Wednesday, September 30, 2015

Cato: that $750 generic pill is a pure artifact of regulation

Yep - but for some no matter the problem the solution is always more government (Cato):

As you probably know if you follow the news, a man named Martin Shkreli in charge of a startup firm called Turing Pharmaceuticals bought the rights to a drug called pyrimethamine (brand name Daraprim), used in the treatment of AIDS and malaria, and announced that he was jacking up its price from $13.60 to $750. Massive outrage resulted, which has echoed through social media for the past week.

Pyrimethamine is long since off patent. It is not difficult to manufacture, and sells cheaply in Europe. But under the distinctive food and drug laws of the United States you can’t just start turning out pills in your factory to compete with Shkreli, at least not without compiling and submitting a huge pile of regulatory paper with the U.S. Food and Drug Administration. This calls on the services of lawyers and scientists, costs a lot of money, and takes time, and you might or might not be able to recover the costs from the relatively small pool of users.
Update (mises): Why are there are so many shortages in generic drugs?

How much better do groups of amateurs beat professional forecasters?

As it turns out about 30% - but as it turns, out the reason is because they have "doubt" (WSJ):

The top 2%, whom Prof. Tetlock dubs “superforecasters,” have above-average — but rarely genius-level — intelligence. Many are mathematicians, scientists or software engineers; but among the others are a pharmacist, a Pilates instructor, a caseworker for the Pennsylvania state welfare department and a Canadian underwater-hockey coach.

The forecasters competed online against four other teams and against government intelligence experts to answer nearly 500 questions over the course of four years: Will the president of Tunisia go into exile in the next month? Will the gold price exceed $1,850 on Sept. 30, 2011? Will OPEC agree to cut its oil output at or before its November 2014 meeting?

It turned out that, after rigorous statistical controls, the elite amateurs were on average about 30% more accurate than the experts with access to classified information. What’s more, the full pool of amateurs also outperformed the experts.

The most careful, curious, open-minded, persistent and self-critical — as measured by a battery of psychological tests — did the best.

“What you think is much less important than how you think,” says Prof. Tetlock; superforecasters regard their views “as hypotheses to be tested, not treasures to be guarded.”

Tuesday, September 29, 2015

California's man-made drought: not because of the lack of rain

But because of the prioritization of fish above people. The infrastructure needed to support people, never got built (theDailySignal):

Even now, in the Sierra foothills, state officials empty reservoirs to protect “unimpeded” river flows to benefit small numbers of non-endangered hatchery fish. The California Coastal Commission, the powerful agency with control of development along the shoreline, is holding up a privately planned desalination plant over concerns about its impact on plankton. The environment-friendly commission want to force the developers to build a pumping system that destroys the economics of the plant.

[...] Even the federal government is in on the action. In the far northern part of the state, along the Klamath River, federal environment officials want to remove four dams that provide water storage near the Oregon border. Their goal is to help preserve the habitat of non-native salmon. The “destroy the dams” movement had gained so much steam in recent years that San Franciscans were asked in a 2012 advisory vote to destroy the O’Shaughnessy dam in Yosemite National Park and drain the Hetch Hetchy Reservoir—the main source of water for the state’s third-largest city. Even that city’s notoriously lefty voters said “no” to shutting their main water spigot.

[...] Recent reports showed that farmers use 80 percent of California’s water resources. It’s true that farmers are an important interest group. And because of the state’s old and quirky system of water rights, we see infuriating misuses of resources—e.g., farmers growing water-intensive hay in one of the driest regions on Earth, the southern Imperial Valley.

But that 80 percent number was deceptive because it completely omitted environmental uses of water, which constitute more than 50 percent of the state’s flows. Farmers, businesses, and residents fight over what remains. What we’re seeing—water releases to benefit a small number of common fish, removing dams along major rivers, delays of desalination plants, failure to build adequate water storage—is not an anomaly. It is the cumulative effect of water policies dominated by environmental interests.

Black lives matter... but not as much as teachers unions?

New York's Mayor DeBlasio aims to close charter schools in NYC at the behest of his Teachers Union supporters (WSJ):

Good charters offer part of the answer. In New York, Eva Moskowitz’s Success Academy charter schools are arguably the best. Yet the mayor, his schools chancellor and the teachers union all apparently prefer maintaining the present inequality rather than allow Ms. Moskowitz to open more of her charters in poor minority neighborhoods.

