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November 30, 2012

DaVita Threw Out Medicine and Billed Taxpayer: Huge Medicare Fraud




DaVitaMedicareFraudDrewGriffin2012-11-29.jpg



























I saw this clip broadcast on Wolf Blitzer's "Situation Room" broadcast on 11/29/12 (if memory serves--it might have been the day before).

The clip shows the magnitude of the fraud, but also emphasizes that there were significant incentives for those who knew about the fraud to keep their mouths shut.

This is one huge case of over-billing, but over-billing happens all the time. Taxpayers could have used that money for other purposes. The opportunity cost is huge.



A link to the clip posted on CNN, is:

http://ac360.blogs.cnn.com/2012/11/29/company-accused-of-giant-medicare-fraud/?iref=allsearch

(Note: I believe the November 29, 2012 date in the image above is the date that Drew Griffin posted the clip to the CNN blog, not necessarily the date of the broadcast.)






November 29, 2012

Personal DNA Data, Smart Phones, and the Social Network Can Democratize Medicine




(p. 236) With the personal montage of your DNA, your cell phone, your social network---aggregated with your lifelong health information and physiological and anatomic data---you are positioned to reboot the future of medicine. Who could possibly be more interested and more vested in your data? For the first time, the medical world is getting democratized. Think of the priests before the Gutenberg printing press. Now, nearly six hundred years later, think of physicians and the creative destruction of medicine.


Source:

Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.






November 28, 2012

Rajan Hired to Open India to Entrepreneurship




RajanRaghuramIndiaSchoolOfBusiness2012-11-20.jpg "Raghuram G. Rajan criticized Indian policy makers during a speech in April at the Indian School of Business. In August, the Indian government offered him a job." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. B3) NEW DELHI -- In April, the economist Raghuram G. Rajan gave a speech to a group of graduating Indian students in which he criticized the country's policy makers for "repeating failed experiment after failed experiment," rather than learning from the experiences of other countries. A week later, he assailed the government again, this time in a speech attended by Prime Minister Manmohan Singh.

But instead of drawing a rebuke from India's often thin-skinned leaders, he got a job offer. In August, Mr. Singh, who has frequently sought Mr. Rajan's advice, called and asked him to take a leave from his job as a professor at the University of Chicago to return to India, where he was born, to help revive the country's flagging economy. Within weeks, he was at work as the chief economic adviser in the Finance Ministry.

Analysts say the appointment of an outspoken academic like Mr. Rajan, along with the recent push by New Delhi to reduce energy subsidies and open up retailing, insurance and aviation to foreign investment, signal that India's policy makers appear to be serious about tackling the nation's economic problems.


. . .


Mr. Rajan said he would like to focus his efforts on three big themes: liberalizing India's financial system; making it easier to do business, particularly for entrepreneurs and manufacturers; and fixing India's dysfunctional food distribution system, which wastes a lot of food even as many of the country's poor are malnourished.



For the full story, see:

VIKAS BAJA. "As Its Economy Sags, India Asks a Critic to Come Home and Help Out." The New York Times (Sat., October 6, 2012): B3.

(Note: ellipsis added.)

(Note: the online version of the article was dated October 5, 2012.)






November 27, 2012

Entrepreneurial Capitalism Offers the Best Chance "for a Life of Engagement and Personal Growth"




(p. 228) Edmund S. Phelps explores "Refounding Capitalism." "One has to conclude that 'generation of wealth' is not special to capitalism. Corporatist economies are quite good at that. . . . A merit of a well-functioning capitalism (again: I do not mean free-market policy: low tax rates, etc.) is the economic freedoms it offers entrepreneurs, managers, employees and consumers--freedoms that socialist, corporatist and statist systems do not provide. . . . Ordinary people, if they are to find intellectual growth and an engaging life, have to look outside the home: these (p. 229) things can be found only at work, if anywhere. And for these rewards to be available for large numbers of people, the economy must be modern. And as a practical matter, that requires that it be based predominantly on a well-functioning capitalist system. Thanks to the grassroots, bottom-up processes of innovation, capitalism at its best can deliver--far more broadly than Soviet communism, eastern European socialism, and western European corporatism can--chances for the mental stimulation, problem-solving, exploration and discovery required for a life of engagement and personal growth."


Nobel-Prize winner Edmund Phelps as quoted in:

Taylor, Timothy. "Recommendations for Further Reading." Journal of Economic Perspectives 24, no. 2 (Spring 2010): 227-34.

(Note: ellipses in original.)


The original source of the Phelps quotes is:

Phelps, Edmund S. "Refounding Capitalism." Capitalism and Society 4, no. 3 (2009).






November 26, 2012

American Innovators Created Synergies and Interchangeable Parts




TheDawnOfInnovationBK2012-11-20.jpg











Source of book image: online version of the WSJ review quoted and cited below.








(p. A13) . . . the post-Civil War industrialization had an important and largely overlooked predecessor in the first decades of the 19th century, when, as Charles Morris writes in "The Dawn of Innovation," "the American penchant for mechanized, large-scale production spread throughout industry, presaging the world's first mass-consumption economy." It is a story well worth telling, and Mr. Morris tells it well.


. . .


Whole industries sprang up as the country's population boomed and spilled over into the Middle West. The rich agricultural lands there produced huge surpluses of grain and meat, especially pork. The city of Cincinnati--whose population grew to 160,000 in 1860, from 2,500 in 1810--became known as "Porkopolis" because of the number of hogs its slaughterhouses processed annually.

Mr. Morris does a particularly good job of explaining the crucial importance of synergy in economic development, how one development leads to another and to increased growth. The lard (or pig fat) from the slaughterhouses, he notes, served as the basis for the country's first chemical industry. Lard had always been used for more than pie crust and frying. It was a principal ingredient in soap, which farm wives made themselves, a disagreeable and even dangerous task thanks to the lye used in the process.

