Crisis in the Pipeline."  The Wall Street Journal  (Weds., August 9, 2006):  A10.   




August 13, 2006

Parts Order is a Major Step Towards a Nuclear Renaissance


WASHINGTON, Aug. 3 — A partnership established to build nuclear reactors has ordered the heavy steel parts needed to make a reactor vessel, as well as other crucial components, apparently the first hardware order for a plant since the 1970’s.

The order, which an executive of the partnership said was worth “tens of millions of dollars,” was a major step toward actual construction after several years of speculation about a nuclear renaissance.

. . .

The design is derived from the Westinghouse layout already in service, but with several changes.  It is 1,600 megawatts, about a third larger than the largest reactor operating here.  It has a double-walled containment building designed to withstand the crash of a large aircraft.  It has four emergency core cooling systems, any one of which would be sufficient in an emergency, so that it can continue operating even if some of the systems are deactivated for maintenance and repair.  And because of design changes, it has 47 percent fewer valves, 16 percent fewer pumps and 50 percent fewer tanks than a typical existing model.

 

For the full story, see:

MATTHEW L. WALD.  "Nuclear Power Venture Orders Crucial Parts for Reactor."  The New York Times (Fri., August 4, 2006):  C2.




August 12, 2006

"When Beds Are Available, Physicians Figure Out a Way to Fill Them"


HospitalStayLength.gif Source of graphic:  online version of the WSJ article cited below.

 

(p. D1)  The Dartmouth investigators say there is no evidence that higher amounts and greater intensity of care lead to better outcomes for patients.  They note past studies done at Dartmouth -- looking at Medicare patients with heart attacks, hip fractures and colon cancer -- that suggest centers with the most high-intensity care actually have slightly higher death rates than those with a lower intensity of care.  As a result, the researchers say, the bills for patients with similar illness may be two or three times higher at some prestigious institutions, with no apparent additional benefit -- and perhaps some risk of harm.

. . .

(p. D4)  John E. Wennberg, principal investigator for the Atlas project, has pioneered research into variation of medical services.  He says the differences among academic medical centers are particularly striking since the medical community depends on these institutions to develop effective treatment strategies.  "If the academic medical centers don't know how to do it, nobody will," Dr. Wennberg says.

He says his research suggests the primary reason for the differences is the capacity of services, such as hospital beds, intensive care units and specialist physicians, within communities.  There isn't any evidence that people are sicker in the markets of high-intensity services than in low ones, says Dr. Wennberg, but when beds are available, physicians figure out a way to fill them.

 

For the full story, see:

RON WINSLOW.   "Care Varies Widely At Top Medical Centers; Utilization of ICU for Sickest Patients Is 5 Times Higher at Some Than Others; NYU Vs. Mayo."  The Wall Street Journal  (Tues. May 16, 2006):  D1.

 

  Source of graphic:  online version of the WSJ article cited above.




August 11, 2006

U.S. Economy Can Prosper, Even if G.M. Does Not


The fragility of success for large corporations is documented in the early chapters of the Foster and Kaplan book that is mentioned below. 

(p. 1)  THE announcement last week that General Motors would cut 25,000 jobs and close several factories is yet another blow to the Goliath of automakers and its workers.  But only if you work for G.M. is the company's decline a worry.  For consumers, the decline can be seen as a symbol of healthy competition.

G.M.'s sales, market share and work force have all been falling for a generation, even as the quality of its vehicles has gone up.  Why?  Because its competitors' products have improved even more.  Today's auto buyers enjoy an unprecedented array of well-built, well-equipped, reasonably priced vehicles offered by many manufacturers.

. . .

(p. 3)  . . .  even if a new generation is drawn to G.M.'s products, recovery of its former position seems unlikely.  Other brands have improved, too:  J.D. Power estimates that for the auto industry overall, manufacturing defects declined 32 percent since 1998 alone.

There is also great pressure to hold prices down, which is bad for companies like G.M. with vast amounts of overhead.  According to the consumer price index, new cars and light trucks today cost less in real-dollar terms than in 1982, despite having air bags, antilock brakes, CD players, power windows and other features either unavailable or considered luxury options back then.

