Friday, March 31, 2006

Two Justices on What Law Is

On March 21, 2006, the U.S. Supreme Court heard arguments in the case of Davis v. Washington. At issue is the Constitution’s Confrontation Clause, from the Sixth Amendment’s explicit right "to be confronted with the witnesses against him." The trouble is that in the Davis case the defendant was convicted based on a call to 911 by Davis’s girlfriend. The tape was played, but the woman never testified in court, and hence was never subject to cross-examination. It is Davis’s argument that this violates his Sixth Amendment rights. The argument is interesting to me not so much for the legal issues involved, but for what it reveals about the (perhaps unexamined) assumptions that what are generally thought to be two of the most ideologically consistent Justices – Antonin Scalia and Ruth Bader Ginsburg – make about the nature of the law. Mr. Davis was convicted before Crawford v. Washington, which held that a woman’s 911 statement during a fight her husband was having with another man was inadmissible on precisely confrontation grounds. Six Justices, including Justice Ginsburg, agreed with that result.

So is a domestic violence case in which a woman is a participant any different from an assault case in which a woman is an (unwilling) observer? Justice Ginsburg says that despite her signing on to Crawford the answer is yes, because in domestic violence trials women may fear reprisal if they must testify in court: "The practical reality is that many women are scared to death of what will happen to them. So neat legal categories don't really fit the realities of this situation." Justice Scalia responded sarcastically that ''[m]aybe we should just suspend the Confrontation Clause in spousal abuse cases.'' (As an aside, there is apparently already a doctrine called “forfeiture,” under which a defendant loses the right to confront the witness if he has threatened him or her.) In a related case argued on the same day, Hammon v. Indiana, he argued that "it seems to me that there are better ways to solve the problem than to design our whole confrontation-clause jurisprudence based on what happens in spousal abuse cases."

There are two beliefs about the law lurking below the surface here. In Justice Scalia’s view, the law is an objective, knowable reality. If one wants to know whether there is a domestic-violence exception, read the Sixth Amendment and see if the Framers put one there. To Justice Ginsburg, the law has to take account not just of changed circumstances (an old doctrine of the “living constitution" school) but of different perspectives. That she is a woman and someone who may have experience with domestic-violence prosecution allows her to see it in a way that Justice Scalia probably cannot.

While Justice Ginsburg might object to this extension, this is fundamentally what the controversy about tribal diversity in our government and our schools (especially our universities) is all about. People have tribally defined experiences that allow them to present different truths -- thus enabling to bulldoze through the inconvenient "neat legal categories." Each truth packet is as good as any other, and all must be treated equally. And so the Supreme Court too must be demographically balanced, so that each tribe’s truth is equally represented in the manufacturing of the law. The law is to be negotiated rather than discerned.

Which view is correct? The critical legal studies scholar Mark Tushnet once said that “Law is politics, all the way down.” (“Critical Legal Studies” is a movement in the legal academy that argues that the law is the way it is so the powerful may benefit, and responsible lawyers must be insurrectionists against this empire.) And that is the tradition out of which Justice Ginsburg hails, and where her reasoning leads. If we accept it, we must also accept that the Constitution is in essence subject to the interpretation of whatever working majority prevails at the moment. Although in principle we may benefit from everyone feeling represented (at the cost of them being forced to define themselves primarily around their tribal identity), we also suffer the curse of instability unrelated to any high principles. The difference ultimately is between a ship anchored safely until the captain gives the order to leave and one where the crew is in mortal combat to gain control of the helm. If you’re a mere crewman you may wish you were steering. But so does everyone else, and in the course of the combat to decide who gets to the ship may ultimately sink to the bottom.

Thursday, March 30, 2006

Does Italy Need an Army of Bureaucrats?

"Papa, what did you do in the service?"
"Kept Italians safe and secure from prosperity, son."

Italy’s election campaign is winding down. The International Herald Tribune has a desultory piece on it, with the usual information about the unwillingness to embrace reform, along with some confirmation that my prediction of imminent intergenerational electoral conflict, in which the old outvote the young to prevent economic reform that the young desperately need, has now come to pass. But I did learn one thing. The candidate of the mainstream left, former European Commission proconsul Romano Prodi, has proposed that young Italians be required to work in the civil service for six months (just as many nations require military service):

Simone Baldelli, who heads the youth movement of Berlusconi's Forza Italia, is also running for Parliament in the Marches region. In a telephone interview, he dismissed fears about job instability as "leftist propaganda and pessimism" and defended Berlusconi's labor reforms as "opening new opportunities in Italy."

He blamed past governments for today's problems.

"We're still paying the price of the promises made by the generation that came out of 1968 - promises of secure, well-paid and creative employment - that cannot be maintained," Baldelli said. "That's an unrealistic dream machine. The truth is that people want concrete proposals."

In the rush before the elections April 9, both coalitions seem to be reaching out to young voters, at least on the streets. Last weekend, the National Alliance, the second-largest party in Berlusconi's coalition, held a rally, complete with rock bands, in the center of Milan, and mocked Prodi's plan to require a six-month civil service stint for all young Italians.

