Archive for 2006
Do as We Say, Not as We Do (Enviro Edition)
If you want pure, unadulterated, gibbering environmental madness, you want to visit the Guardian or the Independent. Within those pages, you’ll find more over-the-top, doom-saying hysteria than in virtually any other collection of newspapers combined. And naturally, if you read the Guardian or Independent, you’re statistically quite likely to be among the most stone-cold envronmental extremists on planet Earth.
What you won’t be, however, is someone who is statistically likely to live the life you propose to force others to live. In fact, you’re likely to be a far bigger environmental villain (at least, as Guardian readers would define the term) than those evil conservatives who read other U.K. newspapers and broadsheets. You’re less likely to invest in energy efficiency, less likely to economize on fuel, and, well, less likely to do just about anything that you want the government to force your fellow man to do.
That, anyway, is the conclusion of a striking series of recently released studies reported, with some obvious chagrin, in the Guardian itself.
I’m not particularly surprised. A few years ago, I was in Aspen and had dinner with a friend and a large group of his acquaintances. One of them was quite exercised about the fate of the planet and quite proud of his solar-powered house … until my friend pointed out that his house was bigger than anything outside of a Third World palace and that the solar panels could scarcely keep his energy bills south of the annual GDP of half the counties in the United States. OK, I think that was an exaggeration, but after seeing the house from a distance, it probably wasn’t by much.
Global Warming — What Would Rawls Do?
If we accept the simplistic version of Rawls’ Theory of Justice — that we should measure the moral and ethical fiber of any society based upon the well-being of its worse off (and I’m sure Will Wilkinson will correct me if I screwed that up) — then what should we make of this story hot off the wires suggesting that global warming means more sex for weaker grey seals?
Whether we’re talking about John Rawls or Lou Rawls, I think you know the implications of this….
HHS Considering Nationwide System of Electronic Healthcare Records
The Department of Health and Human Services (HHS) has given notice in the Federal Register that it would like to receive comments on, among other things, a recommendation by the American Health Information Community (AHIC), a chartered federal advisory committee, to advance the development of electronic health records (EHR).
The recommendations suggest a nationwide approach to developing digital and interoperable health IT systems. (“Request for Information (RFI): Improving Health and Accelerating Personalized Health Care Through Health Information Technology and Genomic Information in Population — and Community — Based Health Care Delivery Systems.” 71 FR 64282 (Nov. 1, 2006). Comment period closes Jan. 2, 2007.)
There is no doubt that the sharing of healthcare information can be in a patient’s best interest and contribute to the facility and accuracy with which the healthcare system cares for patients. Nevertheless, healthcare information should remain as much as possible within a patient’s own control. Healthcare institutions may wish to establish shared databases, but the government should not mandate or suggest that the Joint Commission on Accreditation of Healthcare Organizations or states mandate integrated data networks.
The U.S. healthcare system is suffering from a serious trust crisis and mandating the collection of medical data may very well add to that crisis. Many people associate data collection with criminal data bases and fear the misuse of widely available data. The perception of possible misuse, regardless of how real or unreal that perception may be, is going to create mistrust and suspicion of everyone involved in the data collection process.
In addition to the publicly perceived dangers of such a system, there is at least one just as efficient, but much less costly, alternative: Digital healthcare memory, or “data sticks,” could provide each patient with his or her own personal database. A patient’s memory stick could be plugged into any doctor’s or hospital’s computer, making the patient’s medical records available everywhere in the world, not just within a national network of hospitals. This simple and relatively inexpensive solution would leave a person’s medical records completely in his or her own control, allowing the person to decide when, where, and to whom to disclose such personal information.
At least one company, PinnacleCare, provides such data collection as part of its comprehensive range of patient support services. There is no reason why hospitals, as a customer service, couldn’t provide such data downloads as part of their services. Physicians and hospitals already photocopy records for patients, so why not simply provide digital downloading of such records instead?
Digital records are easily updated and transported. Patients, if they chose to do so, could wear their medical data stick on a lanyard, carry it in their wallet, leave it at home, or lock it in a safe. The choice of what to do with a person’s personal medical data and how to protect it would rest with the patient.
Such a solution would be simple, cheaper and make personal medical more readily available to a wider range of practitioners — all without risking further erosion of patient trust in the healthcare system.
