How big is Medsafe’s invisible graveyard? @PeterDunneMP @annetterongotai
17 Dec 2015 1 Comment
in economics of bureaucracy, economics of regulation, health economics, politics - New Zealand Tags: drug lags, Drug safety
Medsafe replicates in part or in whole the drug approval processes of its overseas counterparts. There is expedited processing for drugs already approved overseas.
Every day in which a drug approval application is sitting on the desk of a bureaucratic at Medsafe is a day in which another New Zealander may die but for that drug.
That delay in access to drugs because of the duplication in approval processes is the invisible graveyard of Medsafe. My Official Information Act requests so far have been unable to access a cost benefit analysis at the Ministry of Health that quantifies the size of that invisible graveyard.
If economists have a bitter drinking song it would be “how many people has the FDA killed today”. Many drugs became available years after they were on the market outside the USA because of drug approval lags at the FDA. The dead are many. To quote David Friedman:
In 1981… the FDA published a press release confessing to mass murder. That was not, of course, the way in which the release was worded; it was simply an announcement that the FDA had approved the use of timolol, a ß-blocker, to prevent recurrences of heart attacks. At the time timolol was approved, ß-blockers had been widely used outside the U.S. for over ten years.
It was estimated that the use of timolol would save from seven thousand to ten thousand lives a year in the U.S. So the FDA, by forbidding the use of ß-blockers before 1981, was responsible for something close to a hundred thousand unnecessary deaths.
The only rational basis for duplicating overseas drug safety approval processes is the honest belief that a New Zealand process can pick up errors. These errors must be so large that they justify the delay. If there are no such errors to pick up in a cost justified manner, the drug approval branch of Medsafe just adds to the invisible graveyard.
The Ministry of Health did advise its Minister of the unilateral recognition model in Singapore. If a drug is registered in two trusted jurisdictions, it is fast tracked. If it is registered in one other trusted jurisdiction, it goes through an expedited process. This process appears to only cut the registration process for a drug from 270 days to 240 days.
The truncated approaches when there is approval of the drug in a trusted jurisdiction usually call for access to evaluation reports and other red tape. What can drug trials in New Zealand
find out that is not already known? Medsafe targets processing applications for the approval of new drugs in New Zealand to be done within 200 days. That’s 200 days too many.
My preferred unilateral recognition process consists of authenticating the drug registration certificate from a trusted overseas jurisdiction. It would be a post-box process. The G7 countries plus Australia should be this list of trusted overseas jurisdiction. There should be automatic recognition in New Zealand of any drug registration in those jurisdictions.
There is no reason to believe that Medsafe will pick up errors of trusted jurisdictions overseas. Medsafe denied New Zealanders access to four drugs approved in comparable regulatory jurisdictions in the last three years. Medsafe rejected two other drugs in the last three years but these drugs were not approved in comparable jurisdictions. Medsafe is not involved in the funding of medicines; this is the responsibility of PHARMAC.
Source: data released 29 October 2015 pursuant to an Official Information Act request to the Ministry of Health.
Medsafe is turning down not even a handful of drugs were approved overseas jurisdictions in the past three years. Was that worth the wait? Was that worth a larger invisible graveyard?
The net benefits of the entire drug approval framework over the past three years in New Zealand is riding out on rejecting for approval half a dozen drugs, four of which are approved as safe in other comparable jurisdictions.
The size of the invisible graveyard has been quantified in the USA. The Prescription Drug User Fee Acts (PDUFA) reduced the drug approval time lag by 10 months:
Converting these economic gains into equivalent health benefits, we find that the more rapid access of drugs on the market enabled by PDUFA saved the equivalent of 140,000 to 310,000 life years.
A few drugs were approved that were later withdrawn. Their unfortunate consequences must always be weighed against the drugs that got to the market faster, saving lives, relieving pain and curing illnesses. That trade-off must be faced up to openly rather than as it is now left in the invisible graveyard.