It is a tough call whether Italy or Germany has the worst case of the European sickness – that toxic brew of demographic collapse, an achievement-destroying welfare state and labor market, and the resulting desperate need for immigrants combined with profound hostility to same. (Ireland is surely the country most free of this disorder.) But that Mr. Prodi thinks that the solution is an army of conscripted temporary bureaucrats is surely a sign of how far the Italian left has traveled from the reality space that the rest of us inhabit. He would do better to propose that "all young Italians" be given a two-year exemption from having to pay any employment taxes or face any hiring restrictions for any businesses they start. But of course that is (a more extreme version of) what Mr. de Villepin has proposed in France, and look where it has gotten him.

Tuesday, March 28, 2006

Of Insulin and Freedom

I have been a Type I diabetic – what used to be called insulin-dependent or juvenile-onset diabetes – for 26 years. (Type I is an autoimmune disorder in which the body destroys its own insulin-producing cells, leaving the body with no capacity to make insulin. It is distinct from the far more common Type II diabetes, in which the body makes insulin but metabolizes it poorly.) When I first became ill in 1980 I was told not to lose hope, because a cure was five to ten years down the road. Several research dead ends and a quarter-century later, new diabetics are apparently still told that (it is a joke we tell among ourselves), but there is no denying that the treatment of the disease is far better now than then. In particular, several new generations of insulin have been introduced over the years that make the disease easier to manage. How those insulins got there, and what I have to go through to use them, is surprisingly informative about how our society has changed during that time.

In 1980 the only types of insulin were made from cows and pigs. They were imperfect substitutes for human insulin. But they had been around since the 1920s, in an age when Americans were still assumed to be grownups capable of running their own affairs, and so no one needed anyone’s permission to buy it. In the mid-1980s these insulins were pushed out by a superior product, human insulin made from genetically engineered bacteria (Humulin). If, as seems reasonable, human insulin is better for humans than insulin made from animals with hooves, this is a significant step forward. While it was correspondingly more expensive (something indispensable in giving companies an incentive to learn how to produce it in the first place, and unsurprising in any event given its greater value to patients), it was still available without having to seek anyone’s permission.

But a key weakness of all injected insulin was that it took a long time to be absorbed through the muscles and to start acting on sugar in the blood. And so if you took it when you ate, your blood sugar would soar far more than that of a healthy person for the first few hours after eating, and all that time the extra sugar would be coursing through the circulatory system, damaging blood vessels everywhere it went. A healthy person, in contrast, begins to produce insulin as soon as his insulin-producing cells detect elevated blood sugar. And so this was a significant problem, a major contributor to the terrible complications many diabetics suffer later in life from elevated blood sugar. The greatest breakthrough to address this problem in my lifetime occurred in 1996, when Lilly received approval for Humalog, an insulin that begins to take effect almost immediately, while also wearing off faster. A few years later Aventis created Lantus, an insulin whose effects are more uniform over 8-12 hours than the spiky pattern of the older longer-term insulins it is designed to replace. This enables better control of blood-sugar level during the overnight period, when it is nearly impossible to test.

Unfortunately, the America of the late 1990s was fundamentally different from that of 1980. In particular, it is impossible to purchase these newer insulins without the explicit permission of a doctor – a prescription, in other words. This has an immediate practical cost, in that if I take a trip and forget a bottle, or drop my last one from the refrigerator on the floor and shatter it, I am unable to replace it until I can consult my doctor and have him forward his permission to a pharmacist. In the meantime, if I have had enough foresight to store Humulin (which expires within 18 months and so must be replaced even if I've hardly used any and is in any event an inferior product) in the refrigerator I can use that instead. If not, I am without insulin until I can get some more. Either way, my diabetes is more poorly managed.

The whole history of insulin is emblematic of how a society ought to be structured but, increasingly, isn’t. First, note that its creation is a story of synergy between pure science and pure commerce. According to Wikipedia, the animal version of the hormone was synthesized and first tested by scientists at the U. of Toronto. But ultimately the reason diabetics could actually use it was because of its commercialization and distribution by Lilly. And so this reveals the indispensability of commerce and those dreaded drug multinationals in making sure that medical breakthroughs are actually available to those in a position to benefit from them. Even if drug companies conducted no research themselves (and of course they conduct a lot), breakthroughs like insulin would satisfy nothing other than scientific curiosity without their ability to marry buyers with the owners of the resources needed to produce what the buyers want. Note also that while Lantus was approved in 2000 in the U.S., it was not approved by the NHS in the U.K. until 2002, with corresponding deleterious effects on U.K. diabetics in the meantime. This is because, as the overlord of all U.K. public health care, consumer (i.e. patient) welfare is considerably far down the list of British government incentives. This is an example of how single-payer health care divorces the tradeoffs patients want to make (and would be willing to make if new medical innovations were introduced) from the providers of health care, a problem I have discussed elsewhere. Remember all this next time someone agitates for a single-payer system or against the scary monster known as “Big Pharma.”

