Government – Page 132 – artdiamondblog.com

“The Black Hole of Agriculture”: “People Love Free Money”

(p. A17) WASHINGTON — Americans are in sticker-shock over grocery prices, while people in developing countries are rioting over food shortages. And across the heartland, American farmers are enjoying record incomes, but losing sleep over rising expenses and turbulence in the commodity futures markets.
Here on Capitol Hill, though, it is pretty much farm politics as usual.
As Congress works toward final passage of the farm bill, it is poised to continue most of the existing farmer subsidy programs, including about $5.2 billion a year in so-called “direct payments” that will be disbursed even as net farm income is projected to hit a historic high in 2008.
The farm bill, which comes along once every five years and will cost upward of $300 billion, in fact will do little to address many of the most pressing concerns. It will not change biofuel mandates that are directing more corn to ethanol and contributing to a global rise in food prices.
. . .
But even strong proponents of the bill, like Senator Tom Harkin, Democrat of Iowa and chairman of the Agriculture Committee, concede that farm interests are deeply entrenched and that there is little appetite for change among many farm state lawmakers, especially when it comes to the direct payment program.
The direct payments are based on the amount of land that certain farmers own, and Mr. Harkin, who has sought to eliminate the payments, said that many recipients of the money then use it to acquire more land and qualify for more payments.
“It’s like the black hole in space that astronomers talk about: everything gets sucked in and nothing ever comes out,” he said. “This is the black hole of agriculture. It doesn’t make sense, but farmers continue to get it.”
Mr. Harkin said there was not much he could do because “I don’t have the votes,” adding, “People love free money.”

For the full commentary, see:
DAVID M. HERSZENHORN. “NEWS ANALYSIS; Farmers’ Income Rises, as Do Food Prices, but It’s Mostly Politics as Usual.” The New York Times (Thurs., April 24, 2008): A17.
(Note: ellipsis added.)

Why Most Economists Oppose the Gas Tax Holiday

(p. A31) Most economists oppose the Clinton-McCain gas tax holiday because they can’t see how consumers will benefit. In fact, “most” is an understatement; when challenged to name one economist willing to back her plan, Mrs. Clinton’s response was to disparage the whole profession.
Why are economists so opposed? In the short run, the supply of gasoline is basically fixed; it takes a while to build a new refinery. The demand for gasoline, in contrast, is more responsive to price; we’re already seeing greater use of public transportation and brisk sales of fuel-efficient cars. When you combine fixed supply with flexible demand, it’s suppliers, not demanders, who pocket the tax cut. That’s Econ 101.
. . .
When the public rejects the mundane explanations for high gas prices — big boring facts like rapid Asian growth — politicians aren’t going to correct them. The best we can expect is for Washington to try to channel the public’s misconceptions in relatively harmless directions. We could do a lot worse than the gas tax holiday; in fact, we usually do.

For the full commentary, see:
BRYAN CAPLAN. “The 18-Cent Solution.” The New York Times (Thurs., May 8, 2008): A31.
(Note: ellipsis added.)

Franklin Roosevelt Exposed in The Forgotten Man

Source of book image: http://blog.syracuse.com/shelflife/forgotten.jpg

Amity Shlaes’s new history of the Great Depression is at once depressing and encouraging. It is depressing in showing how vulnerable human progress is to the threat from a dishonest, slick orator, who has not a clue about how the economy works. It is encouraging in that it shows so clearly that the length and depth of the Great Depression was due to easily avoidable mistakes in policy, rather than due to some fundamental flaw in capitalism, as has occasionally been claimed.
Although the book does not shy away from pointing out the flaws of Coolidge, Hoover and Willke, it mainly shows how F.D.R.’s routine whimsical policy reversals and double-dealings, alienated not only his original opponents, but many of his early friends and allies.
The New Deal policies to seize business profits, reduced business incentives to take risks: if the risks turned out badly, the business would lose the investment, while if the risks turned out well, the profits would be taxed away by the federal government.
In addition, the sheer unpredictability of New Deal policies further led the prudent to delay investments, thereby further impeding recovery.
The book is well-written, and should be equally well-read.

The reference for the book is:
Shlaes, Amity. The Forgotten Man: A New History of the Great Depression. New York: HarperCollins, 2007.

