Privatized Moscow Greenhouses Prosper

   Privatized Moscow greenhouses provide greens to grocery stores during the winter.  Source of the photo:  online version of the NYT article cited below.

 

Much of the country’s agricultural infrastructure is in disrepair, and across many rural regions farm production and labor are in disarray. The government has made reviving the agricultural sector one of its so-called national projects, a target for investment and recovery.

But the sights in Agrikombinat Moskovsky show that such problems are not universal. The business, now privatized, claims to have registered more than $75 million in sales in 2006. Its managers point to the crowded produce shelves in Moscow’s supermarkets and dare an unlikely boast.

“People remember when it was hard to find greens in Moscow, but today you can find them in every single decent supermarket,” said Yevgeny G. Sidorov, the general director. “Moscow has the freshest green plants in the world.”

That last claim, unverifiable, is nonetheless no longer absurd.

Moscow’s food stores, formerly famed for bare shelves and long lines, are now kept stocked with fresh champignons and greens — even in the freeze a year ago that almost paralyzed much of the capital, with temperatures from 6 below zero to 22 below for more than a week.

 

For the full story, see:

C. J. CHIVERS. "MOSCOW JOURNAL; A Soviet Agricultural Success: Vast Greenhouse Complex." The New York Times (Weds., January 31, 2007): A4.

 

    Oyster mushrooms being picked in one of the greenhouses in January.  Source of the photo:  online version of the NYT article cited above.

 

A Case Against “Network Neutrality”


Today there is much praise for YouTube, MySpace, blogs and all the other democratic digital technologies that are allowing you and me to transform media and commerce. But these infant Internet applications are at risk, thanks to the regulatory implications of "network neutrality." Proponents of this concept — including Democratic Reps. John Dingell and John Conyers, and Sen. Daniel Inouye, who have ascended to key committee chairs — are obsessed with divvying up the existing network, but oblivious to the need to build more capacity.

To understand, let’s take a step back. In 1999, Yahoo acquired Broadcast.com for $5 billion. Broadcast.com had little revenue, and although its intent was to stream sports and entertainment video to consumers over the Internet, two-thirds of its sales at the time came from hosting corporate video conferences. Yahoo absorbed the start-up — and little more was heard of Broadcast.com or Yahoo’s video ambitions.

. . .

. . .   Broadcast.com failed precisely because the FCC’s "neutral" telecom price controls and sharing mandates effectively prohibited investments in broadband networks and crashed thousands of Silicon Valley business plans and dot-com dreams. Hoping to create "competition" out of thin air, the Clinton-Gore FCC forced telecom providers to lease their wires and switches at below-market rates. By guaranteeing a negative rate of return on infrastructure investments, the FCC destroyed incentives to build new broadband networks — the kind that might have allowed Broadcast.com to flourish.

. . .

Messrs. Lessig, Dingell and Conyers, and Google, now want to repeat all the investment-killing mistakes of the late 1990s, in the form of new legislation and FCC regulation to ensure "net neutrality." This ignores the experience of the recent past — and worse, the needs of the future.

. . .

Without many tens of billions of dollars worth of new fiber optic networks, thousands of new business plans in communications, medicine, education, security, remote sensing, computing, the military and every mundane task that could soon move to the Internet will be frustrated. All the innovations on the edge will die. Only an explosion of risky network investment and new network technology can accommodate these millions of ideas.

 

For the full commentary, see: 

BRET SWANSON.  "COMMENTARY; The Coming Exaflood."  The Wall Street Journal (Sat., January 20, 2007):  A11.

(Note:  ellipses added.)


In Health Care the “Zeal to Treat and Spend May Actually Hurt Patients”

HeartAttackCostsBenefits.jpg   Source of graphic:  online version of the NYT article cited below.

 

EXPERTS have long been puzzled by the existence of large regional disparities in medical care in the United States. Even for diseases for which the appropriate treatment is widely accepted, doctors across the country take vastly different approaches, often leading to enormous expense without making any appreciable improvement in their patients’ health.

Consider heart attacks. Prescribing beta blockers immediately after a heart attack is a well-established, cheap and efficient treatment. In Iowa, nearly 80 percent of victims in 2000 received the drugs within 24 hours of a heart attack. In Alabama or Georgia, by contrast, fewer than 6 out of 10 patients received the drugs.

