Quotulatiousness

October 21, 2013

The nudge notion rebranded as a “human-centred” approach

Filed under: Books, Government, Media — Tags: , — Nicholas @ 09:26

In sp!ked, James Heartfield discusses a new book by David Chandler:

In his new book, Freedom vs Necessity in International Relations, David Chandler, professor of international relations at the University of Westminster, offers a masterful summation of the latest trends in policy internationally and domestically. The book lays bare the claims of governments to put people and their decision-making at the centre of policy. What Chandler shows to great effect is that the latest claims of policymakers and theorists to a human-centred approach result in something like its opposite. In a wide range of cases — from the United Nations’ Human Development Report to the Cabinet Office’s prioritisation of the ‘choice environment’ — Chandler explains how ‘human-centred’ policy is, in fact, very far from human-centred. The real aim is for people to align their behaviour and choices to the outcomes chosen by those in power, rather than deciding such outcomes for themselves. ‘Human-centred’ policy turns out to have as much to do with people deciding for themselves as the Ministry of Peace had to do with Peace, or the Ministry of Plenty to do with Plenty in Orwell’s novel.

Chandler draws attention to the irony of a worldview that imagines a much greater role for human action ending up making the case for greater restraints on freedom. As he explains, one of the marked prejudices of our times is that people have a far greater impact on the external world — for example, with the question of pollution — where mankind’s industrial output is held to threaten the very existence of life on the planet. Similarly, he observes, we have an exaggerated view of the way that our own health is shaped by the choices that we make. Political loyalties, too, are now widely seen as a great destructive force, limiting more positive outcomes.

[…]

But as Chandler explains, Sen’s own approach, enshrined in the UN Development Report, is less respectful of people’s own choices than you might expect. According to Sen ‘the outcome one wants is a reasoned assessment’ but ‘the underlying question’ is ‘whether the person has had an adequate opportunity to reason about what she really wants’. Building capacity turns out to mean building capacity to make the right choices — in other words, the choices that development economists think are the right choices. ‘Reducing risk-taking among youth requires that they have the information and the capacity to make and act on decisions’, explains the World Bank’s Development Report.

You’ll be free to make choices, as long as you’re careful to only make the approved choices. A very restrictive kind of “freedom” indeed.

Update: Also in sp!ked, Sean Collins talks about the introduction of so-called “libertarian paternalism” aka the nudge:

When Nudge: Improving Decisions About Health, Wealth and Happiness was published in 2008, it seemed like it might be a fad bestseller, like Freakonomics or one of those Malcolm Gladwell books.

Nudge authors Richard Thaler and Cass Sunstein, both American academics, proposed that government and employers should more consciously direct people to make ‘better’ choices in health, personal finance and other areas, in order to improve their lives. They gave the example of a cafeteria that lays out food in a way that encourages people to select carrot sticks over French fries or dessert. The authors label their approach ‘libertarian paternalism’: ‘paternalism’ because they want to steer people in a certain direction, and ‘libertarian’ because they would still offer people an array of choices (if you really want the chocolate mousse, you can reach under the counter at the back).

Although a new idea at the time, nudge was hardly a Big Idea. And yet governments around the world picked it up and ran with it, giving the concept more substance and longevity than might have been expected. As Sunstein has noted, the findings from his and others’ behavioural research have informed US regulations concerning ‘retirement savings, fuel economy, energy efficiency, environmental protection, healthcare, and obesity’. Sunstein himself implemented many of these measures in his role of Regulatory Czar in the Obama administration (described in his recently published book, Simpler: The Future of Government). In the UK, prime minister David Cameron set up a Behavioural Insights Team, also known as the ‘nudge unit’, in 2010. This has led to a variety of new policies and schemes directed at anything from obesity and teenage pregnancy to organ donations and the environment.

Nate Silver on Chinese economic data

Filed under: China, Economics — Tags: — Nicholas @ 08:37

The Wall Street Journal‘s China Real Time Report has an interview with celebrity statistician Nate Silver:

Can you apply good data analysis to poor data, for example, in China?

