Feed on
Posts
Comments

Here is some from Slate Star, and note the observations about the Voxers:

Racism is a uniquely divisive issue. Minorities hear it and think of Klansmen trying to kill them. White people hear it and think of witch-hunters trying to get them fired. A single death in a random Midwestern town has turned half the country into experts on ballistics because it involved race. Bring up race, and people will change their opinion in the opposite direction suggested by the evidence just to spite you for having a different opinion about it than they do.

Once you’ve said words like “racism” or “racial bias”, this dynamic is already in play and you have lost control of the conversation from then on. If you mention the word and then suggest that we should do something about the police bribery or whatever, then ten percent are going to yell “HOW DARE YOU IMPUGN OUR OFFICERS’ HONOR, YOU POLITICALLY CORRECT FASCIST”, another ten percent are going to yell “HOW DARE YOU DERAIL THE CONVERSATION ABOUT RACE, YOU WHITE SUPREMACIST ASSHOLE”, and the other eighty percent are going to be yelling so loud at each other they can’t even hear you. By the time all the fires have been put out and all the rubble cleared, it’s a pretty good bet that nobody is in the mood to hear about policy ideas for reducing the impact of police on lower-income individuals anymore.

Klein ends his piece by interviewing a professor who states that “Liberals sometimes overstate the extent of overt racism as a direct explanation of justice system disparities.” He acts like this is some sort of inexplicable quirk of the liberal mind. I wonder whether it might have more to do with liberals reading things like the recent Vox article, “America’s Criminal Justice System Is Racist”, which declares the thesis “There is no reason to be subtle on this point: the American criminal justice system is racist”, then goes on to repeat the phrase “America’s criminal justice system is racist” five times in the next five paragraphs. It never mentions that possibility that any of this racism is anything but overt.

If, like Robin Hanson, you believe in the metaphor of tugging policy ropes sideways, then I can’t think of any worse way to ensure that everyone will be tugging against you in every direction than trying to focus the discussion about race.

That’s why I limited my review to direct bias within the justice system itself, and why I think other ways of framing the issue are less productive.

The rest is here.

“It” being a really expensive price for a pill that is quite literally a life-saving pill. And once again, we get the usual standard fare from the Voxers:

  • In Europe, things are like, so, way, cooler and more just. They pay, like, so much less for their life-saving pills.
  • Big pharma profits are like, waaaaaayyyyy, over the top, like five times larger than other medical companies.
  • It’s the “system” that has to rise up to stop it, or the “system” that is broken.

So once again I threaten myself with stopping this blogging thing here at TUW because I am not mature enough to treat pieces like this with dignity. It takes until the very end of the piece before the author begrudgingly reminds folks “there’s another take” on high drug prices … which is that investing in pharamceutical research is a high-risk procedure with much uncertainty, especially given the regulatory environment. The article says NOTHING at all about serious economic “solutions” to question like this, ones that were offered by Michael Kremer over a decade ago (read about patent buyouts) if you insist that “the system” ought to do something about it. The article says NOTHING about how the situation with pill pricing in Europe does not at all inform the issue of high prices here – the drugs are not developed in Europe and a simple discussion of how price discrimination works would have been helpful . Here’s an analogy, “the sticker price at the U of R is an outrageous $60,000 and there is nothing the system can do about it.” And then we’d proceed to show how some students pay almost nothing to go to the U of R while others are charged the outrageous price of $60,000. Or finally, and perhaps this ought to go without saying …

… if I offered you a pill that would be virtually guaranteed to save your life, or extend your life by, say, another 10 years, how much would you pay for it, now? Would you prepay into “pill fund” while you are young and healthy so that you would be able to buy such a lifesaving pill when you are older? Why is it imperative that the price of the pill be lower? I’d clean out my entire bank account to extend my life by 10 years … and this pill’s treatment clocks in at a mere $84,000. How come I do not see an article bemoaning that open-heart surgery costs $125,000 here which extends life by 10 years and which maybe even costs the same in Europe? And finally, what “can be done” about the price of the pill? Lots. Innovate. Work on the patient side to prevent the spread of the disease. Encourage drug companies to innovate even more. Are you more likely to find a low-cost alternative way of treating Hep C when firms have a chance of swiping some of the billions from the existing producers or when they have no incentive but the public interest?

