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January 31, 2007

Increase in Minimum Wage Hurts Poor


 

The strong bipartisan support for increasing the federal minimum wage to $7.25 an hour from the current $5.15 -- a 40% increase -- is a sad example of how interest-group politics and the public's ignorance of economics can combine to give us laws that manage to be both inefficient and inegalitarian.

An increase in the minimum wage raises the costs of fast foods and other goods produced with large inputs of unskilled labor. Producers adjust both by substituting capital inputs and/or high-skilled labor for minimum-wage workers and, because the substitutes are more costly (otherwise the substitutions would have been made already), by raising prices. The higher prices reduce the producers' output and thus their demand for labor. The adjustments to the hike in the minimum wage are inefficient because they are motivated not by a higher real cost of low-skilled labor but by a government-mandated increase in the price of that labor. That increase has the same misallocative effect as monopoly pricing.

Although some workers benefit -- those who were paid the old minimum wage but are worth the new, higher one to the employers -- others are pushed into unemployment, the underground economy or crime. The losers are therefore likely to lose more than the gainers gain; they are also likely to be poorer people. And poor families are disproportionately hurt by the rise in the price of fast foods and other goods produced with low-skilled labor because these families spend a relatively large fraction of their incomes on such goods. And many, maybe most, of the gainers from a higher minimum wage are not poor. Most minimum-wage workers are part time, and for the majority their minimum-wage income supplements an income derived from other sources. Examples are retirees living on Social Security or private pensions who want to get out of the house part of the day and earn pin money, stay-at-home spouses who want to supplement their spouse's earnings, and teenagers working after school. An increase in the minimum wage will thus provide a windfall to many workers who are not poor.

Some economists deny that a minimum wage reduces employment, though most disagree. And because most increases in the minimum wage have been slight, their effects are difficult to disentangle from other factors that affect employment. But a 40% increase would be too large to have no employment effect; about a tenth of the work force makes less than $7.25 an hour. Even defenders of minimum-wage laws must believe that beyond some point a higher minimum would cause unemployment. Otherwise why don't they propose $10, or $15, or an even higher figure?

A number of countries, including France, have conducted such experiments; the ratio of the minimum wage to the average wage is much higher in these countries than in the U.S. Economists Guy Laroque and Bernard Salanie find that the high minimum wage in France explains a significant part of the low employment rate of married women. Mr. Salanie has argued that the minimum wage also contributes to the dismal employment prospects of young persons in France, including Muslim youths, an estimated 40% of whom are unemployed. 

 

For the full commentary, see: 

GARY S. BECKER and RICHARD A. POSNER.  "How to Make the Poor Poorer."  The Wall Street Journal (Fri., January 26, 2007):  A11.

 




January 30, 2007

Schumpeterian Alan Greenspan Receives Second Richest Book Advance Ever Paid


GreenspanAlanGrin.jpg   Why is this man smiling?  (Alan Greenspan has reason to grin.)  Source of photo:  online version of the NYT article cited below.

 

I believe that the market for economists is imperfectly competitive, since the supply and demand for academics is highly regulated by governmental and quasi-governmental institutions.  But it is interesting that the second highest book advance ever paid is going to Alan Greenspan.  Greenspan is a practical, eclectic, economist who believes that Schumpeter's process of creative destruction is important for understanding the workings of a capitalist economy. 

 

(p. C1)  Alan Greenspan, the former chairman of the Federal Reserve, has agreed to sell his memoir for an advance of more than $8.5 million, according to people involved in the negotiations, making a deal that appears to give him the second-largest advance ever paid for a nonfiction book. 

. . .

(p. C8)  Mr. Greenspan's advance ranks second only to the more than $10 million paid to former President Bill Clinton for his memoir, "My Life," which was published in June 2004. Pope John Paul II received an advance of $8.5 million in 1994 for his book, "Crossing the Threshold of Hope," and Senator Hillary Rodham Clinton received an $8 million advance for her memoir, "Living History," published in 2003.

 

For the full story, see: 

EDWARD WYATT.  "Greenspan's Book Deal Is Said to Be Among the Richest."  The New York Times (Weds.,  March 8, 2006): C1 & C8.

 




January 29, 2007

Empirical Science at Its Best



   Source of book image:  http://images.barnesandnoble.com/images/11460000/11468284.jpg

 

I have not yet read The Ghost Map, but from the review excerpted below, it sounds like a wonderful book.  One lesson from the book appears to be that much good can come from a careful collection of evidence, and that much harm can come from sticking to a theory in spite of the evidence.  It is also interesting that in this tale, the villain turns out to be the advocate of public works, whose good intentions resulted in much death and suffering. 

 

(p. P8) The sociology of error is a wonderful subject. Some university ought to endow a chair in it -- and then make Steven Johnson the first professor. Mr. Johnson last provoked the public with his counterintuitive polemic "Everything Bad Is Good For You," in which he argued that TV and videogames actually improve our cognitive skills. In "The Ghost Map" he tells the story of how for 30 years and more the medical establishment in Victorian London refused to accept what was staring them in the face, namely that cholera was a waterborne disease.

Thousands of Londoners died while doctors and public-health officials stubbornly clung to the view that the plague was an airborne miasma that hung in the foul atmosphere of the slums and was inhaled by the wretched creatures who lived there. Every kind of cure was proposed: opium, linseed oil and hot compresses, smoke, castor oil, brandy -- everything but the simple, obvious remedy of rehydration, which reduces the otherwise fatal disease to a bad case of diarrhea.

The fact that the cholera toxin tricks the cells in the lining of the colon into expelling water at a terrifying rate (victims have been known to lose 30% of their body weight in a matter of hours) should surely have alerted someone to the possibility that putting this Niagara back into the body might be worth trying. Only one doctor, Thomas Latta, hit upon the answer, in 1832, just a few months after the first outbreak ever in Britain. His mistake was not to inject enough salty water, and his lone initiative was soon overwhelmed by the brainless babble of the quacks.

Chief among the villains of Mr. Johnson's unputdownable tale was the man whom we were brought up to revere as the father of public sanitation, Edwin Chadwick. This dour, tactless, unpopular reformer laid the foundations for all the government interventions in public health that we now take for granted. Yet in this story he labored under not one but two illusions that proved catastrophic.

. . .

With the austere teetotaller and vegetarian Dr. Snow and his devoted helper in the Soho slums, the Rev. Henry Whitehead, "The Ghost Map" gains not one but two heroes. Patiently they mapped the patterns of victims and survivors and narrowed down the most likely source of the cholera plague to the Broad Street pump. But even after the pump handle was removed so that Londoners could no longer fill their buckets there and the illness subsided, the miasmatists were not convinced. Snow then tramped the streets of Battersea and Vauxhall to demonstrate that those who had their water from higher up the Thames, above the reach of the tide, remained unharmed, while those who took it from the foul tidewater perished in the hundreds. This was no easy task, since the pattern of water pipes under London's houses was as tangled as the pattern of Internet service providers are today.