“What makes the lag in beta-blocker adoption puzzling is that the clinical benefits have been understood for years,” wrote Jonathan S. Skinner and Douglas O. Staiger, economists at Dartmouth, in a recent study about these regional patterns.

Congress has decided that some treatment decisions may be best taken out of doctors’ hands. In one of their last acts this year before adjourning, lawmakers passed a bill entitling doctors to a bonus from Medicare if they report data on the quality of their care, using criteria like whether they prescribe aspirin or beta blockers to heart attack victims. In the future, this data would permit Medicare to reward doctors who followed government guidelines.

. . .

. . . , much spending on health care provides enormous benefits. A study published this year by Mr. Skinner, Mr. Staiger and Dr. Elliott S. Fisher of Dartmouth Medical School found that Medicare spending on hospital care for heart attack victims surged two-thirds from 1986 to 1996, after accounting for inflation. But the percentage of victims who were alive a year after their attacks also increased, though by just 10 percentage points, to roughly 68 percent.

The relationship — rising costs bringing increased benefits — has broken down recently. From 1996 to 2002, Medicare spending on treatments for heart attack victims increased about 14 percent, after inflation. But there was virtually no improvement in survival rates.

There is mounting evidence that the zeal to treat and spend may actually hurt patients. The study by Mr. Skinner, Mr. Staiger and Dr. Fisher found that hospitals in regions where spending grew fastest from 1986 to 2002 had some of the worst practices, in terms of providing tried-and-true therapies, and recorded the smallest gains in survival rates.

Treatment of heart disease underscores the deeply idiosyncratic nature of many choices made by America’s doctors and hospitals. Coupled with a fee-for-service system that encourages aggressive treatment, these choices stimulate health spending that provides little benefit to patients. “A lot of the innovation and spending growth are going into gray areas that are not helping people that much,” Mr. Skinner said.

 

For the full commentary, see: 

EDUARDO PORTER.  "ECONOMIC VIEW; The More You Pay, the Better the Care? Think Twice."  The New York Times  (Sun., December 17, 2006):  5.

(Note:  ellipses are added.)

 

 

Union Decline Continues in United States

UnionDeclineGraph.gif   Source of graphic:  online version of the NYT article cited below.

 

Union membership dropped sharply last year in the United States, as the percentage of manufacturing workers in unions fell below the percentage of American workers in unions for the first time in modern history.

The Bureau of Labor Statistics reported Thursday that union membership fell by 326,000 in 2006, to 15.4 million workers, bringing the percentage of employees in unions to 12 percent, down from 12.5 percent in 2005. Those figures are down from 20 percent in 1983 and from 35 percent in the 1950s.

Work force experts said the decline in union membership was caused by large-scale layoffs and buyouts in the auto industry and other manufacturing industries, together with the labor movement’s difficulties in organizing nonunion workers fast enough to offset those losses.

 

For the full story, see: 

STEVEN GREENHOUSE.  "Sharp Decline in Union Members in ’06."  The New York Times (Fri., January 26, 2007):  A11.

 

House Hearing on Global Warming Canceled Due to Severe Winter Weather


BlitzerWolfSituationRoom.jpg  Wolf Blitzer, the host of CNN’s "Situation Room" program.  Source of photo:  http://www.mediabistro.com/tvnewser/cnn/inside_the_situation_room_24403.asp

 

Yesterday afternoon (2/14/07) on CNN’s "Situation Room" program, host Wolf Blitzer reported something close to the following:

 

‘A House of Representatives hearing on global warming was canceled today, because of the severe winter weather.’

 

Fed Chairman Bernanke’s Omaha Speech

     Bernanke in Omaha addressing the Chamber of Commerce (left) and after receiving a plaque officially appointing him as an "admiral" of the Nebraska Navy (right, ha, ha).  Source of the left photo:   http://www.omaha.com/neo-images/photos/large/ap-nenh10102061909.jpg   Source of the right photo:  online version of the NYT article cited below.

 

Last week, on 2/6/07, I attended a large Chamber of Commerce luncheon at which Federal Reserve Chair Ben Bernanke was the featured speaker.  The talk was subtle and restrained, but interesting.  Apparently it was one of the first speeches by Bernanke, since becoming chair, to address an economic issue broader than the macro policy issues that the fed usually addresses.  The headlines in the Omaha World-Herald and the Wall Street Journal missed the main point, I think.