What would a fair price be for a drug that instantly cures all cancers today? If we think that it should not be really high, then I suggest we stop all of this nonsense about cancer research and Movembers and such …

UPDATE: this just hit my inbox

he crisis of R&D is highlighted in a new report by the Tufts Center for the Study of Drug Development. Back in 2003, the Tufts team estimated that the cost to research and develop a new drug was $802 million (in 2000 dollars). In 2013 dollars, that would be $1,044 million.

This month, the team updated its estimate, using drugs first tested on humans from 1995 through 2007: It now costs $2,558 million to develop a new medicine, almost two and a half times more than the (inflation-adjusted) 2003 estimate. It appears that the Tufts group’s estimate is much larger than the one from Deloitte and Thomson Reuters because the Tufts group looks at costs from the first step of research, before discovery.

This means that the cost of abandoned projects is allocated to successful ones. And an astonishing 8 in 10 were abandoned. Because some of the drugs in the Tufts study are still under development, even more will be abandoned. My Forbes colleague Bruce Booth confirms that an 8 percent success rate is the consensus of other estimates.

Why such little success? The authors note that “[c]linical approval success rates have declined significantly” since their earlier study.

For those who advocate that the research-based pharmaceutical industry should be subject to government audit and regulation of its R&D budgets for each new compound, the Tufts report confirms my own conclusion that this would be an impossible task: “The drug discovery and development process typically involves high fixed costs, meaning that substantial expenditures incurred prior to clinical testing cannot be directly linked to work on specific compounds.”

The Tufts report also estimates an average real cost of capital of 10.5 percent over the period. In 2010, it was 9.4 percent. I estimate that the real interest rate at that time (as measured by U.S. Treasury Inflation-Protected Securities) was about 2.8 percent. This implies a real risk premium of about 6.6 percent. If the nominal IRR (as estimated by Deloitte and Thomson Reuters) is only 4.8 percent, the pharmaceutical industry as a whole is clearly not achieving its hurdle rate.

Humans, most of the time, use their brains. We adapt. Here is some pretty startling research from Steven Levitt on the impacts of Hurricane Katrina. Note, that this is not to be construed as advocating breaking windows.

he Economic Impact of Hurricane Katrina on its Victims: Evidence from Individual Tax Returns

Tatyana Deryugina, Laura Kawano, Steven Levitt

NBER Working Paper No. 20713
Issued in November 2014
NBER Program(s):   EEE   PE

Hurricane Katrina destroyed more than 200,000 homes and led to massive economic and physical dislocation. Using a panel of tax return data, we provide one of the first comprehensive analyses of the hurricane’s long-term economic impact on its victims. Katrina had large and persistent impacts on where people live; small and mostly transitory impacts on wage income, employment, total income, and marriage; and no impact on divorce or fertility. Within just a few years, Katrina victims’ incomes fully recover and even surpass that of controls from similar cities that were unaffected by the storm. The strong economic performance of Katrina victims is particularly remarkable given that the hurricane struck with essentially no warning (wintercow emphasis added). Our results suggest that, at least in this particular disaster, aid to cover destroyed assets and short-run income declines was sufficient to make victims financially whole. Our results provide some optimism regarding the costs of climate-change driven dislocation, especially when adverse events can be anticipated well in advance.

So, it turns out that preventing consumers and merchants from doing business now amounts to “peacefully shutting down multiple malls and stores.”

Welcome to postmodern America. We’re doomed.

IMG_7359.JPG

IMG_7358.JPG

Tags:

Ponder this. Perhaps the best way to keep global fossil fuel consumption down now is for all nations to sign a global climate accord that promises they will do absolutely nothing about climate change over the next 100 years. Intro econ students should be able to explain why this strategy may prove more successful than current approaches, and for two reasons, not just the one obvious one.

Today I reprint a slightly edited piece I put together several years ago. Happy Thanksgiving to all.

Four centuries after the celebration of the first Thanksgiving, there is still widespread disagreement about the reason for the Pilgrims’ feast. But whether it was a harvest festival, a strictly religious observance, or a thank you to the local Wampanoag Indians, such a feast would not even have been possible were it not for the abandonment of the utopian ideas the Pilgrims laid out in the original Mayflower Compact.

Imagine a world where the earnings you generate from teaching, or nursing, or tending your orchard, from working the cash register, or mowing some lawns – all of the fruits of your efforts went into a common pool. Imagine further that each of your friends and neighbors, and every stranger in Monroe County was entitled to an equal share of what was placed into the kitty. It didn’t matter whether you mowed 20 lawns per day or one, whether you treated 30 patients per day or none, whether you taught 50 students per day or none – you received the same “income” as everyone else in the community. Imagine further that your home was owned in common by all in your community and that rearing your neighbor’s children was as much your responsibility as anyone else’s.

