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Archive for the ‘political economy’ Category

Mauve and Cerise, I think

 

America, circa 1958, according to JK Galbraith:

The family which takes its mauve and cerise, air-conditioned, power-steered and power-braked automobile out for a tour passes through cities that are badly paved, made hideous by litter, blighted buildings, billboards and posts for wires that should long since have been put underground. They pass on into countryside that has been rendered largely invisible by commercial art. (The goods which the latter advertise have an absolute priority in our value system. Such aesthetic considerations as a view of the countryside accordingly come second. On such matters we are consistent.) They picnic on exquisitely packaged food from a portable icebox by a polluted stream and go on to spend the night at a park which is a menace to public health and morals. Just before dozing off on an air mattress, beneath a nylon tent, amid the stench of decaying refuse, they may reflect vaguely on the curious unevenness of their blessings. Is this, indeed, the American genius?

The point he’s making is about a social imbalance caused by differences between private and public spending. In America, a society of affluence, where the production of comic books and pornography count as valuable economic output, the outlaying of money on roads, parks, policing, education, and other public services is considered nearly valueless and unpalatable.

America is still often considered a land of crumbling infrastructure, but compared to the America described above, some things have improved. The countryside is largely visible, our parks no longer a menace to morality, and the air has been mostly purged from the stench of decaying refuse.

Our private consumption has has also made progress over the decades, seeing as we’ve developed the good taste not to continue buying our autos in the colors of Wild Berry Skittles.

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Readers should know by now I love me some economics, but many of its practitioners in recent years have done their discipline a disservice by inflating its explanatory power to cover all decisions made by all people at all times.  My heart is thus sent a-flutter when simple standard economics can be applied appropriately to a problem and do some good. Take parking:

Yes! We’ve got  a supply of parking spaces, we’ve got demand for them, now use prices to match them up! Now, as Felix Salmon notes, there’s  no reason the pricing couldn’t be more dynamic and variable (which would help on the demand side), and as Matt Yglesias says, cities could leave parking space construction to the purview of private people  (which would help on the supply side). Nonetheless, an improvement over the status quo thanks to good economics.

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Pick and Choose

In rich countries it is becoming increasingly difficult to find people to do this at wages farmers say they can afford. Seasonal demand adds to the problems: in California, where some 450,000 people, mostly immigrants, are employed on fruit farms at the peak of the harvest, growers often leave some produce to rot. Even Japan’s exquisite and expensive strawberries are becoming too costly to pick because of a shortage of workers, in part caused by an ageing population. Despite worries about food shortages in the coming years, many farmers are more worried about labour shortages.

In part, says the article, because of an aging population but mostly because the Japanese government doesn’t let in many foreigners. After all, where in the world would be the benefit of letting poor people work for better pay and having cheaper fruit? Yes, let’s protect the delicate grapes of our social Chablis by restricting the freedom of others; the higher labor costs will make machines economical, and then the migrants won’t have a reason to come!

Just as the mechanical reaper transformed the economics of cereal farming, a new wave of agricultural automation promises to do the same in other areas of horticulture.

Bingo!

***

Bonus points for anyone who can point out the relevance between this and minimum wage legislation.

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One convenient thing for limited government types is they get to avoid many of the tricky issues that develop when action is undertaken by the government on behalf of individuals. If you believe individuals should have the sole prerogative to their health decisions, for instance, you needn’t worry much whether they then choose to spend their money on silly things. Transfer that authority to the government on behalf of the polity, however, and wastefulness becomes less innocuous:

Prue Lewis listens as they explain their symptoms. Then Lewis — a thin, frail-looking woman from Columbia Heights — simply says, “I’ll go to work right away.” She hangs up, organizes her thoughts and begins treating her clients’ ailments the best way she knows how: She prays.

This is health care in the world of Christian Science, where the sick eschew conventional medicine and turn to God for healing. Christian Scientists call it “spiritual health care,” and it is a practice they are battling to insert into the health-care legislation being hammered out in Congress.