But the most compelling lesson about insulin is what it says about our freedom to be responsible for ourselves, which Leviathan increasingly holds in contempt. There is simply no reason why I should have to get someone else’s permission (other than the seller’s) to acquire it, or most medicines. Humalog and Lantus generate medical problems (especially involving control and low blood sugar episodes) that are different only in kind rather than degree from those associated with their predecessors. But the presumption now is that medicine is something that only an Officially Licensed Medical Person is qualified to dispense. That Humalog and Lantus require prescriptions where older types of insulin do not is a function not of any intrinsic differences they possess but of the way our society has changed – in particular, its evolution toward one in which the presumption is now against freedom. I am a grownup, capable of deciding for myself whether I need to buy this insulin at this moment. The only reason older insulin is dispensed this way is because of its grandfathering in. Aspirin, which is now used (like, say, prescription statins) to prevent heart attacks but which is associated with Reye’s syndrome in children and excessive bleeding in adults, would never be available without a prescription if it were introduced today. In the story of the new insulins we see the transformation from a society of free people to a society of pleaders at the throne of the nanny state.

And this is a sign that the whole prescription system is probably out of control. There are some medicines, mostly those that can generate resistance by the microbes they combat and hence a much greater ultimate disease burden, that can clearly be restricted by prescription on grounds that misuse harms others. I am thinking here of such things as antibiotics and anti-HIV drugs. But any medicine that might harm only me should be available to me as I see fit. To be sure, many medicines that I misuse (or even use properly) could harm me. But I know that they could harm me, and I know my limitations – that I don’t know enough just from reading the popular press to know whether I should use them. I know, in other words, that I should consult a doctor over such matters, and will gladly do so before I begin gulping down pills left and right. In the meantime, the epidemic of prescription requirements serves as an entry barrier and an extra transaction cost, both of which drive up drug costs and hence less access to drugs, even as (more importantly) they confirm what we have become, a society where Bureaucrat Knows Best and citizens are simply children.

Monday, March 27, 2006

Economic Reform: Is Europe Blinking?

The Brussels Journal has an interesting post, based on a report from the “Flemish think tank” Work for All about Europe’s economic decline, and its relation to high taxes and public spending. There is nothing unfamiliar in it to readers of this blog, but the new data presented there are interesting.

Make no mistake about it, economic reform is one of the most pressing items on the European agenda - an issue of continued civilizational vitality. Note first that "Europe" is a big, diverse place -- economic reform has already paid off handsomely in Ireland and, depending on the credence one gives to official unemployment data, labor-market liberalization in the 1990s may have done the same in Holland, Denmark and Sweden. But I predicted last year that the central spine of Europe in which the need for reform is most acute – Germany, France and Italy – will ultimately turn away from it because the political pain is too high. In that post I was agnostic about the most likely outcome, but that prediction now may be closer to reality. The French prime minister, Dominique de Villepin, is under siege from huge numbers of protesters demonstrating several times a week against what must be judged to be trivial economic reform. He has proposed that in the first two years of employment workers under 26 may be discharged for any reason. This is radical stuff in France, even though (absent collective-bargaining agreements to the contrary) most Americans of any age can be so discharged.

And the country has turned out in force against it, with a general strike of huge numbers of public and private workers perhaps in the offing. What is worth noting is that the protesters have been led by college students, who (once they ultimately leave the campus, often later than Americans do) are far more likely to find work under the existing contract than those without degrees, and certainly than les beurs in the suburbs. So naturally the elite, cosseted section of French youth has little to gain from such a law. And those who would benefit from greater economic liberty are seldom as motivated to demonstrate in favor of it as those who believe (in ignorance of the idea that job destruction is the inseparable partner of job creation) that they will be harmed by it.

The most likely outcome is that Mr. de Villepin will lose this battle, and the cause of French economic reform will be pushed back at least one election cycle, perhaps permanently. France will thus join Italy, which appears poised next month either to elect Romano Prodi (who is a man of the European left and therefore unlikely to impose substantial reform) or re-elect Silvio Berlusconi (who tried but failed to impose it) in flinching at the critical moment. Germany, with its status-quo left/right government elected last year, will preserve the tepid reforms of the previous administration but not go much further.

In the post linked above I argued last year that the center of the EU-15 was at a critical juncture, because soon demographic realities –- an older, risk-averse population with no desire to trim pensions and health care or to liberalize labor law –- would make reform impossible. In turning away at this moment, France and Italy (and perhaps, ultimately, Germany) have perhaps answered that question. They have turned away in fear from the bridge that links them to a better future, and in so doing perhaps cemented their status as a declining civilization.