Why did it take so long? Because mapping epidemics was only in its infancy, though Snow's famous map was not quite the first. Because the questions that Chadwick's public-health board researched were self-fulfilling, all having to do with the smells and personal habits of the poor and not with the water they drank. The researchers mistook correlation for causation: Nobody died on the high ground of Hampstead, where the air was purer, therefore higher was safer -- or so it seemed until a Mrs. Eley, who had retired thither, arranged to receive a jugful of water from her beloved Broad Street pump and got cholera.

But above all Chadwick and his crew were certain of themselves because the stench of the slums was so utterly disgusting and because smell acts so powerfully on our imaginations. Only the most careful and dispassionate investigators were free of the obsession with stench. Henry Mayhew, for example, noted in his "London Labour and the London Poor" (1851) that sewer-hunters, who scavenged deep underground knee-deep in muck, lived to a ripe old age. The Great Stink of 1858, which finally persuaded the government to commission Sir Joseph Bazalgette to lay down the magnificent network of sewers that have lasted to this day, did not kill a single Londoner -- yet still Chadwick did not believe.

 

For the full review, see: 

FERDINAND MOUNT.  "BOOKS; Lost in a Time of Cholera; How a doctor's search solved the mystery of an epidemic in Victorian London."  The Wall Street Journal   (Sat., October 21, 2006):  P8.

(Note: ellipsis added.)

 

The reference to the book is:

Johnson, Steven. The Ghost Map: The Story of London's Most Terrifying Epidemic - and How It Changed Science, Cities, and the Modern World. New York: Riverhead Books, 2006.  299 pages, $26.95

 

SnowJohn.jpg   Dr. John Snow.  Source of photo:  online version of the WSJ article cited above.

ChadwickEdwin.jpg   Edwin Chadwick.  Source of photo:  online version of the WSJ article cited above.

 




January 28, 2007

Health Care Spending Increases Faster than Inflation, But Slower than Previous Year


HealthCareSpendingGraph.gif   Source of graph:  online version of NYT article cited below.

 

WASHINGTON, Jan. 8 — Spending on health care in the United States increased in 2005 at the slowest pace in six years, mostly because of much slower growth in spending on prescription drugs, the government reported Monday.

It was the third consecutive year of slower growth in the nation’s medical bills. Total health spending reached nearly $2 trillion in 2005, growing only a bit faster than the economy as a whole, officials said.

But with new medical technology becoming available every month and with a generation of baby boomers approaching old age, federal officials made no bold claims about having tamed health costs.

“It is unclear whether this phenomenon is temporary or indicative of a longer-term trend,” said Aaron C. Catlin, the principal author of the government’s annual report on health spending, published in the journal Health Affairs.

 

For the full story, see: 

ROBERT PEAR. "In '05, Medical Bills Grew At Slowest Pace in 6 Years."  The New York Times  (Tues., January 9, 2007):  A13.

 




January 27, 2007

Level 3 Hangs On


   The fiber optic network of Level 3, originally founded in Omaha, Nebraska.  Source of map:  online version of the WSJ article cited below.

 

Ex ante, Level 3 seemed to have a plausible business model.  When they laid fiber optics, they left room to install more, when demand, or a change in technology, made that profitable.  But demand did not rise as expected; and technologists elsewhere found clever ways to cram more bandwidth into existing fiber optics.  So, alas for many in Omaha, ex post, the results are in the graph below.

 

Fiber-optic network operator Level 3 Communications Inc., a high-flyer during the telecommunications bubble, almost went bankrupt after the sector burst in 2000.

Now, it is back, with a stock price that has almost doubled in the past year and bond prices that have risen about 20%.

Behind the gains: Explosive growth in video viewing over the Internet, which requires high-speed networks of the sort Level 3 offers. At the same time, a hearty appetite by investors for risky debt has enabled the company to put itself on firmer footing by refinancing its debt at lower rates. There also are good reasons to believe that Level 3 might be an acquisition candidate, though many feel such speculation is overblown.

But there are reasons to be wary: The company remains saddled with debt, it is in a business that still has excess capacity, and it has reported a quarterly profit just once in its more than 20-year history. With the stock and bonds at lofty levels, it could be that any future possible good news already is priced in.

 

For the full story, see: 

LI YUAN and GREGORY ZUCKERMAN.  "HEARD ON THE STREET; Level 3 Regains Luster Amid Web-Video Boom."  The Wall Street Journal   (Thurs., December 21, 2006):  C1 & C4.

(Note:  the above version is the online version, and differs some from the print version, though not in substance, as far as I noticed.) 

 

 Level3StockPrices.gif   Level 3 stock prices.  Source of graphic:   online version of the WSJ article cited below.

 




January 26, 2007

Poor Mexicans Hurt by Higher Corn Prices Caused by Ethanol Production


   In Mexico City, protesters complain about the high price of tortillas and other corn-based food staples.  Source of photo:  online version of the NYT article cited below.

 

Support for the free market is very fragile in places like Mexico.  Calderón won a close election, and is, by all accounts, an advocate for the free market.  So it is sad that United States government subsides for ethanol result in pain in Mexico that makes it harder for Calderon to effectively move Mexico toward the free market, and a better life for the Mexican people.

So do we blame Bush for coming out for ethanol in his State of the Union address on Tuesday (1/23/07)?  Well maybe Bush can only afford to fight the political trends on one or two issues.  And he has seen the war against terrorism as the big issue of our time.  On that he is right. 

So while we can see why political survival may force Bush into support of ethanol, and Calderón into support for price controls on tortillas, we still need to identify policies that are inefficient and wrong. 

Subsidies on ethanol, and price controls on corn, are inefficient.  And inefficiency means that the economy produces less, and grows more slowly, and lives are lived less well.

   

MEXICO CITY, Jan. 18 — Facing public outrage over the soaring price of tortillas, President Felipe Calderón abandoned his free-trade principles on Thursday and forced producers to sign an agreement fixing prices for corn products.

Skyrocketing prices for corn on the world market have pushed up the price of the humble tortilla, the mainstay of the Mexican diet, by nearly a third in the past three weeks, to 35 cents a pound in Mexico City and even higher in other parts of the country.

Half of the country’s 107 million people live on $4 a day or less, and many of them survive largely on tortillas and beans. The price increases have riled the public to such an extent that it has created a political storm that threatens to swamp Mr. Calderón’s fresh presidency.

This month, the president, who took office in December, was booed and heckled at events around the country over food prices. Mexican lawmakers called on him to impose price controls, while leftist opposition leaders suggested that he was protecting giant corn companies.

. . .

There is a continuing debate here about what caused the price of tortillas to shoot up so quickly. Some economists blame the increased demand for corn from ethanol plants in the United States, and it is true corn prices in the States last week reached their highest point in a decade, the United States Agriculture Department said. At the same time, the cost of white corn has risen about 13 percent here over the past year, Mexican government figures show.

