Malcolm Gladwell on employer-provided health care:
The closest I can come is to imagine if we had employer-based subways in New York. You could ride the subway if you had a job. But if you lost your job, you would either have to walk or pay a prohibitively expensive subway surcharge. Of course, if you lost your job you would need the subway more than ever, because you couldn’t afford taxis and you would need to travel around looking for work. Right? In any case, what logical connection is there between employment and transporation?
It is good to see Americans questioning the cost and inefficiency of employer-provided health-care. While the analogy is amusing, it does not completely hang together, as the cost structure of the subway (huge fixed costs, small variable costs, and a natural monopoly) is very different from the health industry (high variable costs, and some scope for competition).
It is worth remarking that the absurd US system of employer-provided healthcare is a good example of the law of unintended consequences: it came about because of government imposed restrictions on wages during the Second World War, so employers provided health care insurance instead.
Russell Roberts at Cafe Hayek has an excellent debunking of the myth that employing people in manufacturing is important for prosperity.
He shows that while manufacturing employment has fallen, manufacturing output has increased.
But we aren’t being hollowed out. We still make lots of stuff. Not
that that’s the key to our prosperity. But even if you think it is,
the basic premise is false. We’re making more stuff. We’re just doing
it with fewer people than before, which is good. It means we can have
more of other stuff. Productivity along with trade is the road to
wealth.
The Legislative and Regulatory Reform Bill now before Parliament apparently grants ministers the power to make or change legislation by regulation.
"Henry VIII powers" is the Westminster slang for legislation which confers on Ministers the ability to amend Acts of Parliament by regulation. (If anybody knows why, please let us know in the comments.)
Some Bills contain Henry VIIIth clauses to enable ministers to amend the operation of the new policy in the light of experience. Parliament has been sceptical of any proposals to grant such powers, unless they are very tightly defined and limited, as they can provide the Executive with powers to amend legislation to implement policies which have not been scrutinized by Parliament. Such Henry VIIIth clauses are often either thrown out, or amended to limit the circumstances in which the powers can be exercised.
Presumably because they had become frustrated at their inability to sneak such powers into each piece of legislation, the government appears to have decided to go for the sledgehammer approach instead, by proposing a general Henry VIIIth power. I am not a lawyer, but the new bill seems to me to be drawn very widely:
A Minister of the Crown may by order make provision for either or both of the following purposes—
(a) reforming legislation;
(b) implementing recommendations of any one or more of the United Kingdom Law Commissions, with or without changes.
There are some conditions on the use of these powers, but they do not offer much reassurance:
(a) the policy objective intended to be secured by the provision could not be satisfactorily secured by non-legislative means;
(b) the effect of the provision is proportionate to the policy objective;
(c) the provision, taken as a whole, strikes a fair balance between the public interest and the interests of any person adversely affected by it;
(d) the provision does not remove any necessary protection;
(e) the provision does not prevent any person from continuing to exercise any right or freedom which that person might reasonably expect to continue to exercise.
To my eye, this seems to be the mother and father of all Henry VIII powers. I expect we will be told that, like the abolition of local council elections which has been floated this week, these changes will make the business of government much more efficient and streamlined. No doubt there is some truth in that; but there are other criteria which are also important in determining the arrangements by which we want to be governed.
See more at The Last Ditch, Bishop Hill and Talk Politics
Sometimes I am very proud of the UK Department for International Development (full disclosure: I am on sabbatical leave from DFID). Today is one of those days. Sarah Bosely in the Guardian today:
The British government will today publicly defy the United States by giving money for safe abortion services in developing countries to organisations that have been cut off from American funding. …The "global gag" rule, as it has become known, was imposed by President George Bush in 2001. It requires any organisation applying for US funds to sign an undertaking not to counsel women on abortion – other than advising against it – or provide abortion services.
The UK will today become the founder donor of a fund set up specifically to attempt to replace the lost dollars and increase safe abortion services.
via gendergeek
Update: BBC has the story here
Grethe and ran the Kaiser Permanente Half Marathon yesterday.
A beautiful cool, clear day, with sunshine as the race ended and we went for brunch in the city.