Freeing Medical Entrepreneurship Could Speed Cures

Medical entrepreneur Tom Harold. Source of photo: http://www.scyfix.org/management.php

(p. 1D) ScyFix, a Chanhassen, Minn., startup, has developed a device it claims treats diseases such as glaucoma and macular degeneration by shooting electric currents into the eye. The company, which is conducting clinical trials in India and the United States, hopes to sell the first device approved by the Food and Drug Administration designed to restore eyesight.
“To me, this is the pacemaker for the eye,” said Dr. Darrell DeMello, ScyFix president and a former executive at Boston Scientific Corp.
ScyFix hopes to eventually raise $60 million to $70 million to finish its clinical trials.
. . .
(p. 2D) Thomas Harold first came up with the idea for ScyFix in 2002. An Internet entrepreneur and a former executive at General Mills, Harold became interested in studies that showed electricity could restore sight. Drugs, however, could only slow the effects of some diseases.
. . .
Specifically, the studies showed electricity could stimulate the production of neurotrophins, a family of proteins that can instruct optic nerve, retinal neurons and photoreceptor cells not to die. In addition, neuromodulation can also repair cell membranes, allowing cells to absorb nutrients, release wastes, improve blood flow to the eye and rewire faulty nerve connections.
Working with doctors and engineers, Harold, who has no medical background, developed a device that releases low-intensity electric currents into the eyelids through electrodes. A complex mathematical equation programmed into the device controls the amount and frequency of the electricity. Patients can administer the treatment at home twice a day for 20 minutes.
Harold says he is encouraged by the results so far: Since 2002, the device has halted progression of diseases in 95 percent of the 1,000 patients tested in 29 countries, according to ScyFix.
“Everything stopped getting worse,” Harold said. “That was a win in itself.”
In addition, 80 percent of the patients reported vision improvement. There were no side effects, the company said.

For the full story, see:
Lee, Thomas (The Star Tribune). “‘Pacemaker’ for eyes shows initial promise.” Omaha World-Herald (Sunday, March 9, 2008): 1D & 2D.
(Note: ellipses added.)

Below I have pasted a couple of paragraphs from the ScyFIX web site. Note that Europeans are free to try the therapy, if they so desire. But citizens of the United States are not free to try the therapy, due to the regulations of the Food and Drug Admininstration (FDA) of the U.S. government.

Buy ScyFIX 600 and Accessories on-line!
Welcome to ScyFIX international web shop where you can order products, choose payment method, including a secure on-line credit card payment service (SSL), and check your delivery status on-line. Buying on-line is safe and easy and you will be guided all the way. All prices are in € (Euro). Place your order and your credit card company will convert the amount in € to your own currency. We accept Visa, Master Card, EuroCard and most bank cards connected to VISA or Master Card. Follow the instructions to take you through the pages, and then onto a secure site in which you will input your credit card and shipping details. When bank authorization has been attained, you will get a confirmation on-line, as well as a confirming e-mail. If at any stage you wish to change your order, just click the “Remove”-button.
Please note that ScyFIX can not ship devices to US addresses, until the ongoing FDA trials have resulted in an approval to market the product in the USA. US customers who mistakenly order and pay for a therapy kit over the web, will be contacted and refunded. However, ScyFIX will deduct 100€ (Euros) covering banking fees and handling costs. If you are a US resident and want to know more about our therapy, please send an inquiry by e-mail to our European office support@scyfix.org, or fill in your personal information in our Clinical Trial & Purchase Interest Form by clicking here www.scyfix.org/clinical_trial_form.htm.

The paragraphs were accessed on 3/9/08 from:
http://www.scyfix.org/shop/

Hoosiers Were Right to Be Behind the Times

I am a Hoosier by birth and upbringing, and I am not ashamed to admit it, in spite of the fact that “hoosier” is a pejorative in some circles.
Until recently, in Indiana we swam against the tide, in rejecting Daylight Savings Time. It never made sense to me that in order to take advantage of sunlight, the government needed to mandate that the clocks be changed twice a year.
Why couldn’t those who want to use the hours of sunlight differently, simply adjust their own schedules, for example, by getting up earlier or later?
Well the article quoted below, suggests that us Hoosiers may have been wiser than we knew.