This means that during the very period that General Motors has declined, American car buyers have become better off.  Competition can have the effect of ''creative destruction,'' in the economist Joseph Schumpeter's famous term, harming workers in some places, while everyone else comes out ahead.

. . .

As it continues to shrink, G.M. may serve as an exemplar of what the world economy will do in many arenas -- knock off established leaders, while improving quality and cutting prices.  In their 2001 book ''Creative Destruction,'' Richard Foster and Sarah Kaplan, analysts at McKinsey & Company, documented how even powerhouse companies that are ''built to last'' usually succumb to competition.

Competition can be a utilitarian force that brings the greatest good to the greatest number.  Someday when the remaining divisions of General Motors are bought by some start-up company that doesn't even exist yet, try to keep that in mind.

 

For the full commentary, see: 

GREGG EASTERBROOK.  "What's Bad for G.M. Is . . ."  The New York Times, Section 4  (Sunday, June 12, 2005):  1 & 3.

(Note:  the ellipsis in the title is in the original title; the ellipses in the article, were added.)

 

The full reference to the Foster and Kaplan book, is:

Foster, Richard and Sarah Kaplan.  Creative Destruction:  Why Companies that Are Built to Last Underperform the Market---and How to Successfully Transform Them.  New York:  Currency Books, 2001.

 




August 10, 2006

Static Assumptions Undermine Economic Policy Analysis



Over 50 years ago, Schumpeter emphasized that static models of capitalism miss what is most important in capitalism.  Yet static analysis still dominates most policy discussions.  But there is hope:


(p. A14) A bit of background:  Most official analysis of tax policy is based on what economists call "static assumptions."  While many microeconomic behavioral responses are included, the future path of macroeconomic variables such as the capital stock and GNP are assumed to stay the same, regardless of tax policy.  This approach is not realistic, but it has been the tradition in tax analysis mainly because it is simple and convenient.

In his 2007 budget, President Bush directed the Treasury staff to develop a dynamic analysis of tax policy, and we are now reaping the fruits of those efforts.  The staff uses a model that does not consider the short-run effects of tax policy on the business cycle, but instead focuses on its longer run effects on economic growth through the incentives to work, save and invest, and to allocate capital among competing uses.

 

For the full story, see:

ROBERT CARROLL and N. GREGORY MANKIW.  "Dynamic Analysis."  The Wall Street Journal  (Weds., July 26, 2006):  A14.





August 9, 2006

Taking the Red Pill in China


Surfing the Web last fall, a Chinese high-school student who calls himself Zivn noticed something missing.  It was Wikipedia, an online encyclopedia that accepts contributions or edits from users, and that he himself had contributed to.

The Chinese government, in October, had added Wikipedia to a list of Web sites and phrases it blocks from Internet users' access.  For Zivn, trying to surf this and many other Web sites, including the BBC's Chinese-language news service, brought just an error message.  But the 17-year-old had had a taste of that wealth of information and wanted more.  "There were so many lies among the facts, and I could not find where the truth is," he writes in an instant-message interview.

Then some friends told him where to find Freegate, a tiny software program that thwarts the Chinese government's vast system to limit what its citizens see.  Freegate -- by connecting computers inside of China to servers in the U.S. -- allows Zivn and others to keep reading and writing to Wikipedia and countless other sites.

Behind Freegate is a North Carolina-based Chinese hacker named Bill Xia.  He calls it his red pill, a reference to the drug in the "Matrix" movies that vaulted unconscious captives of a totalitarian regime into the real world.  Mr. Xia likes to refer to the villainous Agent Smith from the Matrix films, noting that the digital bad guy in sunglasses "guards the Matrix like China's Public Security Bureau guards the Internet."

. . .

(p. A9)  . . . , with each new version of Freegate -- now on its sixth release -- the censors "just keep improving and adding more manpower to monitor what we have been doing," Mr. Xia says.  In turn, he and volunteer programmers keep tweaking Freegate.