. . .

The spike in corn prices has hurt small storefront tortilla makers, a hallmark of the Mexican street. José Solano, a 27-year-old tortilla maker in Mexico City, said he had lost about 40 percent of his business since early January, when he was forced to start raising his prices.

“People are still buying tortillas, but many of them buy less,” he said. “Look, we can’t give our product away because we need a profit, and if they raise the cost of corn, there’s no other way.”

The crisis has hit hardest for the poorest Mexicans, who may spend more than a quarter of their daily salaries on tortillas.

“This really affects my budget, the expenses of my family, because I cannot tell my kids to eat less,” said Ruth Soria, a 37-year-old housewife, who was buying four pounds of tortillas for her six children on Thursday. “This is something that they must control well. The tortilla is something basic for us. What the government did today is the least they could do.”

 

JAMES C. McKINLEY, Jr.  "Cost of Corn Soars, Forcing Mexico to Set Price Limits."  The New York Times  (Fri., January 19, 2007):  A11.

  

    Calderón on right shakes the hand (and picks the pocket?) of Roberto Gonz├ílez, who is the head of Gruma, one of Mexico's large tortilla and corn flour distributors.  Source of photo:  online version of the NYT article cited below.

 




The Poignant Nobility of Katalimata


 

DefensibleSitesInCreteBk.jpg  Source of book image:  the web site cited below.

 

Years ago I saw a program on the History Channel that has stuck in my mind.  (But, alas, I do not remember the title.)  Near the end, I think, they discussed an ancient horde of invaders that created a dark age in the Mediterranean region.  An on-sight scholar discussed a tiny cliff-side settlement that a family of natives had retreated to, to defend what little they had.

Attacking the tiny enclave would have been difficult.  It was a long way up a treacherous and visible trail.  But for the same reasons, living there would have been difficult too.

How human these unknown ancients were who defended their family and property; how poignantly noble.

 

 

When I watched the program, I jotted down a single word, the name of the site:  Katalimata.

In doing a web search, I encountered the book (a monograph in the Aegean series), whose image appears above.  I'm guessing that the book discusses the site I saw in the program, since the book description says that its author participated in digs at Katalimata.

 

The reference to the book is:

Nowicki, Krzysztof.  "Defensible Sites in Crete C.1200 - 800 B.C."  Aegaeum Vol. 21, 2000.

 

For more information on the book, see:

http://www.ulg.ac.be/archgrec/aegaeum21.html

 

 




January 25, 2007

The Case for Clutter


   Cartoon clutter by Edward Koren.  Source of cartoon:  online version of the NYT article cited below.

 

(p. D1)  But contrarian voices can be heard in the wilderness. An anti-anticlutter movement is afoot, one that says yes to mess and urges you to embrace your disorder. Studies are piling up that show that messy desks are the vivid signatures of people with creative, limber minds (who reap higher salaries than those with neat ''office landscapes'') and that messy closet owners are probably better parents and nicer and cooler than their tidier counterparts. It's a movement that confirms what you have known, deep down, all along: really neat people are not avatars of the good life; they are humorless and inflexible prigs, and have way too much time on their hands.

. . .

(p. D6)  Mr. Freedman is co-author, with Eric Abrahamson, of ''A Perfect Mess: The Hidden Benefits of Disorder,'' out in two weeks from Little, Brown & Company. The book is a meandering, engaging tour of beneficial mess and the systems and individuals reaping those benefits, . . . 

 

For the full story, see: 

PENELOPE GREEN.  "Saying Yes to Mess."  The New York Times (Thurs., December 21, 2006):  D1 & D6.

(Note:  the ellipses are added.)

 

The reference to the new book: 

Abrahamson, Eric, and David H. Freedman. A Perfect Mess: The Hidden Benefits of Disorder--How Crammed Closets, Cluttered Offices, and on-the-Fly Planning Make the World a Better Place. New York: Little, Brown & Company, 2007.

 

    Don Springer won his company's contest for having the worst clutter.  Source of photo:   online version of the NYT article cited above.

 




January 24, 2007

Warm Winter Benefits Poor


 

THE recent warm weather in the Northeast might not have been great for makers of winter coats, but the economy and markets could be poised for a small fillip.

. . .

Putting agriculture aside, there are other potentially important macroeconomic effects, said Michael Greenstone, a professor of environmental economics at the Massachusetts Institute of Technology. “The basic idea is that extremes of temperatures, really hot and really cold, are dangerous for human health,” he said. “To the extent that the recent warm weather on the East Coast moved us from cold days to more moderate days, that’s likely to reduce mortality rates. Having more people around is obviously good for consumption and economic activity.”

. . .  

The temporary warm weather does have very real benefits for poor families.

A warm winter can relax their financial constraints by requiring less spending on heating, said Steven J. Haider, an associate professor of economics at Michigan State University.

“They often are making very tough decisions, whether those decisions are paying bills, child care, clothes or food during a particular month,” he said. “If there is a cold-weather shock, and their heating bill goes up in a particular month, there are poor people who struggle.”

Professor Haider and three colleagues researched the effect of weather on poor families’ budgets and found that there were substantial effects from extreme temperatures.

“For the short-run effects that we’re seeing this year, the answer is, yes, the poor families are feeling a little less constrained,” he said. “I’m sure the families have other important uses for that money.”

Indeed, lower demand for heating oil in the United States, along with rising inventories for other refined petroleum products, has helped to push crude oil prices down— a boon for the rest of the world, too.

 

For the full commentary, see:

DANIEL ALTMAN.  "ECONOMIC VIEW; A Tepid Winter Warms Some Wallets."  The New York Times, Section 3  (Sun., January 14, 2007):  4.

(Note:  ellipses added.)

 




January 23, 2007

International Trade Helps Poor African Cotton Farmer


   Left photo shows Dennis Okelo in the grocery store that he opened with savings from growing cotton, and selling it to Dunavant.  Right photo shows a Dunavant cotton gin in Zambia.  Source of photos:  online version of the NYT article cited below.

 

(p. 1)  WHERE is he?” the old woman asks. “Where is he?”

Finding Dennis Okelo used to be easy. The old woman — and most other people in a village outside of Lira, the provincial capital of northern Uganda — went directly to Mr. Okelo’s fields. He was always in one of his “gardens,” with his slacks rolled up above his calves and a short hoe close by. Or he was seated outside of his mud-brick house under a banana tree.

Then cotton growing revived in Uganda, and Dunavant Enterprises came to town about five years ago, paying cash on delivery. After three seasons of growing cotton for Dunavant, the world’s largest privately owned cotton broker and one of the biggest family-owned agribusinesses in the United States, Mr. Okelo, who owns less than three acres and has two wives and a passel of children, had saved $300, about double his annual earnings before Dunavant started buying his cotton.