(p. D1) For decades, conventional wisdom has held that daylight-saving time, which begins March 9, reduces energy use. But a unique situation in Indiana provides evidence challenging that view: Springing forward may actually waste energy.
Up until two years ago, only 15 of Indiana’s 92 counties set their clocks an hour ahead in the spring and an hour back in the fall. The rest stayed on standard time all year, in part because farmers resisted the prospect of having to work an extra hour in the morning dark. But many residents came to hate falling in and out of sync with businesses and residents in neighboring states and prevailed upon the Indiana Legislature to put the entire state on daylight-saving time beginning in the spring of 2006.
Indiana’s change of heart gave University of California-Santa Barbara economics professor Matthew Kotchen and Ph.D. student Laura Grant a unique way to see how the time shift affects energy use. Using more than seven million monthly meter readings from Duke Energy Corp., covering nearly all the households in southern Indiana for three years, they were able to compare energy consumption before and after counties began observing daylight-saving time. Readings from counties that had already adopted daylight-saving time provided a control group that helped them to adjust for changes in weather from one year to the next.
Their finding: Having the entire state switch to daylight-saving time each year, rather than stay on standard time, costs Indiana households an additional $8.6 million in electricity bills. They conclude that the reduced cost of lighting in afternoons during daylight-saving time is more than offset by the higher air-conditioning costs on hot afternoons and increased heating costs on cool mornings.
“I’ve never had a paper with such a clear and unambiguous finding as this,” says Mr. Kotchen, who presented the paper at a National Bureau of Economic Research conference this month.

For the full story, see:
JUSTIN LAHART. “Daylight Saving Wastes Energy, Study Says.” The Wall Street Journal (Weds., February 27, 2008): D1 & D4.

Government Supported Biofuels Increase Global Warming

Source of graph: online version of the WSJ article quoted and cited below.

(p. A4) While the U.S. and others race to expand the use and production of biofuels, two new studies suggest these gasoline alternatives actually will increase carbon-dioxide levels.
A study published in the latest issue of Science finds that corn-based ethanol, a type of biofuel pushed heavily in the U.S., will nearly double the output of greenhouse-gas emissions instead of reducing them by about one-fifth by some estimates. A separate paper in Science concludes that clearing native habitats to grow crops for biofuel generally will lead to more carbon emissions.
The findings are the latest to take aim at biofuels, which have already been blamed for pushing up prices of corn and other food crops, as well as straining water supplies. The Energy Department expects U.S. ethanol production to reach about 7.5 billion gallons this year from 3.9 billion in 2005, encouraged by high prices and government support. The European Union has proposed that 10% of all fuel used in transportation should come from biofuels by 2020.
Some scientists have praised biofuels because growing biofuel feedstock would remove gases that trap the sun’s heat from the air, while gasoline and diesel fuel take carbon from the ground and put it in the air. However, some earlier studies didn’t account for one hard-to-measure factor: the decision by farmers world-wide to convert forest and grasslands to grow feedstock for the new biofuels.
. . .
[One] study’s funding came from the National Science Foundation and the University of Minnesota’s Initiative on Renewable Energy and the Environment, . . . The other paper relied on funding from various indirect sources, including the Hewlett Foundation and the Agriculture Department.

For the full story, see:
GAUTAM NAIK. “Biofuels Hold Potential for Greater Levels of CO2; Land Use for Crops May Cancel Out Benefits of Use.” The Wall Street Journal (Fri., February 8, 2008): A4.

(Note: ellipses added; and bracketed word added.)
(Note: the somewhat different title of the online version was “Biofuels May Hinder Antiglobal-Warming Efforts; Carbon Emissions Could Increase As Land-Use Shifts.”)

Federal Subsidies for “Those Who Choose to Live Far from a City”

Source of graphic: the online version of the Omaha World-Herald article quoted and cited below.

(p. 1A) WASHINGTON — Opponents of federal air travel subsidies make two points: that subsidized airports are relatively close to regular commercial air service and subsidized flights are used by only a few people a day.
Both are true in Nebraska.
For example, U.S. taxpayers spend nearly $1.4 million a year so that fewer than two dozen travelers a day, on average, can fly out of Grand Island rather than drive the 100 miles to Lincoln.
Taxpayers also chip in $748,635 annually to maintain two daily flights from Alliance to Denver, even though only about a half dozen people a day board the planes.
. . .
(p. 2A) Groups such as Taxpayers for Common Sense and Citizens Against Government Waste say that although the subsidies might have made sense 30 years ago, to prevent communities from losing air service overnight, people know what they’re getting into today if they choose to live far from a city with regular air service.
It’s a matter of prioritizing public spending, said Steve Ellis, vice president of Taxpayers for Common Sense.
“People have the right to food and clean water,” Ellis said. “We don’t need to make sure it’s a chicken in every pot and air service in every community.”

For the full story, see:
JOSEPH MORTON. “Rural travel subsidies still up in the air.” Omaha World-Herald (Sunday, February 24, 2008): 1A & 2A.
(Note: ellipses added.)

