Government – Page 126 – artdiamondblog.com

Doctors Erect Barriers to Keep Out Competition

A Bangalore radiologist. One of three radiologists in India known to be reading U.S. scans. Each of the three has a U.S. degree, as required by U.S. law. Source of image: http://www.nytimes.com/2006/04/19/business/19leonhardt.html?_r=1&oref=slogin

(p. C1) Radiologists seem like just the sort of workers who should be scared. Computer networks can now send an electronic image to India faster than a messenger can take it from one hospital floor to another. Often, those images are taken during emergencies at night, when radiologists here are sleeping and radiologists in India are not.

There also happens to be a shortage of radiologists in the United States. Sophisticated new M.R.I. and CT machines can detect tiny tumors that once would have gone unnoticed, and doctors are ordering a lot more scans as a result.

When I talked this week to E. Stephen Amis Jr., the head of the radiology department at Montefiore Medical Center in the Bronx, he had just finished looking at some of the 700 images that had been produced by a single abdominal CT exam. "We were just taking pictures of big, thick slabs of the body 20 years ago," Dr. Amis said. "Now we’re taking thinner and thinner slices."

Economically, in other words, ra-(p. C6)diology has a lot in common with industries that are outsourcing jobs. It has high labor costs, it’s growing rapidly and it’s portable.

Politically, though, radiology could not be more different. Unlike software engineers, textile workers or credit card customer service employees, doctors have enough political power to erect trade barriers, and they have built some very effective ones.

To practice medicine in this country, doctors are generally required to have done their training here. Otherwise, it is extremely difficult to be certified by a board of other doctors or be licensed by a state government. The three radiologists Mr. Levy found in Bangalore did their residencies at Baylor, Yale and the University of Massachusetts before returning home to India.

"No profession I know of has as much power to self-regulate as doctors do," Mr. Levy said.

So even if the world’s most talented radiologist happened to have trained in India, there would be no test he could take to prove his mettle here. It’s as if the law required cars sold here to have been made by the graduates of an American high school.

Much as the United Automobile Workers might love such a law, Americans would never tolerate it, because it would drive up the price of cars and keep us from enjoying innovations that happened to come from overseas. But isn’t that precisely what health care protectionism does? It keeps out competition.

For the full story, see:

Leonhardt, David. "Political Clout in the Age of Outsourcing." The New York Times (Weds., April 19, 2006): C1 & C4.

Remembrances of Galbraith (and Buckley and Demsetz and Drucker)

John Kenneth Galbraith passed away a couple of days ago, on Sat., April 29, 2006 at the age of 97. (see: "Economist, Writer Galbraith Dies at 97." Omaha World-Herald (Sun., April 30, 2006): 11A)

I remember at a Republican Convention in Miami (1968 I think) when one of the networks had the late Frank Reynolds sitting with Galbraith and William F. Buckley, Jr., to provide occasional commentary on the scene. On this occasion, Galbraith was going on and on about how all of the Republicans had arrived at the convention in their yachts. Buckley sat by, nodding, in uncharacteristic silence. Finally, with a few seconds until they needed to break away, Buckley slowly and deliberately drawled at Galbraith something like the following: ‘And John, when you visit your friends in Hyannis Port, I trust that you find the accommodations adequate?’ As they cut to commercial, you could hear Reynolds, and others in the background, convulsed in laughter.

Actually Buckley and Galbraith were friends, for several years skiing together in Europe. Apparently Galbraith was an indifferent and very slow skier, leading Buckley to observe that Galbraith looked as though he was skiing up the slope backwards. (I read this many years ago, but, alas, do not remember where.)

David Levy and I once wrote a paper in which we measured the writing quality of articles by many important economists. When we presented the paper to the meetings of the American Economic Association, Galbraith was the discussant of our paper. For his comments, he basically recycled an old paper he had written on writing economics, and showed no signs of having read our paper. But he did seem to enjoy our mentioning that by our measures, he turned out to be one of the best writers in the profession. My memory is that at one point, just before or just after the formal proceedings, he actually patted me on the back.

Galbraith wrote many books. One that I enjoyed, and learned from, was his account of the stock market crash of 1929.

Perhaps his most famous book was The New Industrial State, in which he argues that some of the larger firms in the United States form what he called the "technostructure." The technostructure firms were widely held, by many stock owners, few of whom had the incentive or power, to closely monitor whether the firms’ managers were serving the stock owners by maximizing profits. As a result, the technostructure firms’ managers were free to pursue other goals, such as their own power. (Galbraith was OK with the assumption that firms outside the technostructure were maximizing profits.)