But when lard processing was industrialized to make soap, it led to an array of byproducts such as glycerin, used in tanning and in pharmaceuticals. Stearine, another byproduct, made superior candles. Just in the decade from the mid-1840s to the mid-1850s, Cincinnati soap exports increased 20-fold, as did the export of other lard-based products. Procter & Gamble, founded in Cincinnati in 1837 by an Irish soap maker and an English candle maker who had married sisters, grew into a giant company as the fast-rising middle class sought gentility.

Mr. Morris goes into great detail on the development of interchangeable parts--the system of making the components of a manufactured product so nearly identical that they can be easily substituted and replaced.



For the full review, see:

John Steele Gordon. "BOOKSHELF; The Days Of Porkopolis." The Wall Street Journal (Tues., November 20, 2012): A13.

(Note: ellipses added.)

(Note: the online version of the article was updated November 19, 2012.)



The book under review, is:

Morris, Charles R. The Dawn of Innovation: The First American Industrial Revolution. Philadelphia, PA: PublicAffairs, 2012.






November 25, 2012

Progress Will Slow If Consumers Wait for Doctors to Creatively Destroy Medicine




(p. 195) . . . it remains unclear whether there is adequate plasticity of a plurality of physicians to embrace the digital world and acknowledge that the era of paternalism is passé. My sense is that young physicians who are digital natives will be likely to assimilate but that it will be quite difficult for the vast majority who are in practice and inculcated with an older idea of how medical care should be rendered. Eventually there will be enough digital native physicians to take charge, but that will take decades to be accomplished. In the meantime, consumers are fully capable of leading the movement and contributing to medicine's creative destruction. And so they must.


Source:

Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.

(Note: ellipsis added.)






November 24, 2012

Sweden Prospers from Low Taxes, No Stimulus and Fiscal Discipline




SwedenGraphGDP2012-11-20.jpg










Source of graph: online version of the WSJ article quoted and cited below.



(p. A9) STOCKHOLM--Sweden's economy, bolstered by solid exports and healthy consumer spending, is picking up considerable steam even as many of its European neighbors gasp for breath amid the struggle to contain the euro-zone debt crisis.

Sweden's second-quarter economic output data, released Monday, significantly outpaced expectations, further solidifying the Northern European country's reputation as a haven in a volatile period. The Swedish krona, which recently reached a 12-year peak against the euro, strengthened further after the report.


. . .


. . . , Sweden has built a reputation for fiscal discipline since it suffered a financial crisis in the early 1990s. Successive governments have since stuck to a target to post a surplus of 1% of GDP over any business cycle.

Lawmakers resisted the temptation to borrow to fuel growth during the boom of the early 2000s, which meant Sweden hit the global financial crisis of 2008 and 2009 with strong public finances. The government hasn't needed to increase taxes in the way Spain has, or to cut spending as in the U.K.



For the full story, see:

CHARLES DUXBURY. "In Crisis, a Rare Swede Spot." The Wall Street Journal (Tues., July 31, 2012): A9.

(Note: ellipses added.)

(Note: the online version of the article was dated July 30, 2012.)






November 23, 2012

Econometrician Leamer Argues for Methodological Pluralism




(p. 44) Ignorance is a formidable foe, and to have hope of even modest victories, we economists need to use every resource and every weapon we can muster, including thought experiments (theory), and the analysis of data from nonexperiments, accidental experiments, and designed experiments. We should be celebrating the small genuine victories of the economists who use their tools most effectively, and we should dial back our adoration of those who can carry the biggest and brightest and least-understood weapons. We would benefit from some serious humility, and from burning our "Mission Accomplished" banners. It's never gonna happen.


Source:

Leamer, Edward E. "Tantalus on the Road to Asymptopia." Journal of Economic Perspectives 24, no. 2 (Spring 2010): 31-46.






November 22, 2012

"Highly Leveraged Economies, . . . , Seldom Survive"




ThisTimeIsDifferentBK2012-11-14.jpg











Source of book image: http://si.wsj.net/public/resources/images/ED-AK313_book10_DV_20091008170122.jpg





(p. 762) Every once in a while, a work comes along whose key points ought to be part of the information set of every literate economist. Carmen M. Reinhart and Kenneth S. Rogoff's This Time is Different: Eight Centuries of Financial Folly is such a work. It describes and analyzes a long international history of several types of financial crises.


. . .


The authors resist giving too much structural interpretation to their analysis. Most would agree with their conclusion that " . . . highly leveraged economies, particularly those in which continual rollover of short-term debt is sustained only by confidence in relatively illiquid underlying assets, seldom survive" (p. 292).



For the full review, see:

Boskin, Michael J. "Review of: This Time Is Different: Eight Centuries of Financial Folly." Journal of Economic Literature 48, no. 3 (September 2010): 762-66.

(Note: ellipsis internal to the final quotation, and the italics, are in the original; ellipsis between paragraphs is added.)

(Note: the "p. 292" refers to a page in the book, and not a page of the review.)(


The book being reviewed, is:

Reinhart, Carmen M., and Kenneth Rogoff. This Time Is Different: Eight Centuries of Financial Folly. Princeton, NJ: Princeton University Press, 2009.






November 21, 2012

Sclerotic Doctors Resist Change




(p. 177) Atherosclerosis, referring to a progressive and degenerative process of artery walls, is typically translated for a lay audience as "hardening of the arteries." We've never needed a similar word to describe the medical community. It came with sclerosis built in. Of all the professions represented on the planet, perhaps none is more resistant to change than physicians. If there were ever a group defined by lacking plasticity, it would first apply to doctors.

(p. 178) The inherent "hardness" of physicians and the medical community suggests they will have a difficult time adapting to the digital world. Before the emergence of the Internet, physicians were high priests, holding all the knowledge and expertise, not to be challenged or questioned by the lowly consumer patient. "Doctor knows best" was the pervasive sentiment, shared by patients and especially physicians.



Source:

Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.






November 20, 2012

71,000 Years Ago "These People Were Like You & I"




PinnaclePointExcavation2012-11-16.jpg "Scientists at the Pinnacle Point excavation." Source of caption and photo: online version of the WSJ article quoted and cited below.