Tuesday, March 21, 2006

North Korea's Future Uncertain

North Korea is a country crippled by decades of Soviet-style central planning, leavened by a devastating cult of personality. Its policies have led to horrendous famine in recent years, with millions dying. Its economic madness has finally caught up to it, and its leader has recently authorized the creation of special economic zones where its impoverished citizens may engage in trading, particularly of agricultural products, and where foreign firms, mostly South Korean, may invest and take advantage of a docile and cheap work force.

We have seen this movie before. The last showing was China in the early 1980s. Its reforms began as just a dollop of experimentation in the countryside and in four special economic zones, where the usual Marxist rules were suspended. The most famous was Shenzhen, adjacent to Hong Kong, and it and the remainder of the coast powered what became the Chinese growth miracle. By liberating the Chinese people to achieve rapidly growing standards of living, the regime (certainly after the 1989 Tiananmen massacre) gave them an incentive to avoid for now the question (which will ultimately arrive) of greater political rights and an end to the Communist Party's strangehold on power.

So can North Korea duplicate this feat? Not for long, I think. The primary node of DRPK contact with the global economy is going to be South Korean firms, and doing business with them and the rest of the planet is going to require a certain amount of freedom of movement, much as it required the lifting of many Chinese emigration restrictions before. Whereas Chinese could go abroad and either stay there or still identify with the mother country, when North Koreans begin to link with the broader world around them they will notice that in some sense their country is superfluous. There is already a globally linked country full of competitive Koreans - South Korea. While the Chinese government can tap a reservoir of patriotism and claim to possess what Chinese once called the mandate of heaven because of its oversight of China's rising prosperity, power and prestige (and never underestimate the importance of the latter to a people used to decades of humiliation), once the DPRK abandons the cult of the Kim dynasty it has no claim to legitimacy.

And so I would predict that pressure on the Kim regime will come much faster than it has fallen on the Chinese communists. Here connection to the global economy really will foster (in short order) pressure on the regime to either end its oppression or to go extinct entirely, merging with South Korea. The ROK has always feared a rapid collapse of the North, resulting in a surge of impoverished refugees southward, but something similar - a poor but more prosperous and sophisticated DPRK populace demanding everything that their neighbors to the South already have - is coming. That of course will threaten the apparatchiki of the DPRK, all the way up to Kim Jong Il himself, and there is no telling how they would react to a threat to their power and corresponding perquisites. But given their cultural counterexample to the South and their powerful neighbor to the North, I cannot see how the DPRK leadership can avoid extinction. I suspect farsighted people in the South and China are already thinking about how to engineer a quiet ride into the sunset for the DPRK leadership (in the manner of East Germany or Poland rather than Romania). This would explain the increasing comfort the ROK government has with China, and the DPRK's desperate cultivation of the threat of its possession, proliferation and even use of nuclear weapons. Achieving the quiet retirement of the North will be a task calling for the highest diplomatic arts, but I would be very surprised if North Korea exists seven or eight years from now.

Wednesday, March 15, 2006

"I Hate You, You Hate Me..."

Gov. Rod Blagojevich has appointed a commission on hate crimes in the great state of Illinois, only to see it collapse in angry recriminations. The controversy involves whether those composing a report on “hate” are themselves “haters.”

It all began when one commission member, Sister Claudette Marie Muhammad of the Nation of Islam tribe, invited other commission members to hear a lecture by Louis Farrakhan. The speech was apparently garden-variety stuff from Rev. Farrakhan, that is to say nutty stuff about Jews. Here he is expounding on how Hollywood works, according to the excerpt from this source:

"These false Jews promote the filth of Hollywood that is seeding the American people. It's the wicked Jews, the false Jews, that are promoting lesbianism, homosexuality. It's wicked Jews, false Jews, that make it a crime for you to preach the word of God, then they call you homophobic."

The plot thickened when several commission members from the Jewish tribe resigned in part because Ms Muhammad refused to renounce either, depending on the telling, Mr. Farrakhan or his remarks. Commission member Rick Garcia, who apparently represents the gay/lesbian/bisexual/transgender/etc. tribe via an organization called Equality Illinois, said that Ms Muhammad was in fact a valuable commission member and that all members of his tribe would remain there. But another putative tribal spokesman, Rick Ingram of Stonewall Democrats, indicated she had to go, telling the Windy City Times that "[w]hen you combine her ridicule of her critics with her refusal to repudiate Farrakhan’s speech, it leaves us no choice but to conclude that she is in agreement, and there is no room on the Commission for anyone who represents a position advocating hate." Ms Muhammad has previously been quoted as pronouncing the whole controversy "ridiculous."

One almost pities Gov. Blagojevich for the mess he finds himself in -- you can't keep track of who hates whom without a scorecard. Almost pities, but not quite. The uproar is an eminently just punishment for his signing on to the agenda of tribal conflict, which places the imprimatur of the state on the notion that we are all doomed to squabble along tribal lines, and on the related notion that only Father Government, with his mighty, all-powerful commissions and hate-crimes laws, can guide us to peace. Indeed, Gov. Blagojevich himself almost assumed the role of the disappointed parent when he offered to mediate the grievances of his squabbling children.