The Success Academies are 58% black and about 27% Hispanic. Even so, these children regularly outscore their counterparts in wealthy suburban areas. So while each year the Success Academies prove that black kids can compete as equals with white kids so long as the bar is set high and teachers are held accountable, in the schools run by Mayor de Blasio the achievement gap between black and white has widened.

Welcome to progressive New York. Where black and Latino children in poor neighborhoods are condemned to failed schools with almost no possibility of escape. While the schools where kids are treated equally and black lives really do matter get the back of the mayor’s hand.
Fortunately it's not going to happen without a fight:

Elon Musk: fully autonomous cars "in approximately 3 years"

I hope he's right (TechCrunch):

Musk is now saying that Tesla cars should have “full autonomy” in “approximately three years.”

As for when regulators are ready to sanction self-driving technologies, they “probably will not allow for full autonomy for one to three years after that,” said Musk. “It depends on the market. Some will be more forward-leaning than others.”

What if banning private prisons made things worse?

I haven't always been comfortable with the idea of private prisons because of the problem with incentives and cronyism related to government contracts but as notes:

There’s a key difference, however, between privately run prisons and government-run counterparts: the contract mechanism, which provides a vehicle for accountability. If dissatisfied with performance, a government can cancel a prison contract with a private company. By contrast, the government tends not to fire itself, and the watchmen ultimately watch themselves.
Of course, this depends on contracts that allow for cancellation. What's more interesting is how some states are being proactive about reshaping incentives:
In 2013, Pennsylvania cancelled all of its contracts with private operators of community corrections centers and rebid them on a performance basis, tying vendor compensation to their performance at reducing recidivism rates among the populations they manage. The state corrections agency recently announced an overall 11.3% reduction in recidivism across its 42 contracted community corrections centers between July 2014 and June 2015, marking the second consecutive year of decline.

That same year, Pennsylvania awarded a five-year correctional mental health services contract that was updated to significantly enhance performance expectations, including financial incentives to reduce the number of misconducts for mentally ill offenders, the number of inmates recommitted to prison mental health units, and the number of recommitments to prison residential treatment units. Conversely, the state can impose financial penalties on the contractor if it fails to achieve targeted baseline results for those same metrics.

Monday, September 28, 2015

Coming clean about the VW emissions scandal: more regulatory malpractice

Oops (WSJ)

A consensus has formed, in a remarkably short time since the VW scandal, that Europe’s rush to embrace diesel cars was a colossal policy error. For a meaningless cut in greenhouse emissions, Europe got higher emissions of nitrogen oxides and diesel particulates. While claims of thousands of additional deaths from this diesel pollution are questionable, Europe now realizes it converted half its cars to diesel for no good reason. And this is just the beginning.

If carbon dioxide is a problem, cars were never the solution. Cars and light trucks account for less than 8% of global emissions; U.S. cars and light trucks account for less than 3%. U.S. car makers are being required by government to spend hundreds of billions on fuel-mileage improvements in the name of global warming that will have virtually zero effect on global warming.

Regulatory malpractice: why the US hasn't developed electric planes

From Wired:

In 2004, the Federal Aviation Administration created a new category of airplanes, called Light Sport Aircraft (LSA), to make it easier and cheaper for manufacturers to certify simple, fun-to-fly airplanes.

The new rules have allowed for the creation of dozens of new two-seat airplane designs. None of these are electric, however, because in the preamble to the rule, the FAA wrote that all planes in this class must have “a single, reciprocating engine, if powered.”

The point of the rule, FAA officials acknowledge, was to keep more powerful turbine engines out of the picture. The banning of electric powertrains is unfortunate collateral damage.

“This is the thing that has scuttled electric aircraft’s significant development, for years,” says Dan Johnson, president of the Light Aircraft Manufacturing Association, a trade group. “Just by changing six or eight words, you could undo the problem — but we can’t get there.”

Sunday, September 27, 2015

How capitalism improves the environment


In the 1950s, the Belarussian-born American economist Simon Kuznets hypothesized that income inequality as a nation industrializes can be shaped like an inverted U—it increases in the early stages of growth, reaches an apex, and then starts tapering down as the economy matures. The switch begins to happen after a critical mass of people abandon farm life for the big cities, where they obtain better education, benefit from economies of scale, and start agitating for policy changes.