Last summer, Mr. Okelo opened a grocery store, which is where the old woman finally found him: smiling, standing behind the wooden plank that serves as his service counter in a shop the size of a utility shed. The grocery, one of two in the village, carries dried foods, cooking oil, matches, cosmetics, batteries and candy.

“Before Dunavant, no one came to help us,” says Mr. Okelo, 40, who has farmed a variety of crops in these parts for about 20 years.

. . .

(p. 7)  IN his small shop, Mr. Okelo knows nothing of global developments in the cotton trade even though he is a direct beneficiary of them. He started farming during the lean years in Uganda, after the ouster of the country’s notorious dictator, Idi Amin, when the cultivation of cotton lagged so badly that production nearly ceased and farmers treated the crop like a weed.

A few years ago, as Uganda’s production began to revive, Dunavant’s trainers taught Mr. Okelo to grow cotton in straight rows and to use a string to measure precisely the distance between rows, to maximize plantings. Mr. Okelo’s new methods are basic, but in a part of Africa where farmers work the land chiefly with a hoe — and tractors, fertilizer and pesticides are rarities — even basic improvements can lead to large gains in production.

“Cotton is the crop that gives farmers the best money,” Mr. Okelo said. “I want Dunavant to be even closer to me.”

 

For the full story, see: 

G. PASCAL ZACHARY. Out of Africa: Cotton and Cash." The New York Times, Section 3 (Sun., January 14, 2007): 1 & 7.

(Note:  ellipses added.)

 

 DunvanantWilliamCottonEntrepreur.jpg   William B. Dunavant, Jr.  Source of photo:  online version of the NYT article cited above.

 




January 22, 2007

Reagan's Resolve


 

In this anecdote from the Bosch book, Reagan's son Ron (who has often been critical of his father) tells of an expedition with his father to collect flagstone for eventual use in building a patio:

(p. 140, footnote 11)  We went out to retrieve a lot of these big heavy stones and load them into a little trailer that would be then hauled behind this ancient old original Jeep.  I mean this was just like the proto-Jeep that he still had, because he'd never throw anything away.  And so we'd, you know, spend a few hours hauling these big heavy rocks and we'd load them into the little trailer.  It's now piled high.  It must weigh tons.  Climb back into the Jeep and head up this slope that's steep.  I mean this is steep.  And on one side you've got a sheer drop to the Santa Ynez Valley, you know, 2,000 feet below, and on the other side a gully full of rocks.  And we're hauling this huge mass of sandstone behind us.  Now this Jeep, this poor thing, it's...it's not going to make it.  And about three-quarters of the way up this steep hill, it starts to give out.  And it's mmm-mmm-mmm, and it becomes apparent that we're not going to crest the hill.  And now we're actually going backwards.  We're not hauling the rocks, the rocks are hauling us.  And I'm ready to get out.  Not him.  He's---handling it.  He's going to back this thing down, by God.  And he does...and we make it down...the rocks haul us back down the hill, but we manage to stay on the road.  Now I'm thinking, well, OK, so now we're going to turn around and go some other way, because there's no way we're going up, we're not going to try that again.  Oh no, no, we're going to go up that hill.  You know, by God, we're going up that hill.  I...it must have taken us three or four tries, of getting almost up the hill and being hauled back down, and each time I'm thinking OK, you know, which way do I jump.  He's cool as a cucumber.  Didn't bother him at all.

 

Source:

Bosch, Adriana. Reagan: An American Story. TV Books Inc., 1998.

(Note:  ellipses in original.)

 

 




January 21, 2007

Barney Frank on Schumpeter's "Great Concept"


FrankBarney.jpg   Barney Frank. Source of photo: http://www.house.gov/frank/welcome.html

 

Policy-makers are often enthused by the innovation unleashed by Schumpeter's process of creative destruction, but draw back out of fear of the destruction of jobs.  In the passage below, Barney Frank expresses that fear.

I think that there are answers to the fear.  More and better jobs are created, than destroyed; workers can invest in general skills that do not depreciate, and retool the specific skills that do depreciate; and conscientious workers suffer from lack of recognition and upward mobility, when creative destruction is stiffled.  The pain is less than usually thought, and the gain is greater. 

 

One of the consequences of this separation between economic growth and the well-being of the great majority of citizens is that an increasing number of citizens don't care about economic growth.  Not surprising.  Not only do they not benefit, but in many cases they get the short-term disruptive effects.

I mean, there was a great concept from Joseph Schumpeter of creative destruction in which, as the old economic order is destroyed, resources are freed up for the new order.

Well, increasingly, we have people who see the destruction in their own lives, but don't see that they're going to be part of the new creation.

 

Source:

Transcript of remarks delivered at the National Press Club on "Wages" by Democratic Representative Barney Frank of Massachusetts, on January 3, 2007.

 




January 20, 2007

Increase in Minimum Wage, Decreases Employment Among Low-Skill Workers


Basic price theory seems to imply that raising the minimum wage, will result in greater unemployment.  Almost all economists accepted this conclusion until several years ago, when some empirical results seemed to challenge it.  Now there is active debate. 

Here is the abstract of a relevant, just-published, article in the leading journal in the field of labor economics:

 

We infer the employment response to a minimum wage change by calibrating a model of employment for the restaurant industry. Whereas perfect competition implies that employment falls and prices rise after a minimum wage increase, the monopsony model potentially implies the opposite. We show that estimated price responses are consistent with the competitive model. We place fairly tight bounds on the employment response, with the most plausible parameter values suggesting that a 10% increase in the minimum wage lowers low-skill employment by 2%-4% and total restaurant employment by 1%-3%.

 

The article reference is:

Aaronson, Daniel, and Eric French. "Product Market Evidence on the Employment Effects of the Minimum Wage." Journal of Labor Economics 25, no. 1 (Jan. 2007): 167-200.

 




January 19, 2007

At Screen Actors Guild, Communists Threatened to Disfigure His Face


ReaganAnAmericanStoryBK.jpg   Source of book image: http://www.shopaim.org/assets/images/large/458i.jpg

 

There are better books on Reagan.  But Bosch's book has a few illuminating anecdotes.  Here is one:

(p. 63)  Reagan first learned about Communists and their intentions as a member of a Hollywood union, the Screen Actors Guild (SAG).  He had been introduced to the Screen actors Guild by his wife Jane Wyman and had quickly risen to become a member of the Guild's board.  As a SAG Board member, and later as its president, he mediated a dispute between two rival unions.  One of the unions, the Conference of Studio Unions (CSU), was led by a suspected Communist, Herb Sorrell.

. . .  

(p. 64)  Sorrell and Reagan went head to head.  When Reagan crossed a picket line outside Warner Brothers, Sorrell called for a boycott of his movies.  Reagan was called a fascist.  An anonymous phone caller threatened to disfigure his face so he could never act again.  He began to carry a gun and accepted police protection.  He became an informant for the FBI 

"These were eye-opening years for me," he later wrote.  "Now I knew form first-hand experience how Communists used lies, deceit, violence, or any other tactic that suited them to advance the cause of Soviet expansionism."

