As a trader, I am inclined to think the German will, unless his temperament considerably change, remain always a long way behind his Anglo-Saxon competitor; and this by reason of his virtues. To him life is something more important than a mere race for wealth. A country that closes its banks and post-offices for two hours in the middle of the day, while it goes home and enjoys a comfortable meal in the bosom of its family, with, perhaps, forty winks by way of dessert, cannot hope, and possibly has no wish, to compete with a people that takes its meals standing, and sleeps with a telephone over its bed. In Germany there is not, at all events as yet, sufficient distinction between the classes to make the struggle for position the life and death affair it is in England. Beyond the landed aristocracy, whose boundaries are impregnable, grade hardly counts. Frau Professor and Frau Candlestickmaker meet at the Weekly Kaffee-Klatsch and exchange scandal on terms of mutual equality. The livery-stable keeper and the doctor hobnob together at their favourite beer hall. The wealthy master builder, when he prepares his roomy waggon for an excursion into the country, invites his foreman and his tailor to join him with their families. Each brings his share of drink and provisions, and returning home they sing in chorus the same songs. So long as this state of things endures, a man is not induced to sacrifice the best years of his life to win a fortune for his dotage. His tastes, and, more to the point still, his wife’s, remain inexpensive. He likes to see his flat or villa furnished with much red plush upholstery and a profusion of gilt and lacquer. But that is his idea; and maybe it is in no worse taste than is a mixture of bastard Elizabethan with imitation Louis XV, the whole lit by electric light, and smothered with photographs. Possibly, he will have his outer walls painted by the local artist: a sanguinary battle, a good deal interfered with by the front door, taking place below, while Bismarck, as an angel, flutters vaguely about the bedroom windows. But for his Old Masters he is quite content to go to the public galleries; and “the Celebrity at Home” not having as yet taken its place amongst the institutions of the Fatherland, he is not impelled to waste his, money turning his house into an old curiosity shop.
Jerome K. Jerome, Three Men on the Bummel, 1914.
November 1, 2015
QotD: Germany’s class system
October 28, 2015
Reducing the costs of regulation
Henry I. Miller discusses a worthwhile regulatory change that would increase the availability of medicines in the US marketplace without reducing public safety:
The FDA would be a good place to start. Bringing a new drug to market now requires 10-15 years, and costs have skyrocketed to an average of more than $2.5 billion (including both out-of-pocket and opportunity costs) – largely because FDA requirements have increased the length and number of clinical trials per marketing application, and their complexity.
The detrimental effects of FDA delays in approving certain new drugs already available in other industrialized countries are well-documented and deserve as much attention as drugs’ high costs. An example is the three-year delay in the approval of misoprostol, a drug for the treatment of gastric bleeding, which is estimated to have cost between 8,000 and 15,000 lives per year.
[…]
A practical workaround to overcome regulators’ risk-aversion and capriciousness would be “reciprocity” of approvals with certain foreign “A-list” governments, so that an approval in one country would be reciprocated automatically by the others. That would make more drugs available sooner in all of the participating countries, increasing competition and putting downward pressure on prices.
Such an innovation would also help to alleviate another critical problem: The United States is experiencing shortages of certain critical pharmaceuticals, many of which have been essential in medical practice for decades. The majority are generic injectable medications commonly used in hospitals, including analgesics, cancer drugs, anesthetics, antipsychotics for psychiatric emergencies, and electrolytes needed for patients on IV supplementation. Hospitals are scrambling to assure adequate supplies of drugs that are in short supply, or to find substitutes for them. Reciprocal approvals would make numerous alternatives available.
As referenced yesterday, the FDA regulations also create temporary monopoly situations where only one company has the permit from the regulator to produce this or that medicine, so there’s nothing standing in the way of massive price increases if there are no close substitutes to provide price competition.