G ran 1:34:04 – a bit slower than last year but she finished feeling strong, so she could have run faster.
I ran 1:18:03, 14 seconds slower than last year (but an improvement in age-graded terms.) Got overtaken by Caroline Annis with half a mile to go, exactly like last year.
Alex Singleton has an interesting post at the Globalisation Institute: The intellectual revolution in international development:
Three years ago, social justice was a left-wing term, about redistributing income and socialism. Now it means things like welfare reform and community entrepreneurs. That is quite an achievement. And that sort of achievement is what is needed now in the area of international development. The Department for International Development needs an intellectual revolution. We need to turn development policies upside down: we need to change to helping Africa from the bottom up.
Alex is right that those of us who care about international development should embrace practical ways that free markets can help people.
But I think we need to unpack the following proposition carefully:
These enterprise-based approaches to development are vastly more effective than the top-down help of which the government, unfortunately, is still far too fond.
There are three questions I have about this.
Q1. If we believe that enterprises are the basis of economic growth, jobs and poverty reduction (which I do, as does Alex), does it necessarily follow that aid should be used to support enterprises?
I do not think this follows at all. I have commented before on the irony that those who most support the free market are often vocal in advocating public subsidies for enterprises. For example, it is far from clear that if we believe in microfinance, we should subsidize it. We too easily fall into the trap of thinking that because something is important, we should support it. Governments in both rich and poor countries should focus on improving what they are responsible for and which the market will not provide well, and on getting out of doing things that they are not good at. While private enterprise is the foundation of economic growth, it does not follow that enterprise-based approaches to aid are the most effective use of aid.
Q2. Are donors doing enough support the development of enterprise and free markets?
As I pointed out here, the British Government, like other donors, rightly places great emphasis on development assistance designed to improve the supply performance of the economy. Many of the reforms needed – such as reducing import tarrifs, fighting corruption or commercialising state enterprises – are expensive and require considerable external support, and a large part of our aid goes into just this sort of thing. In fact, the UK Government is frequently criticized from the left for doing too much of this, by those NGOs who are sceptical about the value of free markets.
It is unfair of Alex to dismiss this support pejoratively as ‘top down’ (in contrast to ‘bottom up’, which everyone is in favour of). This top-down investment is used to vaccinate children, support scientific research into new crops, build roads, schools, wells and hospitals, reform customs, remove import tarrifs, liberalise telecomms, support teacher training, fight AIDS, tackle corruption, meet the costs of free and fair elections, provide safe drinking water – all things, in fact, that it is necessary for a society to do to enable enterprise and free markets to flourish.
Q3. Is there evidence that supporting NGOs and small businesses is a more effective use of aid than providing aid to governments?
If there is, I should like to see it. Some of this so-called bottom-up aid supports fantastic projects which make an enormous contribution to the people to whom they provide services. But much of it is ill-conceived do-goodery which is not sustainable and has high transactions costs for litle long-run benefit. (I’m thinking, for example, of the idiotic idea of shipping computers to schools, many of which have no electricity or place to store them safely, let alone anybody who knows how to use them.) If we are looking for transformation of these societies, and not merely alleviation of the symptoms of poverty, we need to contribute to transformation of systems and institutions. Bottom up support for NGOs and small enterprises is unlikely to deliver that.
Conclusion
I’m with Alex Singleton in believing in markets and enterprise. But I am more modest than Alex about my belief in what we can contribute directly to those. Good businesses will succeed, or not, because of the energy and enterprise of those who own them and work in them, not because of support we provide. The role of government is to put in place the conditions that enable those markets and businesses to thrive, such as transport and communications infrastructure, effective courts, and a healthy workforce. There is, of course, room for debate about the extent of that responsibility – some societies believe that education should be provided collectively, some do not. But it is not in doubt that many of the preconditions for enterprise are, in whole or in part, public goods, and that governments (and in the case of poor countries) donors may have a role in providing them.