 

Source: 

Bosch, Adriana.  Reagan: An American Story.  TV Books Inc., 1998.

 




January 18, 2007

Becker on Friedman


 

MiltonFriedmanDay.jpg   Source of graphic:  http://www.ideachannel.com/Friedman.htm

 

David Levy has noted in an email that at the reception to preview the new Friedman documentary, Gary Becker gave a great presentation on Milton Friedman, and it was a great shame that no one recorded it.  I feel especially guilty, because I had thought of recording it, and had even brought a small camera that would have (badly) done the job.  But the room was dark and crowded, and by the time the talk started, I was in conversation a long way from where Becker started speaking. 

Levy suggests that maybe those of us who were there, should record our memories of what Becker said.  I like that idea, and will record mine here.

 

Becker started out by saying to Bob Chitester that he wasn't sure that the documentary did justice to Friedman.  (Chitester was the producer, I think, of the original Free to Choose series, and a moving force behind the new Friedman documentary, to be first shown on PBS on January 29th, 2007.)  

Becker mentioned that Friedman was a missionary.  He would talk economics to anyone--if a taxi driver made a mistaken comment about economics, Friedman would set him straight.

Becker mentioned that while Friedman liked to argue about ideas, he never saw him be mean to anyone.

Becker mentioned that a friend of his taking Friedman's price theory class (I think Becker may have said the friend was Gregory Chow?) asked Becker how he could keep asking questions in Becker's class, when Friedman would keep showing the ways in which Becker was mistaken.

Becker mentioned that he talked to Friedman a few days before his death, and that they even talked a little economics.

Becker emphasized that Friedman had been both a great economist, and had made an enormous difference in the world, in particular in making the world more free.

 

Some background:  Becker spoke about Friedman at two sessions at the Allied Social Sciences Association meetings in Chicago in early January.  One was in the afternoon (about 2:30 PM?) of January 5, 2007, and also included Robert Lucas, and Tom Sargent.  I missed that session because I wanted to attend a session featuring the research program of Robert Fogel on longevity.  The second session, at 6:00 - 7:30 PM on Sat., January 6, 2007 was at a reception sponsored by the University of Chicago to preview the new documentary on Friedman.  I attended this reception through Becker's presentation, but did not stay for the documentary preview.  My friend Luis Locay attended both sessions, and told me that some, but not all, of the stories Becker told were similar in both sessions.  Locay also mentioned that Becker appeared to get more choked-up at the session on January 5, 2007.

 




January 17, 2007

George Washington Was a Good Man


   Source of book image: http://www.wiley.com/WileyCDA/WileyTitle/productCd-0471744964.html

 

On December 31, 2006 on C-SPAN2, I heard part of a presentation by Harlow Giles Unger on his new book on George Washington.  I found the presentation wise, sincere, impassioned and delightful.  Almost every story and fact was new to me.  It appears that George Washington was an inventor, a solid businessman, and in most ways a genuinely good person.  Great leaders do not have to be good people in order to be great leaders, but it is nice when they are. 

 

Reference to the book: 

Unger, Harlow Giles.  The Unexpected George Washington: His Private Life.  Hoboken, NJ:  John Wiley & Sons, Inc., 2006.

 

    Harlow Giles Unger.  Source of photo: http://www.brickstoremuseum.org/UngerHeadshot.jpg

 

 




January 16, 2007

The Resilience of Markets


 

(p. A11)  Bystanders pulled an 8-year-old boy from the charred wreckage of a marketplace where the poor come to buy used clothes and household goods.  Two of three explosions in the city claimed the lives of at least 17 people, including the boy's parents.

Vendors said the bombs, which killed seven people, were planted in wooden carts by two strangers who set up shop near the entrance and exit to the market and left just before the explosions.  After the initial shock of the explosions, shoppers and vendors resumed haggling over underwear and socks, eating shish kebab and turnips sweetened with date syrup.

"If I would go home, then what would my family eat?" said vendor Jabbar Shnawa, 35, who, after the explosion, sold a compact disc for 500 Iraqi dinars, about 40 cents.

 

For the full story, see:

Hennessy-Fiske, Molly.  "Saddam could be hanged by weekend."  St. Louis Post-Dispatch 12/29/2006):  A1 & A11.

(Note:  article originally appeared in the Los Angeles Times.)

 




January 15, 2007

"Nature Cannot be Fooled"


 

In his famous minority report on the Challenger shuttle disaster, written near the end of his life, Richard Feynman does not mince words.  He argues that the actual risk of shuttle mission failure was on the order of one in a hundred.  Then he says:

 

(p. 168)  Official management, . . ., claims to believe the probability of failure is a thousand times less.  One reason (p. 169) for this may be an attempt to assure the government of NASA perfection and success in order to ensure the supply of funds.

. . .

(p. 169)  For a successful technology, reality must take precedence over public relations, for nature cannot be fooled.

 

Source:

Feynman, Richard P.  The Pleasure of Finding Things Out: The Best Short Works of Richard P. Feynman. New York:  Perseus Books, 1999.

(Note:  ellipses added.)

 




January 14, 2007

Is Political Freedom a "Normal Good"?


   Shenzhen, China.  Source of photo:  online version of the NYT article cited below.

 

Are starving citizens, or a growing midddle class, more likely to stand up for their rights?  In the ongoing debate, here is a bit of evidence in favor of the middle class. 

(In economics, a "normal good" is one where, ceteris paribus, more is consumed, when income increases.  So in the language of economics, the following article supports the view that political freedom is a normal good.)

 

(p. A1)  When residents here in southern China's richest city learned of plans to build an expressway that would cut through the heart of their congested, middle-class neighborhood, they immediately organized a campaign to fight City Hall.

Over the next two years they managed to halt work on the most destructive segment of the highway and forced design changes to reduce pollution from the roadway. It became a landmark in citizen efforts to win concessions from a government that by tradition brooked no opposition.

And it was no accident that the battle was waged in Shenzhen, a 26-year-old boomtown that was the first city to enjoy the effects of China's breakneck economic expansion and that has served as a model for cities throughout the country. 

. . .

. . .   Possibly the greatest force taking shape here is the quiet expansion of the middle class, thicker on the ground here than perhaps anywhere else in China. This middle class is beginning to chafe under authoritarian rule, and over time, the quiet, well-organized challenges of the newly affluent may have the deepest impact on this country's future.

''Many people laughed at me, because they don't have confidence in the government,'' said Qian Shengzeng, a 62-year-old former rocket scientist who led the movement against the expressway. ''They think the government is hopelessly rotten. However, our view is that maybe there is a remaining sliver of hope, and the government needs to be pushed.''

In newly rich Shenzhen, as in much of China, social change is being driven by economic transformation and, more than anything else, property ownership.