(p. A3) A trove of sophisticated stone tools recently dug up from a South African cliff suggests early modern humans developed complex cognitive ability anywhere from 6,000 to 10,000 years earlier than many scientists believe.

In a study published in the journal Nature, researchers said they had unearthed a large number of small stone blades going back some 71,000 years. The heat-treated blades appear to have been designed for tipping spears or arrows that could be used for hunting game.

Crucially, the discovery indicates that these ancestors had the cognitive ability to manipulate complex tools. In addition, they were able to pass on their inventions to future generations. That, in turn, suggests the use of sophisticated language.

"What it's showing us is that these people were like you and I," said Curtis Marean, a paleoanthropologist at Arizona State University in Tempe, Ariz., co-author of the study, and leader of the South Africa project. "They were smart people."


. . .


Dr. Marean and his colleagues unearthed the microliths at a site known as Pinnacle Point on the southern shore of South Africa. They began the dig in 2005.

Some 72,000 years ago, the earth was wrapped in a glacial chill that lasted about 12,000 years. The African interior was dry and many early modern humans would have moved to more hospitable locations, such as the southern coast.



For the full story, see:

GAUTAM NAIK. "U.S. NEWS (sic); Tool Clue to Early Man's Mind." The Wall Street Journal (Thur., November 8, 2012): A3.

(Note: ellipsis added.)

(Note: the online version of the article was updated August 22, 2012 and had the title "WORLD NEWS; Tools Hint at Earlier Start for Human Smarts.)



MicrolithBlades2012-11-16.jpg














"Microlith blades." Source of caption and photo: online version of the WSJ article quoted and cited above.







November 19, 2012

Econometric "Priests" Sell Their New "Gimmicks" as the "Latest Euphoria Drug"




The American Economic Association's Journal of Economic Perspectives published a symposium focused on the thought-provoking views of the distinguished econometrician Edward Leamer.

I quote below some of Leamer's comments in his own contribution to the symposium.


(p. 31) We economists trudge relentlessly toward Asymptopia, where data are unlimited and estimates are consistent, where the laws of large numbers apply perfectly and where the full intricacies of the economy are completely revealed. But it's a frustrating journey, since, no matter how far we travel, Asymptopia remains infinitely far away. Worst of all, when we feel pumped up with our progress, a tectonic shift can occur, like the Panic of 2008, making it seem as though our long journey has left us disappointingly close to the State of Complete Ignorance whence we began.

The pointlessness of much of our daily activity makes us receptive when the Priests of our tribe ring the bells and announce a shortened path to Asymptopia. (Remember the Cowles Foundation offering asymptotic properties of simultaneous equations estimates and structural parameters?) We may listen, but we don't hear, when the Priests warn that the new direction is only for those with Faith, those with complete belief in the Assumptions of the Path. It often takes years down the Path, but sooner or later, someone articulates the concerns that gnaw away in each of (p. 32) us and asks if the Assumptions are valid. (T. C. Liu (1960) and Christopher Sims (1980) were the ones who proclaimed that the Cowles Emperor had no clothes.) Small seeds of doubt in each of us inevitably turn to despair and we abandon that direction and seek another.

Two of the latest products-to-end-all-suffering are nonparametric estimation and consistent standard errors, which promise results without assumptions, as if we were already in Asymptopia where data are so plentiful that no assumptions are needed. But like procedures that rely explicitly on assumptions, these new methods work well in the circumstances in which explicit or hidden assumptions hold tolerably well and poorly otherwise. By disguising the assumptions on which nonparametric methods and consistent standard errors rely, the purveyors of these methods have made it impossible to have an intelligible conversation about the circumstances in which their gimmicks do not work well and ought not to be used. As for me, I prefer to carry parameters on my journey so I know where I am and where I am going, not travel stoned on the latest euphoria drug.

This is a story of Tantalus, grasping for knowledge that remains always beyond reach. In Greek mythology Tantalus was favored among all mortals by being asked to dine with the gods. But he misbehaved--some say by trying to take divine food back to the mortals, some say by inviting the gods to a dinner for which Tantalus boiled his son and served him as the main dish. Whatever the etiquette faux pas, Tantalus was punished by being immersed up to his neck in water. When he bowed his head to drink, the water drained away, and when he stretched up to eat the fruit hanging above him, wind would blow it out of reach. It would be much healthier for all of us if we could accept our fate, recognize that perfect knowledge will be forever beyond our reach and find happiness with what we have. If we stopped grasping for the apple of Asymptopia, we would discover that our pool of Tantalus is full of small but enjoyable insights and wisdom.



For the full article, see:

Leamer, Edward E. "Tantalus on the Road to Asymptopia." Journal of Economic Perspectives 24, no. 2 (Spring 2010): 31-46.






November 18, 2012

"The Bulk of New Yorkers Do Not Have an Unlimited Appetite for Growing Their Own Kale"




McPhersonEnaUrbanGardener2012-11-11.jpg












". . . , Ena K. McPherson holds the key to three different community gardens." Source of caption and photo: online version of the NYT article quoted and cited below.




(p. D1) There is some evidence, . . . , that the bulk of New Yorkers do not have an unlimited appetite for growing their own kale. Official counts of New York gardens are fragmentary. But John Ameroso, the Johnny Appleseed of the New York community garden movement, suspects that the number of present-day gardens -- around 800 -- may be half what it was in the mid-1980s.

In his long career as an urban extension agent for Cornell University, Mr. Ameroso, 67, kept a log with ratings of all the plots he visited. "I remember that there were a lot of gardens that were not in use or minimally used," he said. "Into the later '80s, a lot of these disappeared or were abandoned. Or maybe there was one person working them. If nothing was developed on them, they just got overgrown."

The truth, Ms. Stone said, is that at any giv-(p. D6)en time, perhaps 10 percent of the city's current stock of almost 600 registered GreenThumb gardens is growing mostly weeds. "In East New York, I can tell you that there are basically many gardens that are barely functioning now."


. . .