This is all bunk. The only thing the government can do with respect to tribal grievances, beyond insuring that all tribal groups are equal before the law, is to aggravate them. Government is substantially about dispensing favors to various pressure groups, and as I have argued previously, the more such favors are dispensed on grounds of race, sex, sexual orientation, religion, etc., the more people will emphasize those characteristics when they are in the civic arena and the more intractable those differences will become.

The best thing Gov. Blagojevich could do to promote harmony among his state’s many tribal groups is to disband his commission immediately. The whole notion of hate crimes is based on a disturbing premise, that injuring or killing someone over his tribal identity is worse than injuring or killing him because, say, you want to steal his wallet. It is the injuring and killing that the state ought to deter, not the particular reason for the injuring or killing. There is an entire cottage industry devoted to documenting hate crimes, even though the criteria used are completely arbitrary. Is it a hate crime when someone seeks a victim of a particular race to rob? Will the police so classify it? Is it a hate crime when a convenience store owned by a racial or religious minority is vandalized? The industry devoted to documenting such instances and leveraging them into government payoffs via commissions, special tax privileges or government spending and the like has every incentive to say so, and every reason to be first in line to claim the valuable prize of official certification as a “hated” group. These commissions and the legislative remedies they generate will worsen the tensions among our rapidly multiplying tribes. The cliché is half-right: our diversity can be our strength, but so too in a society with a tribally obsessed state can it be our eternal curse.

Tuesday, March 14, 2006

The Arab Stock Market Crash

What started as a significant correction in Saudi stock values appears to be spreading to other Arab markets. Some of the gory details are contained in this report from Bloomberg. The Tadawul, the leading Saudi stock index, is down 28 percent since hitting an all-time high on Feb. 25. (This would be the equivalent of the Dow losing about 3080 points in the same period.) Less spectacular but still substantial declines are reported in Egypt, Kuwait and Dubai.

Given that price-to-earnings ratios had reached 40 for many Saudi stocks, this is not unexpected. (During the US NASDAQ boom, many P/E ratios were infinite for some years, in that many firms with rapidly increasing stock prices had never reported profits.) But this is not as helpful as it first seems: why should the ratios ever get to such stratospheric levels in the first place? (According to conventional wisdom, they historically average between 17 and 20.)

There are several things going on here. First, such events do not happen, contrary to conventional wisdom, because investors lose their minds -– either during the manic rise in prices nor the panicky selloff that follows. Theories that depict bubbles and crashes as irrational events always seem unpersuasive, in that they offer no reasons why investors would be sober-mindedly rational most of the time and then become unhinged only during bubble/crash episodes. Instead, during these times the market is doing what it always does -– assimilating each investor’s private information as revealed by his willingness to buy or sell at a given market price. The market-clearing price serves to assimilate all this information. This is known as the “efficient markets” hypothesis, and while it is far from a majority view among financial economists, it seems to me the only way to make systematic sense of investor behavior over time.

Rather, what drives these events must be some information setup that causes them to bid up the prices of a lot of assets across the board to very high levels before selling most of them. And this has to do with a particular combination of great potential (either because of a new technological development like information technology or because a developing country appears to be growing rapidly) and great uncertainty (in which the exact nature of how the new technology will eventually be used or what a country will eventually be good at remains to be learned). In such an environment, investors know that something truly groundbreaking is taking place, but the only way to be part of it is to buy some ticket, any ticket to this lottery. They thus collectively spread their bets across all assets while this uncertainty still exists. Eventually, a moment of clarification comes when some bets are now seen to be much better than others -– E-Bay, it turns out, is a great idea, dot-com high fashion with what consumers ultimately judge to be a terrible interface (Google to get some idea) is not.

So rationality holds out two possibilities for explaining the Arab crash, if we take for granted that much of what goes on economically in these countries is oil-driven. Some of these countries are awash in oil money because of surging prices in the last few years, and so either investors are betting that the oil windfall is over (although oil futures prices don’t suggest that as far as I know), or these countries have spent some of their money foolishly, and investors are suddenly passing a judgment on that. (Egypt, a non-exporter of oil, is admittedly harder to explain using this approach, although the economy is perhaps tremendously dependent on remittances from the Gulf states.)

But one canard about globalization-era financial crashes is clearly called into question: the idea that foreign investors, with their huge trading volumes and emotional overreactions, are to blame. This theory was trotted out to explain the East Asian crash of 1997 and others that followed. Economists such as Paul Krugman will still occasionally argue that developing countries opening up to these kinds of investors is a mistake, and will cite Malaysia, which is allegedly the fastest-growing economy since the crash in that part of the world despite bucking the consensus and keeping these global stock and bond traders at bay. As it happens, Malaysia is not the fastest-growing nation since 1997 among those that crashed back then (Thailand is), and in any event blaming the foreigner will not do here because at least some of these countries (certainly Saudi Arabia) substantially limit foreign participation. The Arab crash is not a foreign problem, but an Arab one. Whether it is a correction or a major rout is still an open question, but it calls even more into question the idea that a China turned bubble might escape because of their restrictions on incoming foreign portfolio investment and on taking Chinese yuan out of the country.