Leaders of the Church of Christ, Scientist, are pushing a proposal that would help patients pay someone like Lewis for prayer by having insurers reimburse the $20 to $40 cost.

The provision was stripped from the bill the House passed this month, and church leaders are trying to get it inserted into the Senate version. And the church has powerful allies there, including Sens. John F. Kerry (D-Mass.), who represents the state where the church is based, and Orrin G. Hatch (R-Utah), who said the provision would “ensure that health-care reform law does not discriminate against any religion.”

This story is usually packaged to fit into a debate about church and state, but let’s slide that to the side and instead inquire about efficiency: could paying for prayer be a less wasteful use of tax dollars than the alternatives?

The instinctive answer is no because prayer can at best have a placebo effect–better to spend the money on more effectual ends. This answer is incomplete, however, because we have to specify at what margin we’re thinking: Are we talking about the first dollar one spends to cure an ailment, or the ten thousandth?

Most knowledgeable people seem to think Americans overspend on healthcare. That is, the extra dollar we spend doesn’t bring extra benefit. To reduce waste, we could reduce our spending to a level where we’re still getting a bang for our taxpayer buck, but this is the government after all, so we can forget about that. Instead, seeing as the extra treatment brings us no extra benefit, we could just select cheaper treatments in order to hie away waste. At the end of this line of reasoning lies the sort of counter-intuitive conclusion economists hold so dear: paying 20 bucks a pop for prayer can be a more efficient use of healthcare spending than, say, paying for a $100 visit to the doctor.

It’s true that for the first dollars we spend we’re better off ignoring faith-based solutions, but at some margin, going to a witch doctor is just as worthwhile as going to the family doctor. And if we take a Hansonian view of heathcare, that margin is at a level lower than we think.

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The New Times, Rwanda’s English paper of record, reports today:

East African Business Council (EABC) has asked East African Community (EAC) governments to treat cement as a sensitive product to protect the domestic industry from cheap imports.

The local cement industry is currently faced with high production costs resulting from high energy and labour costs, poor distribution network especially railway transport and inadequate ancillary industries for spare parts and consumables.

The Executive Director of East African Business Council Charles Mbogori said the influx of cheap cement imports from countries with lower production costs will in the long run have negative impact on the local industry.

Here’s a satirical petition Frédéric Bastiat wrote in 1845.

From the Manufacturers of Candles, Tapers, Lanterns, Candlesticks, Street Lamps, Snuffers, and Extinguishers, and from the Producers of Tallow, Oil, Resin, Alcohol, and Generally of Everything Connected with Lighting.

To the Honorable Members of the Chamber of Deputies.

Gentlemen:

You are on the right track. You reject abstract theories and have little regard for abundance and low prices. You concern yourselves mainly with the fate of the producer. You wish to free him from foreign competition, that is, to reserve the domestic market for domestic industry.

(…)

We are suffering from the ruinous competition of a foreign rival who apparently works under conditions so far superior to our own for the production of light that he is flooding the domestic market with it at an incredibly low price; for the moment he appears, our sales cease, all the consumers turn to him, and a branch of French industry whose ramifications are innumerable is all at once reduced to complete stagnation. This rival, which is none other than the sun, is waging war on us so mercilessly that we suspect he is being stirred up against us by perfidious Albion (excellent diplomacy nowadays!), particularly because he has for that haughty island a respect that he does not show for us.

We ask you to be so good as to pass a law requiring the closing of all windows, dormers, skylights, inside and outside shutters, curtains, casements, bull’s-eyes, deadlights, and blinds—in short, all openings, holes, chinks, and fissures through which the light of the sun is wont to enter houses, to the detriment of the fair industries with which, we are proud to say, we have endowed the country, a country that cannot, without betraying ingratitude, abandon us today to so unequal a combat.