In Wellington CBD, average value of commercial building is almost halved with a red or yellow sticker
17 Dec 2015 Leave a comment
in economics of natural disasters, economics of regulation, politics - New Zealand, urban economics Tags: earthquakes, efficient markets hypothesis, entrepreneurial alertness
Within the Wellington CBD, the average value of a commercial building is almost halved if it receives a legally binding earthquake-prone declaration. Discounts on specific buildings will vary around this average level, reflecting a number of factors such as costs of remediation and the nature of existing rental agreements.
What are the payoffs of energy efficiency?
15 Dec 2015 Leave a comment
in economics of regulation, energy economics, environmental economics, global warming Tags: climate alarmism, energy efficiency
@donal_curtin @smalltorquer Does competition law in high-tech markets help consumers?
14 Dec 2015 2 Comments
in applied price theory, economics of regulation, Gary Becker, industrial organisation, politics - New Zealand, politics - USA, Sam Peltzman Tags: Aaron Director, anti-trust law, cartels, competition law, creative destruction, entrepreneurial alertness, merger law enforcement, offsetting the, The fatal conceit, unintended consequences
New Zealand has decriminalised cartels. Price fixers cannot be sent to prison but can still be fined. Some agree, some disagree with the wisdom of this move.
Those that agreed with the wisdom of this move were christened cartel apologists by one of those that disagree with the removal of criminal penalties for cartels.
There is an infallible rule in competition law enforcement. It arises mostly crisply in merger law enforcement. If competitors oppose a merger, the merger must be pro-consumer. If the merger is anti-competitive, that merger will increase prices. The competing firms can follow those prices up and profit from the weakening of competition.
Under the collusion hypothesis, rivals of the merging firm benefit since there is a higher probability of successful collusion limits output and raises product prices. The share prices of these rival firms should increase in anticipation of enhanced cartel profits. As Eckbo explains:
Using Stigler (1964) theory of oligopoly, a horizontal merger can reduce the monitoring costs by reducing the number of independent producers in the industry. The fewer the members of the industry the more “visible” are each producers actions, and the higher is the probability of detecting members who try to cheat on the cartel by increasing output.
When was the last time an entrepreneur complained about his rivals putting their prices up? The entrepreneur can either match that price increase or undercut it to win more business. The real reason competitors oppose a merger is the merged firm will have lower costs, making it a fiercer competitor.
If the share prices of competitors fall on news of the merger, they are worse off as a result because they face a fiercer competitor. If their share prices rise, that suggests either that others in the industry are to benefit from higher prices or rival firms will soon replicate the cost savings discovered in the course of the merger. The latter is the information effect of mergers:
…since the production technologies of close competitors are (by definition) closely related, the news of a proposed efficient merger can also signal opportunities for the rivals to increase their productivity
Mergers are a high-risk way of securing higher prices unless there are offsetting cost saving of combining the two firms. Mergers disturb previously efficient firm sizes and risk diseconomies of scale and a burgeoning corporate hierarchy. A cartel is a safer way to raise prices by jointly agreeing to restrict output.
Cartels have few redeeming features. Cartels are inherently unstable because the history of cartels is the history of double-crossing. The best place in a cartel is to be on the outside undercutting it slightly to sell as you can at inflated cartel price.
The complication with cartels is competitors must sometimes coordinate their activities with their rivals in various ways such as agreeing product standards, undertaking joint ventures or licensing technologies to them.
Criminalisation of cartels may deter these business practices that promote consumer welfare. The process of innovation in new industries in particular often involves successful firms taking over the unsuccessful firms.
Serial competition is common in rapidly innovating industries with one dominant firm making hay for a while then quickly swept away. Merger law enforcement agencies do not handle the wake of creative destruction well.
There is no more cutthroat market than Hollywood. Yet the movie industry is riddled with collusion and joint ventures. Actors and producers can be collaborating on one film and also be making another film that will be its rival in the box office when released.
The movie industry would not work without this incestuous mix of competition and collaboration. Joint ventures are aplenty between otherwise direct competitors in the film industry. When do these joint ventures become cartels threatened with criminal penalties?
