All entries for July 2005

Risk, Terrorism and Policymaking

I found this post from the d-squared digest on the risk posed by terrorists quite interesting. On the issue of the optimal or acceptable level of risk we should face, we are told:

If you’re trying to bring the risk down to zero, then you have almost certainly over-engineered. So you should design the system to leave some positive risk. Risk, by the way, is the risk that something very bad will happen; the fact that ex post something very bad did happen is not good evidence that ex ante the risk tradeoff made was the wrong one, nor is it evidence that the tradeoff needs to be changed going forward. Having said that, acceptance of the statistical inevitability of bad events needs to be tempered with another important principle: By and large, you get the error rate that you are prepared to tolerate.

Read the full post here.

The events of 7/7 are one such error which may or may not be tolerated by policymakers. As a columnist in the Times recently stated, if criminal profiling, shoot-to-kill policies and indefine detention are considered a good idea after the event, they should have been equally acceptable beforehand. After all, it’s no secret that the country was at risk. If such policies were considered excessive beforehand, widespread acceptance of them now is certainly an emotive rather than rational response.

: 30 Jul 2005 12:27 |  Tags: Economics |  Comments (1) |  Close comments |  Report a problem

Labour's Ineffective Social Policy

Columnist Jamie Whyte wrote a good article in The Times yesterday on government initiatives aimed at ‘improving’ society’s behaviour; in particular, the behaviour of children. Whyte links a poor worth ethic and lack of self sufficiency among some societal groups to the fact that the financial cost of poor parenting and poor behaviour is borne by taxpayers rather than the family in question.

The development of Labour’s social policy displays the same characteristic. Since coming to power Labour has produced an extraordinary number of micro-initiatives aimed at improving our behaviour. Its latest is the brainchild of Beverley Hughes, the Children’s Minister. As well as punishing bad children with the familiar antisocial behaviour orders, school expulsions and the like, the Government will also reward good children

Oddly, for a Labour Party in a nation that believes Marx to be history’s greatest philosopher, it has forgotten one of his most important teachings: the way we live is determined by the economic arrangement of society. There is so much antisocial behaviour in Britain because the values that might prevent it have lost their economic value.

Why do parents instil in their children habits of hard work, self-restraint and consideration for others? Perhaps they believe these values to be intrinsically worthwhile. But they also have an economic interest in raising well behaved children. If your child grows up to be an unemployable slob, he will be an economic burden on the family.

Given that the costs of behaviour deemed irresponsible (drinking, eating unhealthy food, not working) are paid for by the public as a whole, the government feels justified in proposing ever intrusive legislation. Unfortunately the public, seeking value for money, is happy to grant them permission.

Read the article in full here.

: 27 Jul 2005 06:42 |  Tags: Economics |  Comments (0) |  Close comments |  Report a problem

Gun Crime and Gun Ownership

News this week that gun crime in the UK is up 6% from last year coincided with my discovery of an essay by entitled “The False Promise of Gun Control” by Daniel Polsby (found via Capital Freedom ). I’ll summarise the main point of the essay below.

Polsby states that taxes on firearms, detailed background checks and regulations on what/when weapons can be used raise the cost ownership. Policymakers see this as a success given that cost affects willingness to own a weapon. One can class potential owners as criminals, or those with no criminal intent and the impact of higher costs differs between groups. Increasing the cost of ownership has a much greater negative impact on ownership amongst non-criminals than criminals. After all, the latter group makes the purchase with intent to utilise the weapon, while the former have little or no active use for it. The proportion of guns held by criminals therefore increases.

A gun’s effectiveness is partially due to the scarcity of people carrying one. With fewer non-criminals with a gun for protection a criminal has much less to fear. The criminal is less likely to run into trouble when attempting to steal/attack a random member of the public and is less likely to meet resistance from surrounding observers. The more guns there are in circulation, the greater the risk associated with attempted theft and assault.
Total prohibition of gun ownership may yield results worse than those of high taxation and regulation. Ownership amongst non criminals falls to zero whilst criminals continue to access weapons through illicit markets.

The essay goes on to discuss empirical evidence suggesting that the link between crime and gun ownership in US states and across the world is far from clear. The continued debate over the issue is a testament to the ambiguous effect. Given this uncertainty, policymakers should be wary of seeing lower gun ownership as the obvious solution to gun crime.

Read Daniel Polsby’s essay here.

Reducing gun ownership is the intuitive answer to the problems faced. As always, the unseen consequences of policy receive little attention: in this case, the higher incentives for criminals to obtain and use weapons against the unarmed majority.

Having a weapon in the house will inevitably lead to some fatalities as parties get caught up in domestic arguments. There’s also the potential for seemingly innocent disagreements between strangers to escalate into something more serious. In this light, lower gun ownership saves lives. However, claiming particular lives will be saved isn’t sufficient justification for prohibition given that overall rates could well remain the same, or even increase due to adverse incentives.