 

For the full story, see: 

HOWARD W. FRENCH.  "In Chinese Boomtown, Middle Class Pushes Back."  The New York Times  (Weds., December 18, 2006):  A1 & A8.

(Note:  ellipses added.)

 

Shenzhen_map.jpg  Map showing Shenzhen's proximity to Hong Kong.  Source of map:  online version of the NYT article cited above.

 




January 13, 2007

Feynman on Viking Evidence of No Life on Mars


 

Based on the Viking tests, astronomers concluded that there probably was no life on Mars.  Begley (2006) documents the recent research showing that applying the Viking tests to earth, results in the conclusion that there is no life on earth, either.  Once again, Feynman was way ahead of his time:

  

(p. 204)  We like to sit down and talk about how different things could be from what we expected; take the Viking landers on Mars, for example, we were trying to think how many ways there could be life that they couldn't find with that equipment. 

 

Source: 

Feynman, Richard P. The Pleasure of Finding Things Out: The Best Short Works of Richard P. Feynman. New York: Perseus Books, 1999.

(Note:  italics in original.)

 

The reference on the Begley article:

Begley, Sharon. "Science Journal; Scientists Revisit Data on Mars with Minds More Open to 'Life'." The Wall Street Journal  (Fri., October 27, 2006):  B1.

 




January 12, 2007

"The Blogger as DJ"


 

(p. 220)  Increasingly, the winning strategy is to separate content into its component parts ("microchunks"), so that people can consume it the way they want, as well as remix it with other content to create something new.  Newspapers are microchunked into individual articles, which are in turn linked to by more specialist sites that create a different, often more focused, product out of the content form multiple sources---the blogger as DJ, remixing the news, to create something new.

 

Source: 

Anderson, Chris. The Long Tail. New York: Hyperion, 2006.

 




January 11, 2007

Intellectual Property Rights in Toilet



 

CHICAGO (AP) — The gun­man who fatally shot three peo­ple in a law firm’s high-rise office before he was killed by police felt cheated over an invention, au­thorities said Saturday.

  Joe Jackson forced a security guard at gunpoint to take him up to the 38th floor offices of Wood, Phillips, Katz, Clark & Mortimer, which specialized in intellectual property and patents.  He carried the revolver, a knife and a ham­mer in a large manila envelope and chained the office doors be­hind him, police said.

  Jackson, 59, told witnesses be­fore he was shot that he had been cheated over a toilet he had in­vented for use in trucks, Police Superintendent Phil Cline said.

 

For the full story, see:

"Shooter felt cheated over toilet, police say."  Omaha World-Herald  (Sun., 12/10/2006):   4A.

 




January 10, 2007

The Mere Threat of "Hillary-Care" Reduced Investment in Drug R&D



TaurelSidneyCEOEliLilly.jpg   CEO of drug company Eli Lilly.  Source of image:  online version of WSJ artcle cited below.

 

NEW YORK -- Is the future of your health riding on what happens in Washington?  Sidney Taurel thinks it might be.  The Eli Lilly CEO ticks off a list of former "death sentences" being cured or turned into chronic conditions -- "AIDS, leukemia, Hodgkins, hopefully solid tumors within the next few years.  The potential for medical research is unlimited.  We just need to make sure we don't interdict it by the wrong policies."

And what might those "wrong policies" be?  Anything, it would appear, that reduces the financial incentives for drug companies to invest in research and development.  Mr. Taurel points without hesitation to the mere threat of HillaryCare in the early 1990s as an episode that reduced investment in R&D, as drug makers, including his own, redirected money toward the purchase of pharmacy benefit management companies.  As another example, he offers the anti-drug industry crusade of Sen. Estes Kefauver in the late 1950s and early '60s:

"At that point companies started to diversify.  We bought Elizabeth Arden, we went into animal health and agricultural chemical products, later on in medical instruments and so forth.  All other companies did similar things.  And for a while after that we saw fewer new products.  When this threat subsided the companies focused again on R&D and we saw a golden era in the '80s and '90s with a lot of new products and breakthroughs."

 

For the full interview, see:

ROBERT L. POLLOCK.  "THE WEEKEND INTERVIEW with Sidney Taurel; Of Politics and Pills."  The Wall Street Journal  (Sat., December 2, 2006):  A8. 





January 9, 2007

Hugely Wasteful Health-Care Spending


CureBK.jpg   Source of book image:  http://www.encounterbooks.com/books/cure/

 

Milton Friedman is gone now, but the new book reviewed below, includes a forward written by him.  Friedman can be praised for many reasons; a minor one is that he was tireless and generous in offering praise and support for others who were seeking to better understand free markets. 

 

About 10 years ago, I broke my leg playing basketball.  After I came out of surgery, with a cast stretching from my ankle to the top of my leg, an orderly asked me whether I had ever used crutches before.  I hadn't, so he showed me what to do, swinging through them from one end of the room to the other.  The whole lesson lasted about 90 seconds.  When I got my hospital bill, I saw that I had been charged $150 for "gait training on crutches."  I did what all insured Americans do:  I forwarded the bill to my insurance company.  Why should I care?  I wasn't paying for it.

One of the problems with American health care, as David Gratzer notes in "The Cure," is precisely a payment system that takes the patient out of the equation.  In the early 1960s, the average American paid out of pocket one of every two dollars that he spent on health care; today the figure is one dollar in seven.  The inevitable effect is hugely wasteful spending (and inflated hospital bills like mine).  In fact, per-patient costs have gone up almost exactly in inverse proportion to the share of spending borne by the consumer.

Dr. Gratzer cites a remarkable Rand Corp. study that tracked health-care spending by 2,000 families over eight years.  The families who got free health care spent 40% more than the families with cost-sharing arrangements.  And yet the health outcomes for the two groups were the same.  The lesson:  Market-based health insurance systems, such as health savings accounts, cut out inefficiencies and lower costs without compromising quality.

. . .

. . . :   America is clearly at a crossroads in medical care.  Within the next decade we will get either some version of Hillary-care or more free-market medicine, starting with universally available health savings accounts.  Let's hope that our nation's policy makers read "The Cure" before they decide.  They will learn that the government route flattens costs only by holding back the pace of technology, artificially controlling its price and rationing its use.  That is not a prescription for better health.

 

For the full review, see: 

STEPHEN MOORE.  "BOOKS; The Market and Its Medicine."  The Wall Street Journal  (Tues.,  By  December 5, 2006; Page D6. 

 

The reference to the book under review, is: 

Dr. David Gratzer.  The Cure: How Capitalism Can Save American Health Care.  Encounter Books, 2006.  (233 pages, $25.94)

 




January 8, 2007

"Drawing the Best Minds into a Whirlpool of Mathematical Solipsism"


TroubleWithPhysicsBK.gif   Source of book image:  http://www.houghtonmifflinbooks.com/catalog/titledetail.cfm?titleNumber=689539

 

Physicists rightly feel uneasy about descriptions of the physical world that divide it into discrete clusters of equations and axioms, each cluster explaining one part of existence but not another.  Better would be finding a Theory of Everything capable of conjoining, in a few equations, planet-pulling gravitation and the microcosmic weirdness that goes on in the quantum world of atoms and particles.  Physicists would like to stitch time and space together as well.