Harold Demsetz tested this hypothesis by comparing the rate of profit of firms in and out of the technostructure, reasoning that if technostructure firms were not maximizing profits, we would expect their profits to be lower than those of other firms. He found that there was no difference between the rate of profits of the so-called ‘technostructure’ firms, and the non-technostructure firms. Demsetz’s conclusion was that there was no distinguishable technostructure, and no new industrial state.

I tell my classes that if we don’t throw entrepreneurs such as Michael Milken in prison, they can provide us with the means to keep CEOs pursuing shareholder value (profits) as their goal. The way it would work would be that if CEOs start pursuing something else, their firm’s stock price falls, and the firm becomes an attractive take-over target for someone like Milken.

I also point out that if firms maximize profits, a lot of rich people benefit, but that a lot of average people benefit too—Drucker emphasized that roughly half of the value of stock equity in the United States is held by worker pension funds.

I did not agree with Galbraith’s efforts to grow the government, but he was witty, and urbane, and intelligent. The intellectual scene was more interesting, and fun, with him than without him. He will be missed.

Some references to publications mentioned in, or supporting, the discussion above:

Demsetz, Harold. "Where Is the New Industrial State?" Economic Inquiry 12, no. 1 (1974): 1-12.

Diamond, Arthur M., Jr., and David M. Levy. "The Metrics of Style: Adam Smith Teaches Efficient Rhetoric." Economic Inquiry 32, no. 1 (1994): 138-45.

Drucker, Peter Ferdinand. The Unseen Revolution: How Pension Fund Socialism Came to America. 1st ed: Harpercollins, 1976.

Galbraith, John Kenneth. The Great Crash 1929. Houghton Mifflin Co., 1961.

Galbraith, John Kenneth. The New Industrial State. Houghton Mifflin, 1967.

Kornbluth, Jesse. Highly Confident: The Crime and Punishment of Michael Milken. William Morrow & Co., 1992.

Source of book image: http://www.whatihaveread.net/biblio/book_1458.html

“Damn it Fidel! What are you going to do about this lousy, piece-of-**** island of yours?”

Source of image of book: http://www.amazon.com/gp/product/1586483242/qid=1145298612/sr=2-1/ref=pd_bbs_b_2_1/104-9985403-1047968?s=books&v=glance&n=283155

Fernando Cardosa is the former Brazilian President who is best known for having temporarily tamed Brazil’s runaway inflation. Although not a principled believer in the free market, Cardoso made some efforts to reduce the damage the Brazilian government was doing to the economy. The following startling passage is from a useful review of a new memoir by Cardoso:

. . . , Mr. Cardoso mentions a telling moment at a 1999 summit meeting in Havana. When the heads of state were alone at a luncheon, one said to Castro: "Damn it Fidel! What are you going to do about this lousy, piece-of-**** island of yours? We’re sick of apologizing for you all the time, Fidel. It’s getting embarrassing." The anecdote shows how disingenuous Latin governments can be when they remain silent about the Cuban dictatorship.

For the full review, see:

MARY ANASTASIA O’GRADY. "A Leader Who Got Real." The Wall Street Journal (Thurs., April 6, 2006): D8.

(Note: ellipsis added.)

Here is the full reference to Cardoso’s memoir:

Cardoso, Fernando Henrique. The Accidental President of Brazil: A Memoir. PublicAffairs, 2006. [with Brian Winter; 291 pages; $26.95]

Chernobyl Accident Cannot Occur In U.S. Type Reactors

Twenty years ago (April 25, 1986), the Chernobyl nuclear accident sent a plume of radiation into the air above Ukraine. The word "Chernobyl" remains the most emotionally charged argument used by the opponents of nuclear energy. But if examined carefully, the main lesson from Chernobyl may be that what happened there cannot occur in the better designed light water reactors used in the United States, and most of the rest of the world. William Sweet, the author of the commentary below, has also authored Kicking the Carbon Habit: Global Warming and the Case for Renewable and Nuclear Energy.

(p. A23) . . . , though it went unnoticed at the time and has been inadequately appreciated since, Chernobyl also cast into relief the positive features of the reactors used in the United States and most other advanced industrial countries.

The reactor at Chernobyl belonged to a class that was especially vulnerable to runaway reactions. When operating at low power, if such reactors lost water, their reactivity could suddenly take off and very rapidly reach a threshold beyond which they could only explode. Making matters worse, surprisingly little more pressure than normal in the machine’s water channels would lift its lid, snapping the vital control rods and fuel channels that entered the reactor’s core.