Ironically, at a time when Kuznets' original concept has come under intensified attack in the inequality-obsessed developed world, its application to the environment has gained considerable purchase both academically and observationally. As Science Correspondent Ronald Bailey traces in "The End of Doom" (page 20), many of the woes that people still assume are getting worse are actually improving in the most advanced countries.

Wednesday, September 23, 2015

The coming fake meat

I'm pretty optimistic about this - and it makes sense in that it would mean meat becomes far more scalable and cheaper for human consumption while reducing waste (NYTimes):

“The true challenge will be to recreate more complex pieces of meat that are the pinnacle of the meat industry,” he added. “I believe that plausible, good-tasting steaks and pork loins are only a matter of time.”

Puglisi is advising Beyond Meat, a start-up that is a leader in the field, with investments from Bill Gates and both Biz Stone and Ev Williams of Twitter fame, not to mention Kleiner Perkins Caufield & Byers, the venture capital firm that backed Google and Amazon. Beyond Meat says its sales are doubling each year.

Whoever thought public housing was a good idea...

... should have to live there. The 'unintended consequences' of forcing people whose only commonality is poverty, to live in a ghetto. 'City: Murder victim should have known ‘risks’ of public housing' (NYPost):

The family of a college student murdered at her East Harlem housing project doesn’t deserve a dime from the city — because she should have known the “risks” of being on the dangerous grounds, city lawyers claim in court papers.

“I can’t believe they’re saying she’s responsible for her murder,” Olivia Brown’s mother, Crystal, told The Post Friday.

“Everybody has a right to be safe in their home. Why wasn’t my daughter safe? Because we’re poor and live in public housing?”

Making it more difficult for Americans to 'go galt'?

The US has decided to increase the cost of renouncing a US citizenship by 422%. According to the US State Department, it's about cost recovery... because the cost increased 422% between last year and this year? (Forbes):

When the news broke a year ago that the U.S. was hiking the fee to renounce U.S. citizenship by 422% there was a backlash. If anything, the uptick in American expatriations grew rather than declined. The U.S. State Department said raising the fee for renunciation of U.S. citizenship is about demand and paperwork. Perhaps, but a hike from $450 to $2,350 is still steep. That is more than twenty times the average level in other high-income countries. The State Department complains about demand on their services and all the extra workload they have to process people who are on their way out.

More on Elizabeth Holmes, Theranos

She's now 31 years old with a majority ownership of a company valued in excess of $9 billion (Inc):

Her parents both have had careers with noble ambition--her mother was a foreign-policy and defense aide on Capitol Hill, and her father is now the global water coordinator for USAID--but Holmes decided government agencies were not effective enough. She'd watched "all these people with incredibly good intentions" get mired in bureaucracy and politics while trying to make an impact, she says. Meanwhile, with a startup, Holmes adds, "you say, 'We're going to do this,' and you design an organization to do it."

[...] Over the past 18 months the momentum behind Theranos has been building. There's the recent deal with the prestigious Cleveland Clinic, which will use Theranos technology to test its patients. Theranos secured agreements with Capital BlueCross and AmeriHealth Caritas to be a preferred provider. A partnership with the Carlos Slim Foundation, which runs a network of health care centers in Mexico, will use Theranos tests to screen for, among other things, diabetes, a disease known to be preventable with early detection. In July, Arizona passed the country's first bill, co-authored by Theranos, allowing patients to order blood tests without a prescription. And then there's the massive Walgreens deal.

Any of Theranos's advances could potentially transform the lab test industry. But it's in pricing that Theranos arguably has the most powerful opportunity to disrupt, a point the usually restrained Holmes allows herself to get worked up over. "The premise that you're going to run a business, and that if someone is in need, I'm going to charge them a ton of money, is completely wrong," she says. "Price should be the same for everyone, period. And the price should be affordable." Theranos never charges more than half the rate set by Medicare for blood tests; in some cases, it's a 10th of the cost. A test for HIV can cost more than $80. Theranos charges $16.56.
Previously mentioned here and here.

'Well, it seemed like a good idea at the time...'