October 22, 2015
QotD: The historical triumph of public health
… the great public health achievements between roughly 1850 and 1960. Doctors and public health experts were given extraordinarily broad powers by the government, and they used them to eliminate the scourges that had made cities into pestholes from time immemorial. They built gleaming sewers and water treatment plants to wipe out virulent water-borne pathogens that used to regularly claim thousands of lives. Contact-tracing and quarantine of airborne and sexually transmitted diseases turned former plagues like smallpox and syphilis into tragic but sporadic outbreaks. Changes in building codes helped beat back mass killers like tuberculosis. Poison control cut down on both accidental and deliberate deaths. The Pure Food and Drug Act, and similar ordinances in other countries, reduced foodborne illness, and also, the casual acquisition of opiate or cocaine addictions through patent medicines. Malarial swamps were drained. Environmental toxins were identified and banned. Then they went and invented antibiotics and vaccines and vaccination laws, and suddenly surgery was as safe as a long-haul flight, TB was curable, and childhood illnesses that used to kill hundreds of people every year were a quaint footnote in your 10th-grade history textbook.
Having seen public experts work these miracles through the heavy hand of the state, people understandably concluded we could use miracles in other areas. They had a metaphor, so to speak. The metaphor wasn’t very good, as is often the case, but it took a while to find out that you couldn’t solve a problem in your steel supply chain with the same system that was so good at tracing cholera outbreaks to tainted pumps.
[…]
This is an overreaction to a terrible failure, for two reasons. First, big bureaucracies fail all the time, especially in the face of novel threats. A large institution is like a battleship: hard to sink, but also hard to turn. Public health experts of earlier eras made grave mistakes, like dumping London’s untreated sewage into the Thames; public health experts of the future will too. The more important question is whether they correct themselves, as it seems to me the CDC is now doing.
The second is that this is not your grandfather’s public health system. Public health experts were, in a way, too successful; they beat back our infectious disease load to the point where most of us have never had anything more serious than Human papillomavirus or a bad case of the flu. This left them without that much to do. So they reinvented themselves as the overseers of everything that might make us unhealthy, from French Fries to work stress.
As with the steel mills, these problems are not necessarily amenable to the organizational tools used to tackle tuberculosis. The more the public and private health system are focused on these problems, the less optimized they will be for fighting the war against infectious disease. It is less surprising to find that they didn’t know how to respond to a novel infectious disease than it would have been to discover that they botched a new campaign against texting and driving.
Megan McArdle, “Will Ebola Be Good for the CDC?”, Bloomberg View, 2014-10-20.
October 17, 2015
Moynihan’s scissors
David Warren looks at the work of the late Daniel Patrick Moynihan:
We are celebrating this year, if that is the word, the fiftieth anniversary of perhaps the most inconsequential sociological study ever published. That was, The Negro Family: The Case For National Action, by the brilliant American politician and thinker, Daniel Patrick Moynihan (1927–2003).
Working then in the U.S. Department of Labour, Moynihan focused his attention on a counter-intuitive statistical fact. Unemployment among black males was falling, in 1965. But rates of welfare enrollment for black families was rising. This did not make sense. The two lines on this chart had always fallen or risen together. But they had crossed over in 1962. He had put his finger in what came to be called, “Moynihan’s scissors.”
[…] while the “Moynihan Report” is famous, and at one time, everyone claimed to have read it, it contains something so obnoxious to enlightened post-modern thought as to remain invisible to all participants in the discussion.
This was Moynihan’s sociological and anthropological observation that the American black culture was becoming “matriarchal.” Whether without, or more likely with the help of welfare programmes, women were becoming the heads of households, and men were being removed from that station.
(The background: All of the higher civilizations have been unambiguously patriarchal; matriarchy is associated in the prehistoric and anthropological record with savage, gratuitously violent, self-destructive tribes.)
Already, in 1965, one in four black kids in the USA were born out of wedlock. Today it is more than three in four, and levels of bastardy among the other races have risen in course. By the end of the last century (1990s), white children were as likely to be raised in fatherless homes as black children had been in the 1960s. “Progress” has been progressing rapidly.
The Nanny State has replaced fathers as the principal source of income for such families (bankrupting itself in the process), and the feminist movement has supplied the arguments — or more precisely, misandronist slogans and vindictive clichés — for the overthrow of “patriarchy” and its systematic replacement with a shrewish matriarchy in all facets of social life. The movement has been, moreover, so successful in achieving its objects — the emasculation of men, and degradation or actual inversion of traditional morality — that it has now moved on. For with the defeat of masculinity, new horizons of “gender-bending” or “transgendering” have come into view.