What We Do Next Is Correct the “Powerful Perception”
Reihan Salam comments on Alan Reynolds’ important op-ed in yesterday’s Wall Street Journal:
Anyway, even if Reynolds is right and we haven’t actually seen as big an increase in inequality as most observers believe, we still have a powerful perception that is driving political outcomes, including the drift of centrist Democrats away from pro-market policies. Merely pointing out that the statistics are somehow misleading (an important and valuable contribution if it’s true) won’t change that. So even if Reynolds is right, the political question — what do we do next? — remains an open question.
I find this a puzzling statement. The “powerful perception” of outsized increases in inequality is driven in large measure by the drumbeat of media rhetoric played to the time of misread inequality stats. If correcting that mistake cannot change the false perception driving political outcomes, then what can?
If Reihan believes, as I do, that Reynolds is right, then he ought to use his voice as a political commentator to help try to correct the misperception. If the correct belief about inequality becomes more widespread, then inequality will be seen as less of a problem and demand for policies meant to “fix it” will start to dry up. Then, maybe, what we do next won’t be misguided or counterproductive.
More Special Rules for Fannie Mae?
A banner headline and photo in the Business section of the Washington Post show former Enron CEO Jeffrey Skilling reporting to prison to begin serving a 24-year term for fraud and conspiracy. (Note that federal sentences don’t allow for much parole; Skilling must serve at least 85 percent of his sentence.) Sidebars depict other jailed corporate executives: Bernard Ebbers of WorldCom, 25 years; Dennis Kozlowski of Tyco, 8 to 25 years; John Rigas of Adelphia, 15 years (being appealed).
On the same page, another story reports:
Three years ago, Fannie Mae assured lawmakers that it had the required capital to cope with a broad variety of business setbacks.
Since 1992, “Fannie Mae has met or exceeded our capital requirements in every year,” Franklin D. Raines, then its chief executive, testified in September 2003. “Indeed, we are one of the best-capitalized financial institutions in the world, when compared to the risk of our business.”
As it turns out, the assurance was false.
Will Raines and other executives face lengthy jail terms for their repeated and massive accounting misrepresentations, which resulted in multi-million-dollar bonuses for the executives? It doesn’t look likely. Criminal charges against the company itself have been ruled out. The government may seek to recover millions of dollars from executives who received massive bonuses on the basis of the manipulated earnings statements, but there seem to be no plans to pursue criminal prosecution of these sophisticated Washington insiders.
There may well be good legal reasons why Enron and WorldCom executives were guilty of crimes punishable by 25 years in jail, while Fannie Mae executives were guilty only of outrageous behavior. But one can’t help wondering if the difference is related to yet another tiny story in the Post‘s Business section on the same day: “Fannie Breaks Record On Lobbying Outlay.”
Some background on the fundamental problems with Fannie Mae and other government-sponsored enterprises here.
Enlightenment Thinking on the Move: Economic Freedom of the World Report Now in Arabic
Thanks to the hard work of my colleagues Fadi Haddadin and Ghaleb Hijazi, who run Cato’s Arabic website Misbahalhurriyya.org, an elegant Arabic edition of the 2006 Economic Freedom of the World Report has now been released. The Arabic version was unveiled at a recent meeting in Beirut organized by the Fraser Institute of Canada and the Friedrich-Naumann Stiftung of Germany that we attended with our colleague Andrei Illarionov.
The printing of the Arabic edition was gorgeous, as were the cool brochures and other materials that Fadi and Ghaleb had produced in Jordan. The entire report in Arabic is available online now for downloading in PDF format. The availability of such thorough-going comparisons should, I hope, introduce a greater degree of cause-and-effect thinking into discussions of policy, which would be a great advance over the conspiracy theorizing that is unfortunately so common in the Middle East. (Besides all the data, it includes William Easterly’s hard-hitting critique of “foreign aid,” “Freedom vs. Collectivism in Foreign Aid.”)
The printed edition of the report was also delivered to the economics and politics editors at An Nahar, Al Hayat, and other papers (many more are in the mail) and will be distributed at the upcoming meeting of Arab economists in Kuwait this weekend. Congratulations to Fadi and Ghaleb and their team for such a success.