What should be another working rule in competition law enforcement is when there is reasons to stay your hand, that is usually a good idea even if you do not have the reasons worked out yet. When in doubt, stay your hand.
It goes back to that extremely famous 1984 essay by Frank Easterbrook on the limits of anti-trust law. The essay was about errors in competition policy and law enforcement:
- When a competition law enforcer makes a mistake and closes off an efficiency enhancing practice or stops a pro-consumer merger, there are few mechanisms to correct this mistake; and
- If a competition law enforcer inadvertently does not stop a anti-competitive merger or lets a collusive or inefficient practice get through, at least there is market processes that will slowly chip away at his mistake.
Easterbrook argued that courts and enforcers should craft liability and procedural rules to minimise the sum of competition law’s error and decision costs:
The legal system should be designed to minimize the total costs of (1) anticompetitive practices that escape condemnation; (2) competitive practices that are condemned or deterred; and (3) the system itself
Competition law enforcers and policymakers made plenty of errors in the past. Chastened by their follies aplenty in the past, competition law policymakers should not approach any issue with overconfidence. They have had a dismal track record in aligning competition law with applied price theory and the basics of the economics of industrial organisation.
That is at best only a good start for the competition law enforcement agencies. This is because the economics of industrial organisation spent a lot of time condemning practices that neither restricted output or increased prices.
It took many decades for consumer welfare to be the exclusive goal of competition. Time and again protecting competitors from competition was the priority of competition law enforcement agencies.
The ICT revolution coincided with a revolution in competition law economics and policy. That revolution consisted of basing competition law on applied price theory and not condemning every novel or as yet unexplained practice.
In the high-tech industries, competition law runs a high risk of chilling innovation. As Joshua Wright said:
Innovation is critical to economic growth. Incentives to innovate are at the heart of the antitrust enterprise in dynamically competitive industries, and, thus, getting antitrust policy right in high-tech markets is an increasingly important component of regulatory policy in the modern economy. While antitrust enforcement activity in high-tech markets in the United States and the rest of the world is ever-increasing, there remain significant disputes as to how to assess intervention in dynamically competitive markets.
The relentless pursuit of Microsoft by the US Department of Justice at the behest of its competitors such as Netscape is notorious example of the chilling of innovation.
You are showing your age if you even remember who Netscape was. Its complaint was that Microsoft by giving away its browser was engaging in predatory competition.
Netscape want to protect consumers from the scourge of lower prices – from not having to pay $49 for the Netscape browser. You are showing your age if you have ever paid to install a browser.
Netscape had the advantage of a senior US senator representing the state where it was based. He happened to sit on the committee overseeing the budget of the US Anti-trust enforcement agencies.
We are still waiting for the day when Microsoft finishes giving away its browser, excludes competition from the market for browsers, jacks up its price to make up for a good 20 years of giving away its browser and is not immediately threatened by new entry.
Facebook is now worth more than Walmart
buff.ly/1fuvV7V h/t @DKThomp
$FB $WMT buff.ly/1fuvSZB http://t.co/FtIIJP3EGN—
Ninja Economics (@NinjaEconomics) June 22, 2015
The intrepid competition law enforcers of the 1990s did not anticipate a business model where competitors profitably give their product away.
Thankfully, Facebook did not face competitors who charged for their social media. If Facebook had faced such competition, what would the US Department of Justice thought of this anti-competitive practice of giving social media away. The scourge of lower prices again. That great bugbear of competition law enforcement agencies.
10 years ago today Facebook was founded by Mark Zuckerberg and his college friends http://t.co/IVFDFvu2VM—
History Pics (@HistoryPixs) February 04, 2014
Facebook is doing the exact same thing that Microsoft did when it gave away the Internet Explorer browser. To this day, competition law enforcement agencies including the New Zealand Commerce Commission do not accept lower prices to be lawful in all cases without exception.
A test of how imbibed you are with the fatal conceit about competition law is to cast your mind back as to what your attitude was to the Department of Justice anti-trust lawsuit against Microsoft.