People in the United States and the United Kingdom overestimate the quality of economic data. Even if people are above board, it is simply hard to estimate something like the American economy.

With China, you would have even more difficulty. I think the general lesson is that by looking at a broader consensus of indicators, you do well than just looking at one indicator or one sector.

It is problematic to think about “how do you measure Chinese growth”. One way [is to look at] more public facing measures — by looking, for example, at the amount of light output emanating from China.

I flew through Beijing [on the way to Hong Kong] — there was less physical brightness coming from Beijing than you would have seen from a comparable American city or European city.

A true cynic might suggest that the lights were dimmed by the pervasive air pollution in Beijing…

All those boats have been burned

Filed under: Health, Politics, USA — Tags: , , , , , — Nicholas @ 07:35

Megan McArdle on the problem with emulating the Conquistator model of operational planning and burning your boats:

There’s a legend that after Hernan Cortes and his crew landed on the shores of the New World, Cortes ordered that their boats be burned. The only way they would be able to get back to Spain would be to conquer the land, giving them the resources to build new boats. With necessity at their backs, his band of adventurers managed to conquer all of Mexico.

It’s not clear if this story is actually true, but it’s nonetheless beloved by motivational speakers. The last two weeks of political paralysis have been an excellent illustration of why you shouldn’t model your negotiation strategy on a guy who’s mostly famous for slaughtering strangers.

[…]

The state insurance exchanges aren’t working, Obamacare is in jeopardy, and Democrats are casting around for a way to blame this on Republicans. The answer they have settled on: It’s their fault because Republican governors did not set up exchanges.

Think about what they are actually saying: “We passed a law that was so incredibly fragile that it was destined to fail unless all the state governments controlled by the party that opposed this law worked hard to make the system a success.”

And why did they expect this to happen? The answer boils down to this: “After we burn the boats, everyone’s supposed to band together to fight the Aztecs!”

I’ve long criticized the health-care law for being a Rube Goldberg Policy Machine: There are dozens of pieces that all have to work perfectly. If one of them fails, the whole apparatus breaks down and the individual insurance market spirals toward death. That seemed risky to me, especially when the law was passed over fervent opposition — a fervent opposition that was smugly told that “elections have consequences,” without anyone apparently considering that future elections might have different consequences.

But in this view, the Rube Goldberg quality is actually a plus, because after all, if we do something that might break the insurance market unless Republicans enthusiastically cooperate, they’ll have to enthusiastically cooperate.

This is … what’s the technical term? Right, insane.

Start with the fact that the state exchanges — what we would have had if the Republican governors and legislatures had cooperated — aren’t all in such great shape, either. Don’t get me wrong; some of them are doing very well. But some aren’t really working at all, and in others the results are … unclear. And that’s in blue states where the governor and the legislature were hugely enthusiastic about this program and are going all out to make it work. As anyone who has ever implemented a new program (corporate or government) can tell you, one of the biggest hurdles is getting people who don’t care about your program, or who actively oppose it, to make their piece work. Even if they’re trying in good faith, they have neither your enthusiasm nor your deep grasp of the internal logic. In the best-case scenario, it’s not their No. 1 priority; when it competes for resources with stuff they really care about, it tends to get the second-string people and budget. This is one reason that promising pilot projects often fail when they’re rolled out to the larger organization—and one of the most important things that a corporate innovator has to do is to evangelize his program so that other departments get as enthusiastic as he is.

The Obama administration was not in a position to evangelize the president’s health-care program to Republican governors. If the law absolutely required that those governors be as enthusiastic about implementing a state exchange as the folks in the administration, then it was a bad law that should never have been passed, and the Democrats made a grave mistake that could destroy the nation’s insurance market.

After the boat-burning failed the first time, leaving it weeks from its debut without a working computer system, the administration seems to have decided that what was needed was simply a larger bonfire: Launch the nonworking system, because after all, once you’ve gone live, the potential catastrophe would be nearly upon us, which would somehow force those inside and outside the administration to somehow bring order out of the chaos they had created.