Alex underestimates the extent to which the views he is advocating are already part of mainstream development thinking. Development will be driven by the people of poor countries improving their own lives, through education, hard work, and enterprise. There is much we can do, and are doing, to promote an environment in which that bottom-up growth can prosper and accelerate. But it is at best an oversimplification, and at worst dangerous, to think that because small enterprises are the basis of development that this is where we should put our support.
From time to time I gloat about how much better the weather is here in Northern California than in London, Washington or just about anywhere else.
Not this weekend it ain’t. This picture is of the town of Napa, the centre of wine country, about an hour north of Berkeley.
And Berkeley isn’t much better – I was up to my calves in water cascading down the roads when I was running yesterday, and I haven’t even tried to brave the rain today.
I begin with a confession that I am an admirer of Craig Murray, the former British Ambassador to the Republic of Uzbekistan. He deserves praise for his courage and clarity in speaking out against vicious human rights abuses by the dictatorial regime of Islam Karimov, which (deplorably) receives funding and support from the US and the UK Governments. As well as calling the world’s attention to the repressive regime in Uzbekistan, Mr Murray has been outspoken against the use of information gathered through torture and the practice of extraordinary rendition.
Recently, Mr Murray has published a series of confidential documents which purport to show that the UK Government government knowingly received information extracted by the Uzbekistan government using torture. This revelation has caused quite a storm in the blogosphere, including at Bloggerheads and at Daily Kos.
Mr Murray says (and the documents appear to confirm) that he warned the UK Government that information being passed on by the Uzbek security services was torture-tainted. But in a thoughtful post, another former Ambassador, Sir Brian Barder (who happens to be my father) makes an important distinction between using information tainted by torture as evidence in court (which is, and should be, inadmissable) and acting upon intelligence, however obtained, as the basis of further investigation.
As my father says, if our security services get information about a possible terrorist attack they should investigate it further, knowing that information gathered under duress of torture is likely to be far less reliable than information from other sources. That is what Mr Murray says has been happening, and it isn’t obvious to me that it it is either ethically wrong or illegal.
Furthermore, I don’t think UK Government Ministers have ever said that we don’t, or shouldn’t, act upon information even it is has been obtained by torture. So it not clear to me that Mr Murray’s documents demonstrate that the Government has in any way misled us about receiving or using such information.
I suppose it might be said that our willingness to receive and use information obtained from torture somehow encourages the Uzbek government to torture people that they otherwise wouldn’t. But given the nature of that regime, I doubt if it makes any difference to them if we do, or don’t, use the information they provide.
What Mr Murray is surely right about is the need for the UK and US to be much more robust in isolating the brutal, dictatorial regime and putting maximum economic and political pressure for change (read Mr Murray’s comments on my father’s blog for some idea of the nature of the government). It is deplorable that the relationship between the Uzbek government and the US or UK is sufficiently friendly for us to be receiving any intelligence information at all from their security services, let alone doing anything to encourage them to torture people.
So on this precise point, I don’t think Mr Murray is right, as it is not necessarily ethically wrong, nor is it illegal, for our services to use whatever information they can get in the fight against terrorism; and it is not clear to me that our Ministers have ever said otherwise.
The US Senate is choking on the US-UK Extradition Treaty (full text pdf) because they are concerned that it might adversely affect civil liberties of people living in the United States. The irony is that the treaty protects those liberties much better than it protects the liberties of British citizens. But we have no Senate to protect us.
The proposed extradition treaty was signed on March 31, 2003 by US Attorney General, John Ashcroft, and the British Home Secretary David Blunkett. It was transmitted by the President to the U.S. Senate Committee on Foreign Relations in April 2004, and was considered by them on 15 November 2005. The Committee hearings were held in private and no transcript has been published, so we don’t know exactly what happened, but it appears that the Committee declined to vote on the treaty. This is a major problem for the passage of the treaty, as the the full Senate cannot consider the treaty until the Committee has approved it.
Opposition to the treaty in the US is based on fears that it removes the exception for political offences, allows for extradition even if no US law has been broken, removes any statute of limitations, applies retroactively, and allows the UK authorities to try a person for an offence other than that for which he or she was originally extradited. The failure of the Committee on Foreign Relations to vote on the treaty is the result of opposition from American Civil Liberties Union (which probably doesn’t matter the Republican-controlled Senate) and from the Ancient Order of Hibernians and other Irish-American organisations (which probably does matter).