Such was the intention of the Compact – by eliminating any semblance of private property and personal accountability, which were declared to be the foundation for avarice and selfishness – prosperity and brotherly love would result. How did it work out?

You need only look at the cleanliness of your office fridge or the condition of a public bathroom for a glimpse into the horrors of such collectivism. People suffered, starved and perished. Governor Bradford wrote in his diary, “For this community (so far as it was) was found to breed much confusion and discontent, and retard much employment that would have been to their benefit and comfort. For young men that were most able and fit for labor and service did repine that they should spend their time and strength to work for other men’s wives and children without any recompense … that was thought injustice.”

Most shocking perhaps is that this injustice generated penury, jealousy and sloth in a society comprised entirely of (self-professed) holy people, each with a common cause, each from a similar background, and in a community with less than 200 settlers. The lessons for a society comprised of people of varying degrees of “saintliness”, with differing interests and backgrounds, and hundreds of millions in size should be obvious.

Confronting the disaster of collectivism, Plymouth’s elders wisely “resorted” to a system of private property and free exchange. Bradford wrote of the reforms, “… it made all hands very industrious, so as much more corn was planted than otherwise would have been. The women now went willingly into the field, and took their little ones with them to set corn; which before would allege weakness and inability; whom to have compelled would have been thought great tyranny and oppression…By this time harvest was come, and instead of famine, now God gave them plenty, and the faces of things were changed, to the rejoicing of the hearts of many, for which they blessed God.”

I doubt many Pilgrims themselves properly understood the nature of their original problem, nor its solution – which is why I doubt that the first Thanksgiving was a celebration of liberty and private property. While they might have thanked Providence and luck for the bounties that followed the change in property institutions in 1623, it was only their industry, thrift and discipline in response to the formation of private property institutions that such a feast was even possible. For a truly detailed and incredible account not only of the first Thanksgiving, but of the sad and incredible struggle the local Indian tribes had with their new European neighbors, I cannot recommend more highly Nathaniel Philbrick’s bookMayflower in large part because of its telling of the largely forgotten yet historically important King Phillip’s War. 

Fast forward to 2014, where the most productive among us are made to feel like criminals, and the non-productive (those who are able) are portrayed as innocent victims of a tyrannical system of capitalism. That Thanksgiving is a “national” holiday is ironic – for it is was a celebration enabled by an explicit movement away from “nationalistic” ideals – a celebration made possible by the unleashing of the individual productive efforts of all in the Plymouth colony.

I am blessed to have a healthy family, the ability to have completed my formal education, and the discipline to work hard with the lot I was given in life. Providence and luck has been kind to me. I give thanks to that every single day of my life. But on this day, this 393rd renewal of Thanksgiving Day, as many in our nation clamor to gallop anew down a 21st century style collectivist path (health care for everyone, financial bailouts, auto bailouts, fairer taxes, public/government schools, managed trade, green-collar subsidies, farm subsidies, licensing restrictions, “living wages” and more) littered with the tragedies of hundreds of failed experiments before us, let us remember what made the first Thanksgiving possible, and what has made our modern prosperity possible.

The productive efforts of billions of individuals past and present who unknowingly cooperate each and every day in an effort to improve their own lots, have bestowed upon us a gift even greater than the yams, apples, turkeys, wheat, and other resources that we were naturally endowed with. Just how large a gift have they given to each of us? Imagine yourself alone in the New England wilderness on a cold and wet November day 500 years ago. The difference between the “fire roasted” yam you might conjure up with days of immiserating work in 1508 and the majestic spread set out before you today in 2014 is but a glimpse of the bounty that liberty and property have bestowed upon us. Let us hope that the light of liberty remains lit, so that we may see our way through harsh and brutal winters that might lie ahead.

The old Wonkbloggers are at it again. We are scolded that “It is not OK to have a second refrigerator.”

I happen to have 2 fridges and 3 freezers in my house. Both his premise and conclusion are wrong and that’s entirely excepting the smug and offensive attitude.

Without a lecture:

1. It very clearly was not regulation that drove energy efficiency. Maybe I’ll post my lecture notes when I’m back.

2. Regulating appliance efficiency, celebrated by Mr. Mooney, basically ensures that people like me end up with two or more refrigerators. Why? They’ve imposed policies that make the cost of using electricity LOWER. But leave it to the pointy hats to ignore this and instead resort to berating us heathens for using more than one fridge.