But Republicans should make this work! It’s the right thing to do! That is, of course, debatable. But aside from that, this is magical thinking — as magical as the Tea Partiers who responded, when I pointed out that the shutdown was costing them the support they’d need to retake the Senate and the White House and actually get some policy making done, that this was all the fault of the liberal media, which was just repeating administration talking points.

QotD: Obamacare as a special case of The Adams Rule of Slow-Moving Disasters

Filed under: Economics, Health, Quotations, USA — Tags: , , , — Nicholas @ 00:01

So who is up for some side bets on Obamacare?

I’m sympathetic to the opinion that introducing a huge, complicated, government-run program is just asking for trouble. On the other hand, the Adams Rule of Slow-Moving Disasters says everything will work out.

As a reminder, The Adams Rule of Slow-Moving Disasters says that any disaster we see coming with plenty of advance notice gets fixed. We humans have a consistent tendency to underestimate our own resourcefulness. For example, the Year 2000 bug was a dud because we saw it coming and clever people rose to the challenge. In the seventies, we thought the world would run out of oil but instead the United States is heading toward energy independence thanks to new technology.

Obamacare is a classic slow-moving disaster. Absent any future human resourcefulness, it just might be a nightmare. But my money says that clever humans will figure out how to tame the beast before it triggers the collapse of civilization.

If betting were legal, I’d bet $10,000 that in ten years the consensus of economists will be that Obamacare had a lot of problems but that overall it was neutral or helpful to the economy. I base that hypothetical bet on The Adams Rule of Slow-Moving Disasters, not on the scary first-year state of the law. And I reiterate that I know next-to-nothing about the details of Obamacare. I’m just working off of pattern recognition.

Scott Adams, “Obamacare – Side Bets”, Scott Adams Blog, 2013-10-18

October 20, 2013

QotD: The “Paleo” diet

Filed under: Food, Health, History, Quotations — Tags: — Nicholas @ 13:53

Look, I can see that there is a lot of common sense behind some of these modern dietary ideas and yes, I have personally adjusted my lifestyle a bit, such as cutting down on grains and bread and so on. But there is something about the almost religious fervor behind this “paleo” stuff that bothers me. The fact is that without what we call modern agriculture, the vast majority of the today’s population would not be alive. And that is a rather big plus for agriculture. Sure, there is obesity and associated issues to deal with, many of which have complex causes. But I am damn glad we did have agriculture. It is precisely the wealth that such developments made possible that enable people today to worry about this stuff, and even make whole careers and businesses out of it.

(Full disclosure, I am a Suffolk farmer’s son, and probably the only person on this blog who has driven a combine harvester for its intended purpose.)

Johnathan Pearce, “Let’s talk about paleo”, Samizdata, 2013-08-30

October 19, 2013

CETA as a lever to (finally) loosen rules on inter-provincial trade

Filed under: Cancon, Economics, Europe — Tags: , , , — Nicholas @ 11:18

In Maclean’s, Paul Wells thinks that the new free trade deal between Canada and the European Union will be one of the historical successes of Stephen Harper’s career, but also notes it has a potentially great domestic influence:

Flip it around. Every delay in reaching an agreement with the EU on freer trade in goods and services has been merrily mocked by a few critics in the gallery, yours truly first among them. And if Stephen Harper had failed to conclude this deal, having taken negotiations this far, he would have durably wrecked Canada’s reputation as a serious trading nation.

(That goes doubly so now that Canada and the EU have reached an agreement in principle. Could it still fall apart? It could, although my test on this, for reasons I explained long ago, is the reaction of the Europeans. I’m told there is no love lost between Harper and José Manuel Barroso; Barroso would not waste time in Brussels on an empty dog and pony show so Harper could duck a few questions about Mike Duffy. The Europeans think this is real. For now we should take today’s announcement at face value. The Council of Canadians sure does.)

