Art Diamond – Page 462 – artdiamondblog.com

Unintended Consequences of Sending Food: More on Why Africa is Poor

Millet in bowl. Source of photo: online version of the NYT article cited below.

NIAMEY, Niger, Sept. 21 – The images coming out of this impoverished, West African nation have been unrelentingly grim: hungry children with stick-thin arms and swollen bellies, mothers carrying babies hundreds of miles to look for food after a poor harvest and high prices put local staples out of reach. A few months ago, those images prompted a torrent of food aid from Western donors.

But now, after a season of good rains, Niger’s farmers are producing a bumper crop of millet, the national staple. This should be a cause for rejoicing, yet in one of the twists that mark life in the world’s poorest countries, the aid that was intended to save lives could ruin the harvest for many of Niger’s farmers by driving down prices.

The newly harvested millet and the donated food will reach market stalls at the same time, and with prices depressed, poor farming families may be forced to sell crops normally set aside for their own use and use the money to pay off debts. The effect would be a new cycle of hunger and poverty.

For the full story, see:

Burley, Natasha C. "In Place Where the Hungry Are Fed, Farmers May Starve." The New York Times (Thurs., September 22, 2005): A3.

Source of map: online version of the NYT article cited above.

Chilean Socialist Praises American Melting Pot

Michelle Bachelet. Souce of photo: online version of the NYT article cited below.

SANTIAGO, Chile, June 7 — Michelle Bachelet has lived in the United States twice, first as a child and then as a single mother studying military affairs at the Inter-American Defense Board in Washington. On Thursday, she will return to the capital, but this time on her first official visit as president of Chile.

Elected with a comfortable majority in January, Ms. Bachelet, 54, is her country’s first female president, a pediatrician and, like her predecessor Ricardo Lagos, a Socialist. . . .

. . .

Ms. Bachelet also plans to visit the middle school she attended while living in Bethesda, Md., in 1962 and 1963, when her father was a military attaché at the Chilean Embassy in Washington. That was the first time she had been outside Chile, and the exposure to American society helped mold her intellectually, she said.

"It was a lovely experience, because I found a society with a democratic history, a rich diversity of thought, and which offered opportunities to its citizens," she said. "The idea of the melting pot was the biggest novelty to me, and I would say that all of that allowed me to acquire a political and cultural foundation that has been quite positive to my political performance."

LARRY ROHTER. "Visit to U.S. Not a First for Chile’s First Female President." The New York Times (Thurs., June 8, 2006): A3.

Chinese Learn “a Way of Life” from U.S. TV Shows

Shanghai friends watch downloaded, subtitled, episode of "Friends." Source of photo: online version of the NYT article cited below.

SHANGHAI, Aug. 8 — For the past year and a half, said Ding Chengtai, a recent university graduate, friends have wondered why he seems to have disappeared.

Mr. Ding, 23, an Internet technology expert for a large Chinese bank, chuckled at the thought. He has kept himself in virtual seclusion during his off hours, consumed with American television programs like “Lost,” “C.S.I.” and “Close to Home.”

He is no ordinary fan, though; none of the shows he watches can be seen on Chinese television. Instead, he spends night after night creating Chinese subtitles for American sitcoms and dramas for a mushrooming audience of Chinese viewers who download them from the Internet free through services like BitTorrent.

. . .

To a person, the adapters say they are willing to devote long hours to this effort out of a love for American popular culture. Many, including Mr. Ding, say they learned English by obsessively watching American movies and television programs.

Others say they pick up useful knowledge about everything from changing fashion and mores to medical science.

“It provides cultural background relating to every aspect of our lives: politics, history and human culture,” Mr. Ding said. “These are the things that make American TV special. When I first started watching ‘Friends,’ I found the show was full of information about American history and showed how America had rapidly developed. It’s more interesting than textbooks or other ways of learning.”

On an Internet forum about the downloaded television shows, a poster who used the name Plum Blossom put it another way.

“After watching these shows for some time, I felt the attitudes of some of the characters were beginning to influence me,” the poster wrote. “It’s hard to describe, but I think I learned a way of life from some of them. They are good at simplifying complex problems, which I think has something to do with American culture.”

For the full story, see:

HOWARD W. FRENCH. "Chinese Tech Buffs Slake Thirst for U.S. TV Shows." The New York Times (Weds., August 9, 2006): A6.

“If Ethanol Made Economic Sense, It Wouldn’t Need a Subsidy”

Source of graphics: online version of the World-Herald article cited below.

(p. 1D) LINCOLN – David Pimentel, a Cornell University researcher, has been criticized repeatedly since he questioned the energy value of ethanol in 1980.

In a government-funded report, he suggested that ethanol provides less energy than is used to produce it. Even though that report has been disputed and rejected by other analysts, Pimentel has not backed down.

He said last week that rural developers, farmers and investors will rue the day they put their money, hopes and dreams into the corn-based alternative fuel.

"It is too bad," he said in an interview, "because it would be a tremendous asset to agriculture if this were a true winner."

