Regulations – Page 68 – artdiamondblog.com

Process Innovations, Allowed by Deregulation, Creatively Destroyed Railroads

(p. A11) In “American Railroads: Decline and Renaissance in the Twentieth Century,” transportation economists Robert E. Gallamore and John R. Meyer provide a comprehensive account of both the decline and the revival. . . . They point to excessive government regulation of railroad rates and services as the catalyst for the industry’s decay.
. . .
. . . deregulation, Mr. Gallamore and Meyer demonstrate, was a process of creative destruction. Conrail was created by the government in 1976 in a risky, last-ditch attempt to rescue Penn Central and other bankrupt Eastern railroads. It was quickly losing $1 million a day, and its plight helped make the case for the major revamp of railroad regulation that came in 1980. A wave of mergers followed, and the new companies slashed routes and employees on the way to profitability. The shrinking of the national rail system helped, too, as freight companies consolidated traffic on a smaller (and therefore cheaper) network. Freight-train crews were cut to two or three people from four or five. Cabooses were replaced by electronic gear at the end of freight trains.

For the full review, see:
DANIEL MACHALABA. “BOOKSHELF; Long Train Runnin’; Track conditions got so bad in the 1970s that stationary freight cars were falling off the rails thanks to rotting crossties.” The Wall Street Journal (Weds., July 9, 2014): A11.
(Note: ellipses added.)
(Note: the online version of the review has the date July 8, 2014, and has the title “BOOKSHELF; Book Review: ‘American Railroads’ by Robert E. Gallamore and John R. Meyer; Track conditions got so bad in the 1970s that stationary freight cars were falling off the rails thanks to rotting crossties.”)

The book under review is:
Gallamore, Robert E., and John R. Meyer. American Railroads: Decline and Renaissance in the Twentieth Century. Cambridge, MA: Harvard University Press, 2014.

Flexibility of System of Industrial Relations Makes German Economy Strong

(p. 183) We have argued that the remarkable transformation of the German economy from the “sick man of Europe” to a lean and highly competitive economy within little more than a decade is rooted in the inherent flexibility of the German system of industrial relations. This system allowed German industry to react appropriately and flexibly over time to the demands of German unification, and the global challenges of a new world economy.

Source:
Dustmann, Christian, Bernd Fitzenberger, Uta Schoenberg, and Alexandra Spitz-Oener. “From Sick Man of Europe to Economic Superstar: Germany’s Resurgent Economy.” Journal of Economic Perspectives 28, no. 1 (Winter 2014): 167-88.

Lynas Apologizes for Organizing Anti-GM (Genetic Modification) Movement

(p. 115) More than a decade and a half since the commercialization of first-generation agricultural biotechnology, concerns about transgenic crop impacts on human and environmental health remain, even though the experience across a cumulative 1.25 billion hectares suggests the relative safety of first-generation genetically engineered seed. The risks posed by agricultural biotechnology warrant continued attention, and new transgenic crops may pose different and bigger risks. Weighing against uncertain risks are benefits from increased food production, reduced insecticide use, and avoided health risks to food consumers and farm workers. At the same time, adoption is shown to increase herbicide use while reducing herbicide toxicity, save land by boosting yields while also making previously unfarmed lands profitable. Adoption benefits food consumers and farmers but also enriches seed companies that enjoy property right protections over new seed varieties. The (p. 116) balance of scientific knowledge weighs in favor of continued adoption of genetically engineered seed, which may explain why some longtime critics have reversed course. For example, Lord Melchett, who was the head of Greenpeace, has been advising biotechnology companies on overcoming constraints to the technology (St. Clair and Frank forthcoming). Mark Lynas, a journalist and organizer of the anti-GM (genetic modification) movement, publicly apologized for helping start the movement in his “Lecture to Oxford Farming Conference” (2013).
Agricultural biotechnology remains regulated by regimes developed at the introduction of the technology. Whereas precaution may have been appropriate before the relative magnitudes of risks and benefits could be empirically observed, accumulated knowledge suggests overregulation is inhibiting the introduction of new transgenic varieties. Regulation also discourages developing-country applications, where benefits are likely greatest. In the future, new genetic traits may promise greater benefits while also posing novel risks of greater magnitudes than existing traits. Efficient innovation and technology adoption will require different and, perhaps, more stringent regulation in the future, as well as continued insights from researchers, including economists, in order to assess evolving costs and benefits.

Source:
Barrows, Geoffrey, Steven Sexton, and David Zilberman. “Agricultural Biotechnology: The Promise and Prospects of Genetically Modified Crops.” Journal of Economic Perspectives 28, no. 1 (Winter 2014): 99-120.