If the treaty removes liberties from US citizens it do so even more from people under the jurisdiction of the UK. Under the existing 1972 treaty, the US has to produce evidence sufficient to make a case to answer under UK law, whilst the UK has to satisfy a “probable cause” test for extradition from the US. (These are broadly similar in effect: the requirement for prima facie evidence is probably a little more onerous than the requirement to show probable cause.) Under the new treaty American prosecutors no longer have to provide prima facie evidence in order to extradite a citizen from the United Kingdom. Article 8 of the treaty only requires the US to provide a statement of the facts of the offence only. By contrast, Article 8.3(c) of the treaty requires UK prosecutors to supply information in an extradition request providing a “reasonable basis to believe that the person sought committed the offence for which extradition is requested”.
Try out this Africa Quiz from the excellent Ethan Zuckerman. I’m ashamed to say that I got one wrong.
Politicians, the media, bloggers and other armchair experts on development almost all agree that aid for developing countries should be conditional on reforms by recipient countries, and that aid should be tied to conditions about how the aid is used. But this approach is generally not supported by people who work in development.
I’ve written a paper which looks at the advantages and disadvantages of conditionality. Unlike many critics of conditionality, I am broadly supportive of the policy reforms that donors recommend. But I am not at all convinced that aid conditionality is the right way to get those reforms implemented.
There are three possible arguments for conditionality:
(a) Conditions on aid might increase incentives for policy reform by developing country governments.
(b) Allocating aid to countries with good policy environments might increase the impact of aid spending.
(c) Aid conditions might increase our ability to account for how the money was used and what effects it had.
Alongside these advantages, we should consider the possible disadvantages of aid conditionality.
(a) The conditions increase transactions costs, for both the donor and especially for the recipient.
(b) Conditions may reduce predictability, which in turn reduces the effectiveness with which aid is used.
(c) There is a possibility that some of the policy prescriptions are incorrect, either because they reflect donor interests or because some of the international experts have given poor advice.
(d) The conditions may undermine internal government systems for prioritising, allocating, managing and accounting for public spending.
(e) The imposition of external conditions may contribute to poor accountability of developing country governments to their own citizens.
As set out in detail in the longer note, the arguments for conditionality are not very persuasive; but the possible adverse consequences are alarming. I conclude that aid should take the form of long-term, predictable commitments, focused on countries that are pursuing policies that are likely to benefit the poor. I support aid “selectivity” linked to long-term outcomes, which is a far cry from the current system.
You can read the full note here.
Interesting article in The Grauniad by Laura Barton who claims that 2005 has seen a decline in the monopoly control of the marketing departments of music companies:
This has been the year fans have increasingly taken music into their own hands, rejecting the over-processed diet served up by many major labels in favour of something a little more homemade. In the process they have notched up numerous high-profile successes, including Arctic Monkeys, Arcade Fire, Clap Your Hands Say Yeah, Spinto Band and Nizlopi.
It does seem to me broadly right that it is in the interest of songwriters and performers that people should be able to share music, rather as many of us did with cassette tapes many years ago.
The G7 Finance Ministers met in London this weekend, and agreed to pilot the policy that I have been working on in my day job for the last year.
The idea is simple. Pharmaceutical companies do not have sufficient incentive to invest in making vaccines for developing countries, against diseases like malaria and HIV, nor to produce large quantities of existing vaccines for diseases such as Hepatitis B, Hib and measles. The reason is that the markets are too small, even though these vaccines would be a hugely cost-effective way to save lives in developing countries. To solve this, rich countries could offer a guarantee: if a company can develop a vaccine for a disease like malaria, we will pay for it to be bought in large quantities in developing countries. This creates strong commercial incentives for the biotech and pharmaceutical industry to accelerate the development of vaccines that will save millions of lives a year in developing countries.