Federal spending on Essential Air Service
——————————————————————————–
Year   # of communities    Total funding for subsidies *
1998   101   $50
1999   100   $50
2000   106   $50
2001   115   $50
2002   123   $113
2003   126   $101.3
2004   140   $101.7
2005   146   $101.6
2006   151   $109.4
2007   145   $109.4
2008   142   $125
*Figures in millions
Source of data: Government Accountability Office; U.S. Department of Transportation
Source of version of table above: very slightly modified from the online version of the Omaha World-Herald article quoted and cited above.

The Inefficiency of Zoning Laws

“It may not look like much, but the opening of this casino, for one day only, let its owner keep a crucial zoning designation.” Source of the caption and photo: online version of the NYT article quoted and cited below.

(p. A11) For eight hours on Tuesday, Station Casinos opened a nondescript 40-by-10-foot trailer on a vacant 26-acre plot about six miles east of the Strip with just 16 slot machines. The sole purpose was to comply with a state law that requires public gambling to occur on a property for at least one shift every two years in order for the landowner to retain the valuable zoning designation needed to conduct wagering.
. . .
As of midday, nobody but reporters had turned out for the event, which had been publicized by only a few bloggers on the Internet. The biggest payout on the bank of video poker and blackjack machines was $2.50.
. . .
The opening of the nameless temporary casino, which the local newspaper dubbed Trailer Station, was rich in red tape, including seven permits, approvals from the City Council and the Nevada Gaming Control Board, and a certificate of occupancy.
As required by the city code, the trailer, brought onto the land just for the day, came complete with a portable toilet outside and, to comply with the Americans With Disabilities Act, a wheelchair-accessible entrance. A casino floor manager sat at one end of the narrow room ready to pay out winnings should there be any, a security guard patrolled outside, and two city zoning officers visited for 20 minutes to inspect and fill out paperwork.

For the full story, see:
STEVE FRIESS. “If This Happens in Vegas, It Can Sure Stay in Vegas.” The New York Times (Weds., January 9, 2008): A11.
(Note: ellipses added.)
“A floor manager watched over 16 slot machines Tuesday, but there was hardly a rush on them.” Source of the caption and photo: online version of the NYT article quoted and cited above.

“Frustration Opens the Door to Religiosity”

“Ahmed Muhammad Sayyid, center, praying at a Cairo mosque, has drawn religion closer after many disappointments.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) Here in Egypt and across the Middle East, many young people are being forced to put off marriage, the gateway to independence, sexual activity and societal respect. Stymied by the government’s failure to provide adequate schooling and thwarted by an economy without jobs to match their abilities or aspirations, they are stuck in limbo between youth and adulthood.
“I can’t get a job, I have no money, I can’t get married, what can I say?” Mr. Sayyid said one day after becoming so overwhelmed that he refused to go to work, or to go home, and spent the day hiding at a friend’s apartment.
In their frustration, the young are turning to religion for solace and purpose, pulling their parents and their governments along with them.
. . .
The wave of religious identification has forced governments that are increasingly seen as corrupt or inept to seek their own public redemption through religion.
. . .
(p. 11) Depression and despair tormented dozens of men and women in their 20s interviewed across Egypt, from urban men like Mr. Sayyid to frustrated village residents like Walid Faragallah, who once hoped education would guarantee him social mobility. Their stifled dreams stoke anger toward the government.
“Nobody cares about the people,” Mr. Sayyid said, slapping his hands against the air, echoing sentiment repeated in many interviews with young people across Egypt. “Nobody cares. What is holding me back is the system. Find a general with children and he will have an apartment for each of them. My government is only close to those close to the government.”
. . .
Mr. Sayyid’s path to stalemate began years ago, in school.
Like most Egyptians educated in public schools, his course of study was determined entirely by grades on standardized tests. He was not a serious student, often skipping school, but scored well enough to go on to an academy, something between high school and a university. He was put in a five-year program to study tourism and hotel operations.
His diploma qualified him for little but unemployment. Education experts say that while Egypt has lifted many citizens out of il-(p. 12)literacy, its education system does not prepare young people for work in the modern world. Nor, according to a recent Population Council report issued in Cairo, does its economy provide enough well-paying jobs to allow many young people to afford marriage.
Egypt’s education system was originally devised to produce government workers under a compact with society forged in the heady early days of President Gamal Abdel Nasser’s administration in the late 1950s and ’60s.
Every graduate was guaranteed a government job, and peasant families for the first time were offered the prospect of social mobility through education. Now children of illiterate peasant farmers have degrees in engineering, law or business. The dream of mobility survives, but there are not enough government jobs for the floods of graduates. And many are not qualified for the private sector jobs that do exist, government and business officials said, because of their poor schooling. Business students often never touch a computer, for example.
On average, it takes several years for graduates to find their first job, in part because they would rather remain unemployed than work in a blue-collar factory position. It is considered a blow to family honor for a college graduate to take a blue-collar job, leaving large numbers of young people with nothing to do.
“O.K., he’s a college graduate,” said Muhammad el-Seweedy, who runs a government council that has tried with television commercials to persuade college graduates to take factory jobs and has provided training to help improve their skills. “It’s done. Now forget it. This is a reality.”
But more widespread access to education has raised expectations. “Life was much more bearable for the poor when they did accept their social status,” said Galal Amin, an economist and the author of “Whatever Happened to the Egyptians?” “But it is unimaginable when you have an education, to have this thought accepted. Frustration opens the door to religiosity.”