If you thought the anti-trust lawsuit against Microsoft was well-founded, you are an optimist about the efficient scope of competition law. To quote McKenzie and Shughart:
Microsoft’s critics come far closer to the mark when they complain that Microsoft has been “brutally competitive” than when they claim Microsoft is a “monopoly.” From our perspective, it appears that once again the Justice Department is using the antitrust laws to thwart competition by a highly successful American firm. To protect unsuccessful competitors, it is squelching competition.
A long time has passed since that suit. People can reflect upon the extent to which Microsoft have successfully monopolised browsing the Internet. It hasn’t. As Gary Becker said:
Anti trust policy should recognize that dynamic competition is often a powerful force when static competition is weak. The big policy question then is whether it is worthwhile to bring expensive and time consuming anti trust cases against still innovating firms that have considerable profits and monopoly power, given the significant probability that new competitors will before long greatly erode this power through different products? I believe the answer to that is no, and that policy should often rely on dynamic competition, even when that allows dominant firms only temporarily to enjoy economic power.
The law and economics of competition has been a bit of a glass house for the last 50 years. People should be careful about criticising new idea and attempts to be more modest about the positive contribution the competition law makes to society.
Competition law can subvert competition by stymieing the introduction of new goods and the temporary monopoly often necessary to recoup their invention costs and induce innovation. Sam Peltzman, when reflecting on the contributions of Aaron Director to the law and economics of competition said:
There are the myriad of ways in which real world business practices behave differently from the caricaturing in textbooks. Those differences sometimes arouses suspicious responses from economists. Visions of market power and deadweight loss triangles dance their heads, and some of the suspect practices have been constrained by anti-trust policy. Director rejected this kind of intellectual laziness, and he sought, sometimes successfully, to inoculate those around him against it.
Director approached all business practices with the methodology that entailed asking very basic questions and answering them in a rigorous logic that it appealed ultimately to facts. The style was verbal – some combination of Socratic dialogue and Adam Smith. This style had the disadvantage of producing few closed-form solutions. But it had the advantage of permitting analysis of the kind of problems that eluded simple solutions.
Indeed I believe that one reason for Director’s lasting influence he was able to show that simple judgements about business practices often cannot withstand rigorous scrutiny.
Economic theory and empirical evidence are full of examples of business conduct that reduce choice but increase consumer welfare through lower prices, more innovation, or higher quality products and services. Manne and Wright noted in the paper, Innovation and the Limits of Antitrust that:
Both product and business innovations involve novel practices, and such practices generally result in monopoly explanations from the economics profession followed by hostility from the courts (though sometimes in reverse order) and then a subsequent, more nuanced economic understanding of the business practice usually recognizing its pro-competitive virtues.
Competition law enforcement agencies are suing Google because it is anti-competitive. The dead hands of the competitors to Google are buried somewhere in those suits. Is there no learning. There is certainly no modesty about past mistakes about the proper scope of competition law.
Were @jamespeshaw & @DrJamesHansen at the same #COP21
13 Dec 2015 Leave a comment
in economics of regulation, energy economics, environmental economics, global warming, politics - New Zealand Tags: climate aid, climate alarmism, green rent seeking, international climate treaties, New Zealand Greens
Paris was a tremendous defeat for the climate alarmists. Now that they have their treaty – a non-binding treaty – their ability to stir up political momentum to do more is undermined. If the environmental movement already has their agreement to save the world, why is anything more necessary. Especially anything that is costly to the hip-pocket such as a carbon tax.
The Greens, rarely for them, have settled for half measures. That was unwise considering these half measures are nothing at all apart from climate aid. Few like to remember that the Republicans still control the U.S. Congress. Centre-right parties control most governments in Europe.