The 'unintended consequences' of excluding electric cars from high tolls in Norway (WSJ):

On the losing side of Mr. Nordbø’s commute are local municipalities, including Finnøy, which went into debt to dig the $70 million tunnel but charge no fee on electric cars because of national policies aimed at curbing carbon emissions.

The incentive helped convince many islanders to shift to electric cars. The vehicles now account for about a quarter of tunnel traffic, and allow owners to dodge one of the heaviest toll burdens in the country.

Tuesday, September 22, 2015

How regulation kills jobs

By making it more difficult for new entrants / startups / entrepreneurs (USNews):

While we find that regulation reduces the number of new business start-ups, it does not appear to harm existing businesses. In fact, we find that the largest firms in an industry – those with more than 500 employees – actually benefit when regulation increases. Why? They are less likely to go out of business, presumably because they are better able to hire accountants and lawyers to deal with the red tape. In addition, they can afford to hire lobbyists that ensure regulation is tailored to their advantage. Potential entrepreneurs, on the other hand, have neither the resources nor the political connections necessary to overcome the same red tape.

Federal regulation increased 28 percent from 1997 to 2012. The economy of the late '90s is not usually remembered as a time when unregulated firms were wreaking havoc on the economy. Our study results suggest that even just returning to the modestly lower level of regulation of the late '90s would lead to over 6,000 additional new businesses being started and 100,000 new jobs being created every year.

The morality of capitalism

Pope Francis: prioritizing the environment over the poor

"In his encyclical Laudato Si’, published today, the pope lambasts wasteful consumerism and unchecked human economic activity as a root of climate change, singling out one product in particular for censure: the air conditioner" (National Review)

Two years ago, the National Bureau of Economic Research published a study concluding that air conditioning reduced heat-related deaths in the United States by 80 percent and could save even more lives in hotter, often poorer countries. A/C is an especially promising life-saving technology given the potential effects of climate change, the authors contend. “The typical Indian experiences 33 days annually where the temperature exceeds 90 degrees fahrenheit and this is projected to increase by as much as 100 days by the end of the century.”

Monday, September 21, 2015

What Pope Francis gets terribly wrong

Markets are the greatest anti-poverty tool we have (Reason):

"Entrepreneurial capitalism takes more people out of poverty than aid." With those 10 words, spoken to an audience at Georgetown University in 2013, philanthropist rock star Bono demonstrated a keener understanding of economic reality than the leader of global Catholicism.

The U2 frontman clearly has it right—and Pope Francis is wrong to suggest that poverty is growing, or that capitalism, free markets, and globalization are fueling the (non-existent) problem. In just two decades, extreme poverty has been reduced by more than 50 percent. "In 1990, almost half of the population in developing regions lived on less than $1.25 a day," reads a 2014 report from the United Nations. "This rate dropped to 22 per cent by 2010, reducing the number of people living in extreme poverty by 700 million."

How was this secular miracle achieved? The bulk of the answer is through economic development, as nascent markets began to take hold in large swaths of the world that were until recently desperately poor. A 2013 editorial from The Economist noted that the Millennium Development Goals "may have helped marginally, by creating a yardstick for measuring progress, and by focusing minds on the evil of poverty. Most of the credit, however, must go to capitalism and free trade, for they enable economies to grow—and it was growth, principally, that has eased destitution."
More from Mercatus: "Capitalism isn't flawless. But it far outperforms any known alternative at peacefully uniting the peoples of the world in the practical and moral enterprise of producing dignity and extraordinary wealth for the masses" And more still from USA Today: "What the United States has accomplished under a free enterprise system at home and abroad proves that business is not part of the problem; rather, it is a big part of the solution." Rich Lowry in the Politico is scathing: "In his interviews and writings, the pope blames capitalism for a host of ills, from income inequality to the degradation of people to the despoliation of the planet. Of course, no human system is perfect, and the pope wouldn’t be the pope if he didn’t warn against soulless consumerism. Where he loses credibility is in making a material case against capitalism. When it comes to the miracles of widespread prosperity and enhanced well-being wrought by capitalist development, the pope is a denier."

Sunday, September 13, 2015

The fall of Chicago

Self inflicted wounds (OCRegister):

When I grew up in the north suburbs of Chicago in the 1960s and ’70s, Illinois was still a‎ financial and industrial powerhouse. The Land of Lincoln had a low-rate flat income tax, the property taxes were reasonable, the state ran budget surpluses, and Illinois was the home of such iconic megaemployers as Caterpillar, Sears Roebuck and the Chicago Mercantile Exchange.