: 25 Jul 2005 18:33 |  Tags: Economics |  Comments (0) |  Close comments |  Report a problem

The rights of non–smokers

I came across this post from Reason magazine on smoking regulations in a number of US states.

The putative logic of these laws is to protect bar and restaurant workers. In reality, this is something of a fig leaf: The primary support for smoking bans seems to come from folks who don't like having to dry clean their clothes after a night out, and who are therefore asserting their God-given right to visit any bar or restaurant they like on their own terms, owners and other customers be damned.

But the anti-smoking movement's official spokespeople still seem to have the minimal decency required to be ashamed of such a naked appeal to self-interest. Instead, they've been forced to resort to the argument that workers who don't mind smoke must be protected from making stupid choices about their own bodies, while those who do mind it must be protected from the hassle of either making a trade-off or seeking a more congenial job over the course of the many years it takes for environmental tobacco smoke to increase health risks. To the extent that it does, that is—the data on the precise degree of risk involved is notoriously ambiguous.

I’ll leave the issue of employees aside to talk about visitors to smoky buildings. I was wondering if there’s a solid reason why a business should be considered different to one’s home. Few would argue against one’s right to smoke at home. You bought the property and should be free to create whatever environment within it you deem desirable. If that involves paining the walls pink, playing pop music incessantly or smoking, then so be it. It follows that voluntary visitors to the house can’t enforce changes. If pink walls, pop music or smoke are undesirable, one has the option of not entering the building in the first place.

Businesses, like a typical home have a named, private owner. Though a business generally wants as many visitors as possible, like a typical home, all visits are voluntary and thus subject to the environmental preferences of the owner. Trips to a pub, club or restaurant may be enjoyable but the chasm between this and saying such things are a right is substantial. Visits to pubs and restaurants aren’t enforced. One has the option of:

• Choosing not to visit
• Visiting a non-smoking organisation providing a similar service
• Purchasing raw goods and consuming them at home
• Sticking funds in a piggy bank

Despite the small set of alternatives above, people continue to visit smoky environments day in, day out. There’s little doubt that passive smoking carries risks but people clearly don’t consider the cumulative risk substantial enough to warrant staying at home. Why then should this group dictate terms to the rest a pub or restaurant’s visitors? Why should this group dictate terms to the owner of the pub or restaurant? Where did this ‘right’ to a smoke free environment come from? It’s not as if non-smokers would accept such dictatorship in their own homes.

: 20 Jul 2005 18:44 |  Comments (4) |  Close comments |  Report a problem

Child Labour

Virginia Postrel writes in the New York Times about research into child labour:

When he started working on child labor issues six years ago, Professor Edmonds said in an interview, "the conventional view was that child labor really wasn't about poverty." Children's work, many policy makers believed, "reflected perhaps parental callousness or a lack of education for parents about the benefits of educating your child." So policies to curb child labor focused on educating parents about why their children should not work and banning children's employment to remove the temptation.

Recent research, however, casts doubt on the cultural explanation. "In every context that I've looked at things, child labor seems to be almost entirely about poverty. I wouldn't say it's only about poverty, but it's got a lot to do with poverty," Professor Edmonds said. As families' incomes increase, children tend to stop working and, where schools are available, they go to school. If family incomes drop, children are more likely to return to work.

Read the full article here.

The thought of young children working tends to elicit outrage from many camps. Such groups claim childhood is a time for playing, learning and enjoying lack of real responsibility. Multinational companies therefore come under fire for turning childhood into an undesirable chore. Critics would do well to ask why these children are working in the first place. According to the NYT article, poverty is the primary cause. If families are to feed themselves and purchase vital medicines and equipment, income is needed. If that income must come from the young, then so be it.

That children choose to work in a factory implies it’s the best option available given all alternatives. Rather than demonise those employing child labour, we should accept the current state of affairs as necessary if families are to build up sufficient funds to allow future children to enjoy the carefree lifestyle of kids in the developed world. Imposing what we in the UK see as employee ‘rights’ upon foreign subsidiaries of multinational firms reduces incentives to locate abroad, effectively punishing those workers who depend on them the most.

via Dynamist Blog

: 18 Jul 2005 18:48 |  Tags: Economics |  Comments (0) |  Close comments |  Report a problem

Nozick on Intellectuals and Capitalism

Below, is a short summary of a Robert Nozick essay entitled “Why Do Intellectuals Oppose Capitalism?”.

Nozick defines an intellectual as not “all people of intelligence or of a certain level of education, but those who, in their vocation, deal with ideas as expressed in words, shaping the word flow others receive. These wordsmiths include poets, novelists, literary critics, newspaper and magazine journalists, and many professors.”

Nozick cites the school system as the cause of their distain for market systems. A school rewards students on the basis of academic achievement and effort exerted. The distribution of awards is thus deemed ‘just’. Rewards may come in the form of attention from teachers or perhaps formal grades. Outside of schools, economic rewards (income, wealth) are determined by how well one meets the demands of others, or how ‘valuable’ one is to society. In typical free market systems, the highest rewards often accrue to those deemed average intellectually.