HL Mencken on the @realDonaldTrump & @BernieSanders
13 Dec 2015 Leave a comment
in economics of bureaucracy, economics of media and culture, economics of regulation, income redistribution, Marxist economics, politics - USA, Public Choice, rentseeking Tags: 2016 presidential election, expressive voting, left-wing populists, Leftover Left, rational ignorance, rational irrationality, right-wing populists
Corruption vs. Human Development
09 Dec 2015 Leave a comment
in development economics, economic history, economics of bureaucracy, economics of crime, economics of regulation, growth disasters, growth miracles, income redistribution, industrial organisation, law and economics, Public Choice, rentseeking Tags: bribery and corruption, capitalism and freedom, rent seeking, rule of law, The Great Fact
Corruption vs. Human Development (HDI) http://t.co/WNlSMYzdWD—
Max Roser (@MaxCRoser) August 08, 2015
@Greenpeace leave it in the ground campaign increases emissions @RusselNorman
06 Dec 2015 1 Comment
in economics of regulation, energy economics, environmental economics, global warming Tags: Hotelling, offsetting behaviour, Oil prices, OPEC, The fatal conceit
Matthew Kahn wrote a fascinating blog post today on the impact of climate change, regulatory risks and fossil fuels disinvestment campaigns on investment portfolios.
At the end of that post, Kahn discussed the implications of a threatened carbon tax extraction rates of fossil fuels and the level of greenhouse gases:
Suppose that Exxon is aware that there will be a rising $100 carbon tax 50 years from now. Al Gore has claimed (in a 2014 WSJ piece) that this carbon pricing will lead to “stranded assets” and Exxon shareholders will suffer greatly.
He needs to study his Hotelling no-arbitrage condition. Exxon will simply increase its extraction upfront to avoid this tax and the carbon emissions will occur earlier!
Regulatory uncertainty fostered by Greenpeace will have the same result of increasing extraction rates and carbon emissions with it because of the lower oil prices.
If Greenpeace looks like implementing any of its anti-growth, anti-poor, antidevelopment policies in a country, investors will respond by extracting as much as they can in anticipation of the regulatory crackdown.
Not long after I joined the Department of Finance from university, I remember attending a Treasury seminar that gave a property rights explanation of oil prices in the 1970s.
It was an alternative hypothesis to the OPEC cartel explanation. This was always a clumsy explanation because of the instability of cartels. Not only does OPEC not control the majority of production even in the 1970s, several members have been at war with each other and other OPEC member countries frequently in terrible financial straits with every incentive to cheat on their OPEC production quotas
Under the property rights hypothesis for oil prices, the oil companies anticipated nationalisation and pumped as much oil as they could before they were nationalised. This depressed prices prior to these nationalisations for as far back as the mid-50s. After these nationalisations, the oil companies became contractors who ran the oil fields on behalf of the national government who expropriated them.
After the nationalisation in the late 60s and early 70s, the radical change in property rights structure reduced extraction rates and with it increased oil prices in the international markets.
The oil price increases were a result of the change in control over production from the oil companies to the oil-producing countries. With these nationalisations there was a change from high rates of time preference to low rates on the part of the production decision-makers.
There was over-depletion because of insecure property rights. OPEC deserves credit for introducing long-overdue conservation policies to the benefit of generations of consumers then unborn.
The same logic applies to threats of a carbon tax. That risk encourages more depletion today so oil producers can sell at the untaxed rate. This will increase greenhouse gas emissions because oil prices will be depressed.
Policies that limit or reduce revenues in the future will induce the resource owners to bring their sales forward to the present. To quote Hans-Werner Sinn:
In my view, the Green Paradox is not simply a theoretical possibility. I believe it explains why fossil fuel prices have failed to rise since the 1980s, despite decreasing stocks of fossil fuels and the vigorous growth of the world economy.
The emergence of green policy movements around the world, rising public awareness of the climate problem, and increased calls for demand reducing policy measures, ranging from taxes and demand constraints to subsidies on green technologies, have alarmed resource owners.
In fact, while most of us perceived these developments as a breakthrough in the battle against global warming, resource owners viewed them as efforts that threatened to destroy their markets. Thus, in anticipation of the implementation of these policies, they accelerated their extraction of fossil fuels, bringing about decades of low energy prices.