HR Regulations and Fear of Lawsuits Keep Managers from Firing Workers Who Do Not Work

(p. 1B) The biggest problem in your workplace has a name. His name is Jeff. . . .
Jeff sits two cubicles down from us, or three, or four. His real name may be John, Juan or Joan. He gets to the widget factory late, he leaves early and always mucks up his part of any group project. He complains, loudly, about the smallest things, and when you bring doughnuts for your birthday he probably takes three and then talks with his mouth full, too.
. . .
(p. 2B) . . . , morale suffers greatly when most of a company’s employees perceive that their supervisor is failing to deal with their low-performing co-worker, month after month, year after year.
For this, Hoogeveen blames a corporate culture that is so concerned about HR regulations, and the often-imagined threat of litigation, that bosses often fail to take into account how the trouble employee affects the larger climate.
. . .
. . . if Jeff doesn’t improve, he needs to be fired. This is perhaps the worst part of a boss’s job, Hoogeveen thinks. His eyes mist as he recalls firing an employee whom he liked, but who was simply a bad fit at QLI.
It’s human nature to avoid this conflict, to maintain the status quo and let Jeff be, he says. That’s what can and does happen at most Omaha companies.
But it’s bad for the employees, and it’s bad for business.
“A lot of this stuff is incredibly easy to understand,” says Omaha’s workplace mechanic [Kim Hoogeveen]. “It’s incredibly difficult to live.”

For the full story, see:
Hansen, Matthew. “Workplace Guru: Don’t Let Problem Worker Slide.” Omaha World-Herald (Mon., July 21, 2014): 1B-2B.
(Note: ellipses, and bracketed name, added.)
(Note: the online version of the article had the title “Hansen: Don’t let Jeff — the problem worker — slide, workplace guru says.”)

Countries that Protect Jobs Stifle Economic Growth

(p. 240) In an “Interview” conducted by Jessie Romero, John Haltiwanger discusses changing patterns of job creation and destruction: “But now we’re seeing a decline in the entry rate and a pretty stark decline in the share of young businesses. . . . But it’s also important to recognize that the decline in the share of young firms has occurred because the impact of entry is not just at the point of entry, it’s also over the next five or 10 years. A wave of entrants come in, and some of them grow very rapidly, and some of them fail. That dynamic has slowed down. . . . If you look at young small businesses, or just young businesses period, the 90th percentile growth rate is incredibly high. Young businesses not only are volatile, but their growth rates also are tremendously skewed. It’s rare to have a young business take off, but those that do add lots of jobs and contribute a lot to productivity growth. We have found that startups together with high-growth firms, which are disproportionately young, account for roughly 70 percent of overall job creation in the United States. . . . “I think the evidence is overwhelming that countries have tried to stifle the [job] destruction process and this has caused problems. I’m hardly a fan of job destruction per se, but making it difficult for firms to contract, through restricting shutdowns, bankruptcies, layoffs, etc., can have adverse consequences. The reason is that there’s so much heterogeneity in productivity across businesses. So if you stifle that destruction margin, you’re going to keep lots of low-productivity businesses in existence, and that could lead to a sluggish economy. I just don’t think we have any choice in a modern market economy but to allow for that reallocation to go on. Of course, what you want is an environment where not only is there a lot of job destruction, but also a lot of job creation, so that when workers lose their jobs they either immediately transit to another job or their unemployment duration is low.” Econ Focus, Federal Reserve Bank of Richmond, Second Quarter 2013, pp. 30-34. http://www.richmondfed.org/publications/research/econ_focus/2013/q2/pdf/interview.pdf.

Source:
Taylor, Timothy. “Recommendations for Further Reading.” Journal of Economic Perspectives 28, no. 1 (Winter 2014): 235-42.
(Note: italics, ellipses, and bracketed word, in original.)

The Opportunity Cost of Surgeons Dictating and Documenting Health Records

(p. A13) Across the country, doctors waste precious time filling in unnecessary electronic-record fields just to satisfy a regulatory measure. I personally spend two hours a day dictating and documenting electronic health records just so I can be paid and not face a government audit. Is that the best use of time for a highly trained surgical specialist?

For the full commentary, see:
DANIEL F. CRAVIOTTO JR. “A Doctor’s Declaration of Independence; It’s time to defy health-care mandates issued by bureaucrats not in the healing profession.” The Wall Street Journal (Tues., April 29, 2014): A13.
(Note: the online version of the commentary has the date April 28, 2014.)