At first, the software would automatically change its Internet Protocol address -- a sort of phone number for a Web site -- faster than China could block it.  That worked until September 2002, when China blocked Freegate's domain name, not just its number, in the Internet phone book.

More than three years later, Mr. Xia is still amazed by the bold move, calling it a "hijacking."  Ultimately he prevailed, however, through a solution he won't identify for fear of being shut down for good.

Confident in that solution, Mr. Xia continues to send out his red pill, and users like Zivn continue to take it.  The teen credits his cultural and political perspective to a "generation gap" that has come of having access to more information.  "I am just gradually getting used to the truth about the real world," he writes.

 

For the full story, see: 

Geoffrey A. Fowler.  "Chinese Internet Censors Face 'Hacktivists' in U.S."  The Wall Street Journal  (Monday, February 13, 2006):  A1 & A9.




August 8, 2006

Entrepreneur Found Creative Way to Save Thousands of Babies


(p. 1)  The babies were lined up under heaters and they breathed filtered air.  Few of them weighed more than three pounds.  They shared the Boardwalk there on Coney Island with Violetta the Armless Legless Wonder, Princess WeeWee, Ajax the Sword-Swallower and all the rest.  From 1903 until the early 1940's, premature infants in incubators were part of the carnival.

It cost a quarter to see the babies, and people came again and again, to coo and to gasp and say look how small, look how small.  There were twins, even, George and Norma Johnson, born the day before Independence Day in 1937.  They had four and a half pounds between them, appearing in the world a month too soon because Dorothy Johnson stepped off a curb wrong and went into labor.

All those quarters bought a big house at Sea Gate for Dr. Martin A. Couney, the man who put the Coney Island babies on display.  He died broken and forgotten in 1950 at 80 years old.  The doctor was shunned as an unseemly showman in his time, even as he was credited with popularizing incubators and saving thousands of babies.  History did not know what to do; he was inspired and single-minded, distasteful and heroic, ultimately confounding.



. . .



(p. 31)  He displayed incubators developed by his mentors at the Berlin Exposition of 1896, and though they caught on in Europe, acceptance was slower in the United States.

Using babies from New York hospitals that lacked the facilities to care for them, Dr. Couney mounted a display at Luna Park, a Coney Island amusement park, in 1903, soon adding another at a second Coney Island park, Dreamland.



. . .



At least 8,000 babies passed through the incubators, and the doctor was credited with saving at least 6,500, according to news reports of the time.  The Johnson twins made it off the Boardwalk and grew up strong and tall. George Johnson found work, and a sense of freedom, driving trains up and down the coast for the Pennsylvania Railroad.  Norma Johnson married a man named Coe.  Between the twins there are nine children, 13 grandchildren and one great-grandchild.  George and Norma attended Dr. Couney's induction ceremony yesterday.  "My father didn't have any money, and this doctor says you can use our incubator for free, but you have to put them on display on Coney Island," Mr. Johnson said, sitting next to his sister on the porch at the Sheepshead Bay Yacht Club the other day.  "It was us and a lot of other people, too."

The twins will turn 68 the day before Independence Day, old enough to enjoy the seaside air on an idle weekday morning.

Down the Boardwalk, the beach is open.  Pretty girls and seagulls play their games.  For a few dollars, you can watch a baseball game, shoot paint pellets at a hungry young dude or become a tattooed lady.

The likes of Martin A. Couney nobody has seen in 60 years.

 

For the full story, see: 

MICHAEL BRICK. "And Next to the Bearded Lady, Premature Babies."  The New York Times, Section 1 (Sun., June 12, 2005):  1 & 31.

(Note: ellipses added.)



JohnsonTwins.jpg  The Johnson twins who were displayed, and whose lives were saved, by Dr. Couney.  Source of photo:  online version of NYT article cited above.

 




August 7, 2006

Audacity and Scale of Hurricane Katrina Waste and Fraud Are Amazing


Photo scanned in from my paper copy of the NYT issue cited below.  Compare the version above to the cropped version that appeared in to online version below--whether deliverate or innocent, the effect of the cropping is to reduce the visual magnitude of the scene (and hence reduce the evidence of the magnitude of the waste).