On the night of April 25, 1986, poorly trained and supervised plant operators conducted an ill-conceived experiment, putting the machine into the very state in which reactivity was most likely to spike. Within a fraction of a second, the reactor went from being barely on to power levels many times higher than the maximum intended.

This kind of accident cannot happen in the so-called light water reactors used in the United States and most of Western Europe and Asia. In these reactors, the water functions not only as a coolant but as a "moderator": self-sustaining nuclear chain reactions cannot take place in its absence. This is a very useful passive safety feature. If coolant runs low, there is still a danger of a core meltdown, because the fuel retains heat; but the reactor will have automatically and immediately turned itself off.

For the full commentary, see:

WILLIAM SWEET. "The Nuclear Option." The New York Times (Weds., April 26, 2006): A23.

The reference to Sweet’s related book is:

Sweet, William. Kicking the Carbon Habit: Global Warming and the Case for Renewable and Nuclear Energy. Columbia University Press, 2006.

Source of book image: http://www.amazon.com/gp/product/0231137109/sr=8-1/qid=1146071688/ref=sr_1_1/104-5668094-9083929?%5Fencoding=UTF8

Hurricanes Not Caused by Human-Induced Climate Change: More on Why Crichton is Right

The Alfred P. Sloan Professor of Atmospheric Science at MIT analyzes the case for human-induced global warming:

(p. A14) There have been repeated claims that this past year’s hurricane activity was another sign of human-induced climate change. Everything from the heat wave in Paris to heavy snows in Buffalo has been blamed on people burning gasoline to fuel their cars, and coal and natural gas to heat, cool and electrify their homes. Yet how can a barely discernible, one-degree increase in the recorded global mean temperature since the late 19th century possibly gain public acceptance as the source of recent weather catastrophes? And how can it translate into unlikely claims about future catastrophes?
The answer has much to do with misunderstanding the science of climate, plus a willingness to debase climate science into a triangle of alarmism.
. . .
To understand the misconceptions perpetuated about climate science and the climate of intimidation, one needs to grasp some of the complex underlying scientific issues. First, let’s start where there is agreement. The public, press and policy makers have been repeatedly told that three claims have widespread scientific support: Global temperature has risen about a degree since the late 19th century; levels of CO2 in the atmosphere have increased by about 30% over the same period; and CO2 should contribute to future warming. These claims are true. However, what the public fails to grasp is that the claims neither constitute support for alarm nor establish man’s responsibility for the small amount of warming that has occurred. In fact, those who make the most outlandish claims of alarm are actually demonstrating skepticism of the very science they say supports them. It isn’t just that the alarmists are trumpeting model results that we know must be wrong. It is that they are trumpeting catastrophes that couldn’t happen even if the models were right as justifying costly policies to try to prevent global warming.
If the models are correct, global warming reduces the temperature differences between the poles and the equator. When you have less difference in temperature, you have less excitation of extratropical storms, not more. And, in fact, model runs support this conclusion. Alarmists have drawn some support for increased claims of tropical storminess from a casual claim by Sir John Houghton of the U.N.’s Intergovernmental Panel on Climate Change (IPCC) that a warmer world would have more evaporation, with latent heat providing more energy for disturbances. The problem with this is that the ability of evaporation to drive tropical storms relies not only on temperature but humidity as well, and calls for drier, less humid air. Claims for starkly higher temperatures are based upon there being more humidity, not less — hardly a case for more storminess with global warming.
. . .
In Europe, Henk Tennekes was dismissed as research director of the Royal Dutch Meteorological Society after questioning the scientific underpinnings of global warming. Aksel Winn-Nielsen, former director of the U.N.’s World Meteorological Organization, was tarred by Bert Bolin, first head of the IPCC, as a tool of the coal industry for questioning climate alarmism. Respected Italian professors Alfonso Sutera and Antonio Speranza disappeared from the debate in 1991, apparently losing climate-research funding for raising questions.
And then there are the peculiar standards in place in scientific journals for articles submitted by those who raise questions about accepted climate wisdom. At Science and Nature, such papers are commonly refused without review as being without interest. However, even when such papers are published, standards shift. When I, with some colleagues at NASA, attempted to determine how clouds behave under varying temperatures, we discovered what we called an “Iris Effect,” wherein upper-level cirrus clouds contracted with increased temperature, providing a very strong negative climate feedback sufficient to greatly reduce the response to increasing CO2. Normally, criticism of papers appears in the form of letters to the journal to which the original authors can respond immediately. However, in this case (and others) a flurry of hastily prepared papers appeared, claiming errors in our study, with our responses delayed months and longer. The delay permitted our paper to be commonly referred to as “discredited.” Indeed, there is a strange reluctance to actually find out how climate really behaves. In 2003, when the draft of the U.S. National Climate Plan urged a high priority for improving our knowledge of climate sensitivity, the National Research Council instead urged support to look at the impacts of the warming — not whether it would actually happen.
Alarm rather than genuine scientific curiosity, it appears, is essential to maintaining funding. And only the most senior scientists today can stand up against this alarmist gale, and defy the iron triangle of climate scientists, advocates and policymakers.