Our colleague Andrei Illarionov gave a remarkable presentation, based on statistical data, on the roots of economic stagnation in the Arab Middle East. A condensed version will appear in the Arabic press, and — if I can cajole him — in English, Spanish, Russian, and other languages.
…and None of these Little Piggies Went to Market
How close are we to enjoying truly free educational marketplaces in this country? Not very, according to our newly released Cato Education Market Index (CEMI).
Well over a year in the making, CEMI measures how closely existing school systems resemble free markets and rates education policy proposals on their conduciveness to the rise of markets. The verdict? No state in the nation even comes close. The two top scoring states, Wisconsin and Connecticut, tied with a score of 26 out of 100.
Why is Wisconsin — with its vouchers, charter schools, and public school choice — rated so low? Why is Connecticut — which lacks vouchers and has few charter schools — rated the same?
The answer to the first question is that Wisconsin’s voucher program enrolls only about 1 percent of the state’s students, while its charter schools only enroll about 3 percent. These numbers are too low to have a significant impact on the level of education market activity statewide. And public school choice just isn’t close to real market activity because public schools are too standardized by state and disctict policies and regulations, can’t be operated for profit, don’t charge tuition, and neither open nor close exclusively in response to consumer demand.
Connecticut has among the most public school choice and the least intrusive public school regulation in the country, along with a truly free private education sector that is larger than the national average. But private schools serve only 11 percent of the state’s population, so it, too, only rates a 26.
Anyone interested in how the numbers were crunched can have a look the paper linked to above. The brave of heart may also want to dig into the uber-Excel spreadsheet that contains all the input data (100 data points per state), the calculations, and the tabulated results.
The full technical report contains regression analyses showing that higher CEMI ratings are correlated with both higher test scores and higher graduation rates.
Brief explanations of all the state ratings can be found here.
Signs of Sanity at the International Trade Commission
Today is a pretty good day, as far as trade policy goes.
This morning, pursuant to a five-year “Sunset Review,” the U.S. International Trade Commission voted to revoke longstanding antidumping and countervailing duty restrictions against imported carbon steel plate and corrosion-resistant steel from 15 different countries. The ITC also voted to continue the measures against corrosion-resistant steel from Korea and Germany for at least another five years.
While not perfect, today’s outcome is something to rejoice. Revocation of trade remedy restrictions is rare, indeed, and rarer still where steel is concerned.
As described in this recent paper, the U.S. steel industry is doing phenomenally. And given the dramatic growth in demand for steel in other regions of the world, today’s decision is unlikely to produce a significant surge in U.S. steel imports. But at least now, U.S. steel consuming industries, which have been forced to endure some of the highest steel prices in the world on account of the limited competition, will have greater flexibility and negotiating leverage to counter the growing market power of the domestic steel industry.
Another Blue Ribbon Energy Report Falls Flat
Yesterday saw the publication of yet another blue ribbon style report on energy policy, this one called Recommendations to the Nation on Reducing U.S. Oil Dependence, from the Energy Security Leadership Council. The press went wild. Color me unimpressed.
The authors of the report are convinced that America’s reliance on foreign oil is a dangerous thing. But why? Panicky narratives abound, but none of them are particularly well informed.
Consider the widespread concern about the prospect of being cut off from supply. Relying on foreign producers for oil means that we might find ourselves without physical access to petroleum if those foreign producers were to decide to shut us out. But that worry is only plausible if you fail to understand and fully appreciate the fungible nature of the global oil market. As MIT oil economist M.A. Adelman once wrote:
Rarely has a word ["access"] been so compact of error and confusion. Nobody has ever been denied access to oil: anyone willing to pay the current price could have more than he wanted. One may assume what he likes about future demand, supply, and market control, and conclude that the future price will be high or low, but that price will clear the market in the future as in the past. The worry about “access” assumes something queer indeed: that all of the producing countries will join in refusing to sell to some particular buyer—for what strange motive is never discussed … it takes only one other country, with a desire for gain, to cure this irrationality.
The 1973 oil embargo proves the point. As Adelman notes,
The “embargo” of 1973–4 was a sham. Diversion was not even necessary, it was simply a swap of customers and suppliers between Arab and non-Arab sources. . . . The good news is that the United States cannot be embargoed, leaving other countries undisturbed.