Well, if delay was worth criticism and failure would have been read as a career-threatening personal defeat, success must be counted as a personal triumph for Stephen Harper. When his political career ends, this is one of the first three things the newspapers will mention.

But as he notes, there’s a long-term, nagging domestic trade issue that might also improve under the new international agreement:

Best of all, any advantage offered by any province and its municipalities to European importers must, in simple logic, be made available to businesses from other Canadian provinces. This accord will act powerfully to deepen the still fragmented internal Canadian market. In a week when some cabinet ministers were turning cartwheels because it will now be legal to drive from Hull to Ottawa with a bottle of wine, that’s an overdue change. I’m on the record being skeptical Harper couldn’t close this deal, and I’m happy to eat crow. This CETA deal will be the most powerful pro-market accomplishment of any Canadian government in a quarter century.

As Wells correctly notes, this isn’t a true free trade deal but it’s a “free-r trade” agreement that moves us a few notches closer to actual free trade with the EU. Regulators and bureaucrats of all stripes will still have a lot of say in what goods and services are actually exchanged between the signatories, but that will still be less than the influence they currently wield.

In which Jonah Goldberg compares the Tea Party to Nazis

Filed under: Humour, Media, Politics — Tags: , , , — Nicholas @ 11:02

This week’s Goldberg File email included a brief analysis of Raiders of the Lost Ark and tied it to the last couple of weeks of Washington political theatre:

If the Tea Party isn’t pissing someone off, it’s doing it wrong.

Like the skinny guy everyone in prison is afraid of, much of the Tea Party’s political power is drawn from the perception that it’s just a little crazy. Boehner’s hand has been strengthened over the last few years by his ability to tell Obama, “Hey, look, I’d love to cut a deal with you but you see those guys over my right shoulder? — DON’T LOOK THEM IN THE EYE! They are crazy and if I walk back there with what you’re offering they will rip off my legs and beat me to death with them. And then they will get mean.”

So why did I get crosswise with them this time? Because I didn’t think their strategy would work. But going over all that again feels like airing dirty laundry during Thanksgiving dinner just so you can get grandma riled up about grandpa’s escapades during the war. “You weren’t fighting Communists! You were fighting syphilis! We’re going home!”

Still, like most of my colleagues, I didn’t think the strategy would work. And that was a risk for the Tea Parties themselves. Sometimes to use power means to lose power. Good hostage-takers are always careful to ask for a ransom the victim’s families can afford to pay, otherwise what’s the point?

Indiana Jones and the Tea Party of the Lost Ark

In a recent episode of The Big Bang Theory, Sheldon introduces his girlfriend, Amy, to the Raiders of the Lost Ark, which she’d never seen before. She liked the movie, she explains, despite the big “story problem.” Sheldon is aghast at the suggestion there could be any story problems with the “love child” of Steven Spielberg and George Lucas. “What story problem?” he demands to know. She explains that Indiana Jones is absolutely irrelevant to the story. If he’d never gotten involved, the Nazis would have still found the ark of the covenant, they would have still brought it to that island, and they would have still had their faces melted.

I’d never thought of it that way before, but it’s actually a very close parallel complaint to the one I’ve written about many times. My dad — who loved the movie — always laughed at the idea that the Nazis would be able to use the ark for their dastardly purposes. The idea that God would be like, “Darn, it’s out of my hands. I guess I have no choice but to lend you my awesome powers for your evil deeds,” is pretty ridiculous. They even returned to this idea in the third movie, when the Nazis tried to get their hands on the Holy Grail — because, you know, Jesus would totally say, “Nazis!? Rats. There’s nothing I can do. It’s life everlasting for the SS!”

I’m no theologian, but I just have a hard time believing that’s how God rolls.

Anyway, I bring this up because I think you can say something similar about the last few weeks. There was a whole lot of action, but at the end of the day, things worked out the way they were going to all along. I’m sure there’s a really good extended metaphor in here somewhere. Default was the face-melting ark, but we looked away at the last minute. Or defunding Obamacare was the Holy Grail, or something like that. But I want to get back to why I feel pretty good about how things worked out.