For the full commentary, see:
RICHARD LINDZEN. “Climate of Fear.” The Wall Street Journal (Weds., April 12, 2006): A14.

State Colleges and Universities “suffer from all the inefficiency and poor decision-making of Soviet-style factories”

In its public meetings, panelists from Wall Street and elsewhere in the business world have criticized academia as failing to meet the educational needs of working adults, stem a slide in the literacy of college graduates and rein in rising costs.
During a February meeting in San Diego, Trace Urdan, a senior research analyst for the investment banking firm Robert W. Baird & Company, said state colleges and universities “amount to state-run enterprises and suffer from all the inefficiency and poor decision-making of Soviet-style factories.”

For the full story, see:
SAM DILLON. “Panel Considers Revamping College Aid and Accrediting.” The New York Times (Weds., April 12, 2006): A14.

Teachers’ Unions Fight Innovation, Customization, and Variety

(p. A27) Washington – A Wisconsin court rejected a high-profile lawsuit by the state’s largest teachers’ union last month seeking to close a public charter school that offers all its courses online on the ground that it violated state law by depending on parents rather than on certified teachers to educate children. The case is part of a national trend that goes well beyond virtual schooling: teachers’ unions are turning to the courts to fight virtually any deviation from uniformity in public schools.

. . .

There is a universal American desire for customization and variety in goods and services, and education must respond to that demand, whether the unions like it or not.
. . .

This debate, like the ones over many other education issues, is fundamentally about who gets to have power. Yet the power the teachers’ unions now wield will be fleeting if public schools do not become more responsive to parents.
An industry cannot survive by rushing to court every time a new idea threatens even a small slice of its market share. Instead, maintaining, and even broadening, support for public schools means embracing more diversity in how we provide public education and who provides it.

For the full commentary, see:
Andrew J. Rotherham. “Virtual Schools, Real Innovation.” The New York Times (Friday, April 7, 2006): A27.
(Note: ellipses added.)

Jhontelle Johnson on public schools: “you can’t make me go”

Fransoir William. Source of image: http://www.nytimes.com/2006/04/06/education/06voucher.html?pagewanted=1&ei=5094&en=d2a47406ed1f9127&hp&ex=1144382400&partner=homepage