In short, the only way for producers to keep their oil out of America is to impose a military blockade of U.S. ports. Market agents – not agents of the producer states – decide where oil goes when it enters the market. As long as someone is willing to buy oil from a producing state and then sell it to the United States, no shut off is possible absent military force.
OK, so physical access isn’t the problem – our vulnerability to producer-induced price spikes is the real worry. Or is it?
Recent macroeconomic studies suggest that the economy is nowhere near as vulnerable to oil-induced recessions as once thought. How else to explain the world’s gangbuster economic performance in the teeth of the present price spike?
Jack Wenders, RIP
Jack Wenders, professor emeritus of economics at the University of Idaho, passed away at the end of November. Jack was a tireless champion of reason and liberty, and was very well known in Idaho for pointing out the shortcomings of the state’s bureaucratic, monopolistic school system, and how they could be overcome through parental choice and market incentives. I met Jack at a conference back in 2004 and was impressed not only by his knowledge but by his passion for the work. He will be missed by everyone at Cato who knew him.
Health Wonk Review #22 Is Up…
…at MSSP Nexus Blog. And a note to all you health wonks: if, for some strange reason, you only want to be notified of health-related posts to Cato@Liberty, you can now do so by customizing your Cato@Liberty RSS feed.
Neocons Want a Mulligan on Iraq
And, it appears, President Bush may give it to them. The LA Times reports:
military officials are taking a close look at a proposal advanced by Frederick W. Kagan, a former West Point Military Academy historian, to combine a surge with a quick buildup of the Marines and the Army. That could allow new units to take the place of the brigades sent to Iraq to augment the current force.
“It is essential for the president to couple any recommendation of a significant surge in Iraq with the announcement that he will increase permanently the size of the Army and the Marines,” Kagan said.
Kagan, who plans to release a preliminary report on his proposal Thursday, said he had discussed his ideas with people in the government. Although the military has had trouble meeting recruiting goals, Kagan said Army officials believed they could recruit at least an extra 20,000 soldiers a year. The Army missed its recruiting targets in 2005 but met this year’s goal.
This strategy faces a few obstacles, though. First:
Only 12% of Americans support a troop increase, whereas 52% prefer a fixed timetable for withdrawal, a Los Angeles Times/ Bloomberg poll has found.
Indeed. This echoes this recent USA Today/Gallup poll which revealed that 57% of Americans want U.S. troops out of Iraq within one year. Also, there are deeper problems with the “more troops” strategy:
Kalev Sepp, an instructor at the Naval Postgraduate School, said that the U.S. had demonstrated that many commanders simply did not understand how to mount effective, long-term counterinsurgency strategies.
Increasing the size of the force, Sepp said, will mean that U.S. forces continue to focus on killing insurgents, not training Iraqis. “That kind of approach is still tied to the idea that attrition, of just killing enough of our opponents, is going to get us to success,” Sepp said.
It’s disheartening in the extreme, almost to the point of being maddening, that President Bush continues to look to the folks who brought you the war in the first place for the way forward. There are a few problems with the Kagan approach.
This surge of roughly 25,000 additional troops, at this stage in the conflict, is unlikely to even suppress the violence significantly in Baghdad. Kaganites like to point to U.S. operations in Tal Afar as an analog. In that instance, a population of (a guesstimated) 150,000 Iraqis was pacified by 3,800 U.S. soldiers, with Iraqi forces in tow. Kagan protests, in response to those who say the forces don’t exist to replicate this strategy in the rest of Iraq or even Baghdad, that their opposition “rests on vague extrapolations of force ratios in Tal Afar to the entire population of Iraq or of Baghdad.”
But our extrapolations aren’t vague at all–they’re based on all the counterinsurgency literature out there. Kagan’s plan doesn’t use the normal metrics for stability ops–he changes them completely. He uses studies that are based on total population, but then decides, without much explanation, that only using the Sunni population for calculation is appropriate in this instance, since “it would be unnecessary and unwise to send coalition forces into Kurdistan or most of the Shiite lands.”
But force requirements in the literature aren’t based on hostile population or some sub-segment of the population, they’re based on total population. Rarely can counterinsurgencies adequately quantify the number of hostile population. So we use overall population for a metric.
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