Now, part of the reason people can’t get their little heads around what has actually happened — first to the black family, then to the brown, then to the white — is the surviving, basically modern (i.e. pre-post-modern) belief that eunuchs behave much like fairies; that they become docile and effeminate, harmless and nurturing, sensitive and sweet; that their previously reprehensible “masculine” traits will quietly disappear. Some men do indeed respond to emasculation by becoming the pathetic, contemptible wimps that all women, including feminists, instinctively abhor. But some do not.
As a well-read student of social sciences and history, Moynihan knew better than this. The masculine capacity for violence (at all levels, spiritual as much as physical) does not go away. From Spartan Laconia, backwards and forwards through history on all continents, we see that eunuchs and other “homosexual” (the word is inadequate) guards and soldiers have been employed by the great warrior despots. This is because they make the fiercest fighters. Having no families, no heritage to protect, no women and children to feed and shelter in safety, they become a purely destructive force. They become men who do not care even for their own lives, let alone for the lives of others.
October 13, 2015
October 11, 2015
QotD: The Kaiser’s Reich
“Anybody could rule this country,” said George; “I could rule it.”
We were seated in the garden of the Kaiser Hof at Bonn, looking down upon the Rhine. It was the last evening of our Bummel; the early morning train would be the beginning of the end.
“I should write down all I wanted the people to do on a piece of paper,” continued George; “get a good firm to print off so many copies, have them posted about the towns and villages; and the thing would be done.”
In the placid, docile German of to-day, whose only ambition appears to be to pay his taxes, and do what he is told to do by those whom it has pleased Providence to place in authority over him, it is difficult, one must confess, to detect any trace of his wild ancestor, to whom individual liberty was as the breath of his nostrils; who appointed his magistrates to advise, but retained the right of execution for the tribe; who followed his chief, but would have scorned to obey him. In Germany to-day one hears a good deal concerning Socialism, but it is a Socialism that would only be despotism under another name. Individualism makes no appeal to the German voter. He is willing, nay, anxious, to be controlled and regulated in all things. He disputes, not government, but the form of it. The policeman is to him a religion, and, one feels, will always remain so. In England we regard our man in blue as a harmless necessity. By the average citizen he is employed chiefly as a signpost, though in busy quarters of the town he is considered useful for taking old ladies across the road. Beyond feeling thankful to him for these services, I doubt if we take much thought of him. In Germany, on the other hand, he is worshipped as a little god and loved as a guardian angel. To the German child he is a combination of Santa Claus and the Bogie Man. All good things come from him: Spielplätze to play in, furnished with swings and giant-strides, sand heaps to fight around, swimming baths, and fairs. All misbehaviour is punished by him. It is the hope of every well-meaning German boy and girl to please the police. To be smiled at by a policeman makes it conceited. A German child that has been patted on the head by a policeman is not fit to live with; its self-importance is unbearable.
The German citizen is a soldier, and the policeman is his officer. The policeman directs him where in the street to walk, and how fast to walk. At the end of each bridge stands a policeman to tell the German how to cross it. Were there no policeman there, he would probably sit down and wait till the river had passed by. At the railway station the policeman locks him up in the waiting-room, where he can do no harm to himself. When the proper time arrives, he fetches him out and hands him over to the guard of the train, who is only a policeman in another uniform. The guard tells him where to sit in the train, and when to get out, and sees that he does get out. In Germany you take no responsibility upon yourself whatever. Everything is done for you, and done well. You are not supposed to look after yourself; you are not blamed for being incapable of looking after yourself; it is the duty of the German policeman to look after you. That you may be a helpless idiot does not excuse him should anything happen to you. Wherever you are and whatever you are doing you are in his charge, and he takes care of you — good care of you; there is no denying this.
Jerome K. Jerome, Three Men on the Bummel, 1914.