Pimentel is among the public critics who raise red flags as momentum gathers for dramatic increases in production, especially in the nation’s top two ethanol-producing states: Iowa and Nebraska.

While Pimentel is perhaps the expert most often quoted – in part because he presented his analysis more than 25 years ago – others also raise questions about the energy value of ethanol and its economic benefits and environmental effects.

Ethanol backers defend the fuel as a viable way to help stabilize the nation’s fuel supply. But they haven’t convinced Jerry Taylor, an energy policy specialist for the Cato Institute, a conservative think tank in Washington, D.C.

"If ethanol made economic sense, it wouldn’t need a subsidy," Taylor said.

For the full story, see:

BILL HORD. "High-octane Clash." Omaha World-Herald (Sunday, August 6, 2006): 1D-2D.

Source of graphics: online version of the World-Herald article cited above.

Entrepreneur’s $100 Million Rocket Destroyed

Lesson one: entreprepreneurship is risky, and often fails. Lesson two: when an entreprepreneur’s rocket is destroyed, his $100 million goes up in smoke; when NASA’s rocket is destroyed, your $100 million goes up in smoke.

Government and industry efforts to develop innovative, less costly rockets suffered a high-profile setback Friday, when the initial flight of a satellite launcher bankrolled by outspoken entrepreneur Elon Musk ended in failure.

After Mr. Musk spent nearly four years and well over $100 million of his personal fortune to create a rocket company from scratch, his Falcon project became the best-known and most aggressive entrant in the fledgling small-rocket segment. But according to preliminary assessments, a fuel leak and resulting fire during last week’s inaugural launch shut down the main engines less than 30 seconds after blastoff from a Pacific atoll. The rocket and a research satellite built by Air Force Academy students were destroyed.

For the full story, see:

Pasztor, Andy. "Entrepreneur’s Rocket Suffers Setback During Maiden Launch." Wall Street Journal (Monday, March 27, 2006): A14.

Internet Reduces Elite Universities’ Competitive Edge

With professors spending so much time blogging for no payment, universities might wonder whether this detracts from their value. Although there is no evidence of a direct link between blogging and publishing productivity, a new study* by E. Han Kim and Adair Morse, of the University of Michigan, and Luigi Zingales, of the University of Chicago, shows that the internet’s ability to spread knowledge beyond university classrooms has diminished the competitive edge that elite schools once held.

Top universities once benefited from having clusters of star professors. The study showed that during the 1970s, an economics professor from a random university, outside the top 25 programmes, would double his research productivity by moving to Harvard. The strong relationship between individual output and that of one’s colleagues weakened in the 1980s, and vanished by the end of the 1990s.

The faster flow of information and the waning importance of location—which blogs exemplify—have made it easier for economists from any university to have access to the best brains in their field. That anyone with an internet connection can sit in on a virtual lecture from Mr DeLong means that his ideas move freely beyond the boundaries of Berkeley, creating a welfare gain for professors and the public.

For the full story, see:

"FINANCE & ECONOMICS: Economists’ blogs; The invisible hand on the keyboard; Why do economists spend valuable time blogging?" The Economist 380, no. 8489 (Aug. 3, 2006): 67.

The full reference to the paper by Kim et al, is:

* “Are Elite Universities Losing Their Competitive Edge?” by E. Han Kim, Adair Morse and Luigi Zingales. NBER working paper 12245, May 2006.

(Thanks to Carolyn Diamond for giving me a copy of the article from The Economist.)

“DDT Saves Lives, Environmentalists Take Lives”

Connecticut hedge-fund trader, and malaria-fighting activist and philanthropist. Source of image: online version of the WSJ article cited below.

Inside of a year, and working with George Ayittey of the Free Africa Foundation, Mr. Laifer’s efforts have spawned five "malaria-free zones" in Ghana, Nigeria and Kenya. Expansion to Ivory Coast and Benin is in the works. He adds that he has the financing to roll out additional zones this year but — ever the searcher — first wants to assess what’s working and what isn’t. If all is going well, "next year I see us doing something like 100 villages."

Mr. Laifer says a future focus will also be DDT, the pesticide used by Americans and Europeans in the 1940s to win domestic fights against malarial mosquitoes. Indoor spraying of DDT is by far the cheapest and most effective way to control the disease. One South Africa province employing DDT saw malaria infections and deaths drop 96% over a three-year span.

Yet Rachel Carson-inspired environmentalists have convinced many public health agencies that the chemical is dangerous. African nations, fearful that lucrative European and U.S. markets might ban their agricultural exports, make do with less-effective DDT substitutes. Though DDT, like any chemical, can be harmful in high doses, there’s no evidence that using it in the amounts needed to combat malaria has any ill-effect whatsoever on humans.

Mr. Laifer’s been unable to spray DDT in any of his malaria-free zones. "It’s the best thing in our arsenal," he says. "We have a prodigious supply, it’s cheap and we know it works. Our world leaders need to legalize DDT, and people in America need to get mad about this. . . . We need to have people walking around with signs that say, ‘DDT saves lives, environmentalists take lives.’"