An honest census would reveal that many gardens (perhaps most) depend on just one or two tireless souls, said Ena K. McPherson, a Brooklyn garden organizer. She would know because she's one of them.

Ms. McPherson holds the keys to three community gardens in Bedford-Stuyvesant. (Ms. Stone appreciatively refers to these blocks as "the Greater Ena McPherson Zone.") And she serves on the operations committee for the nonprofit Brooklyn Queens Land Trust, which holds the deeds to 32 garden plots.

"In an ideal situation, we would have gardens with everyone in the community participating," Ms. McPherson said. "But in fact, a few die-hard people end up carrying the flag."


. . .


The original gardens followed the city's vacant lots, which by 1978 numbered 32,000. Mr. Ameroso, though trained in agronomy, pitched them as an instrument for community renewal. "How did you take back your block?" he said. "Put in a community garden and stop that dumping."

Ms. Stone, who laughingly (and earnestly) describes herself as a socialist, continues to embrace something of this mission. "All the people who are marginal in society -- and I'm not using that as a judgmental term, it's children, senior citizens, people on disability, the 47 percent -- these people are the main power people in the garden," she said.

These days, Mr. Ameroso espouses more of what he calls an "urban agriculture" model: a food garden with a dedicated farmers' market or a C.S.A. These amenities make stakeholders out of neighbors who may not like dirt under their nails and rural farmers who drive in every weekend.

"The urban-agriculture ones are flourishing," he said. "There's a lot of excitement. They're active eight days a week." But "community gardens, as such, where people come in to take care of their own boxes -- those are not flourishing."

It's almost a cliché to point out that this new green model seems to have attracted tillers with a different skin tone. "Back then," Mr. Ameroso said of his earlier career, "when we worked in Bronx or Bed-Stuy, it was mostly communities of color. Now when we talk about the urban agriculture stuff, it's white people in their 30s."

What explains this demographic shift?

"I have no idea," he said. "I'm still baffled by it, and I'm involved in it!"



For the full story, see:

MICHAEL TORTORELLO. "IN THE GARDEN; Growing Everything but Gardeners." The New York Times (Sat., November 1, 2012): D1 & D6.

(Note: ellipses added.)

(Note: the online version of the article was dated October 31, 2012.)






November 17, 2012

AMA Resists the Democratization of DNA





The "Walgreens flap" mentioned below was the episode in 2010 when Walgreens announced that it would cell a genome testing saliva kit, but was pressured by government regulatory agencies, and withdrew the kit from the market within two days of the announcement.


(p. 119) . . . there will likely never be a "right time"---after we have passed some imaginary tipping point giving us critical, highly actionable, and perfectly accurate information---for it to be available to the public. The logical conclusion is that the tests should be made available. What's more, the fact that they have been available has meant that democratization of DNA is real. Consumers now realize that they have the right to obtain data on their DNA. As a blogger wrote in response to the Walgreens flap, "To say that this information has to be routed through your doctor is a little like the Middle Ages, when only priests were allowed (or able) to read the Bible. Gutenberg came along with the printing press even though few people were able to read. This triggered a literacy/literature spiral that had incredible benefits for civilization, even if it reduced the power of the priestly class."

The American Medical Association (AMA) sees things differently. In a pointed letter to the FDA in 2011, the AMA wrote: "We urge the Panel ... that genetic testing, except under the most limited circumstances, should carried out under the personal supervision of a qualified health professional." The FDA has indicated it is likely to accept the AMA recommendations, which will clearly limit consumer direct access to their DNA information. But this arrangement ultimately appears untenable, and eventually there will need to be full democratization of DNA for medicine to (p. 120) be transformed. Of course, health professionals can be consulted as needed, but it is the individual who should have the decision authority and capacity to drive the process.

The physician and entrepreneur Hugh Rienhoff, who has spent years attempting to decipher his daughter's unexplained cardiovascular genetic defect and formed the online community MyDaughtersDNA.org, had this to say: "Doctors are not going to drive genetics into clinical practice. It's going to be consumers .... The user interface, whether software or whatever will be embraced first by consumers, so it has to be pitched at that level, and that's about the level doctors are at. Cardiologists do not know dog shit about genetics."



Source:

Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.

(Note: first ellipsis added; other ellipses in original.)






November 16, 2012

Race Car Flywheels Save Fuel




FlywheelWilliamsHybrid2012-11-11.jpg













"FLYWHEEL; Using a flywheel system from Williams Hybrid Power. Audi's R18 e-tron quattro car became the first hybrid vehicle to win the iconic 24 Hours of Le Mans race." Source of caption: print version of the WSJ article quoted and cited below. Source of photo: http://www.williamshybridpower.com/#%2Ftechnology%2Fthe_flywheel



NASA costs are often justified by giving cases where innovations from space spillover into the consumer economy. But in the normal market economy, there are alternative sources of innovation that would spillover into the consumer economy, without taking taxpayer dollars. I wonder if anyone has ever studied how often race car innovations make their way into mainstream production cars?



(p. B4) European auto makers might turn to an unlikely source to reduce fuel consumption and pollution: gas-guzzling Formula One race cars.

Rotating mechanical devices called flywheels developed for these speed machines could make everyday cars more powerful and efficient.


. . .


Flywheels have been around since the Industrial Revolution, when they were widely used in steam engines. Mounted on a crankshaft, these spinning discs provide a steady flow of energy when the energy source isn't constant, as is the case with piston-driven engines in cars.

Flywheels can range from about a meter in diameter to less than three centimeters, depending on the amount of energy required. The larger and heavier the flywheel is, the more inertial energy it delivers when spinning.

In miniature form, they show up in friction toy cars that are driven by a flywheel and speed up when the toy is rolled quickly across a surface. When the car is let go, it is the flywheel that speeds the car across the floor.

Until recently, flywheels--known in the auto industry as kinetic energy recovery systems, or KERS--have been too heavy or too bulky to use on road vehicles. But that is changing, thanks to new, lighter materials, high-tech engineering and power-management systems.