October 9, 2015
October 5, 2015
Trading Pollution: How Pollution Permits Paradoxically Reduce Emissions
Published on 18 Mar 2015
In an effort to reduce pollution, the government tried two policy prescriptions under the Clean Air Act Amendments of 1990. The first — command and control—mandated that each power plant lower its pollution by a determined amount. However, different firms face different cost curves and, because information is dispersed, policymakers don’t always know those costs. The second policy prescription — tradable pollution permits — empowered firms to use knowledge of their cost curves to buy or sell pollution permits as needed. Under this policy, the invisible hand of the market helped discover the lowest cost way of reducing pollution.
October 1, 2015
US tax cut proposals fail the laugh test
At Ace of Spades H.Q., Ace responds to a recent Kevin Williamson post:
It is standard conservative theory that tax cuts and spending cuts go hand in hand. But after decades of ever-rising spending, coupled with occasional tax cuts, I’m not so certain of that any longer.
I believe it was after Reagan that Republican theorists began justifying his model of tax-cuts-now-spending-cuts-later as the “starve the beast” theory of limiting government — if we cut taxes, therefore cutting government’s resources, we should, logically, force the government to adapt itself to living with fewer taxpayer dollars. Ergo, spending should be forced down by the practicalities of the situation — either you start cutting spending, or else you start running up dangerous, Greece-level of debts.
The problem is that this country has always elected the “or else” part of this syllogism: We are racking up dangerous, Greece-levels of debts, and we’re barely even talking about that any longer.
The problem has grown so immense that we’ve decided to declare it officially a Non-Problem. (It will decide to re-assert itself as a Really Big Problem in a short period of time.)
So I no longer believe in the “starve the beast” theory, because the “starve the beast” theory relies upon Americans understanding the mid-to-longer term trajectory of their spending choices, which they plainly do not.
Since Americans are not capable of understanding the mid-to-longer term trajectory of their spending choices, it seems to me the only way to impose budget discipline and spending rollback is to offer Americans an immediate, as opposed to future, confrontation with reality: that is, if Americans wish to have so much government, they should be forced to pay for the level of government they are choosing, and not defer that payment (as they apparently will choose, every single time) into the future, to be imposed upon their children.
But, instead, they must be forced to reckon with the level of government they are choosing now by paying the full freight and cost of that government now.
That is to say: I believe that rolling back spending is only possible when Americans are made to feel the costs of the government they’re choosing, and that will only happen when they’re forced to actually pay for it.
The biggest hurdle, after the economic illiteracy of the voting public, is the starkly clear self-interest of the politicians: they can get re-elected only if they pander sufficiently to the voters. The voters, who do not understand how the government works (and refuse to believe it when you tell them) … want ever-more of it to benefit them as soon as possible. Telling the voters that you’ll not only not give them more but that you’ll be giving them significantly less is a great way to lose your next election (assuming you don’t get thrown out of office before that even comes up).
September 30, 2015
QotD: Self-government and the scale problem
The pioneering political thinkers of the West — Greeks, mostly Athenian, including the sublime Aristotle — devoted much thought to this question of scale. Their consensus was that a state of more than about five thousand people (plus slaves, of course) was essentially unmanageable, at least by its citizens. Large empires or alliances of states might attempt to guarantee the freedom and independence of these small states (or might not), but the hard fact was that above around five thousand souls, the participation of the citizen in his own government ceases to be reality, and becomes rather a pious (or impious) myth.
Skip forward to 1789, the year of the French Revolution. As I have written elsewhere, perhaps the most permanent effect of that Revolution was the transformation of local government across France. Overnight, the seemingly timeless boundaries of 60,000 French parishes, each governed in its own unique way — were erased and replaced with 36,000 “communes,” governed identically and now under central direction from Paris.
This model was copied, across most of Europe, for even those national politicians who did not share in the ideals of the Revolution were attracted by the prospect of central power. France has mostly preserved her revolutionary communes, of a piece in land area, though now a city such as Paris is a single commune with more than two million people. In other countries, these small districts were merged and merged again, into ever larger territorial units, ever more bureaucratic and ever more subject to central direction.
[…]
According to me — and I have mulled this at length, with my own feeble mental powers — the Greeks were right. Five thousand is near the top end of a population that can attempt genuine self-government, deciding for themselves what they will and will not put up with, inside their own little domains. In huge conurbations, I would say that is about the maximum size for a self-governing urban borough or ward, necessarily small in area. Outside, rural districts would be rather larger, and there the question of maximum acreage comes into view, balanced against the minimum population to make any formal government necessary.