This would be a new way of giving aid: focusing on global public goods; linking payment to results; and harnessing the energy and creativity of the private sector. For developing countries, it offers the prospect of access to medicines that will save lives cost-effectively. For companies, it offers larger new markets. And for donors, there is no cost unless the policy succeeds.
The finance ministers considered a report from Italian Finance Minister Guilio Tremonti which recommended that the G-7 adopt a plan that is based on proposals made in April by a Working Group convened by the Center for Global Development (CGD), in our report Making Markets for Vaccines. (Our work on this is funded by the Bill & Melinda Gates Foundation). I am proud to say that the finance ministers welcomed the idea, and decided to pilot this approach.
The communiqué from the G7 Finance Ministers says this:
We welcome Minister Tremonti’s report, published today, on Advance Market Commitments (AMCs) for vaccines. Alongside direct funding of research, AMCs could be a powerful, market-based mechanism to support research and development of vaccines for diseases which affect the poorest countries. We agree to work with others on developing a pilot AMC next year, including continued discussions with expert bodies on the diseases to be addressed.
This is a huge step forward. I am tired, and very proud of what we have achieved so far. Read more in my vaccines for development blog.
The TV commentators here in the US are distinctly underwhelmed by the visit of the Prince and Princess of Wales; they are not just bored, they are mocking the British. Maybe, as Christine Odone claims (via Tim) it is because a second marriage to your long-time mistress is less romantic than marrying a glamorous airhead. But what I’ve heard suggests a more fundamental distaste for the idea and practice of monarchy. The criticisms I’ve heard on the box in the last 24 hours include:
- "why should we block the traffic for an un-elected official?"
- "he isn’t very intelligent – he just likes anything spiritual"
- "what gives him the right to come and wag his finger at us about Kyoto? Who elected him?"
- "hereditary power is just .. unAmerican"
- "why don’t the British just get over this stuff already?"
All of which, it seems to me, are fair points; and they demonstrate that America’s deep-rooted commitment to democracy is alive and kicking.
(As an aside: when we have to carry identity cards, will Camilla’s include her real legal title – Princess of Wales – or the pseudonym she uses – Duchess of Cornwall? Are we allowed to put fake names on our id card?)
I have made my first contribution as a member of the team at The Sharpener. It discusses the economics of branding – are brands good for the economy, or merely a transfer from consumers to producers?
Tomatoes being unloaded in the market today in Berkeley.
Chris at Stumbling and Mumbling has an excellent restropsective look at Margaret Thatcher’s economic legacy. (The title of Mr Dillow’s blog is a total misnomer – it is fluent, well-informed and rarely takes a misstep.) As ever, don’t neglect the comments.
Chris summarizes Mrs Thatcher’s influence on privatisation, labour markets, and macroeconomic policy. He concludes:
She has given a generation of non-economists the impression that support for free markets is equivalent to support for the vested interests of the rich. Nothing could be further from the truth.
I agree with Chris’s analysis, especially the point quoted above – and I would add a few glosses.
- We tend to take for granted some of the really good reforms and policy changes of that era, such as the abolition of exchange controls and the agreement to the Single Market Act. Maybe they would have happened anyway; maybe not.
- It is important to distinguish the period when Geoffrey Howe was Chancellor, which was largely disastrous, from Nigel Lawson, who was pretty good (at least from 1983 to 1987).
- Howe’s budget of 1981 was a catastrophic, unforgiveable mistake, clinging to the wreckage of monetarism long after any reasonable person would have abandoned it, leading to one of the deepest (and least necessary) recessions on UK history; as was Lawson’s expansionary budget of 1988 based on the arrogant belief that he had conquered the business cycle.
- Thatcher and Lawson should be commended for persuading the chattering classes that increasing trend economic growth is primarily challenge for microeconomic policy (ie improving the supply side), whereas controlling inflation is primarily a challenge for macroeconomic policy. This seems obvious today but it was a total reversal of the then prevailing wisdom which saw macroeconomic policy targeting growth (demand management) and microeconomic policy controlling inflation (price controls, wage freezes, hire purchase controls etc).
- Lawson should be commended for his simplification of the tax system (subsequently largely reversed, sadly).