Thursday, March 09, 2006

Away for a Few Days

I will be attending a conference for a few days in Los Angeles. Blogging will be light if not nonexistent until early next week.

Do You Believe in (Canadian) Miracles?

Canada beat the U.S. in the World Baseball Classic yesterday, using a team with a lot of minor-league players. The sports media treated it as more or less the same as the first time the U.S. lost a game (one of many, as it turned out) in the World Basketball Championships, to Argentina in 2002 – in other words, as a stunning event. But the result is really less surprising, because baseball is more or less the second most unpredictable of the big four North American team sports (football, baseball, basketball, hockey), trailing only the NFL.

There are several ways to measure what sports economists call competitive balance. In one of the most popular measures, you define ideal competitive balance by assuming that the probability that a team will win any of its games is 0.5. This allows you to define what the standard deviation of team winning percentages would be. The more the actual deviation departs from this, the less balanced the league is. Another way is to look at how uniformly distributed league titles are. While the stereotype is that the big-payroll teams, especially the Yankees, win all the time, over the long term this is not true. The National League is the most balanced of all North American leagues in this respect, followed by the NFL and then the American League.

One could build a very simple model of how unpredictable various team sports are simply by invoking the number of players on the field. Basketball has the fewest, five, and so one randomly great player makes a big difference compared to other sports with more participants. Michael Jordan, Shaquille O’Neal or Bill Russell, in other words, makes a lot more difference than Hank Aaron or Jim Brown. European soccer, which also has a lot of players, is more predictable than all North American sports, according to a 2003 article by Stefan Szymanski in The Journal of Economic Literature. But in the North American leagues more steps are taken to address competitive imbalance: salary caps, reverse-order drafting, and more centralized distribution of television money to all teams more or less equally.

To the fans of teams who never win it all more competitive balance seems like something to applaud. But it ain’t necessarily so. First, teams in big markets with national fan bases make more people happy when they win than do small teams with only local followings, and so a purely utilitarian argument can be made for big-city dominance. Second, fans love to hate some other city’s winner almost as much as they love to love their own city’s. Hating the Yankees and the Lakers is part of being an MLB or NBA fan, and if they become just another team the league loses that aspect of its appeal.

One way for a team to improve its performance, if it can get away with it, is to have its players use performance-enhancing drugs. And yet fans generally consider this cheating, as Barry Bonds has known for some time, and leagues try to prohibit such practices. Given that players who use steroids, etc. have better production than those who don’t, and given that production and winning is a big part of what fans are paying for, why are such substances universally condemned rather than embraced? That is a mystery for another day.

In general I find the first real assessment of global baseball prowess fascinating, and already full of surprises -- Korea beating Japan, Canada beating the U.S., and the performance of the mysterious Cuban team. But I note that the sport is only popular in a few areas where the American cultural influence is overwhelming - Canada, the Caribbean, Latin America as far south as Venezuela and Colombia, and the Far East. The U.S. is a pretty fair exporter of sports, with baseball, basketball and volleyball popular well beyond our shores. But the all-time champion exporter of sports is Britain. Soccer is by far the world's most popular sport, and rugby, cricket, golf and the various racket sports are also extremely popular all over the world. While cricket is played at the highest level mostly in former British colonies, golf and soccer flourish everyhere.

Why? Soccer is one of the world's least capital-intensive sports: all you need is a ball and a way to mark off the goal area. This means that the world's most impoverished people can still play and excel at it. Baseball (and the other British and American sports mentioned) require far more capital stock - rackets, gloves, nets, etc. And so they don't appeal as much to impoverished societies (except in totalitarian states where the government invests a huge amount in international sport to create an artificial pride and distract everyone from the grimness around them). The only mystery is golf, which requires a full set of clubs and a lot of land but is still very popular. (I once heard that "golf" and "visa" are the only words that sound more or less the same in all the world's major languages.) But golf is a sport associated with middle- and upper-class aspirations, and so it may be appealing in rapidly growing countries so people can confirm to themselves that their country has made it. So in that sense even its popularity is reasonable to the economic mind.

Wednesday, March 08, 2006


Australia, it seems, needs sturdier toilets. Because Australians are getting fatter, the private group there that designs toilet-design standards is recommending that they be redesigned to hold more weight.

Australia is of course far from the biggest sinner in the global epidemic of obesity. That dubious distinction can be claimed by the U.S., which leads the OECD with an obesity rate of 30.6 percent. (Australia comes in at 21.7 percent.)

That we are getting fatter is painfully obvious to anyone of a certain age. Why? The economist starts from the widely accepted premise that weight gain is a function of an unfavorable change in calories in minus calories out. Calories out is a function of exercise, and calories in is a function of diet. But the economist then turns to the incentives to consume more calories or work them off.