Boundaries are important. Above the parish or ward, the county seems to be the next higher natural level of government, for the resolution of issues that cross parish boundaries. But at all levels, attention should be given to geography. The boundaries of the jurisdiction should correspond as closely as possible to natural landmarks, and elevations of land, such that e.g. riparian responsibilities can be assigned to the visibly appropriate jurisdiction.
What has all this got to do with the environmental management of the planet? Everything. Where people can see the cause and effect of their actions, problems such as pollution will be tackled, and beauties such as birdsong will not be sacrificed. If the problems aren’t tackled, and the blight spills into another jurisdiction, penalties may be imposed from a higher level, but first give people the chance and the power to solve their own problems at source. Give them ownership, and stable rule by law — not by central planning which rewrites laws for its own convenience.
David Warren, “Five thousand max”, Essays in Idleness, 2015-06-19.
September 21, 2015
Greek businesses discover the receipt
Megan McArdle is in Athens, where she’s finding that Greek businesses have started handing out receipts for transactions that once would have been undocumented (the better to hide revenue from the taxman):
I was last in Greece in 2006, during the twilight years of the boom that peaked during the Athens Olympics. Back then, Greece was notable to Americans for its lack of receipts. This is convenient for the shoppers, who don’t have to hunt around for somewhere to toss yet another piece of unwanted paper. But it was also convenient for vendors who wanted to underpay the tax authorities.
The inability of the Greek government to collect the taxes it is owed is one of the recurring themes of coverage of the financial crisis. This problem is sometimes exaggerated, but everyone agrees that it’s very real. And since the burden of structural adjustment is falling on fiscal reforms — rather than, say, firing unproductive members of the vast government workforce — that’s a big problem.
Widespread evasion narrows the tax base, forcing the government to set higher rates. If the evasion were spread evenly across all sectors of the economy, then these two things would roughly cancel out. Unfortunately, it’s not. Some sorts of taxes are easier to evade than others. Employment taxes are hard to evade, while self-employed professionals like doctors and lawyers have found it relatively easy to shelter most of their incomes. As a result, the cost of employing a new staff worker is quite high (especially since those workers are incredibly difficult to fire). The value-added tax here is now 23 percent, close to the EU maximum rate. (Thank God for that maximum, joked one journalist I met; otherwise, who knows how high they’d have raised it.) That’s making up for taxes that aren’t collected elsewhere.
The good news is that Greece has at least made progress on collecting sales tax. They’re hardly at the level that our Internal Revenue Service would accept, but most of the places I’ve gone have automatically given me a receipt, printed out by a cash register. The taxi drivers mostly offer printed receipts. One did ask me how much he should make it out for. (Note to boss: I told him to make it out for the amount of the fare.) I’m told that on the islands, collection is less sure. But here in Athens, they are slowly but surely improving their collection apparatus.
Greece is attempting to do in the space of a few years what other economies did over the course of decades. Most people think of a cash register primarily as a way to add up the value of the sale, but in fact, that is the least of its functions. Its most attractive feature to the merchants who adopted them back in the late 19th century was that they made it harder for clerks to steal. (That’s why old registers made a noise every time the cash drawer opened; that prevented employees from stealthily recording sales and then pocketing the money, or alternatively, giving goods to their friends without being paid.) Over time, of course, revenue authorities realized that cash register tickers were also a good way to ensure that employers gave the state its due.
Command and Control Solutions
Published on 18 Mar 2015
What happened to the cleanliness of your clothes after the U.S. Department of Energy issued new washing machine requirements? The requirements — which require washers to use 21% less energy — mean that washers actually clean clothes less than they used to. Is “command and control” an efficient way to achieve the desired outcome (which is less pollution)? Rather than a standard requirement, such as the Department of Energy issued, a tax on electricity would provide users with greater flexibility in their washing—and would prompt people to purchase machines that use energy more efficiently and keep their clothes clean.
Are there times when a command and control solution to a problem makes the most sense? We look at the eradication of smallpox as one example.