For the full story, see:

DAVID PEARSON. "NEXT IN TECH; An Unlikely Fuel Saver: Racing Cars; To Reduce Pollution, Auto Makers Experiment With Flywheels Developed for Formula One Motors." The Wall Street Journal (Tues., August 21, 2012): B4.

(Note: ellipsis added.)

(Note: the online version of the article was updated August 22, 2012.)






November 15, 2012

Organic Farming Too Unproductive to End African Starvation




(p. 6) There is no shortage of writing -- often from a locavore point of view -- in support of more organic methods of farming, for both developed and developing countries. These opinions recognize that current farming methods bring serious environmental problems involving water supplies, fertilizer runoff and energy use. Yet organic farming typically involves smaller yields -- 5 to 34 percent lower, as estimated in a recent study in the journal Nature, depending on the crop and the context. For all the virtues of organic approaches, it's hard to see how global food problems can be solved by starting with a cut in yields. Claims in this area are often based on wishful thinking rather than a hard-nosed sense of what's practical.


For the full story, see:

TYLER COWEN. "ECONOMIC VIEW; World Hunger: The Problem Left Behind." The New York Times, SundayBusiness (Sun., September 16, 2012): 6.

(Note: the online version of the article is dated September 15, 2012.)






November 14, 2012

Entrepreneurs of Coffee, the Battlefield, and Missing Minerals




InventionOfEnterpriseBK2012-11-04.jpg














Source of book image: http://img.qbd.com.au/product/l/9780691143705.jpg



[p. 167] The book . . . contains a variety of entertaining stories and colorful facts about entrepreneurship that could potentially be used for teaching. [p. 168] Murray, for instance, explains that the word "entrepreneur" was borrowed from the French language in the late Middle Ages, a time when it was used to describe a battlefield commander (p. 88). Kuran describes how Middle Eastern coffee entrepreneurs originally faced harsh resistance from many clerics who believed that "coffee drinkers reap hell-fire" (pp. 71-72). Hudson traces early merchant activity and entrepreneurship all the way back to Sumerian cities in Mesopotamia in the third millennium BC (pp. 11-17). These cities, made rich by their fertile alluvial soil, still needed to acquire other important minerals, missing in their own ground, from the distant Iranian plateau or Anatolia. Since military conquest proved too expensive and because the Sumerian cities really needed these resources, they pioneered international import-export activities in their temples and palaces.


For the full review, see:

Bikard, Michael, and Scott Stern. "The Invention of Enterprise: Entrepreneurship from Ancient Mesopotamia to Modern Times." Journal of Economic Literature 49, no. 1 (March 2011): 164-68.

(Note: ellipsis added.)

(Note: the page numbers in square parentheses refer to the review; the page numbers in curved parentheses refer to the book under review.)


Book being reviewed:

Landes, David S., Joel Mokyr, and William J. Baumol, eds. Invention of Enterprise: Entrepreneurship from Ancient Mesopotamia to Modern Times. Princeton, NJ: Princeton University Press, 2010.






November 13, 2012

Personal Genomics Startups Struggle Under a "Circus" of Government Regulation




(p. 118) Government regulation of consumer genomics companies has been centerpiece (and the semblance of a circus) in their short history. Back in 2008, the states of California and New York sent "cease and desist" letters to the genome scan companies. State officials were concerned that the laboratories that generated the results were not certified as CLIA (Clinical Laboratory Improvement Amendments) and that the tests were being performed without a physician's order. All three companies developed work-around plans in California and remained operational but were unable to market the tests in New York.

In 2010, the regulation issues escalated to the federal level. In May it was announced that 7,500 Walgreens drugstores throughout the United States would soon sell Pathway Genomics's saliva kit for disease susceptibility and pharmacogenomics. While the tests produced by all four companies had been widely available via the Internet for three years, the announcement of wide-scale availability in drugstores (which was cancelled by Walgreens within two days) appeared to "cross the line" and set off a cascade of investigations and hearings by the FDA, the Government Accountability Office (GAO), and the Congressional House Committee on Energy and Commerce. The FDA's Alberto Gutierrez said, "We don't think physi-(p. 119)cians are going to be able to interpret the results," and "genetic tests are medical devices and must be regulated." The GAO undertook a "sting" operation with its staff posing as consumers who bought genetic tests and detailed significant inconsistencies, misleading test results, and deceptive marketing practices in its report.

All four personal genomics companies are struggling.



Source:

Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.






November 12, 2012

Edison Foresaw Phonograph Music Potential




EdisonWangemannGroupPhoto2012-11-11.jpg "EUROPEAN JOURNEY; Thomas Edison, seated center, sent Adelbert Theodor Edward Wangemann, standing behind him, to France in 1889. From there Wangemann traveled to Germany to record recitations and performances." Source of caption and photo: online version of the NYT article quoted and cited below.



Edison is often ridiculed for failing to foresee that playing music would be a major use for his phonograph invention. (Nye 1991, p. 142 approvingly references Hughes 1986, p. 201 on this point.) But if Edison failed to foresee, then why did he assign Wangemann to make the phonograph "a marketable device for listening to music"?



(p. D3) Tucked away for decades in a cabinet in Thomas Edison's laboratory, just behind the cot in which the great inventor napped, a trove of wax cylinder phonograph records has been brought back to life after more than a century of silence.

The cylinders, from 1889 and 1890, include the only known recording of the voice of the powerful chancellor Otto von Bismarck. . . . Other records found in the collection hold musical treasures -- lieder and rhapsodies performed by German and Hungarian singers and pianists at the apex of the Romantic era, including what is thought to be the first recording of a work by Chopin.


. . .


The lid of the box held an important clue. It had been scratched with the words "Wangemann. Edison."

The first name refers to Adelbert Theodor Edward Wangemann, who joined the laboratory in 1888, assigned to transform Edison's newly perfected wax cylinder phonograph into a marketable device for listening to music. Wangemann became expert in such strategies as positioning musicians around the recording horn in a way to maximize sound quality.