The main point was not to criticize the inequality of the United States economy, but to praise its dynamism.  He pointed out the extent to which living standards have improved as a result of that dynamism.  And he wanted mainly to suggest that when we adopt policies aimed at reducing inequality, we be careful to be sure that the policies do not have the unintended consequence of reducing the dynamism. 

In particular, he suggested that much of the inequality was driven by an increasing skill premium, and that the most constructive way to reduce inequality would be to reduce the skill premium by increasing the supply of skilled labor.  This implies that individuals, and government, invest in increasing skills through increased access to community colleges, universities, online education, and the like.

 

For the full NYT article, see:

"Bernanke Suggests How to Narrow Wage Gap."  The New York Times   (Weds., February 7, 2007):  C13.

For the full WSJ article, see:

DAVID WESSEL.  "Fed Chief Warns of Widening Inequality; Bernanke Urges Steps That Avoid Harm to Economy."  The Wall Street Journal  (Weds., February 7, 2007):  A6.

For the full Omaha World-Herald article, see: 

STEVE JORDON.  "Fed chief says income gap poses problems."  Omaha World-Herald (Wednesday, February 7, 2007):   1D & 2D.

(Note:  the online version of the article had the slightly different title "Growing income gap poses problems, Fed chief says" and is dated 2/6/07.  The article may have first appeared in the paper’s evening edition on 2/6/07.  My copy was the morning edition of 2/7/07.)

For the text of Bernanke’s "The Level and Distrubution of Economic Well-Being" presentation, see:  http://www.federalreserve.gov/boarddocs/Speeches/2007/20070206/default.htm

   Source of graphic:  online version of the WSJ article cited above.

 

 

 

Investment Firms’ Advice Biased Towards Over-Saving

   Graphic on optimal savings.  Source of graphic:  online version of the NYT article cited below.

 

Could it be possible that you are saving too much for your retirement?

. . .

. . . , a small band of economists from universities, research institutions and the government are clearly expressing the blasphemy that many Americans could be saving less than they are being told to by the financial services industry — and spending more — while they are younger. The negative savings rate, they say, is wildly distorted.

According to them, the financial industry, with its ostensibly objective online calculators, overstates how much money someone will need in retirement. Some, in fact, contend that financial firms have a pointed interest in persuading people to save much more than they need because the companies earn fees on managing that money.

The more realistic amount could be as little as half the typical recommendation made by Fidelity, Vanguard or any number of other financial institutions.

For a middle-income couple, that could mean trading $400,000 in retirement money for about $3,000 a year more during prime working years to spend on education or home improvement. “For a middle-class household, that’s a lot of money,” said Laurence J. Kotlikoff, a Boston University economics professor, who is on the forefront of this research into spending and savings, and is selling his own retirement calculator.

. . .

Nevertheless, the loose confederation of well-regarded economists, who have not been working in concert, say their research points to the startling conclusion that many Americans are saving too much, not too little. Indeed, their studies of the savings and spending habits of the generation born between 1931 and 1941 revealed that at least 80 percent had accumulated more than enough wealth for retirement. While they have not studied the baby boom generation as closely, they believe that the greater wealth of that generation should also leave those retirees secure.

A study last October by another group of economists, including two working for the Federal Reserve Board, found 88 percent of retirees age 51 and older had adequate wealth.

“Even the most casual reading of the popular press will have you convinced that Americans are heading like lemmings over a cliff,” said John Karl Scholz, an economics professor at the University of Wisconsin at Madison. “Going into this, I had no idea that we’d find any results anything like this.”

. . .

Mr. Scholz said he and his co-authors of a study, “Are Americans Saving ‘Optimally’ for Retirement?” found oversaving across all economic and education levels and most ethnic or racial groups as well. (It found that Hispanics tended to save less.) Those who were not saving enough were usually missing their target by only a small amount.

The one exception to this optimism involves people who enter retirement single, either because their spouse died early, they divorced, or they never married. The studies found this group did not save enough.

 

For the full story, see:

DAMON DARLIN. "Your Money; A Contrarian View: Save Less and Still Retire With Enough." The New York Times (Sat., January 27, 2007):  ??.