For the full commentary, see:

JASON L. RILEY. "Malaria’s Toll." Wall Street Journal (Mon., August 21, 2006): A11.

(Note: the ellipsis is in the original.)

Distorted Incentives in Medicine

Source of book image: http://www.harpercollins.com/books/9780061130298/The_End_of_Medicine/index.aspx

The problem right now, as Mr. Kessler sees it, is that we fight the "big three" — cancer, stroke and heart attack — with treatment rather than early detection. Cancer cells and blood-vessel plaque can be handled much more easily in the early stages, but we spend most of our money on the later ones. More than 80% of health-care dollars are paid by insurance companies and the government, and neither is especially interested in detecting disease when it first appears. Doctors, regulators, researchers and payers of all kinds are locked into what Mr. Kessler calls — a bit ungenerously — the "cholesterol and cancer conspiracies."

A complicated system of mutual dependency distorts the incentives. "The FDA is like the FCC and Big Pharma is like the regional Bells" is what Mr. Kessler hears from Don Listwin, a former Cisco executive who now heads the Canary Foundation, a Silicon Valley-based effort to promote preventive medicine. In other words, in medicine as in telecom, the big players end up exploiting regulations more than opposing them, if only to preserve their monopolies. The Food and Drug Administration — understandably but narrow-mindedly — wants "cures" for cancer and other diseases. Thus tens of thousands of chemicals are screened, only a handful make it even to Phase I trials, and by the time a new drug is approved a billion dollars has been spent. Even then the new drug may help only 10% of patients.

Yet if someone were to invent a device with a wide, preventive usefulness — say, a nanotech implant that would spot the proteins that indicate the first minute presence of cancer — it would have to go through the same process of billion-dollar testing. Since the government and insurance companies are reluctant to add anything to their repertoire of coverage — and since such a device would be targeted at the much broader pool of people who are not sick — research might well stall in its earliest phases for lack of reimbursement-funding.

For the full review, see:

WILLIAM TUCKER. "Bookshelf; The Art of Navigating Arteries." Wall Street Journal (Tues., July 18, 2006): D6.

A full reference to the book reviewed, is:

Kessler, Andy. The End of Medicine: How Silicon Valley (and Naked Mice) Will Reboot Your Doctor. HarperCollins, 2006.

Welfare Reform Increases Number Employed

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

WASHINGTON, Aug. 20 — Ten years after a Republican Congress collaborated with a Democratic president to overhaul the nation’s welfare system, the implications are still rippling through policy and politics.

The law, which reversed six decades of social welfare policy and ended the idea of free cash handouts for the poor, was widely seen as a victory for conservative ideas. When it was passed, some opponents offered dire predictions that the law would make things worse for the poor. But the number of people on welfare has plunged to 4.4 million, down 60 percent. Employment of single mothers is up. Child support collections have nearly doubled.

“We have been vindicated by the results,” said Representative E. Clay Shaw Jr., Republican of Florida and an architect of the 1996 law who was vilified at the time. “Welfare reform was one of the most successful policy changes in our nation’s history.”

For the full story, see:

ROBERT PEAR and ERIK ECKHOLM. "A Decade After Welfare Overhaul, a Shift in Policy and Perception." The New York Times (Mon., August 21, 2006): A12.

Money Buys Happiness, and Governments Tax It Away

We are . . . all constantly reminding each other that "money doesn’t buy happiness."

Economists aren’t so sure. They note that people with a lot of money tend to express a higher subjective happiness than people with very little. According data from surveys by the National Opinion Research Center, for example, people in the top fifth of income earners are about 50% more likely to say they are "very happy" than people in the bottom fifth, and only about half as likely to say they are "not too happy."

There is, however, generally very little change in the average level of happiness in populations getting richer over the years. For instance, the percentage of the U.S. population saying it was "very happy" in 1972 was exactly the same as it was in 2002: 30.3%. Social critics of "consumerism" explain this by claiming that what makes rich people happy is not money per se, but rather the fact that they have more of it than others — so if everybody gets richer, happiness remains unchanged. The critics go on to say that income differences lead to unwholesome feelings of superiority, so taxes can improve our moral fiber simply by bringing us closer to the same income level.

Perhaps you’re unconvinced. In fact there is another explanation for unchanging happiness levels over time which is rather less supportive of income redistribution. As incomes rise, so generally do levels of government revenues and spending, and there is evidence that these forces work against personal income on the overall level of happiness. For example, a $1,000 increase in per capita income is associated with a one-point decrease in the percentage of Americans saying they are "not too happy." At the same time, a $1,000 increase in government revenues per capita is associated with a two-point rise in the percentage of Americans saying they are not too happy. In other words, not only can money buy happiness, but it may be that the government can tax it away as well.

For the full commentary, see:

ARTHUR C. BROOKS. "Money Buys Happiness." The Wall Street Journal (Thurs., December 8, 2005): A16.