Einstein tried and failed.  In recent years, "string theory" has been the favored means of attempting to tie everything together, but it has unraveled into mathematical frippery, positing ever more intricate elaborations extending into anywhere from 10 to 26 dimensions, some arising from themselves, some hidden in ways so baroquely scrolled that you can get a migraine just thinking about thinking about them.  Little wonder that, as an experimental science, string theory seems to have nowhere to go.

That is the problem that Lee Smolin identifies in "The Trouble With Physics."  He laments a kind of sociological imperative drawing the best minds into a whirlpool of mathematical solipsism.

 

For the full review, see:

RUSSELL SEITZ.  "BOOKS; Untangling the Knots in String Theory."  The Wall Street Journal  (Sat., December 2, 2006):  P9.

 

The reference to the book under review, is: 

Lee Smolin.  The Trouble With Physics: The Rise of String Theory, the Fall of a Science, and What Comes Next.  Houghton Mifflin, 2006.  (392 pages, $26)

 




January 7, 2007

Gates Foundation Will Not "Rule With a Dead Hand"


MelindaAndBillGates.gif  Source of image:  online version of WSJ article cited below. 

 

When he was discussing with Pierre Goodrich the rules for Goodrich's Liberty Fund, my late-lamented mentor Ben Rogge tried to convince Goodrich to set some date by which the foundation would be required to spend all of its funds.  Rogge would quote Smith against the practice sometimes called 'ruling with a dead hand' by which the dead try to put restrictions on the living.  Rogge thought the dead had a right to restrict the future use of their money; its just that he thought it would become increasingly hard for them to do so effectively, the further out into the future you go.

There were at least a couple of reasons.  One of them was that as you go out into the future, it is increasingly hard to make sure that those supervising the money will remain true to the donor's intent.  Another reason was that as you go further out, and conditions change, it becomes increasingly hard to know what the donor would have wanted done.  (Rogge used to jest that probably, evenually Liberty Fund would end up spending libertarian Goodrich's money on making films promoting the beliefs of communist Anna Rosenberg.)

On this issue, it appears that Bill and Melinda find Adam Smith more persuasive, than did Pierre:

 

The Bill & Melinda Gates Foundation said it will spend all its assets within 50 years of the death of its last trustee, a decisive move in a continuing debate in philanthropy about whether such groups should live on forever.

. . .

The decision is expected to influence other charities to consider following suit.  . . .

. . .

The Gates decision will add fuel to a debate about whether foundations should live in perpetuity, a longtime model used by the Ford and Rockefeller foundations and Carnegie Corp.

 

For the full story, see: 

SALLY BEATTY.  "Gates Foundation Sets Its Lifespan; All Assets Are to Be Spent Within 50 Years of Death of the Remaining Trustee."  Wall Street Journal  (Fri., December 1, 2006):  A10.

 




January 6, 2007

Coolidge: A Popular Pro-Business, Small Government, President


  Source of book image: http://images.barnesandnoble.com/images/11530000/11530321.jpg

 

"Silent Cal" was a pro-business, small-government president to a degree beyond the wildest dreams of today's conservatives.  The tax cuts effected by Coolidge and by his Treasury secretary, Andrew Mellon ("under whom three presidents served," goes the old quip), were so effective that, as Mr. Greenberg reports, "by the end of Coolidge's second term most Americans paid no federal income taxes at all."  William Humphrey, who was Coolidge's appointee to the Federal Trade Commission, described the FTC as "an instrument of oppression and disturbance and injury" to U.S. industry.  Americans liked Coolidge's policies because of the great prosperity that resulted.  Inflation-adjusted GNP grew 49% during the Harding and Coolidge presidencies, the highest growth on record.  Inflation and unemployment statistics were just as impressive.

. . .

In 1994 John Coolidge, the president's older son, told me:  "My father could not possibly be elected to anything today."  That is surely true.  Looking at the people who do get elected to our republic's highest offices today, it is also regrettable.

 

For the full review, see: 

JOHN DERBYSHIRE.  "BOOKS; A Quiet Man in a Roaring Time."  Wall Street Journal  (Tues., December 12, 2006):  D8.

(Note:  ellipsis added.)

 




January 5, 2007

Toyota Turns from Incremental Change to Revolutionary Change


 

ToyotaEfficiencyGraph.gif   Source of graph:  online version of WSJ article cited below.

 

(p. A1)  TOYOTA CITY, Japan -- The world sees Toyota Motor Corp. as an unstoppable profit juggernaut, overtaking rivals one by one as it rolls toward replacing General Motors Corp. as the world's largest auto maker.

Not Katsuaki Watanabe.  Toyota's chief executive officer is a worried man.  He thinks Toyota is losing its competitive edge as it expands around the world.  He frets that quality, the foundation of its U.S. success, is slipping.  He grouses that Toyota's factories and engineering practices aren't efficient enough.  Within the company, he has even questioned a core tenet of Toyota's corporate culture -- kaizen, the relentless focus on incremental improvement.

U.S. and European car makers have spent years struggling to overhaul outdated operations and work practices to better compete with Toyota.  By some measures, some of those companies are catching up.  Now, driven by a severe dose of institutional paranoia, Mr. Watanabe is trying to move the target.

Mr. Watanabe, 64 years old, wants kakushin, or revolutionary change in how Toyota designs cars and factories.  He is pushing Toyota to reduce the number of components it uses in a typical vehicle by half -- a radical idea that would usher in a new chapter in car design.  He also wants to create new fast and flexible plants to assemble these simplified cars.

 

For the full story, see:

NORIHIKO SHIROUZU.  "Paranoid Tendency As Rivals Catch Up,Toyota CEO Spurs Big Efficiency Drive Culture of Institutional Worry Drives Mr. Watanabe; How Paint Is Like 'Fondue' Finding Limits to Improvement."  Wall Street Journal   (Sat., December 9, 2006):  A1 & A6.

(I thank Aaron Brown for bringing this article to my attention.)

 




January 4, 2007

Risk Diversification Only Works If Risks are Random


RiskIntelligenceBK.jpg   Source of book image:   http://www.inbubblewrap.com/2006/08/should_i_do_it_should_i.php

 

According to Mr. Apgar, managing director of the Corporate Executive Board and a former McKinsey consultant, the problem is that our traditional tool set deals only with random risk.  Equity prices, interest rates, natural catastrophes -- all operate, more or less, as perfect markets, distributing risk with equal probability among all the players.  No one consistently knows more about what drives these phenomena than anyone else.  We can bear or hedge these risks in the secure sense that competitors don't have an inside lead on the future.

. . .