(Note:  ellipses added.)

 

Al Gore Freezes


   Al Gore.  Source of image:  http://drinkingliberally.org/blogs/louisville/archives/2006/01/

 

For the past couple of weeks, much of the country has been suffering from non-stop frigid weather.  So on "Weekend Update" on NBC’s Saturday Night Live (2/10/07), something close to the following was reported:

 

‘And in an ironic note:  this week while lecturing on global warming, Al Gore froze to death.’

 

Toy Boats, Johnny Astro, and the Free Market

   Screen capture from eBay’s "Toy Boat" ad.

A few years ago, eBay created a wonderful ad in which a young boy is at the beach playing with his toy boat.  His mother tells him that it’s time to go; he leaves the beach forgetting his boat; the boat washes out to sea and sinks in a huge storm.  A fisherman hauls up the boat in his fishing net.  He brushes it off and puts it up for sale on eBay.  The next scene is of a 20-something young man looking stunned at a computer screen, with a picture in the background of himself as a boy with the toy boat.  On his PC screen is the eBay page with the boat for sale.

The point is how wonderful free markets can be when they help consumers find and obtain what consumers desperately want.

Of course this is just an ad.  But it rings true.  See the story excerpted below: 

 

My husband, for example, still hankers for a certain flying toy he played with as a child.

For years, I have heard stories about this lost talisman of youth, an almost mythical toy that had an inflated balloon that could be launched into the air and propelled through a room by a whirring fan.

But my husband could never remember its name — until the other day.

“I FOUND IT! I FINALLY FOUND IT!” he wrote in an instant message that popped up on my computer.

. . .

“IT’S CALLED THE JOHNNY ASTRO.”

Johnny Astro. With a name like that, a name that evokes rocket ships, moon walks and the glory of the technological future hurtling our way, you can see why such a toy would linger in the memory of a boy who grew up in the 1960s.

“GET ME ONE FOR MY BIRTHDAY,” he typed. “PLEASE.”

How could I refuse?

. . .

I turned to eBay. A set was for sale with seven bidders so far, with a high bid of $76. An hour before the auction closed, I placed a bid authorizing eBay to go as high as $207 on my behalf. (I calculated I would get the set for a much lower price, however, given Ms. Grant’s price range.)

In the last minutes of the auction, the number of bids climbed to 21. But in the end I got the set — for $204.49.

My husband acted shocked.

“You paid how much?” he asked.

“You said you wanted it for your birthday,” I said.

He thought about it for a minute.

“If I got two,” he said, “we could fly them together and exchange balloons in the air.”

 

For the full story, see: 

MICHELLE SLATALLA.  "ONLINE SHOPPER; A Toy That Sends Grown Men Into Orbit."  The New York Times  (Thurs., January 25, 2007):  E6.  

 

The link for the Toy Boat ad is:  http://www.thepowerofallofus.com/flash.html   (click "TV Spots" and then "Toy Boat")

 

JohnnyAstroToy.jpg   Drawing of Johnny Astro toy.  Source of drawing:  online version of the NYT article cited above.

 

Milton Friedman’s School Vouchers Pass Utah Senate

I received an email mailing yesterday (2/9/07) from Robert Fanger, who is the Communications Director of the Milton and Rose Friedman Foundation.  He wrote:  "By a vote of 19 to 10, the Utah Senate passed the universal school voucher bill this afternoon."

On Wednesday, the Wall Street Journal ran an editorial on the issue that is excerpted below:

 

Proving that the best reforms often pass by the slimmest of margins, Utah’s house voted 38-37 late last week to create a state-wide voucher program that will allow students to escape failing public schools.

Union opponents can be expected to mount a furious assault in the state senate, and then head to court. But the senate is likely to pass the reform supported by GOP Governor Jon Huntsman Jr., so Utah may soon become the first state with a universal school choice plan. It would offer students who attend private K-12 schools from $500 to $3,000 in tuition reimbursement based on family income.

Meanwhile, South Carolina could be next. Legislation is now being drafted to allow nearly 200,000 poor students to opt out of failing public schools by giving them up to $4,500 a year to spend on private school tuition. Middle class parents would be eligible for a $1,000 tax credit.

 

Reference for editorial:

"Choice Advances."  The Wall Street Journal  (Weds., February 7, 2007):  A14.