 

(p. A1)  WASHINGTON, June 26 — Among the many superlatives associated with Hurricane Katrina can now be added this one:  it produced one of the most extraordinary displays of scams, schemes and stupefying bureaucratic bungles in modern history, costing taxpayers up to $2 billion.

A hotel owner in Sugar Land, Tex., has been charged with submitting $232,000 in bills for phantom victims.  And roughly 1,100 prison inmates across the Gulf Coast apparently collected more than $10 million in rental and disaster-relief assistance.

There are the bureaucrats who ordered nearly half a billion dollars worth of mobile homes that are still empty, and renovations for a shelter at a former Alabama Army base that cost about $416,000 per evacuee.

And there is the Illinois woman who tried to collect federal benefits by claiming she watched her two daughters drown in the rising New Orleans waters.  In fact, prosecutors say, the children did not exist.

The tally of ignoble acts linked to Hurricane Katrina, pulled together by The New York Times from government audits, criminal prosecutions and Congressional investigations, could rise because the inquiries are under way.  Even in Washington, a city accustomed to government bloat, the numbers are generating amazement.

"The blatant fraud, the audacity of the schemes, the scale of the waste — it is just breathtaking," said Senator Susan Collins, Republican of Maine, and chairwoman of the Homeland Security and Governmental Affairs Committee.

 

For the full story, see:

ERIC LIPTON.  "'Breathtaking' Waste and Fraud in Hurricane Aid."  The New York Times  (Tues., June 27, 2006):  A1 & A13. 

 

  Cropped version of the photo run in the online version of the NYT article cited above.

Source of the graphic:  the online version of the NYT article cited above.



August 6, 2006

Five More Hours Per Week of Leisure Time in 2003 Than in 1965


The easiest way to measure leisure is to take survey data on how many hours a week people spend at work and subtract.  Since 1965, the number of hours the average American works for pay has not changed much.  By this simple measure, then, leisure has also stayed the same.

But are we really working as much as ever?

''All time away from work is not equal,'' Erik Hurst, an economist at the Graduate School of Business at the University of Chicago, said in an interview.  Some time off is actually just more work.

To put it in economic terms, we spend some time off the job in consumption (watching TV, hanging out with our friends, reading for pleasure) and some in production (cooking dinner, cleaning the house, doing household repairs).  Some activities, like sleeping and eating, fall somewhere in between, while others, including child care and gardening, combine pleasure and production.

The difference is not just that we enjoy some activities and dislike others.  It is that we could, in theory, pay someone else to do the production for us.  A cook or a restaurant can make dinner, but nobody else can play golf or watch TV for you.

. . .

Americans are not, in fact, working as much as they used to.  They are just getting paid for more of the work they do.  Using several different definitions of leisure, Professor Hurst and Mark A. Aguiar, an economist at the Federal Reserve Bank of Boston, analyzed time-use surveys done from 1965 to 2003.  Whether they defined leisure narrowly or broadly, they got a consistent result.

''Leisure time -- measured in a variety of ways -- has increased significantly between 1965 and 2003,'' they write in ''Measuring Trends in Leisure:  The Allocation of Time Over Five Decades,'' a Boston Fed working paper.  . . .  Using the most restrictive definition, which includes only ''entertainment/social activities/relaxing'' and ''active recreation,'' the economists found that leisure had increased 5.1 hours a week, holding demographics like age constant.  (Without that control, leisure has grown 4.6 hours.)  Assuming a 40-hour work week, that is like adding six weeks of vacation -- an enormous increase.

''I was surprised by the magnitude,'' Mr. Aguiar said in an interview, though the general trend agrees with earlier research.

 

For the full commentary, see: 

VIRGINIA POSTREL.  "ECONOMIC SCENE; The Work You Do When You're Not at Work."  The New York Times  (Thursday, February 23, 2006):  C3.