Instead of 50 Silicon Valleys, Andreessen Sees 50 Kinds of Silicon Valley

“Marc Andreessen, co-founder of the first major web browser, Netscape, has a record for knowing what’s coming next with technology.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B8) Mr. Andreessen said new valleys will eventually emerge. But they won’t be Silicon Valley copycats.

Over the past couple of years, venture firms have invested in start-ups in Los Angeles, New York, Chicago and all over China. Los Angeles, for example, is home to Snapchat, Tinder, Whisper, Oculus VR and Beats, some of the big tech stories of the year. Mr. Andreessen said another hot place is Atlanta, the home of Georgia Tech.
But he offers a caveat.
“My personal view is that Silicon Valley will continue to take a disproportionate share of the No. 1 positions in great new markets, and I think that’s just a reflection that the fact that the valley works as well as it does,” Mr. Andreessen said.
There is a caveat to his caveat.
In Mr. Andreessen’s view, there shouldn’t be 50 Silicon Valleys. Instead, there should be 50 different kinds of Silicon Valley. For example, there could be Biotech Valley, a Stem Cell Valley, a 3-D Printing Valley or a Drone Valley. As he noted, there are huge regulatory hurdles in many of these fields. If a city wanted to spur innovation around drones, for instance, it might have to remove any local legal barriers to flying unmanned aircraft.

For the full interview, see:
NICK BILTON. “DISRUPTIONS; Forecasting the Next Big Moves in Tech.” The New York Times (Mon., MAY 19, 2014): B8.
(Note: the online version of the interview has the date MAY 18, 2014, and has the title “DISRUPTIONS; Marc Andreessen on the Future of Silicon Valley(s), and the Next Big Technology.” )

Occupational Licensing Hurts Poor and Restricts Innovation and Worker Mobility

Source of book image: http://www.upjohn.org/sites/default/files/bookcovers/soor_0.JPG

(p. A31) In the 1970s, about 10 percent of individuals who worked had to have licenses, but by 2008, almost 30 percent of the work force needed them.

With this explosion of licensing laws has come a national patchwork of stealth regulation that has, among other things, restricted labor markets, innovation and worker mobility.
. . .
Occupational licensing, moreover, does nothing to close the inequality gap in the United States. For consumers, there is likely to be a redistribution effect in the “wrong” direction, as higher income consumers have more choice among higher quality purveyors of a service and lower income individuals are left with fewer affordable service options.
. . . , government-issued licenses largely protect occupations from competition. Conservatives often see members of the regulated occupation supporting licensing laws under claims of “public health and safety.” However, these laws do much more to stop competition and less to enhance the quality of the service.
Also, all consumers do not demand the same level of quality. If licensure “improves quality” by restricting entry into the profession, then some consumers will be forced to pay for more “quality” than they want or need. Not everyone wants a board-licensed hairdresser.

For the full commentary, see:
MORRIS M. KLEINER. “Why License a Florist?” The New York Times (Thurs., MAY 29, 2014): A31.
(Note: the online version of the commentary has the date MAY 28, 2014.)

Kleiner’s most recent book on occupational licensing is:
Kleiner, Morris M. Stages of Occupational Regulation: Analysis of Case Studies. Kalamazoo, Michigan: W.E. Upjohn Institute, 2013.

How Medicaid Rewards Doctors Who Mistreat Patients

(p. A13) I recently operated on a child with strabismus (crossed eyes). This child was covered by Medicaid. I was required to obtain surgical pre-authorization using a Current Procedural Terminology, or CPT, code for medical identification and billing purposes. The CPT code identified the particular procedure to be performed. Medicaid approved my surgical plan, and the surgery was scheduled.
During the surgery, I discovered the need to change my plan to accommodate findings resulting from a previous surgery by another physician. Armed with new information, I chose to operate on different muscles from the ones noted on the pre-approved plan. The revised surgery was successful, and the patient obtained straight eyes.
However, because I filed for payment using the different CPT code for the surgery I actually performed, Medicaid was not willing to adjust its protocol. The government denied all payment. Ironically, the code-listed payment for the procedure I ultimately performed was an amount 40% less than the amount approved for the initially authorized surgery. For over a year, I challenged Medicaid about its decision to deny payment. I wrote numerous letters and spoke to many Medicaid employees explaining the predicament. Eventually I gave up fighting what had obviously become a losing battle.