Prohibition ended this day 1933
05 Dec 2015 Leave a comment
in economic history, economics of regulation, health economics, politics - USA Tags: alcohol prohibition, alcohol regulation, meddlesome preferences, nanny state, prohibition era
December 5th 1933 – The night they ended Prohibition http://t.co/OCxvyNfVIR—
Old Pics Archive (@oldpicsarchive) April 11, 2015
Cut drug lags with Free To Choose Medicine @annetterongotai @dbseymour @PeterDunneMP
03 Dec 2015 Leave a comment
in economics of regulation, health economics, politics - New Zealand, politics - USA, Sam Peltzman
Bart Madden and Vernon Smith outlined a brilliant proposal charted above to shorten lags in the availability of life-saving medicine based on reforms in Japan:
Recently, Japanese legislation has implemented the core FTCM [Free to Choose Medicine] principles of allowing not-yet-approved drugs to be sold after safety and early efficacy has been demonstrated; in addition, observational data gathered for up to seven years from initial launch will be used to determine if formal drug approval is granted. In order to address the pressing needs of an aging population, Japanese politicians have initially focused on regenerative medicine (stem cells, etc.).
Source: Give The FDA Some Competition With Free To Choose Medicine – Forbes via A Dual-Track Drug Approval Process.
This process would release the relevant data behind the drug including its clinical trials on a web portal so that patients and their doctors can work out whether a new drug is suitable to them given their genetic markers. Madden and Smith explain the operation of the web portal for Free to Choose Medicine (FTCM) as follows:
Doctors would be empowered to use their medical knowledge and in-depth knowledge of their patients similar to how they decide on off-label use for approved drugs, i.e., for uses that the FDA has neither tested nor approved but, in the opinion of doctors, are likely to be beneficial to patients. To gain early access, patients would purchase the drug from developers and consent to doctor and developer immunity from lawsuits except in the case of gross negligence or willful misconduct.
Off label use of medicines arises because the current Food and Drug Administration (FDA) process for drug approval has several phases. Phase 1 tests for the safety of the drug. Later phases are about whether the drug has its predicted effects. That should not be a concern of the FDA or its superfluous New Zealand equivalent Medsafe.
If a new drug isn’t better than the existing competition, that’s a problem for its investors for backing the wrong horse. It’s up to its investors and potential buyers to work out for themselves whether a new drug is more effective than the existing options. That’s a commercial decision, not a decision from regulators.
https://twitter.com/Carolynyjohnson/status/667696845615968257
Once a drug is approved by the FDA for particular uses, doctors and researchers often discover that a drug has other clinical applications.
Source: Pharma Marketing Blog
Rather than go through another round of FDA approvals, doctors simply prescribe that drug despite the fact it is not approved by the FDA for that particular clinical use. This is what is called off label prescription.
A number of US states have passed hopelessly unconstitutional Right to Try legislation that authorises the prescription of new drugs not approved by the FDA.
The Free to Choose Medicine proposal is similar to Right to Try legislation. Free to Choose Medicine would allow doctors to make their own prescription choices for their patients as long as the new drug has been shown to be safe. That is, it has passed Phase 1 of the FDA drug approval process. Phase 1 is about drug safety.
In 1962, an amended law gave the FDA authority to judge if a new drug produced the results for which it had been developed. Formerly, the FDA monitored only drug safety. It previously had only sixty days to decide this. Drug trials can now take up to 10 years.
https://twitter.com/MaxCRoser/status/627581135355310080
Sam Peltzman showed in a famous paper in 1973 that the 1962 amendments to US Federal drug approval laws reduced the introduction of effective new drugs in the USA from an average of forty-three annually in the decade before the 1962 amendments to sixteen annually in the ten years afterwards. No increase in drug safety was identified.
Peltzman found that the unregulated market quickly weeded out ineffective drugs prior to the 1962 law change in the USA. The sales of ineffective new drugs declined rapidly within a few months of their introduction.
Doctors stop prescribing medicines that don’t work. Patients complain quickly about medicines that don’t work. What matters is they had the chance to try this drug.