Amusing maps – US population distribution in units of Canadas

Filed under: Cancon, Randomness, USA — Tags: — Nicholas @ 10:19

You can find the most interesting things on Twitter. Here’s @Amazing_Maps with a map of the United States divided up into units of Canadas:

Click to embiggen

Click to embiggenate

QotD: Army leadership

Filed under: Britain, Military, Quotations — Tags: , , — Nicholas @ 00:01

Long ago I had learned that in conversation with an irate senior, a junior officer should confine himself strictly to the three remarks, “Yes, sir”, “No, sir”, and “Sorry, sir”! Repeated in the proper sequence, they will get him through the most difficult interview with the minimum discomfiture.

Field Marshal William Slim, “Student’s Interlude”, Unofficial History, 1959.

October 18, 2013

Vikings move Harrison Smith to injured reserve list

Filed under: Football — Tags: , , , — Nicholas @ 14:58

Earlier today, the Minnesota Vikings announced that free safety Harrison Smith will be moved to the injured reserve list (but with the designated to return notation so he’s out for at least eight weeks, but not the whole season). Minnesota’s defence was already near the bottom of the league in all measurements even with Smith playing … Monday’s game is starting to look like a great opportunity for the Giants to regain something like their normal form.

In other Vikings news, Tom Powers of the Pioneer Press published an article today calling for the team to trade Adrian Peterson for a boatload of draft picks.

He’s wasting his prime here. And the Vikings need bulk, not one superstar player. So trading Peterson for enough components to jumpstart the team’s development is a sound strategy. It would be tremendously unpopular, of course. But it doesn’t make sense to keep Peterson around for what could be a drawn-out rebuilding process. The team already is a long ways off and likely will be without Jared Allen and Kevin Williams next season.

[…]

Trading Peterson should be seriously considered. It would be good for him and good for the Vikings. He’s out of place here, like a Rolex on the wrist of a hobo.

There are a few problems with this notion, not least of which is that Peterson is a huge fan favourite and it would look very bad for the team to trade him away. It’s also not clear how much of a haul in draft picks any team would be willing to give up for him, as few teams depend as much as the Vikings do on a dominant ground game.

Beyond that, there’s also the concern about what the team would do even if they did get a valuable set of draft picks in exchange for Peterson. This year, the team ended up with three first-round picks, all of whom were expected to contribute on the field.

  • Defensive tackle Sharrif Floyd is on the field relatively little: less than half as many snaps as Kevin Williams. Maybe it’s those tragically short arms holding him back.
  • Xavier Rhodes is playing more (he’s in the nickel package), but the team considers Josh Robinson a more valuable cornerback than Rhodes because Robinson is the starter over Rhodes. That’d be the same Robinson that comes in dead last among all starting cornerbacks in the league. The guy who has allowed nearly every pass thrown in his direction to be completed.
  • Wide receiver Cordarrelle Patterson also gets on the field for a token number of snaps per game, but less than any other receiver on the roster.

One has to assume that the coaching staff don’t consider any of the 2013 first-round draft picks to be worth playing much. Given all of that, what hope is there that getting a bunch of extra picks in exchange for reigning league MVP Adrian Peterson would work out any better?

This week in Guild Wars 2

Filed under: Gaming — Tags: , — Nicholas @ 12:04

My weekly Guild Wars 2 community round-up at GuildMag is now online. The October Halloween event, Blood and Madness is in full swing and there are lots of posts covering the new and updated content. There’s also the usual assortment of blog posts, videos, podcasts, and fan fiction from around the GW2 community. This week there’s a lot of fan fiction … must be something in the water in Lion’s Arch.