(p. A1) WASHINGTON, April 5 – As a student at Shaw Junior High School here, Amie Fuwa strained to shut out the distractions of friends cutting up. She struggled through math, and used photocopies or the library when textbooks were scarce.
Now Amie, 14, a child of immigrants from Nigeria and the Dominican Republic, attends Archbishop Carroll High School, a Catholic school near a verdant hill of churches nicknamed the Little Vatican. When algebra confounds Amie, her teacher stays with her after school to help, and a mentor keeps her on course.
”It’s a lot of people behind my back now,” Amie said.
Before, she said, she ”felt like it didn’t really matter to different people I know, like my teachers, if I failed.”
Amie is one of about 1,700 low-income, mostly minority students in Washington who at taxpayer expense are attending 58 private and parochial schools through the nation’s first federal voucher program, now in its second year.
Last year, parents appeared lukewarm toward the program, which was put in place by Congressional Republicans as a five-year pilot program, But this year, it is attracting more participation, illustrating how school-choice programs are winning over minority parents, traditionally a Democratic constituency.
Washington’s African-American mayor, Anthony A. Williams, joined Republicans in supporting the program, prompted in part by a concession from Congress that pumped more money into public and charter schools. In doing so, Mr. Williams ig- (p. A16) nored the ire of fellow Democrats, labor unions and advocates of public schools.
. . .
Like many other voucher students, Breanna Walton, 8, rises before dawn for the long bus ride from Northeast Washington, ”amongst the crime and drugs and all that,” in the words of her mother, April Cole Walton, to Rock Creek International, near Georgetown University. There, she learns Spanish with the children of lawyers and diplomats.
Ms. Walton said that her neighborhood school ”has broken down,” and that she would have done just about anything to keep Breanna from going there. ”Every child here should be able to say I’m going to set my sights high,” she said. ”I refuse to let my child be cheated.”
Patricia William, a single mother, said that at first she liked her son Fransoir’s public school, John Quincy Adams Elementary School, a tall sprawling building in the Adams Morgan neighborhood. Teachers seemed good, but overwhelmed. It was other parents, not teachers, Ms. William said, who told her that Fransoir was hyperactive. ”I was not getting quality information from them on time,” she said. ”For some reason, it was not working.”
Fransoir is one of 62 students with vouchers attending Sacred Heart Elementary, a Catholic school of 210 students, where he learns prayers along with five-digit multiplication and long division. He takes medication for his hyperactivity. Last year, he teamed up with another child to research the sinking of the Titanic. This year, he is interested in reptiles. Ms. William said her son today has nothing in common with the boy who once lay on the floor, turning in circles like a clock wound too tight. Now she is learning from him, about more than just math or reading or a sinking ship.
”All the effort he’s making every night makes me want to sit with him and study,” said Ms. William, a high-school dropout. ”I’m learning academically, but also about making an effort.”
. . .
. . . the pressure of competition is inescapable. In one sixth-grade classroom, two of six students said they would probably go to charter schools next year, unless Adams could get its seventh grade started.
”I’ll probably go to Washington Latin,” said Jhontelle Johnson, setting her sights on a new charter school opening in August. If not, she said, ”I’d probably be home-schooled.”
A teacher’s aide, Sheonna Griffin, looked askance. ”You don’t like public schools?” she asked the child.
Jhontelle turned back, her young eyes flashing. ”You can’t make me go,” she said.

For the full story, see:
DIANA JEAN SCHEMO. “Federal Program on Vouchers Draws Strong Minority Support.” The New York Times (Thurs., April 6, 2006): A1 & A16.

Fransoir William. Source of image: http://www.nytimes.com/2006/04/06/education/06voucher.html?pagewanted=2&ei=5094&en=d2a47406ed1f9127&hp&ex=1144382400&partner=homepage

Studies Show Economic Freedom Boosts Economic Growth

A trio of European economists have just published a meta-analysis on the effects of economic freedom (EF) on economic growth. After many pages, here is their bottom-line conclusion:

(p. 182) Most studies reviewed in this paper have serious drawbacks, including lacking senstitivity analysis and poor specifications of the growth model used. However, studies that have applied some kind of sensitivity analysis and sensible specfications generally find support for a positive relationship between changes in EF and growth. This suggests that liberalization will indeed boost economic growth.

For the full article, see:
De Haan, Jakob, Susanna Lundström, and Jan-Egbert Sturm. “Market-Oriented Institutions and Policies and Economic Growth: A Critical Survey.” Journal of Economic Surveys 20, no. 2 (2006): 157-91.

Private Enterprise “computer-chip makers have better hand-cleaning standards than most hospitals”

With rising alarm over hospital infections, which cause 90,000 deaths annually, a growing number of hospitals are adopting aggressive hand-hygiene surveillance and monitoring programs, and in some cases imposing penalties for doctors, nurses, and other health-care workers who don’t follow the rules.
. . .
Despite strict guidelines issued by the CDC to stop the spread of bacteria on contaminated hands, and wide adoption of alcohol-based hand-rub dispensers in patient rooms and hospital corridors to make it easier for harried health-care workers to disinfect between patients, compliance rates remain mired at 40% to 50% nationwide, studies show.
The IHI program recommends a far more activist approach that holds hospital administrators and staffers accountable for failure.
“It no longer is tolerable to accept noncompliance rates of more than 50% when we are dealing with critically ill patients,” says Don Goldmann, a senior vice president of IHI and a professor of pediatrics at Harvard Medical School, who notes that computer-chip makers have better hand-cleaning standards than most hospitals. While the IHI program emphasizes education and positive feedback, “repeated violations in health-care, or any industry, need to have consequences,” Dr. Goldmann says.

For the full story, see:
LAURA LANDRO. “THE INFORMED PATIENT; Hospitals Get Aggressive About Hand Washing; Staff Surveillance Programs, New Penalties Aim to Boost Sagging Compliance Rates.” The Wall Street Journal (Weds., April 5, 2006): D3.