If economists have a bitter drinking song, a battle cry that unites the warring schools of economic thought all, it would be “how many people has the FDA killed today”. Many drugs became available years after they were on the market outside the USA because of drug approval lags at the FDA. The dead are many. To quote David Friedman:
In 1981… the FDA published a press release confessing to mass murder. That was not, of course, the way in which the release was worded; it was simply an announcement that the FDA had approved the use of timolol, a ß-blocker, to prevent recurrences of heart attacks. At the time timolol was approved, ß-blockers had been widely used outside the U.S. for over ten years. It was estimated that the use of timolol would save from seven thousand to ten thousand lives a year in the U.S. So the FDA, by forbidding the use of ß-blockers before 1981, was responsible for something close to a hundred thousand unnecessary deaths.
Free to Choose Medicine is an excellent way to break the regulatory deadlock over drug lags. Free to Choose Medicine should be adopted in New Zealand. Any new drug that has passed the phase 1 drug safety part of regulatory approval processes in any one of the USA, UK, Australia, Canada or Germany should be lawful to prescribe in New Zealand. New drugs should not have to go through the superfluous processes of Medsafe.
The existing drug regulatory regime is based upon making the drug safe for the average patient. That has been swept aside by pharmaceutical innovation as Madden and Smith explain:
Today’s world of accelerating medical advancements is ushering in an age of personalized medicine in which patients’ unique genetic makeup and biomarkers will increasingly lead to customized therapies in which samples are inherently small. This calls for a fast-learning, adaptable FTCM environment for generating new data.
In sharp contrast, the status quo FDA environment provides a yes/no approval decision based on statistical tests for an average patient, i.e., a one-size-fits-all drug approval process. In a FTCM environment, big data analytics would be used to analyze TEDD [Tradeoff Evaluation Drug Database] in general and, in particular, to discover subpopulations of patients who do extremely well or poorly from using a FTCM drug.
The modern macroeconomics of the Global Financial Crisis
02 Dec 2015 Leave a comment
in applied price theory, budget deficits, business cycles, economic growth, economic history, economics of regulation, Euro crisis, fiscal policy, global financial crisis (GFC), great depression, great recession, macroeconomics, monetary economics Tags: adverse selection, bank panics, bank runs, banking crises, deposit insurance, economics central banks, financial crises, moral hazard, sovereign defaults
@NYTimeskrugman nails urban inequality @PhilTwyford @metiria
01 Dec 2015 Leave a comment
in economics of regulation, politics - New Zealand, urban economics
Source: Inequality and the City – The New York Times via Krugman: Deregulate Housing, David Henderson | EconLog | Library of Economics and Liberty.
Climate sceptics are so low that they must be smeared as libertarians
01 Dec 2015 3 Comments
in applied welfare economics, economics of regulation, environmental economics, global warming, politics - USA, Public Choice
When the Twitter Left brands an opponent as a libertarian, I assume it’s a secret handshake among true believers trying to identify each other. You need time management counselling in your calling as a political junkie if you knew what a libertarian was until a few years ago. The only reason to change was the election of Senator Ron Paul.
The Twitter Left likes to smear opponents as libertarians despite the fact that certainly outside the USA and even within the USA few know what the libertarian means even with the help of scare quotes.
Only political junkies have an inkling of what a neoliberal is so why smear someone such an even more obscure label such as libertarian? Libertarian must be lower than a neo-liberal and should be hated even more by the Twitter Left must be the implication despite its poor marketing outreach value. I’m still puzzled as to why use such an obscure political label.
Today in the New York Times, a guide was published giving its readers the short answers to the key questions global warming. The author argued that most attacks on the science of global warming come from libertarians and other political conservatives who don’t like the implications of fighting global warming for growth in the size of government.
Source: Short Answers to Hard Questions About Climate Change – The New York Times via Environmental Economics: Short Answers to Hard Questions About Climate Change – The New York Times.
It is true that people attempt to discredit the arguments behind positions. Let he who is without sin cast the first stone.