With respect to calories out it is true that people in many societies now have a lifestyle that involves less physical exertion. In rich countries physically demanding farm and factory labor has been replaced by sitting at a desk all day. Sitting in a car or on a train has replaced walking, and so on. The ultimate things of value here – getting to work and earning income – are done in a way that spends fewer calories. In many ways this is a thing to be applauded, in that we can work farther than ever from home, we can get work done on the train or even in the car, and we can listen to the radio, chat with carpoolers or otherwise enhance the commuting experience. But it comes at a cost with respect to calorie burning.

But it is some of the changes on the "calories in" side that have gone most unappreciated in discussions of rising obesity rates. The most basic relation in economics is the law of demand, which says that consumers demand more as price declines. That is as true for calories as any other things of value, and it turns out that calories are simply cheaper than they have ever been.

Seen in this light, it turns out that many of the usual suspects, especially fast food, fall by the wayside. It is true that restaurant portions in general are huge in the U.S. compared to thirty years ago. But it is also true that had those portions been offered thirty years ago they wouldn’t have sold, both because Americans couldn’t eat it all and because they couldn’t take the uneaten portion home to be consumed before they went to bed. Either an increase in obesity (which makes us want more food) or an improvement in food-storage technology almost had to causally precede bigger portions – huge portions occurred because we were fatter, not the other way around. There has been a huge range of technological innovations in recent years that have all served to make calories cheaper. Better food packaging and cheaper and better vending machines enable the latter to be more common, which in turn enables midday snacks, an apparently large portion of increased calories in recent years. (If you are old enough consider how ubiquitous these machines and how big the containers within them are compared to several decades ago.) The replacement of sugar (more expensive to produce both intrinsically and because sugar protectionism keeps out cheap foreign sugar) with corn syrup made the 32-oz. soda a going proposition. (Soda in particular provides pleasant tastes while having no nutritional value, and so is likely to be a significant contributor.)

The net effect of all of this is that calories require less sacrifice to obtain, and so we consume more of them. When looking to the obesity epidemic, do not blame Ronald McDonald, whatever Eric Schlosser says in his bestseller Fast Food Nation. Instead, blame the microwave oven, Styrofoam packaging (which enables the storage of food that would otherwise have never been served in the first place), cheap corn, and bigger and better refrigerators and food-packaging technology. In short, blame incentives. It may be that because of greater wealth and greater food-related technological progress we may reach a point where the only folks who aren't fat are those who are either genetically protected or forced to exercise a lot in the course of their daily lives.

Monday, March 06, 2006

A Talib Goes to Yale

Yale University has admitted a man named Sayed Rahmatullah Hashemi into a non-degree program, with the possibility of being admitted to the regular undergraduate curriculum. He is an unusual applicant in that apparently his formal education ended at the fourth grade, and he has never taken the SAT. But what is most unusual about him is that he is former deputy foreign secretary for the Taliban government of Afghanistan.

He applied in 2004 at the suggestion of an American photojournalist, Mike Hoover. (The world first learned of this in a New York Times magazine article on Feb. 26. If you have Times access it is available here, and the Times is available on Lexis/Nexis and several other databases.) He is by all accounts still devout, but not obviously a jihadi anymore. Officials at Yale are apparently delighted to have him. Richard Shaw, their dean of undergraduate admissions, told the New York Times that "We lost him to Harvard. I didn't want that to happen again." His primary virtue, according to Dean Shaw, is that he is someone who “is a person to be reckoned with and who could educate us about the world.” (These virtues are not shared by military recruiters and students who join the ROTC, both of which are barred by Yale Law School and the whole university respectively.)

The enthusiasm of Yale is a striking sign of the times. Had an official of, say, the Nazi Romanian puppet government been offered admittance to Yale after the government’s overthrow but before the end of the war there would almost certainly have been nationwide outrage. That Yale so quickly saw Mr. Hashemi as an asset rather than a liability suggests a couple of things. First, the notion of an “enemy” is one that Dean Shaw and those who see the world as he does find difficult to accept. One can be from an enemy regime with medieval attitudes toward women, gays and living peacefully with people of other religions, but if one is sufficiently thoughtful one moves beyond that.

Not that there’s anything wrong with that. The admission decision also suggests a belief in a particular sort of universalism, the idea that in some senses we are all the same – united by pursuit of self-interest (as economists assume), by class loyalty the inevitability of history (as Marxists once had it) or, here, by the ability to share sharply different ideas in an atmosphere of reason and to emerge more enlightened and more respectful of one another. Indeed as a state-of-the-art Western university Yale itself is a veritable temple to this idea. So devoted is it to the modern sensibility that any outrageous regime or ideology looks reasonable when refracted properly through its culture’s own belief system that Gustav Ranis, a distinguished economist there, once organized a debate in which Mr. Hashemi participated that had the incongruous title of “The Taliban: Pro and Con.” (The "Pros" of the Taliban do not jum immediately to mind, but that of course is not the point.)