Newly discovered Homo erectus skulls may upset current evolutionary timeline

Filed under: Asia, History, Science — Tags: , — Nicholas @ 07:57

I can’t improve on Joey DeVilla‘s introduction to this story: “I don’t think that the skull of homo erectus throws the story of evolution into disarray. However, I do know for a fact that SAYING ‘homo erectus’ in a high school classroom will most certainly put it in disarray.” Here’s the Guardian article by Ian Sample:

The spectacular fossilised skull of an ancient human ancestor that died nearly two million years ago in central Asia has forced scientists to rethink the story of early human evolution.

Anthropologists unearthed the skull at a site in Dmanisi, a small town in southern Georgia, where other remains of human ancestors, simple stone tools and long-extinct animals have been dated to 1.8m years old.

Experts believe the skull is one of the most important fossil finds to date, but it has proved as controversial as it is stunning. Analysis of the skull and other remains at Dmanisi suggests that scientists have been too ready to name separate species of human ancestors in Africa. Many of those species may now have to be wiped from the textbooks.

The latest fossil is the only intact skull ever found of a human ancestor that lived in the early Pleistocene, when our predecessors first walked out of Africa. The skull adds to a haul of bones recovered from Dmanisi that belong to five individuals, most likely an elderly male, two other adult males, a young female and a juvenile of unknown sex.

[…]

David Lordkipanidze at the Georgian National Museum, who leads the Dmanisi excavations, said: “If you found the Dmanisi skulls at isolated sites in Africa, some people would give them different species names. But one population can have all this variation. We are using five or six names, but they could all be from one lineage.”

If the scientists are right, it would trim the base of the human evolutionary tree and spell the end for names such as H rudolfensis, H gautengensis, H ergaster and possibly H habilis.

The fossil is described in the latest issue of Science.

“Some palaeontologists see minor differences in fossils and give them labels, and that has resulted in the family tree accumulating a lot of branches,” said White. “The Dmanisi fossils give us a new yardstick, and when you apply that yardstick to the African fossils, a lot of that extra wood in the tree is dead wood. It’s arm-waving.”

Peak America

Filed under: Economics, History, Media, USA, WW2 — Tags: , , , , — Nicholas @ 07:42

In the Telegraph, Ambrose Evans-Pritchard reviews the last few times we thought we’d reached “peak America” moments:

Those old enough to remember the 1929 crash on Wall Street and the US exit from the Gold Standard under Franklin Roosevelt — thin in numbers these days — will recall the pervading sense that America had already peaked, its capitalist model overtaken by history.

The Russian trade agency Amtorg in New York famously advertised for 6,000 skilled plumbers, chemists, electricians, and dentists, and suchlike, to work in the Soviet Union, then deemed the El Dorado of mankind, or the “moral top of the world where the light never really goes out”, in the words of Edmund Wilson. It is said that 100,000 showed up.

The commentariat went into overdrive, more or less writing off the United States. The Yale Review, Harpers, and The Atlantic all ran pieces debating the risk of imminent revolution.

Just 12 years later the US accounted for half of all global economic output and was military master of the West, literally running Japan and Germany as administrative regions.

Those a little younger — like me — who remember the impeachment of President Richard Nixon and the last American citizens being lifted by helicopter from the roof of the US embassy in Saigon in 1975, will recall the ubiquitous claims that the US could never fully recover from what looked like a crushing defeat.

The Carter Malaise, the Sandinista Revolution in Nicaragua, the Soviet invasion of Afghanistan, Iran hostage humiliation all followed in quick succession, and seemed to seal the argument.

Oh, but this time it’s different because reasons. The sky really is falling! It’s the end! THE END!

Republicans and conservatives

Filed under: Politics, USA — Tags: , , , — Nicholas @ 07:18

In The Atlantic, Molly Ball looks at the split between the GOP establishment and the increasingly angry conservative base:

On his radio show recently, Glenn Beck urged his listeners to “defund the GOP.” Sarah Palin has threatened to leave the Republican Party; Rush Limbaugh calls it “irrelevant.” The Senate Conservatives Fund has targeted mainly incumbent Republican senators for defeat. Erick Erickson, one of the right’s most prominent commentators, wonders if what’s coming is “a real third party movement that will fully divide the Republican Party.”