“How to discredit an unwelcome report:
… Stage Four: Discredit the person who produced the report. Explain (off the record) that
1. He is harbouring a grudge against the Department.
2. He is a publicity seeker.
3. He is trying to get a Knighthood/Chair/Vice Chancellorship.
4. He used to be a consultant to a multinational.
5. He wants to be a consultant to a multinational.”
Sir Humphrey, The Greasy Pole.
As a professional economist, I am used to special interests as well as the Twitter Left arguing that economics is “just a theory” and its methodology is unrealistic along with various other attempts to avoid engaging with the actual advice put forward.
It is also true that scepticism about climate science has a partisan divide. In the USA, for example, Democrats are far more worried about global warming then independents or Republicans. (Independents is their name for swinging voters. They are called independents because if they register as one, they can vote in the Republican or Democratic primaries in many states).
I have argued in the blogosphere since 2011 that let the science be settled, only the economics matters because the economic cost of global warming is small.
Global warming, although real, is not apt to be severe. It will lower the level of GDP by maybe 2%. The loss of one year’s income growth! Courtesy of David Friedman’s reading of the report, this is what the most recent report of the IPCC said:
With these recognized limitations, the incomplete estimates of global annual economic losses for additional temperature increases of ~2°C are between 0.2 and 2.0% of income (±1 standard deviation around the mean)
I have also argued that the climate alarmists scored a great tactical victory in keeping the debate about the reliability of the science. By successfully baiting that trap for opponents, the climate alarmists have avoided having to discuss the costs and benefits of global warming.
Richard Tol on the scientific consensus about human-caused global warming skepticalscience.com/graphics.php?g… http://t.co/OpdRtsY1tx—
John Cook (@skepticscience) March 24, 2015
So it is rather curious that climate sceptics are playing to the strength of the climate alarmists rather than their weaknesses. Those weaknesses are the economics of global warming and the public choice economics of international climate agreements.
Source: Richard Tol.
Not only is the economic cost of global warming small, the chances of supplying an international public good such as a treaty to reduce carbon emissions is minimal.
The New York Times today in its Q&A guide did not quantify the costs and benefits of global warming. That makes their guide deeply misleading. This is because such estimates of the cost of global warming as a percentage of GDP are available from the IPCC. Which is worse? Being a libertarian or a misleading, low rent journalist?
Source: Short Answers to Hard Questions About Climate Change – The New York Times via Environmental Economics: Short Answers to Hard Questions About Climate Change – The New York Times.
What is even more bizarre in the guide today in the New York Times is the claim that politicians are finally taking climate change seriously. Anyone who claims that a climate change treaty will come out of Paris that is in any way binding is simply not paying attention to the last 5 years of politics and who controls the U.S. Congress. They cannot be taken seriously as a political commentator.
Obama gave up on a climate bill passed by the House of Representatives in 2010 despite the fact that he had the numbers in the Senate to break a filibuster. There were 5 Republican senators who would have voted for cap and trade in April 2010: Lindsey Graham, Susan Collins, Olympia Snowe, Scott Brown, and George LeMieux. There were 57 Democrat Senators. It takes 60 votes to break a filibuster.
Obama gave up because he didn’t want the additional political flak of passing a climate change bill in the aftermath of the political costs of passing Obamacare. President Obama could have fought harder to get the Bill the House passed through the Senate but he did not.
Concern about global warming fads away when it becomes a hip pocket issue. Rather than blaming vast right-wing conspiracies, using Google searches for “unemployment” and “global warming”, Kahn and Kotchen found that:
- Recessions increase concerns about unemployment at the expense of public interest in climate change;
- The decline in global-warming searches is larger in more Democratic leaning states; and
- An increase in a state’s unemployment rate decreases in the probability that Americans think global warming is happening, and reduces the certainty of those who think it is.
As Geoff Brennan has argued, CO2 reduction actions will be limited to modest unilateral reductions of a largely token character. There are many expressive voting concerns that politicians must balance to stay in office and the environment is but one of these. Once climate change policies start to actually become costly, expressive voting support for these policies will fall away, and it has.
Utopia, you are standing in it! 
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