Last week the state, had to sheepishly announce that it doesn’t even have the money in the bank to pay lottery winners. Now jackpot winners are suing the state to get their rightful money.

Perhaps the state will need a second lottery to raise money to pay off the winners from the first lottery.‎

Chicago is so broke that its bonds are junk status, and Mayor Rahm Emmanuel had to go hat in hand last week to the state capital, Springfield, for bailout money to pay the bills.

Does knowledge of economics matter at least as much as algebra?

Even more so (Mises)

Yet once we understand that all human action is economic action, we understand that we can’t escape or evade our responsibility to understand at least basic economics. To think otherwise is to avoid responsibility for our own lives.

While we shake our heads when twenty year olds can’t read at the college level or do simple algebra, we don’t worry much whether they never take economics. We would be alarmed if our children couldn’t perform basic math to know how much change they should get at a cash register, but we send them out into the world far more susceptible to being cheated by politicians. Why do we want our kids to learn at least basic geography, chemistry, and physics? And grammar, spelling, literature, history, and civics? We want them to know these things so they can navigate their lives properly as adults
And the problems with mathematical economics (Mises).

How cronyism hurts entrepreneurship

It might be shocking to some people, but entrepreneurs don't just do it for the money (USNews)

Psychologists have found the intrinsic desire to master challenges, known as "mastery," to be an important human drive. Economics has emphasized the external or monetary rewards for business, typically to the exclusion of mastery.

The words of entrepreneurs provide evidence for mastery as a business motive. Tom Monaghan, founder of Domino's Pizza, has remarked, "To me, the real substance of life and work is the constant battle to excel." Cable television pioneer Ted Turner observed, "America is about competition and rising above that competition." Michael Bloomberg has said that, "Even today, after toiling for 30 years, I wake up looking forward to practicing my profession, creating something, competing against the best … receiving psychic compensation money can't buy."

And actions speak louder than words. Many members of the Forbes Richest Americans list work long hours, even though they already have more money than one could spend in several lifetimes. A 2013 profile noted that Bill Gates was looking forward to working more with product managers in the upcoming year. Serial entrepreneur Richard Branson has started over 200 businesses and never tires of the challenge of making a new venture succeed.

[...] Cronyism can reward favored entrepreneurs with profits, but not necessarily mastery. Many top athletes would not care to compete in a contest rigged in their own favor. Similarly, some entrepreneurs or businesses, who may be well-positioned to take on a new challenge, do not seek government favoritism. And others may choose not to compete when it's clear that their performance doesn't necessarily equal results in a rigged marketplace.

The extension of cronyism in an economy over time can affect the types of individuals who choose business as a career. Profits for entrepreneurs who successfully court favor with politicians may not satisfy those with a true competitive streak. Imagine a track meet where the organizers rig the races so that their favorites, and not the best runners, win. Such a meet will likely fail to attract the world's best competitors.

The effects on the quality of entrepreneurship could be devastating in the long-term. After mastery-seekers choose other pursuits, the remaining profit-seekers will likely have no qualms about seeking or benefitting from government favors. A vicious cycle of cronyism could ensue, as more favoritism results in a group of business leaders more willing to lobby, leading in turn to more favors.

Victimhood, microaggressions, and a bit of good news

Supposedly the good news is that the national debate in the US over microaggressions is only really a debate because social status is improving among what traditionally have been disadvantaged groups:

As social status becomes more equal, they argue, people become more sensitive to any slights perceived as aiming to increase the level of inequality in a relationship. In addition, as cultural diversity increases, any attempts seen as trying to reduce it or diminish its importance are deemed as a morally deviant form of domination. As the New York University moral psychologist Jonathan Haidt has astutely observed, "As progress is made toward a more equal and humane society, it takes a smaller and smaller offense to trigger a high level of outrage. The goalposts shift, allowing participants to maintain a constant level of anger and constant level of perceived victimization."