Indeed, if Dean Shaw's remark above is to be believed his primary virtue is not even that but that he will help to relieve the Yale community of its ignorance. That Yale is believed to be more in need of enlightenment than, say, Pakistani madrassas is an idea that takes some getting used to, but such is the nature of the American academy these days. It is believed, presumably, that the primary gift of a Yale degree for Mr. Hashemi will be in his return to his native land inculcated with the virtues of tolerance, and in a position to help reorient the faithful in Afghanistan toward an ideology more consistent with sharing the planet peacefully with people of other faiths than his.

But one wonders. The founding father of modern radical political Islam is often said to be Sayyud Qutb, the Egyptian who wrote several tracts on Islam as political ideology. He spent time in the late 1940s on scholarship at what is now the University of Northern Colorado. But, alas, while here he was not drawn to the “Can’t we all get along?” school of cultural dialogue. Rather, he was repulsed far more than impressed by what he saw. In his eyes American racism was everywhere, and the primitive music of jazz as well as sock hops and the flirtatious behavior of young men and women at church dances were repugnant to him. These experiences would influence his writings upon his return, and those writings were instrumental in creating generations of acolytes who today can be found at the top rank of institutions such as Al Qaeda. So too previous generations of Japanese who went abroad in the years after Commodore Perry rammed his fleet into Tokyo Harbor went more to strengthen their own state rather than in pursuit of international harmony. And Japan’s ultimate conversion to the virtues of the open society came not through persuasion but through defeat and occupation by about half a million Allied soldiers.

The question Europe wonders about now as it sees its filmmakers getting their throats slashed in broad daylight, its authors and cartoonists receiving death threats and some of its parliamentarians under occasional military protection is whether there must be tolerance for intolerance. It is an interesting question whether the desire to live peacefully with the other is so overwhelming that mere sustained exposure to it is more often than not sufficient to dislodge a prior, perhaps primitive hostility. But the idea of the liberal society open to all comers depends on it. The modern West appears to have gambled on the notion that a cornerstone of its own culture – that truth emerges from vigorous contention of ideas, and that proponents of losing ideas accept their defeat graciously – is so strong that not only can it withstand such challenge from the billions around the globe who do not share this belief at present, but that taking it to its limits will eventually persuade them.

Thursday, March 02, 2006

Campaign-Finance "Reform" Takes a Beating

In oral arguments over Vermont’s law sharply restricting campaign donations (Randall v. Sorrell), newly minted Chief Justice John Roberts took William B. Sorrell, Vermont’s attorney general, to the woodshed (from the SCOTUS blog):

Q (Justice Roberts): “How many prosecutions have you had for political corruption in Vermont?”

A (Mr. Sorrell): “Not any.”

Q: “Is political corruption a problem in Vermont?"

A (paraphrased): 70 percent of the citizens think so.

Q: "Would you describe your state as clean or corrupt?"

A: No one has gone to jail (paraphrase), but "the threat of corruption in Vermont is far from illusory."

In this brief exchange Chief Justice Roberts demonstrates the absurdity of campaign-finance reform. Allegedly it promotes corruption, but no one – not Sen. McCain, not Rep. Meehan, no one – is willing to say that in a particular instance money bought a result. Campaign-spending limits are not about corruption, but about increasing the probability that legislatures will achieve some outcomes and not others.

I assume that in politics money commonly buys results, but so what? Money allegedly destroys “democracy,” because the rich have more influence than the poor. All voters should be equal, the argument goes. But this is silly. Money is one of many resources that can be translated into political pressure. To focus only on it is to unfairly subsidize certain forms of political activism and to tax others. It is true that a corporation (or a union, or a rich financier like the lefties George Soros or Jon Corzine, the governor of New Jersey who funded his own campaign) with a lot of money can use it to buy influence. It’s also true that people with a lot of free time to devote to writing letters, knocking on doors, running pressure groups for little pay, etc. can also use their cheap time to gain disproportionate influence. Ultimately, money is simply one input among many in the generation of political pressure, and there is little evidence that it is more important than time or others that citizens might bring to bear. But no one proposes, for example, that in conjunction with ceilings on money spent influencing elections citizens should be prohibited from spending more than a certain number of hours per week engaging in political activity.

There is no way that every citizen’s voice can be equalized. Citizens have different resources they can bring to the political-pressure game, and there is no just reason to arbitrarily limit the force of only one, money. Such restrictions also violate what seems to me to be a fundamental right of citizens to defend themselves against government redistribution, even if it sometimes results in redistribution toward those citizens who spend the most money. The core problem, of course, is that the government is in a position to do so much redistributing to begin with. It is also true that campaign-finance limits amount to the erection of entry barriers for the protection of incumbents, with corresponding toxic effects on the Republic. But another primary reason to oppose them is that they are simply unfair, restricting some ways of generating political pressure and not others.

Chief Justice Roberts is still an unknown quantity, but at least in this instance I love what I’ve seen so far.