In real business, though, many of the risks that can potentially wipe us out are non-random -- what Mr. Apgar calls "learnable risks" -- involving customers, technologies, marketing strategies, supplier relationships and so on.  The challenge is not just to learn, quickly, enough about them to survive but to determine whether someone else can learn about them even faster and thus put us out of business.

. . .

. . .   Mr. Apgar also explains how to perform a "risk audit," judging a company's current projects by how they diversify total risk or demonstrate risk intelligence.  Here is where his program differs most widely from conventional wisdom -- because, as he notes, risk diversification is no virtue if the risks are non-random and we have little intelligence of any of them.  If you don't know much about poisonous snakes, keeping several different species won't make you any safer.

Like liberty, risk intelligence demands eternal vigilance -- and for the same reason:  threats evolve.  Mr. Apgar's analysis of the life cycle of a business risk is particularly fruitful.  He notes that a successful company needs to maintain a risk pipeline, constantly probing into areas where it has higher risk intelligence and opportunities for real diversification -- just as technology and pharmaceutical companies need a proportion of blue-sky research to innovate into the future.

 

For the full review, see: 

MICHAEL KAPLAN.  "BOOKS; The Hazards of Fortune."  Wall Street Journal  (Fri., December 8, 2006):  W6.

(Note:  ellipses added.) 

 




January 3, 2007

Standard Heart Therapies Do Little to Fight "Vulnerable" Plaque


Most people have of a clear image of how atherosclerosis, popularly known as hardening of the arteries, causes a heart attack -- fatty deposits called plaque build up in a coronary artery until the day the blood flow that sustains the heart is blocked.

If only they were right.  In reality, severe coronary artery blockages almost always cause chest pain known as angina and other symptoms as they form.  But among those who suffer heart attacks, half of the men and two-thirds of the women report never experiencing a warning symptom.  And autopsies of such victims frequently show blood clots jammed into arteries that have been only modestly narrowed.

Standard atherosclerosis therapies include bypass surgery to route blood around blockages, angioplasty and stenting to clear blockages from inside the artery, and drugs like statins that reduce cholesterol levels to slow the formation of plaque.  But they have not been enough to prevent 200,000 to 500,000 American deaths annually from what doctors refer to as coronary artery disease.

As a result, many researchers have turned their attention from atherosclerosis in general to the tendency of some patients to develop a form of plaque prone to inflammation and rupture, which can spill a stew of cells into the bloodstream that can incite rapid clotting.  Such plaques have been called ''vulnerable'' plaque. 

 

For the full story, see:

BARNABY J. FEDER.  "In Quest to Improve Heart Therapies, Plaque Gets a Fresh Look."  The New York Times  (Mon., November 27, 2006):  C1 & C3.

 




January 2, 2007

University Chancellor in Iran Bulldozes Office of Student Reform Group


According to the article excerpted below, Iranian tyrant Mahmoud Ahmadinejad appointed Alireza Rahai to be chancellor of Amirkabir University.  Apparently Mr. Ahmadinejad supports discussions of his doubts about the holocaust, but is not so fond of discussions of his own activities as an enemy of the open society.

 

Since Mr. Ahmadinejad took office, government pressure has increased on Iranians who have actively promoted changes to create a more open society.  As part of the crackdown, dozens of university students around the country have been barred from taking classes this year, and a substantial number of professors have been demoted or forced to resign.

A major reformist newspaper, Shargh, was shut down in September and several of its veteran journalists were barred from working.  The government has blocked thousands of news Web sites and blogs in an effort to limit the access of Internet users to independent news outlets.

Over the summer, Mr. Rahai, the university chancellor, had the office of a reformist student group, the Islamic Association, leveled by a bulldozer.

 

For the full story, see: 

NAZILA FATHI.  "Students Cry ‘Death to the Dictator’ as Iranian Leader Speaks."  The New York Times  (Tues., December 12, 2006):  A3.

 

See also, an article on the same page:

NAZILA FATHI.  "Iran Opens Conference on Holocaust."  The New York Times  (Tues., December 12, 2006):  A3. 




January 1, 2007

Doctors Earn More When They Rush Colonoscopies


ColonoscopyGraph.gif   Source of graph:  online version of the NYT article cited below.

 

For years, patients and many doctors assumed that a colonoscopy was a colonoscopy.  Patients who had one seldom questioned how well it was done.  The expectation was that the doctor conducting the exam would find and cut out any polyps, which are the source of most colon cancer.

But a new study, published today in The New England Journal of Medicine, provides a graphic illustration of how wrong that assumption can be, gastroenterologists say.  The study, of 12 highly experienced board-certified gastroenterologists in private practice, found some were 10 times better than others at finding adenomas, the polyps that can turn into cancer.

One factor distinguishing the physicians who found many adenomas from those who found few was the amount of time spent examining the colon, according to the study, in which the gastroenterologists kept track of the time for each exam and how many polyps they found.

They discovered that those who slowed down and took their time found more polyps.

. . .

The Rockford study was preceded by other signs that colonoscopies are by no means foolproof.   But as problems have been pointed out, they have all too often been met with disbelief among doctors, Dr. Rex said.

The first indication that colonoscopies were not as effective as widely believed came with two studies, one in 1991 and a larger one, in 1997, in which patients had two colonoscopies on the same day.  Those studies showed that doctors were missing 15 to 27 percent of adenomas, including 6 percent of large adenomas.

Then, in the last few years, two studies of so-called virtual colonoscopies, which use a CT scan to view the colon, found that the rate of overlooked adenomas in traditional colonoscopies was even higher.  Patients in those studies had traditional and virtual colonoscopy on the same day.   Traditional colonoscopies missed 12 to 17 percent of the large adenomas detected in the virtual colonoscopies.  But many doctors dismissed those findings, saying — if they believed them at all — that they applied to other doctors, not to themselves, Dr. Rex said.

Dr. Schoen, for one, said he was a believer.  The conclusions of the adenoma detection studies were reinforced, he said, by studies finding that colonoscopies missed not just polyps but actual cancers.

That finding emerged from studies testing ideas about how to prevent polyps, like taking beta carotene or calcium pills or sticking to a low fat, high-fiber diet.

The patients in all the studies had at least one adenoma detected on colonoscopy but did not have cancer.  They developed cancer in the next few years, however, at the same rate as would be expected in the general population without screening.

. . .

The study by the group in Rockford suggests a way to improve colonoscopy:  by slowing down.  “If you rush things, you miss things,” Dr. Schoen said.

That happens in part because reimbursement rates for colonoscopies have fallen in recent years, and some doctors are doing the exams faster than ever, Dr. Schoen and others say.

“I have heard of people who do it in 30 seconds,” Dr. Schoen said.  “Whoosh, and it’s out.”

 

For the full story, see: 

GINA KOLATA.  "Study Questions Colonoscopy Effectiveness."  The New York Times  (Thurs., December 14, 2006):  A23.

 

 




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