In June 1889, Edison sent Wangemann to Europe, initially to ensure that the phonograph at the Paris World's Fair remained in working order. After Paris, Wangemann toured his native Germany, recording musical artists and often visiting the homes of prominent members of society who were fascinated with the talking machine.

Until now, the only available recording from Wangemann's European trip has been a well-known and well-worn cylinder of Brahms playing an excerpt from his first Hungarian Dance. That recording is so damaged "that many listeners can scarcely discern the sound of a piano, which has in turn tarnished the reputations of both Wangemann and the Edison phonograph of the late 1880s," Dr. Feaster said. "These newly unearthed examples vindicate both."



For the full story, see:

RON COWEN. "Restored Edison Records Revive Giants of 19th-Century Germany." The New York Times (Tues., January 31, 2012): D3.

(Note: ellipses added.)

(Note: the online version of the article is dated January 30, 2012.)



EdisonPhonograph2012-11-11.jpg "Adelbert Theodor Edward Wangemann used a phonograph to record the voice of Otto von Bismarck." Source of caption and photo: online version of the NYT article quoted and cited above.






November 11, 2012

The Economics of Intercollegiate Athletics




Here is more evidence that the role of athletics in higher education should be reconsidered. Another useful discussion occurs in the book by Christensen and Eyring. An earlier entry on this blog is also relevant.


(p. 230) The Knight Commission on Intercollegiate Athletics offers "College Sports 101: A Primer on Money, Athletics, and Higher Education in the 21st Century." "In fact, the vast majority of athletics programs reap far less money from external sources than they need to function. Virtually all universities subsidize athletics departments through general fund allocations, student fees, and state appropriations, and the NCAA estimates in a given year that only 20 to 30 athletics programs actually generate enough external revenue to cover operating expenses. Institutional subsidies to athletics can exceed $11 million, according to data provided by the NCAA. With costs in athletics rising faster than in other areas of university operations, it is not clear how many institutions can continue to underwrite athletics at their current level . . . Rigorous studies of the subject, however, suggest that there is no significant institutional benefit to athletic success. . . . Indeed, donations to athletics departments may cannibalize contributions to academic programs. . . . There are two other myths to be dispelled. First, there is no correlation between spending more on athletics and winning more . . . Second, increased spending on coaches' salaries has no significant relationship to success or increased revenue . . . October 2009, at 〈http://collegesports101.knightcommission.org〉.


Source:

Taylor, Timothy. "Recommendations for Further Reading." Journal of Economic Perspectives 24, no. 2 (Spring 2010): 227-34.

(Note: ellipses in original.)


The Knight Commission report can be downloaded at:

Weiner, Jay. "College Sports 101: A Primer on Money, Athletics, and Higher Education in the 21st Century." Knight Commission on Intercollegiate Athletics, 2009.


The Christensen and Eyring book is:

Christensen, Clayton M., and Henry J. Eyring. The Innovative University: Changing the DNA of Higher Education from the Inside Out. San Francisco, CA: Jossey-Bass, 2011.






November 10, 2012

The Case for More Climate Adaptations and Fewer Climate Mitigations




ClimatopolisBK2012-11-02.jpg

















Source of book image: http://perseuspromos.com/images/covers/200/9780465019267.jpg



(p. 777) Climatopolis begins with the assumption that our future will bring some combination of higher temperatures, sea level rise, more intense natural disasters, and changes in precipitation and drought conditions. The forecast is considered inevitable because of humanity's deep and (p. 778) growing dependence on energy from fossil fuels, the burning of which generates emissions that cause climate change. In a way that some readers are likely to find overly pessimistic, dismissive, or both, Kahn asserts that we are unlikely to invent a "magical" technology that allows us to live well without producing greenhouse gases. He is equally skeptical about whether geo-engineering will help stabilize the climate. So when it comes to facing a future that includes climate change, Kahn has concluded as soon as page 5 that "unlike a ship, we cannot turn away."

Economics is, after all, the dismal science, but early pessimism in Climatopolis quickly gives way to an overall optimistic theme. It is first encountered, somewhat surprisingly, in a chapter titled "What We've Done When Our Cities Have Blown Up." With examples that range from fires and floods to wars and terrorist attacks, Kahn makes the case that we humans are a surprisingly resilient species. Among the lessons he draws are that destruction often triggers economic booms, people learn from their mistakes, cities are shaped by the accumulation of small decisions by millions of self-interested people, and when conditions are bad in one location people migrate to where it is better.

Kahn gets traction out of the notion that people "vote with their feet," and he describes how climate change will affect where people want to go. Rising temperatures will cause Sun Belt cities in the United States to suffer, for example, while northern cities such as Minneapolis and Detroit will become more attractive places to live.


. . .


Climatopolis . . . cautions against maladaptive policies, and the recommendation here will be familiar to economists: prices should be left undistorted to reflect real costs and risks. Kahn is critical of a policy in Los Angeles under which people who demand more water pay a lower marginal price, and thereby face exactly the wrong incentive for conservation as water becomes increasingly scarce. He also points to the problems of subsidized insurance or caps on premiums for residents in climate-vulnerable areas, as these policies only promote greater vulnerability. What is more, Kahn would like us to stop treating people who move into harm's way as victims in need of a bailout when natural disasters strike. He writes that, "Ironically, to allow capitalism to help us adapt to climate change, the government must precommit to not protect 'the victims'."



For the full review, see:

Kotchen, Matthew J. "Review of Kahn's Climatopolis." Journal of Economic Literature 49, no. 3 (September 2011): 777-79.

(Note: ellipses added.)


Book under review:

Kahn, Matthew E. Climatopolis: How Our Cities Will Thrive in the Hotter Future. New York: Basic Books, 2010.






November 9, 2012

"The Resistance from the Priesthood of Medicine Is at Its Height"




(p. 77) In December 2010 in Milwaukee, Wisconsin, Nicholas Volker, a five-year-old boy with a gastrointestinal condition that had not previously been seen, who had undergone over a hundred surgical operations and was almost constantly hospitalized and intermittently septic, was virtually on death's door. But when his DNA sequence was determined, his doctors found the culprit mutation. That discovery led to the proper treatment, and now Nicholas is healthy and thriving. Even though this was only the first clearly documented case of the life-saving power of human genomics in medicine, (p. 78) few could now deny that the field was going to have a vital role in the future of medicine. Some would argue that the treatment led to an even bigger breakthrough: health insurance coverage of sequencing costs for select cases.