You can read the rest of the fairly brief petition here. As you read, just try and not marvel at how little such arguments have changed in the past 160 years.

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Caveat Venditor

A common complaint of expats here is that Rwanda, in contrast to other African countries, has no cheap, delicious street food.  The reason is because the government forbids street vendors. Here’s a New Times article from today on the subject

Following the directives from Kigali City Council (KCC) to get rid of all street vendors operating within the city, penalties for those who will be caught in the act have been made public, The New Times has established.

In an interview, Bruno Rangira, the KCC Director of Media and Communication, said that those caught in the act will on top of seizing their merchandise, be fined Rwf 10,000 [~$20].

Goods seized from the vendors are given to different orphanages in the city.

Why the beat down on the beleaguered burghers?

“These are the people who cause commotion and poor hygiene in the city,” he said.

He added that some of the vendors indulge in pick pocketing, snatching ladies’ bags and stealing phones around town.

Of course, the “Three C’s” of good governance: Commotion Prevention, Cleanliness, and Crime Stoppage. Of these, the only one that has any smell of legitimacy amongst all the African odors is the last.  But does the fact that some vendors engage in petty crime necessitate a ban of their hitherto legal profession?

Here’s a story of firefighter who stole over $150; here’s another one of a police detective who pilfered $8,000 worth of confiscated drug money. Guess we better get rid of the police and fire departments.

One suspects the “Three C’s” are ex post rationalizations for a policy based primarily on the personal preferences of people in power (isn’t alliteration fun–er, alluring!).

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Via Lexington, I find the claim in a WSJ op-ed that, contra Newsweek’s cover story, the end of Christianity in America is not nigh, ergo….uh…well, ergo nothing except that I felt I needed a Latin triumvirate in this sentence–oh drat, that made four. Caveat lector, and all that.

What was I talking about? Oh yeah:

Betting against American religion has always proved to be a fool’s game. In 1880, Robert Ingersoll, the leading atheist of his day, claimed that “the churches are dying out all over the land.” In its Easter issue in 1966, Time asked “Is God Dead?” on its cover. East Coast intellectuals have repeatedly assumed that the European model of progress, where modernity equals secularization, would come to the U.S. They have always been wrong.

Claims about the death of American Christianity are as frequent and fervent as a prisoner’s prayers on the eve of execution, so why is religion so robust?

[I]n Salem, Mass., the setting for “The Crucible,” 83% of taxpayers by 1683 confessed to no religious identification.

America became religious after the Constitution separated church from state, thus ensuring that religious denominations could only survive if they got souls into pews. While state-sponsored religion withered in Europe, American faith has been a hive of activity: from the Methodists, who converted close to an eighth of the country in the half century after the Revolution, to the modern megachurches.

In other words, it’s the economics stupid!

I’ve had the chin-stroking suspicion for a few years that pastors were the most overlooked entrepreneurs, but apparently it’s recognized enough to have a portmanteau:

Meanwhile, the supply seems as plentiful as ever. Religion, no less than software or politics, is a competitive business, where organization and entrepreneurship count. Religious America is led by a series of highly inventive “pastorpreneurs” — men like Bill Hybels of Willow Creek or Rick Warren of Saddleback. These are far more sober, thoughtful characters than the schlock-and-scandal televangelists of the 1970s, but they are not afraid to use modern business methods to get God’s message across.

The church-as-business doesn’t give me any moral queasiness, but–bless me, Father–I must confess there’s much to it I don’t prefer. Why should a church need a slick logo emblazoned on interstate billboards; shouldn’t being the purveyor of the meaning of life sell itself? In truth, I often feel the same way about well-marketed businesses. I have some training in graphic design and love a well done corporate identity, but many times the designs feel too good by half, as if compensating for some core deficiency. With churches, clever business-style marketing signals to me they are there not to give me the truth, but to flatter me and make me feel good.

But it’s just a preference, and at least in the American system that counts for a lot.

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