 

A PDF of the NBER draft of the Aguiar and Hurst paper can be found at: 

http://faculty.chicagogsb.edu/erik.hurst/research/aguiar_hurst_leisure_nber_submit_final.pdf




August 5, 2006

Road Opens a Year Early: Contract Included Incentives



OmahaExpresswaySmall.jpg With monetary incentives to finish early, Hawkins Construction Company finishes westbound lanes a year ahead of schedule.   Source of photo:
http://www.omaha.com/index.php?u_pg=1636&u_sid=2214442&u_rnd=7720251

 

The long delays, and lack of visible progress in expanding 132nd, near our house, became a running joke---but the wasted travel time was not funny.  Similar road construction delays were occuring all over town, to the point where it looked as though the issue might threaten the mayor's re-election.  So he got serious, and in new road contracts, included substantial monetary incentives for finishing the job ontime, and even more incentives to finish it early.  The expressway pictured above is one of those built under the new contract.  Maybe incentives really do matter?

 

(p. 1A)  An electronic sign above West Dodge lured drivers with a simple message:  "Expressway Open."

The real draw was the quicker commute drivers encountered Thursday evening during the first rush hour after the opening of the West Dodge Road Expressway.

After two years of construction, the expressway's westbound bridge opened to traffic at 10:35 a.m. Thursday, more than a year ahead of schedule.

A steady flow of traffic streamed across the bridge Thursday evening.

"It was wonderful," said commuter Jean Crouchley.

 

For the full article, see:

MICHAEL O'CONNOR AND RICK RUGGLES.  "A Concrete Example of Progress; Motorists Expect Daily Drives to be Quicker with New Route."  Omaha World-Herald (Friday, July 28, 2006):  1-2.

(Note: The online version of the article had the title: "Making quick work of commute on Expressway.")





August 4, 2006

Schumpeter Not Invited to Milton Friedman's Dinner Party



FriedmanRoseMilton.jpg   Rose and Milton Friedman.  Source of image:  the online venison of the WSJ article cited below.

 

Milton Friedman is one of my heroes.  But my dinner party invitation list would include Hayek and Schumpeter in place of Marshall and Keynes.

 

If they were to throw a small dinner party . . . for Mr. Friedman's favorite economists (dead or alive), who'd be invited?  . . . he reeled off this answer:  "Dead or alive, it's clear that Adam Smith would be No. 1. Alfred Marshall would be No. 2. John Maynard Keynes would be No. 3. And George Stigler would be No. 4. George was one of our closest friends."  (Here, Mrs. Friedman, also an economist of distinction, noted sorrowfully that "it's hard to believe that George is dead.")

 

For the full interview, see: 

TUNKU VARADARAJAN. "COMMENTARY: THE WEEKEND INTERVIEW; Rose and Milton Friedman; The Romance of Economics." The Wall Street Journal  (Sat., July 22, 2006):  A10.





August 3, 2006

"The More Sweatshops the Better"


JACQUELINE NOVOGRATZ, a veteran of the Rockefeller Foundation and a former consultant to the World Bank, talks enthusiastically about the development of a company in Africa where some 2,000 women earn, on average, $1.80 a day producing antimalarial bed netting.  With the assistance of a $350,000 loan from an American investor, the business started making the nets nearly three years ago and is likely to add 1,000 more jobs within the next year.

''They're in the process of building a real company town there,'' Ms. Novogratz said.

 

Ms. Novogratz is not an outsourcing executive at a multinational company.  Rather, she is the chief executive of the Acumen Fund, a philanthropic start-up based in New York that uses donations to make equity investments and loans in both for-profit and nonprofit companies in impoverished countries.  One of the stars of her small portfolio is the bed-netting maker, A to Z Manufacturing, a family-owned company in Tanzania -- a country where 80 percent of the population makes less than $2 a day.

. . .

''To put it in the baldest possible terms, the more sweatshops the better,'' said William Easterly, professor of economics at New York University and author of ''The White Man's Burden:  Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good.''  Professor Easterly is not advocating the deliberate creation of workplaces with miserable conditions.  ''As you increase the number of factories demanding labor, wages will be driven up,'' he said, and eventually such factories will not be sweatshops.