For the full commentary, see:
ZANE F. POLLARD. “The Bureaucrat Sitting on Your Doctor’s Shoulder; When I’m operating on a child, I shouldn’t have to wonder if Medicaid will OK a change in the surgical plan..” The Wall Street Journal (Thurs., May 22, 2014): A13.
(Note: the online version of the commentary has the date May 21, 2014.)

“A Backhanded Slap to Overweening European Union Rule Makers”

“Lemons sold by Ugly Fruit.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 6) At a time of lingering economic hardship for many in the European Union, whose penchant for regulation has extended even to the shape, size and color of the foods its citizens eat, Ms. Soares has bet that there is a market for fruits and vegetables deemed too ugly by government bureaucrats, supermarkets and other retailers to sell to their customers.

Six months ago, she and a handful of volunteers started a cooperative called Fruta Feia, or Ugly Fruit, which in its short life is already verging on a kind of countercultural movement. It has taken off with hard-pressed consumers, won applause from advocates outraged by Europe’s skyrocketing food waste, and provided a backhanded slap to overweening European Union rule makers. In its own way, it has even quietly subverted fixed notions of what is beautiful, or at least edible.
“The E.U. norms are based on the mistaken idea that quality is about appearance,” said Ms. Soares, 31, who formerly worked in Barcelona as a renewable energy consultant. “It’s of course easier to measure the exterior aspect rather than interior features like sugar levels, but that is the wrong way to determine quality.”
She said her goal was “to break the dictatorship of aesthetics, because it has really helped increase food wastage.”
Europe wastes 89 million tons of food a year, according to a study presented in May by the Dutch and Swedish governments, which called on the European Union “to reduce the amount of food waste caused by the labeling system.”
For her part, Ms. Soares estimates that a third of Portugal’s farming produce goes to waste because of the quality standards set by supermarkets and their consumers. She says the waste is also a striking example of misplaced regulatory intervention by the European Union, which has tried to unify food standards across the 28-nation bloc.

For the full story, see:
RAPHAEL MINDER. “Tempting Europe With Ugly Fruit.” The New YorkTimes, First Section (Sun., MAY 25, 2014): 6 & 8.
(Note: the online version of the story has the date MAY 24, 2014.)

Government Regulations Favor Health Care Incumbents

Source of book image: online version of the WSJ review quoted and cited below.

(p. A11) The rise in U.S. health-care costs, to nearly 18% of GDP today from around 6% of GDP in 1965, has alarmed journalists, inspired policy wonks and left patients struggling to find empathy in a system that tends to view them as “a vessel for billing codes,” as the technologist Dave Chase has put it.

Enter Jonathan Bush, dyslexic entrepreneur, . . .
. . .
. . . , Mr. Bush touts technology as a driver of change. It has revolutionized the way we shop for books and select hotels, but health-care delivery has been stubbornly resistant. Mr. Bush notes that the number of people supporting each doctor has climbed to 16 today from 10 in 1990–half of whom, currently, are administrators handling the mounting paperwork. Astonishingly, as Mr. Bush observes, the government had to pay doctors billions of dollars, via the 2009 HITECH Act, to incentivize them to upgrade from paper to computers. Meanwhile, fast-food chains discovered computers on their own, because the market demanded it.
. . .
Let entrepreneurs loose on these challenges, Mr. Bush believes, and they will come up with solutions.
Mr. Bush identifies three major obstacles to the kinds of change he has in mind. First, large hospital systems leverage their market position to charge hefty premiums for basic services, then use the proceeds to buy more regional hospitals and local practices. “As big ones take over the small,” Mr. Bush laments, “prices shoot up. Choices vanish.” Second, government regulations, especially state laws, favor powerful incumbents, shielding “imaging centers and hospitals from competition.” Third, heath care suffers from a risk-avoidant culture. The maxim “do no harm,” Mr. Bush says, should not be an excuse for clinging to a flawed status quo.

For the full review, see:
David A. Shaywitz. “BOOKSHELF; A System Still in Need of Repair; Routine medical services can be done for less cost–one of many obvious realities that current health-care practices studiously ignore.” The Wall Street Journal (Mon., May 19, 2014): A11.
(Note: ellipses added.)
(Note: the online version of the review has the date May 18, 2014, and has the title “BOOKSHELF; Book Review: ‘Where Does It Hurt?’ by Jonathan Bush; Routine medical services can be done for less cost–one of many obvious realities that current health-care practices studiously ignore.”)

The book under review is:
Bush, Jonathan, and Stephen Baker. Where Does It Hurt?: An Entrepreneur’s Guide to Fixing Health Care. New York: Portfolio, 2014.