It took the better part of a decade from the completion of the first draft of the Human Genome Project for genomics to reach the clinic in such a dramatic way. To make treatment like Volker's common will likely take more time still. Even if that's the ultimate prize, the creative destruction of medicine still has various other, less comprehensive, genomic tools for us to use, based on investigations of things like single-nucleotide polymorphisms, the exome, and more. The material can be a bit heady, but it's worth pushing through: these tools could effect not just dramatic corrections of faulty genes but a better, more scientific understanding of disease susceptibility and what drugs to take. Moreover, as they empower patients and democratize medicine, they make medical knowledge available to all and deep knowledge of ourselves available to each of us. Nevertheless, at this level, perhaps more than anywhere else in this ongoing medical revolution, the resistance from the priesthood of medicine is at its height. The fight might be tougher than the material, but in neither case can we afford to give up.



Source:

Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.






November 8, 2012

Coase: "Firms Never Calculate Marginal Costs"








Source of YouTube video:

http://www.youtube.com/watch?feature=player_embedded&v=ZAq06n79QIs#!




(p. 257) You can watch a 99 year-old Ronald Coase speaking in December 2009 for 25 minutes on the subjects of "Markets, Firms and Property Rights." "One of the things that people don't understand is that markets are creations. . . . In fact, it's very difficult to imagine that firms act in the way that is described in the textbooks, where you maximize profits by equating marginal costs and marginal revenues. One of the reasons one can feel doubtful about this particular way of looking at things is that firms never calculate marginal costs . . . I think we ought to study directly how firms operate and develop our theory accordingly." From the conference "Markets, Firms and Property Rights: A Celebration of the Research of Ronald Coase," held at the University of Chicago Law School by the Information Economy Project at George Mason University School of Law. The webpage also includes video of seven panels of prominent speakers, along with PDF files of a dozen or so papers given at the conference. Available at 〈http://iep.gmu.edu/CoaseConference.php〉.


Source:

Taylor, Timothy. "Recommendations for Further Reading." Journal of Economic Perspectives 24, no. 3 (Summer 2010): 251-58.

(Note: ellipses in original.)






November 7, 2012

Health Inefficiencies Free-Ride on "Home Run Innovations"




The article quoted below is a useful antidote to those economists who sometimes seem to argue that health gains fully justify the rise in health costs.


(p. 645) In the United States, health care technology has contributed to rising survival rates, yet health care spending relative to GDP has also grown more rapidly than in any other country. We develop a model of patient demand and supplier behavior to explain these parallel trends in technology growth and cost growth. We show that health care productivity depends on the heterogeneity of treatment effects across patients, the shape of the health production function, and the cost structure of procedures such as MRIs with high fixed costs and low marginal costs. The model implies a typology of medical technology productivity: (I) highly cost-effective "home run" innovations with little chance of overuse, such as anti-retroviral therapy for HIV, (II) treatments highly effective for some but not for all (e.g., stents), and (III) "gray area" treatments with uncertain clinical value such as ICU days among chronically ill patients. Not surprisingly, countries adopting Category I and effective Category II treatments gain the greatest health improvements, while countries adopting ineffective Category II and Category III treatments experience the most rapid cost growth. Ultimately, economic and political resistance in the United States to ever-rising tax rates will likely slow cost growth, with uncertain effects on technology growth.


Source of abstract:

Chandra, Amitabh, and Jonathan Skinner. "Technology Growth and Expenditure Growth in Health Care." Journal of Economic Literature 50, no. 3 (Sept. 2012): 645-80.







November 6, 2012

When Trade Is a Matter of Life and Death (and the Progress of Knowledge)




BataviasGraveyardBK2012-11-01.jpg
















Source of book image: http://www.mikedash.com/assets/images/Batavia-l.jpg



(p. 236) In Mike Dash's book, Batavia's Graveyard, the mutineers on the ship Batavia get stranded on a parched sand bar with the liquor and foodstuffs, but no fresh water. A few hundred watery yards away are the remnants of the loyal crew, stuck on another islet without liquor or provisions, but with plentiful fresh water. Trade proves impossible. The analog of this breakdown is the current relationship between history and the social sciences.


Source:

Clark, Gregory. "The Ends of Life: Roads to Fulfillment in Early Modern England." Journal of Economic History 71, no. 1 (March 2011): 236-37.

(Note: italics in original.)


Dash's book that Clark mentions:

Dash, Mike. Batavia's Graveyard: The True Story of the Mad Heretic Who Led History's Bloodiest Mutiny. New York: Crown, 2002.






November 5, 2012

When Bibliometrics Are a Matter of Life and Death




(p. 51) . . . it is essential, if at all possible, to have a go-to physician expert and authority when one has a newly diagnosed, serious condition, such as a brain or, neurologic conditions like multiple sclerosis and Parkinson's disease, heart valve abnormality. How do you find that individual doctor?

In order to leverage the Internet and gain access to state-of-the-art expertise, you need to identify the physician who conducts the leading research in the field. Let's pick pancreatic cancer as an example of a serious condition that often proves to be rapidly fatal. The first step is to go to Google Scholar and find the top-cited articles for that condition by typing in "pancreatic cancer." They are generally listed in order by descending number of citations. Look for the senior, last author of the articles. The last author of the top-listed paper in the Journal of Clinical Oncology from 1997 is Daniel D. Von Hoff, with over 2,000 citations ("cited by ... " appears at the end of each hit). Now you may have identified an expert. Enter "Daniel Von Hoff" into PubMed (www.ncbi.nlm.nih.gov/sites/pubmed) to see how many papers he has published: 567. Most are related to pancreatic cancer or cancer research.