Conservatives have declared war on the GOP.

Tired of feeling taken for granted by a party that alternately panders to them and sells them down the river, in their view, Tea Partiers and others on the right are in revolt. The Republican Party itself is increasingly the focus of their anger, particularly after Wednesday’s deal to reopen the government, which many on the right opposed. Now, many are threatening to take their business elsewhere.

“Conservatives are either going to split [from the GOP] or stay home,” Erickson, the influential editor of RedState.com and a Fox News contributor, told me. “They’ll first expend energy in primaries, but if unsuccessful, they’ll bolt.”

Erickson, a former Republican elected official in Georgia, stressed that he wasn’t advocating such a split, only foreseeing it. “I think the GOP is already splitting,” he said, with grassroots activists feeling “played” by elected officials’ unfulfilled promises to defeat Obamacare.

The calls for a split mark a new, more acrimonious chapter in the long-simmering conflict between the Tea Party and the Republican establishment. Steve Deace, an Iowa-based talk-radio host, said his audience has never been angrier. “They’re tired of electing a bunch of Republicans who care more about what the media thinks about them than what the people who elected them think,” he told me. “Why do I care whether John Boehner or Nancy Pelosi is the speaker of the House? Why do I care whether Harry Reid or ‘Ditch’ McConnell is the Senate majority leader? What changes? Nothing changes.”

Of course, most of this is froth and fuming — they won’t split the party or form a new one. Why is that? It’s because the GOP and the Democrats have got the system rigged so that only those two parties ever have a real chance at getting candidates elected to state or federal office. In some states, third parties have to petition for ballot access every election for every individual candidate. This doesn’t sound too unreasonable, except the threshold for gathering signatures is incredibly high in many cases (or time-limited, or rigged in other ways), so that without an active, fully staffed party organization only the top few positions can be realistically contested. Only GOP and Democratic candidates are included in polls, debates, and other electoral events covered by the media, so as little “oxygen” as possible is given to outsiders, independents, and third party candidates. Stories like this recent one in Reason happen just about every year in most states.

Having done their part to make the existing duopoly the only game in town, the conservative faction of the Republican party may gripe all they want, but they’re not seriously going anywhere.

QotD: The hidden problem with regulating prescription drug prices

Filed under: Cancon, Economics, Government, Health, Quotations — Tags: , , , , , — Nicholas @ 00:01

[W]hen negotiating with other governments, pharmaceutical companies operate at a severe disadvantage, not because the governments’ buying power is so vast (the national health-care systems of Canada and many European countries cover fewer people than Aetna), but because the people you’re negotiating with can change the rules under which your product gets sold. At any point they can say, like Lord Vader, “I am altering the deal. Pray that I do not alter it any further.”

But if Canada started paying more, that wouldn’t mean we’d pay less. Drug companies are charging what they think we will pay. The result of Canadians and Europeans paying less is not that we pay more for drugs; it’s that fewer drugs get developed. To the extent that they are harming us, it is in hindering the development of cures or better treatments that we are missing, and don’t even know about.

Unfortunately, this is a classic case of Bastiat’s dilemma. It is easy for each country’s government to see the high prices that people are paying and intervene to lower them. It is hard for each country’s government, much less its citizens, to envision the new medical treatments that they might get if they paid more for drugs. So their incentives are heavily skewed toward controlling the price here and now, even if that means losing future cures.

Drug development is essentially a giant international collective-action problem. The U.S. has kept it from being a total disaster because we don’t have good centralized control of our insurance market, and our political system is pretty disorganized and easy to lobby. If that changes — and maybe we just changed it! — we’ll knock down the prices of drugs to near the marginal cost using government fiat, and I expect that innovation in this sector will grind to a halt. Stuff will still be coming out of academic labs, but no one is going to take those promising targets and turn them into actual drugs.

Megan McArdle, “U.S. Consumers Foot the Bill for Cheap Drugs in Europe and Canada”, Bloomberg, 2013-10-14

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