Those experiencing what they think are microaggressions seek third-party redress of their grievances by assuming the pose of victim. "People portray themselves as oppressed by the powerful—as damaged, disadvantaged, and needy," write Campbell and Manning. The process heralds the emergence of a culture of victimhood that is distinct from earlier honor and dignity cultures. This is nothing less than demoralizing and polarizing.
Victimhood devalues/ignores individual power and responsibility. The irony is that the solutions proposed by those who supposedly advocate for victims are for entitlement systems that more permanently reduce individual power and transfer it to the state.

Why frequent business travel is so bad for you...

Hmmm... apparently there are a few reasons mixed in with a healthy dose of scaremongering... (Fastcompany):

If aging faster isn’t scary enough, it turns out that frequent business travelers are exposed to more radiation than is considered healthy. "Radiation exposure is hundreds of times higher at high altitude than at ground," says Cohen.

Matter of fact, it’s so high that "there have been calls to classify frequent business travelers as ‘radiation workers,'" he says, and notes that just seven round-trip flights a year from New York to Tokyo (about 85,000 miles) exceeds the limit for public exposure to radiation. As Cohen notes in his paper, "radiation exposure amongst commercial aircrew even exceeds that of nuclear power workers."

NYC's homeless crisis and 'unintended consequences'

It so happens the positions of 'advocates' were for a system that not only preserved the status quo but was self serving - funding the organizations that benefited from homelessness (NYPost via Instapundit):

Then, precisely as we predicted, the number of people in homeless shelters started to rise sharply, going from 38,800 in May 2011 to more than 60,000 at the peak earlier this year.

During the 2011 budget debate, the Coalition for the Homeless dismissed the Bloomberg administration’s predictions about what would happen if the Advantage program was cut by the state. They claimed our dire warnings constituted nothing more than “scare tactics.”

The results speak for themselves.

Thursday, September 10, 2015

What makes us who we are?

It's more than an interesting philosophical question as it turns out. A new paper looking at Alzheimer’s and other neurodegenerative diseases suggests that it's not in our intellect or memory but in our moral character (WSJ):

The researchers found that the people who cared for the FTD patients were much more likely to feel that they had become different people than the caregivers of the Alzheimer’s patients. The ALS caregivers were least likely to feel that the patient had become a different person. What’s more, a sophisticated statistical analysis showed that this was the effect of changes in the patient’s moral behavior in particular. Across all three groups, changes in moral behavior predicted changes in perceived identity, while changes in memory or intellect did not.

These results suggest something profound. Our moral character, after all, is what links us to other people. It’s the part of us that goes beyond our own tangle of neurons to touch the brains and lives of others. Because that moral character is central to who we are, there is a sense in which Edith literally, and not just metaphorically, lives on in the people who loved her.

Saturday, September 05, 2015

No, communism wouldn't work any better today just because we have better computers...

It's befuddling that anyone would think it would (Bloomberg via Instapundit):

I’ll swing for the fences and argue that no, even with better computers, Communism isn’t going to work. Nor some gauzy vision of post-capitalism that looks like Communism, but with YouTube videos.

In retrospect, Communism seems wildly stupid, or at least, incredibly naive. Did the people who dreamed up this system not understand the enormous incentive problems they were creating? As Ayn Rand dramatized the problem in “Atlas Shrugged”: “It’s miseries, not work, that had become the coin of the realm — so it turned into a contest among six thousand panhandlers, each claiming that his need was worse than his brother’s. How else could it be done?” The incentives of “from each according to his ability, to each according to his need” drive toward falling production, which means there won’t be enough to cover the needs.

Or as a former colleague who fled Communist Poland once told me, “They pretended to pay us, and we pretended to work.” There is a reason that basically all the Communist and Socialist regimes ended in some degree of authoritarianism.

Hugo Chavez: "one of the most disastrous leaders the world has seen"

Another example of how socialism works in practice (Bloomberg):

Yes, he steered a bunch of money to the poor, and did lots of things that drove both labor unions and business leaders nuts. The head of the country’s chamber of commerce even replaced him as president in a 2002 coup attempt that failed after two days. But as of 2005 Venezuela still had the highest per-capita gross domestic product in Latin America (adjusted for purchasing-power parity), and no trouble paying its bills. Chavez supporters could even point to some indicators that poverty and malnutrition were on the decline.

