Posts Tagged With: Economics

Record Numbers of Poppies in Afghanistan

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New York Times has an article detailing the record levels of opium being produced in Afghanistan this year. We are spending $600 million on counternarcotics efforts, divided between eradication, interdiction, and "alternative livelihoods." Government officials admit, however, that eradication "drives farmers into the hands of the Taliban." Why not pay the farmers for the opium they produce and then destroy the crop, instead of insisting they grow wheat, which makes a tenth of the profits? A lot of the high cost of heroin in the United States is added at the end, because it costs so much to smuggle it in and refine it for street sale. As the leader of the free world, and with trillions of dollars in tax revenue, we should be able to outbid the Taliban.

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Posner on college

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From Richard Posner: "...colleges and graduate (including professional) schools provide a screening and certifying function. Someone who graduates with good grades from a good college demonstrates intelligence more convincingly than if he simply tells a potential employer that he's smart; and he also demonstrates a degree of discipline and docility, valuable to employers, that a good performance on an IQ test would not demonstrate. (This is an important point; if all colleges did was separate the smart from the less smart, college would be an inefficient alternative to simple testing."

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Health Care Quote of the Day

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From Judge Richard Posner: "The current concern about the health system, which generates plans such as the Edwards plan, may be misplaced. It is true that health costs are rising faster than the inflation rate. But rising costs, even of "essential" products and services, such as food, health care, and national defense, do not necessarily demonstrate the existence of a problem. Costs may be rising because quality is rising, which is true of health care (new and better therapies and diagnostic tools), or because demand is rising (and average cost is not flat or declining), which is also true; as people live longer, their demand for health care rises because more health care is required to keep people alive and healthy the older they are. In addition, much health care is in fact discretionary (cosmetic surgery is only one example; others are treatment for mild depression and other mild emotional or cognitive problems and treatments designed to enhance athletic ability), and demand for it can be expected to rise if quality rises relative to price. "It is also true that Americans spend much more on health care on average than the people in other wealthy countries do, without greater longevity to show for these expenditures. But health care does much more than extend life; it alleviates pain, discomfort, disfigurement, limited mobility, visual and hearing impairments, and mental suffering, and it is not clear that foreign health systems, which also involve considerable costs in queuing, do these things as well. In addition, the better a nation's health care is, the riskier the population's life style is likely to be, because the cost of obesity and other risk factors for disease is less." The full text is here. When Tyler Cowen and Greg Mankiw wake up I expect they'll link to this article too. In the hysteria of, "We deserve cheap good healthcare," these points are forgotten. Of course there are issues with the current system. I listened Posner talk earlier this year. While he made very good points, he is a more compelling writer than speaker.

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Illegal Immigration

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President Bush today said that National Guard deployments are helping curb illegal immigration. I wonder if anyone has done studies to show a correlation between immigration crackdowns and economic growth in the United States, positively or negatively.

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Prison Vouchers

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What if prisoners, when sentenced, were given a voucher and could choose what prison they went to? As long as the state ensures prisons with escapees are heavily fined and prisons have minimum capacities, a voucher plan could do wonders for our overtaxed prison system. Heck, prisoners could even put up money to go to a better institution! Prisons would have to compete for money from prisoners, and prisons with the worst reputations would disappear. This would never get past Congress but I like it. I have to flush this idea out more.

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Pigou Club, Mobility & Unemployment

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There has been a lot of talk recently about the idea that unemployment is correlated with home ownership. The idea behind the theory (as I understand it) is that people are unwilling to change homes, and so are not mobile enough to take full advantage of their workplace opportunities. Given this, would a carbon tax also lend itself to higher unemployment? If I am willing to drive to any job within three gallons of my home at the current gasoline price, but only one and a half gallons when gas is $4.50 a gallon... Cars, for all the pain they cause, are a very easy way to get around; taxing gasoline would most likely lead to a decrease in mobility. Comments are open... :-)

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Cheap Education Quote

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From Andrew J. Coulson of the Cato Institute: "...it would be institutionally suicidal for a monopoly school system to do a good job of teaching market economics. The very fact that we continue to have a monopoly school system is retroactive proof that market economics has not been well taught. Monopolies, after all, tend to be frowned on by the economically savvy."

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Home Ownership & Unemployment

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Slate and MR have been talking recently about the fact that unemployment is tied to permanent home ownership: the more mobile your population the lower unemployment will be. This is another reason why the simple economic models I am looking at in my intro classes will never work. Economists for the sake of simplicity will ignore simple things, like that people get attached to their belongings and surroundings. With that said we should not dismiss economics. It is simply unlikely that we will ever get to the equilibriums the models imply.

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