For the full story, see:
MICHAEL SLACKMAN. “Generation Faithful; Dreams Stifled, Egypt’s Young Turn to Islamic Fervor.” The New York Times, First Section (Sun., February 17, 2008): 1 & 11-12.
(Note: ellipses added.)
Source of graphic: online version of the NYT article quoted and cited above.

Entrepreneur Calls 2008 “The Year of the Spaceship”

Burt Rutan’s current design for WhiteKnightTwo, carrying the smaller SpaceShipTwo spaceship. Source of image: http://www.techno-science.net/?onglet=news&news=4993

(p. A18) Virgin Galactic, the company that hopes to fly well-heeled tourists to the edge of space by the end of 2009, provided a peek Wednesday at the craft that will take them there.
During a news conference at the American Museum of Natural History in Manhattan, Richard Branson, the British entrepreneur whose Virgin Airways is the parent company of the project, said 2008 would be “the year of the spaceship.”
Mr. Branson showed models of two vehicles, both created by the airplane designer Burt Rutan. WhiteKnightTwo, a two-fuselage, four-engine plane, is designed to ferry a smaller spacecraft, SpaceShipTwo, high into the sky and release it. The pilot of SpaceShipTwo will then fire the craft’s rocket engine, which burns a combination of nitrous oxide and a rubber-based solid fuel, shooting the vehicle to an altitude of more than 62 miles into the realm of black sky.

For the full story, see:
JOHN SCHWARTZ. “Built to Fly Into Space With the Greatest of Ease (They Hope).” The New York Times (Thurs., January 24, 2008): A18.

Artist’s rendering of SpaceShipTwo spaceship. Source of image: http://www.techno-science.net/?onglet=news&news=4993

Non-Market Health Care Pricing Results in Health Care Shortages

(p. A22) When my Labrador retriever became acutely lame, we were able to locate a veterinary orthopedic expert in Atlanta within 48 hours who was able to repair a ruptured tendon within one week. But my prospects of identifying an endocrinologist who can care for my daughter’s diabetes when she turns 18 are much less promising.
The limited number of endocrine specialists is a not a consequence of limited demand — everyone is aware of the epidemic of diabetes we are facing. There are also shortages of generalists and other specialists, and the reason is the absence of market signals — i.e., market-based prices — for influencing the supply of physicians in various specialties.
The roots of this problem lay in the use of administrative pricing structures in medicine. The way prices are set in health care already distorts the appropriate allocation of efforts and resources in health care today. Unfortunately, many of the suggested reforms of our health care system — including the various plans for universal care, or universal insurance, or a single-payer system, that various policy makers and Democratic presidential candidates espouse — rest on the same unsound foundations, and will produce more of the same.
. . .
One important lesson of the 20th century is that, while markets are far from perfect, more choices are available when people are able to use free markets to interact with each other. Markets may not get the prices exactly correct all the time, but they are capable of self- correction, a capacity that has yet to be demonstrated by administrative pricing.
It tells you something when the supply of and demand for specialist veterinary care is so easily matched when the prices of these services are established on the market — while shortages and oversupplies are common for human medical care when the prices of these services are set by administrators in the public sector. Will health-care reformers — and American citizens — get the message?

For the full commentary, see:
Robert A. Swerlick. “Our Soviet Health System.” Wall Street Journal (Tues., Jun 5, 2007): A22.
(Note: ellipsis added.)