3. If using electricity is a problem, raise the price of electricity. This has many virtues. First it does not require pointy hats to figure out what technologies are and are not appropriate. Second of course it raised the cost of the behavior you want less of. The nice part of this policy is that it still allows all of us to reduce electricity consumption in ways that are best and less costly FOR US and not to satisfy the wet dreams if our techno-overlords. Third of course is that the tax is far less probe to cronyism and corruption than a tech standard. Go look at the political economy of the lightbulb bans emanating from the 2007 Energy Act and you’ll get an appalling illustration.

4. While we’re playing in the sandbox, it’s not OK to put forward such offensive morality and economics.

I hope his Thanksgiving Turkey is dry. Of course, I’m fully expecting to see an article to tell me why a saturnalia of thankfulness tomorrow is not OK.

By the way one reason I have three freezers is that I converted one to a keezer that holds and serves 20 gallons of beer – WAAAY more than the pointy-hat’s recommended 6-pack.

Two completely underappreciated developments. As optimistic as I am about the world, EVEN I was taken aback by the rapidity and breadth of these developments: malaria and species extinction.

Species Extinction

You may by now know that a horrible blight wiped out up to 3 billion American chestnut trees last century. It was one of the most common trees in America and made up an estimated 1/4 of all trees in the Appalachian forests. There are basically NONE left.

Two observations:

(1) Yes, lots of food and furniture depended on the tree. And this supremely important species both ecologically and economically was virtually extinct. What kind of an impact did its loss really have when you understand that there are very good substitutes for it?

(2) In an amazing collaberation of scientists, we believe we can bring the tree back. With a GMO technique to make it blight resistant, this once great tree may soon be a part of the American landscape. You can be a part of this historic restoration here: https://fundly.com/10-000-chestnut-challenge. I think points (1) and (2) are closely related.

 

 

Malaria

PMI’s Bernard Nahlen brought it home to me when he talked about the sea change he’s seen in the tools available. When Bill Gates announced a commitment to elimination on the part of the Gate Foundation in 2007, it was roundly understood as an aspirational but unrealistic goal. No one thinks that any more – it’s an inevitability. The only question is how quickly can we do it – and every bit of speed we can muster is another child that doesn’t have to die.

To think of how incredible this is, check here and here.

I’ll remind you that nothing will guarantee that such incredible innovations will continue, but it is my deepest conviction that this should nonetheless be our default view of the world, and should be the baseline upon which we think about the challenges that climate change will bring us.

Not in the mood to be charitable again. Screw the FDA and the crop of enfeebled nannies who demand crap like this:

The Food and Drug Administration is announcing long-delayed calorie labeling rules on Tuesday, requiring establishments that sell prepared foods and have 20 or more locations to post the calorie content of food “clearly and conspicuously” on their menus. Companies will have until November 2015 to comply.

Read the whole thing so you can see that the rule does not of course apply to everyone:

As in the proposed rules, the final version still exempts airplanes, trains, food trucks and other food served on forms of transportation.

Of course, we “needed” this mandatory labeling because you know, consumers are just so inept and producers are just so inept that they could not survive without it, or that no one would have the bright idea to offer this information if indeed it was valuable. Of course, my local supermarket already has been posting calorie counts on a huge host of food preparations for years, and the “big food” companies have regularly experimented with things like “100 calorie packs” of snacks in order to help consumers better make choices. The imagination must run wild at what doors this ruling opens. It’s probably near impossible, by the way, for any food company to post calorie counts on the quite literally billions of combinations of things they might prepare for you. So either we cripple them, or we can just expect a hell of a lot less prepared foods being made for us, an outcome I’d find far more regrettable than eating more calories than I wanted.

Finally, of course there are no such requirements that I post food calorie counts in my home preparations and the incredible fact is that I am probably more clueless about the calories in my own food production than in anything that is prepared for me by supermarkets or other vendors. Yet my friends and family members have not had unwanted bursts of obesity.

Here is a former episode in the series. Screw the FDA, which obviously can’t be bothered to get drug and device innovation policy right. You guys wonder why people become extremely partisan and suspicious of “others” … this is surely an illustration.

Finally, I have to post on innocuous things like calorie labeling because as a white male who has only been helped by the centuries’ old legacy of racism in America, I am not legitimately able to talk about the goings’ on in Ferguson and beyond.

« Newer Posts - Older Posts »