(p. 52) Now go back to Google Scholar and enter his name, and you'll see over 24,000 hits--this number includes papers that cite his work. There are some problems with these websites, since getting citations by other peer-reviewed publications takes time; if a breakthrough paper is published, it will be years to accumulate hundreds, if not thousands, of citations. Thus, the lag time or incubation phase of citations may result in missing a rising star. If it is a common name, there may be admixture of citations of different researchers with the same name, albeit different topics, so it is useful to enter in all elements including the middle initial and to scan the topic list to alleviate that problem. For perspective, a paper that has been cited 1,000 times by others is rare and would be considered a classic. In this example, the top paper by Von Hoff in 1997 is a long time ago, and he is no longer at the University of Texas, San Antonio-he moved to Phoenix, Arizona. How would you find that out? Look for Daniel D. Von Hoff using a search engine such as Google or Bing, and look up his profile on Wikipedia. Without any help from any doctor, you will have found the country's leading authority on pancreatic cancer. And you will have also identified some backups at Johns Hopkins using the same methodology.




Source:

Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.

(Note: initial ellipsis added; parenthetical ellipsis in original.)






November 4, 2012

Environmental Humor Down Under


PizzaCapersNapkin2012-10-13.jpg


Above is a scan of a napkin I picked up at a tasty little pizza restaurant we stopped at in Brisbane, Australia this July.

Every time I see the napkin, I smile.

The progress of civilization uses energy and resources. Progress and civilization and clean sleeves are all worth fighting for.






November 3, 2012

"Richly Researched" Study of "Ironies of Antitrust Policy" in Retailing




(p. 819) Levinson's book opens up a crucial discussion on the role of integrated retailer-distributors in shaping the twentieth-century U.S. economy. As he rightly notes in the book's conclusion, A&P was in many ways the Walmart of its day: it used its buying power to squeeze inefficiencies out of supply chains, it was widely reviled for upending small-town business patterns and bitterly fighting union organizers, and yet it drew waves of customers who appreciated its low prices. While we have many business histories of mass-production industries, we have only a handful of richly researched studies of the mass retailers that have, in the words of historian Nelson Lichtenstein (2009), "become the key players in the worldwide marketplace of our time." Levinson has produced a valuable book for business and economic historians interested in retailing, supply chains, and the ironies of antitrust policy. As a former editor for The Economist, furthermore, Levinson is particularly effective at translating challenging economic concepts into language that lay audiences and undergraduate students can grasp.


For the full review, see:

Hamilton, Shane. "The Great A&P and the Struggle for Small Business in America." Journal of Economic Literature 50, no. 3 (Sept. 2012): 818-19.

(Note: italics in original.)


The book under review is:

Levinson, Marc. The Great A&P and the Struggle for Small Business in America. New York: Hill and Wang, 2011.


The Lichtenstein book mentioned is:

Lichtenstein, Nelson. The Retail Revolution: How Wal-Mart Created a Brave New World of Business. hb ed. New York: Metropolitan Books, 2009.






November 2, 2012

A Rising Tax Gathers No Rolling Stone




life-keith-richardsBK2012-10-31.jpg















Source of book image: http://1.bp.blogspot.com/-Nhhn-YcP9IY/TjkQHfGGEeI/AAAAAAAAAVA/_jKMGRBm9Ac/s1600/life-keith-richards.jpg



(p. 289) The tax rate in the early '70s on the highest earners was 83 percent, and that went up to 98 percent for investments and so-called unearned income. So that's the same as being told to leave the country. ... The last thing I think the powers that be expected when they hit us with the super-super tax is that we'd say, fine, we'll leave. We'll be another one not paying tax to you. They just didn't factor that in. It made us bigger than ever, and it produced Exile on Main St., which was maybe the best thing we did. They didn't believe we'd be able to continue as we were if we didn't live in England. And in all honesty, we were very doubtful too. We didn't know if we would make it, but if we didn't try, what would we do? Sit in England and they'd give us a penny out of every pound we earned? We had no desire to be closed down. And so we upped and went to France.


Source:

Richards, Keith. Life. New York: Little, Brown and Company, 2010.

(Note: I first saw the quote on the back cover of: Journal of Political Economy 119, no. 1 (Feb. 2011).)

(Note: ellipsis added.)






November 1, 2012

FDA and ACS Wrongly Endorsed Sunscreen with Retinyl Palmitate




Some consumers let their guard down on medical issues, assuming that the government Food and Drug Administration (FDA), and large incumbent bureaucratic non-profits, like the American Cancer Society (ACS), will protect them---it ain't necessarily so. Caveat emptor should remain the rule for consumers.


(p. 39) Of note, one of the reasons for the lack of updating the rules and acknowledging UVA rays has been heavy pressure from sunscreen manufacturers, which include Johnson and Johnson (Neutrogena), Merck-Schering Plough (Coppertone), Proctor and Gamble (Olay), and L'Oreal. Interestingly, in Europe products that provide solid UVA protection have been available for years. The concerns run even deeper because many of the products (41 percent in the United States) contain a form of vitamin A known as retinyl palmitate, which has been associated with increased likelihood of skin cancer. There are, however, no randomized studies, but biological plausibility and the observational findings of a rising incidence of basal cell (p. 40) carcinoma and melanoma, despite the widespread use of sunscreens. In mid-2011, the FDA finally unveiled some new rules about sunscreen claims.

This issue really hit home when my wife brought out a tube of Neutrogena Ultra Sheer Dry-Tough SPF 30 Sunblock. It claims "Broad Spectrum UVNUVB Protection" despite repeatedly failing UVA tests. But the real eye-opener is to find the American Cancer Society logo on the front of the tube with the message "Help Block Out Skin Cancer." Now what is the American Cancer Society logo doing on the tube of Neutrogena? The fine print on the bottom reads: "The American Cancer Society (ACS) and Neutrogena, working together to help prevent skin cancer, support the use of sunscreen. The ACS does not endorse any specific product. Neutrogena pays a royalty to the ACS for the use of its logo."



Source:

Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.






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