- One of the defining features of Mrs Thatcher’s economic policy was her ambivalent relationship with the exhange rate. I think – though without much conviction – that we should have joined the Exchange Rate Mechanism of the EMS sooner than we did; and had we done so we might not have suffered the humiliating ejection that occured under the Major government. Mrs Thatcher had a largely instinctive set of opinions about the exchange rate – she believed in keeping sterling independent and "strong" – without any very sophisticated underlying analysis.
- The Thatcher Government has not got the opprobrium it deserves for breaking the link between the state pension and the growth of wages. Allowing our old people to fall behind rising living standards of the rest of the community year after year, creating a generation of retired people living in poverty, was unforgiveable.
- I think Mrs Thatcher did, in some undefinable way, change our attitudes – largely for the better - to the role of the state in private enterprise. Before her, there was a widespread assumption, under both Labour and the Conservatives, that the state should step in to prevent the collapse of particular firms or industries. That was mainly an expensive mistake, and Mrs Thatcher was robust in refusing to come to the aid of many sunset industries. (She was, however, not entirely consistent on this: her friends in industries such as aerospace continued to receive large public subsidies.)
See also New Economist, who has some good links to further commentary.
Update 17 October: See also BrightonRegencyLabour for 20 reasons why he hates Thatcher. Also the comments below have a lot of good stuff.
To commemorate the 150th anniversary of the Irish Famine, Boston’s Irish community unveiled a memorial park on June 28,1998. The park is in downtown Boston, along the city’s Freedom Trail. The text on the plaque reads:
Lest we forget. The commemmoration of the Great Hunger allows people everywhere to reflect upon a terrible episode that forever changed Ireland. The conditions that produced the Irish famine – crop failure, absentee landlordism, colonialism and weak political leadership – still exist around the world today. Famines continue to decimate suffering populations. The lessons of the Irish famine need to be constantly learned and applied until history finally ceases to repeat itself.
Joseph Kony, leader of Uganda’s Lord’s Resistance Army, has been indicted by the International Criminal Court.
The Lord’s Resistance Army (LRA), formed in 1987, is a rebel paramilitary group operating mainly in northern Uganda. The group is engaged in an armed rebellion against the Ugandan government in what is now one of Africa’s longest-running conflicts.
It is led by Joseph Kony, who proclaims himself a spirit medium and apparently wishes to establish a state based on his unique interpretation of Biblical millenarianism.
It is estimated that around 20,000 children have been kidnapped by the group since 1987 for use as soldiers and sex slaves. The group performs abductions primarily from the Acholi people, who have borne the brunt of the 18-year LRA campaign. The insurgency has been mainly contained to the region known as Acholiland, consisting of the districts of Kitgum, Gulu, and Pader, though since 2002 violence has overflowed into other districts. The LRA has also operated across the porous border region with Southern Sudan, subjecting Sudanese civilians to its horrific tactics.
Up to 12,000 people have been killed in the violence, with many more dying from disease and malnutrition as a direct result of the conflict. Nearly two million civilians have been forced to flee their homes, living in internally displaced person (IDP) camps and within the safety of larger settlements, sleeping on street corners and in other public spaces. The plight of these people has received little media coverage in affluent countries.
These are the first indictments by the International Criminal Court.
I have mixed feelings about this. It is good to see the ICC up and running, despite the opposition of the United States. It is good to see bad men like Kony on the wrong end of international legal proceedings.
But it is hard to see how there can be a peaceful settlement to what is effectively Africa’s longest running war now that Kony faces trial in the International Criminal Court. The international community owes it to the people of Uganda to provide resources, logistics and military support to bring the war to an end and to bring the leaders of the LRA to justice.
But perhaps our commitment to a war on terrorism does not run that deep?
I’m sitting in a coffee bar in Berkeley, which is about my favourite state of being.
There’s been some good music playing … Beatles (White Album), David Bowie (Let’s Dance), Pink Floyd (Murmur).
And I’ve just realised that all the bands they’ve played are British. And that we are disproportionately well-represented in the annals of great pop music.
Ah: now it’s Simon and Garfunkel. A reminder that there are some great American singers and songwriters too.
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