Now, of course, Venezuela’s economy is a disaster. The government stopped releasing regular economic statistics in December, but one official told Bloomberg News the annual inflation rate is 150 percent. The latest estimate from the Troubled Currencies Project run by Steve H. Hanke of the Cato Institute and Johns Hopkins, meanwhile, is that inflation is really 808 percent. Food shortages have become a problem, a debt default seems almost certain, and a complete economic collapse isn’t out of the question. By 2014 Venezuela had, by the World Bank’s PPP-adjusted accounting, slid to fifth place in per-capita GDP in Latin America, behind Chile, Cuba (!), Uruguay and Panama. Mexico and Brazil may pass it this year, despite their own economic troubles. Even next-door neighbor Colombia is getting within striking distance.

The end of (extreme) poverty?

Cato says yes:

Ending extreme poverty may sound like a remote dream voiced by idealists and beauty pageant contestants, but that goal’s attainment is actually closer than you think. The share of people living in absolute poverty (i.e., living on less than $1 a day) has dwindled to around five percent of the world’s population. Much of this progress can be attributed to massive poverty reduction in China that elevated hundreds of millions of people out of destitution.

Ranking the fiscal solvency of American states (and territory)

Not surprisingly, Puerto Rico is dead last. Runners up are Illinois, New Jersey and Massachusetts (Mercatus).

Breakthrough in LASERs could speed rise of self driving cars

As Glenn Reynolds says, faster please (Wired).

Friday, September 04, 2015

Where the moral argument for a "living wage" fails

The war to put additional price controls on wages continues (Mises):

Behind this effort is a philosophical claim that employers are morally obligated to pay “a living wage” to employees, so they can afford necessities (however ambiguously defined) on a single wage, working forty hours per week. This moral argument singles out employers as the morally responsible party in the living wage equation, even though the variables that determine a living wage go far beyond the wage earned.

[...] And yes, it’s true that plenty of activists regularly denounce landlords as “slumlords” or greedy capitalists for charging the highest rents the market will bear. And there are still plenty of activists who argue for price controls on rents and food. But they’re in a small minority nowadays. The vast majority of voters and policymakers recognize that government-dictated prices on food and housing lead to shortages. Setting a price ceiling on rents or home prices simply means that fewer housing units will be built, while setting a price ceiling on eggs, or milk or bread will simply mean that fewer of those staples will be brought to market.

Such assertions are barely even debated anymore, as can be seen in the near-extinction of new rent-control efforts in the political sphere. You won’t see many op-eds this Labor Day arguing for price controls on fruit, gasoline, and apartments. You won’t see any articles denouncing homeowners for selling their homes at the highest price they can get, when they really should be slashing prices to make homeownership more affordable for first-time homebuyers.

So, for whatever reason, homeowners, grocers, and others are exempt from the wrath of the activists for not keeping real wages low. The employers, on the other hand — those who pay the nominal wage — remain well within the sights of the activists since, for some arbitrary reason, the full moral obligation of providing a living wage falls on the employer.

Thursday, September 03, 2015

How markets are triumphing over the Saudis

While they had previously been successful at quashing upstarts by flooding the marketing with cheap oil, that strategy hasn't worked this time for the Saudis (WSJ):

What the Saudis and the naysayers closer to home seem to have forgotten is that the free market is the greatest incubator of technological innovation. Energy producers in this country have gauged the challenges of lower prices, are working to tackle them, and it’s paying off.

The technology behind shale production is advancing rapidly, and its costs are falling. Today the industry can tap multiple separate oil pools from a single vertical hole, drilling horizontally through miles of rock with computer-guided, steerable drill bits. Some of these “octopus” wells can feature as many as 18 horizontal shafts.

Articles about falling rig counts don’t take this into account. We’re seeing additional innovations such as the use of recycled “fracking” water, carbon dioxide and other substances to break formations, reducing the use of precious fresh water in drilling.

An extended period of below-$40 prices—if that’s what’s ahead—will have an effect on the industry and many families will have to endure consolidation and layoffs. Weaker and overleveraged players will go out of business. The oil industry as we knew it before prices dropped may never be the same.

But if history is any guide, oil and gas prices won’t remain low forever. And the technology, the talent and the infrastructure associated with America’s energy renaissance aren’t going away. They’re new facts in the global landscape. When prices rise, American capital will flow back to the oil patch and production will ramp up again.