Ms. Novogratz says it can be difficult to tell well-off, philanthropy-minded Westerners that what Africa really needs is more $2-a-day jobs.  But when they understand the alternatives, she said, such concerns tend to melt away.  Before they found work at the netting factory in Tanzania, for example, many of the women were street vendors or domestic workers and earned less than $1 a day.  A to Z's wages place the women in Tanzania's top quartile of earners, Ms. Novogratz said.

 

For the full commentary, see: 

DANIEL GROSS.  "ECONOMIC VIEW; Fighting Poverty With $2-a-Day Jobs."  The New York Times    Section 3, (Sunday, July 16, 2006):  4.




August 2, 2006

Life Has Improved; And Can Continue to Improve


 Source of graphic:  online version of the NYT article cited below. 

 

(p. 1)  New research from around the world has begun to reveal a picture of humans today that is so different from what it was in the past that scientists say they are startled.  Over the past 100 years, says one researcher, Robert W. Fogel of the University of Chicago, humans in the industrialized world have undergone “a form of evolution that is unique not only to humankind, but unique among the 7,000 or so generations of humans who have ever inhabited the earth.”

. . .

(p. 19)  . . .  stressful occupations added to the burden on the body.

People would work until they died or were so disabled that they could not continue, Dr. Fogel said. “In 1890, nearly everyone died on the job, and if they lived long enough not to die on the job, the average age of retirement was 85,” he said. Now the average age is 62.

A century ago, most people were farmers, laborers or artisans who were exposed constantly to dust and fumes, Dr. Costa said. “I think there is just this long-term scarring.”

 

For the full story, see:

Health1860s1994.gif Source of graphic:  online version of the NYT article cited above. 

HealthCivilWarAndNow.gif EscapeFromHungerAndPrematureDeath1700-2100BK.jpg  Source of graphic:  online version of the NYT article cited above.  Source of book image:  http://www.cambridge.org/us/catalogue/catalogue.asp?isbn=0521808782

 

Fogel's book is a primary academic source for much of what is interesting in the New York Times article.  Fogel predicts that if we don't screw things up, half of today's college students will live to be 100.  He shows that academics in the past have consistently and significantly underestimated the maximum lifespans that would be attainable in the future.

The full reference for the Fogel book is:

Fogel, Robert William. The Escape from Hunger and Premature Death, 1700-2100, Cambridge Studies in Population, Economy and Society in Past Time. Cambridge, UK: Cambridge University Press, 2004.

 




August 1, 2006

Environmentalists Hurt Poor Quatemalans


Residents of El Estor, a small Q'eqchi community of 40,000 people located in northeast Guatemala, cheered when they heard that Vancouver-based Skye Resources was interested in reopening a local abandoned nickel mine.  According to local press, the town's mayor and several community leaders led a rally last September in favor of the mine with a banner that read, "El Estor says yes to responsible mining."

It's easy to see why there was such excitement. Skye Resources estimates that it will employ 1,000 people and create four indirect jobs in the community for every new mining job.  That plus an overall investment of at least $539 million is not irrelevant for an impoverished town with one of the highest illiteracy rates in the country -- over 40% for indigenous men and 35% for indigenous women.

The festive mood didn't last long.  Within months, opposition to the project began to swell.  Well-organized protesters were soon demanding that the Guatemalan government withdraw the mining license it had issued, alleging environmental risks and inadequate consultation with the community.

. . .

In a country with such dire needs for capital and technology to lessen the want of the poor, it is worth exploring whether such anti-mine activism truly expresses the will of the people.  Looking behind the scenes, the funding and instigation of the activism appears heavily driven by international nongovernmental organizations that end up discouraging development while trying to fulfill their own mission.

Boston-based Oxfam America and Toronto's Rights Action are two anti-development NGOs active in Guatemala.  Oxfam has partnered with MadreSelva (Mother Jungle), a Guatemala City environmental group headed by affluent urbanites, to block mining projects.

 

For the full commentary, see: 

ANDREA TUNAROSA.  "AMERICAS; What Do NGOs Have Against Poor Guatemalans?"   The Wall Street Journal (Fri., July 21, 2006):  A15.




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