The intellectual working in academia observes such groups and bemoans the failure of the market to reward him/her adequately. After all, isn’t an intellect more valuable than the ability to run fast? Or even the ability to sing well? Markets fail to reward the intellectual in the same way rewards were awarded in school. Lamenting the lack of economic reward and social status in the real world, the intellectual develops a distrust of market systems, favouring centralised control: a system which gives highest reward to people of ‘real value’.

The full essay can be found here.

: 14 Jul 2005 16:49 |  Tags: Economics |  Comments (0) |  Close comments |  Report a problem

Aid Is/Isn't effective

The recent G8 discussions on Africa's development have left many NGOs and think tanks disappointed with the new funds being promised. On the topic of increased aid, Jim of Our Word Is Our Weapon links to a study by Mark McGillivray of the World Insititue of Development Economics Research (WIDER) summarising literature implying the effectivness of aid and outlining trends in aid provision.

Contrary to studies published by the Cato Institute and The Globalisation Institute, the paper “finds overwhelming evidence that aid increases growth and other poverty-relevant variables. By implication, therefore, it can be inferred that poverty would be higher in the absence of aid.”

The apparent conflict between this study, and ones claiming the ineffectivness of aid are often attributed to differences in model specification, different datasets and the composition of aid measurments. Comment on which methods is most correct is best left to statisticians.

In any case acceptance that aid can generate economic growth isn’t reason to abandon all skepticism. To be honest, I’d find it extremely odd if several hundred billion dollars failed to yield any benefit whatsoever. What’s more important is whether such growth is self sustaining. Is it feasible, for growth to be driven by exogenous factors (i.e. western generosity) in the long run? If willingness to donate funds increases, are there real incentives for leaders to implement reform? These are questions aid advocates must answer. For donors, consideration of ‘value for money’ still has its place. We need to ask how much growth is needed to justify an extra billion pounds of aid; how much institutional change must we see before we accept further requests for aid, and so on. After all, the money being channeled abroad ultimately comes from your pocket and its money that could be used for other productive purposes.

An interview with Kenyan economist James Shikwati entitled For God's Sake, Please Stop the Aid! has been doing the rounds and is worth a look for an on-the-ground perspective on the issue.

: 10 Jul 2005 13:30 |  Tags: Economics |  Comments (2) |  Close comments |  Report a problem

Terrorism and its inadequacy

Jason Kuznicki of Positive Liberty writes a lengthy comment on terrorism and its impact (or lack thereof) on developing nations. Jason states that whether the aim of the perpetrators is revenge, or to hinder our ability to function as normal they’re unable to directly eliminate the fundamental values which create the society they’ve come to despise. In relation to the US, he says

What will destroy the United States is if ever, under any pretext at all, we lose the idea of decentralization. If we give up on the idea that people ought to pursue their happiness in a billion different ways, if we dismantle our spontaneous order in the name of security, then we will have finished the job that the terrorists are too ignorant even to start.

With yet another unoriginal—and, in the grand sense, unsuccessful—terrorist attack, we should take comfort in that our enemies haven't yet properly tried to destroy us. In the war of ideas, they still don't know what they're up against, and the proof can be found in their rhetoric and choice of targets. Our greatest danger lies in mistakenly believing them—and in failing to understand that our greatest strength lies in having no center at all.

Loss of life is tragedy, but unlike authoritarian command and control mechanisms, free societies are clearly very resilient to such atrocities. Hopefully, terrorism's proponents will continue to be frustrated by their lack on influence on the way we live our day to day lives.

Read 'The Absurdity of Terrorism' in full here.

: 07 Jul 2005 21:57 |  Comments (2) |  Close comments |  Report a problem

Software patents bill overturned

From theregister.com

The European Parliament has voted by a massive majority to reject the software patents directive, formally known as the Directive on the Patentability of Computer Implemented Inventions. The vote to scrap the bill was passed by a margin of 648 votes to 14, with 18 abstentions.

The Foundation for a Free Information Infrastructure (FFII) says the rejection is a logical response to the Commission and Council's refusal to take parliament's will into consideration.

Anti-software patent campaigner Florian Muller argues that today's vote was prompted by events back in February, when the parliament's committee of legal affairs, JURI, voted for a restart of the legislative process. That vote was flatly ignored by the European Commission, which decided instead to move on to a second reading.

"A nightmare is over," Muller says. "Next time around, let's honestly discuss the pros and cons of pure software patents, and then we can get a great directive that won't die a dishonourable death like this."

It looks as if members on both sides of the debate chose to reject the bill in its current form. Supporters of patents would have been unhappy with the numerous amendments to the bill and will thus work on creating a motion that’s more appealing to sceptics. At stake is future innovation in the realm of software. The introduction of software patents may hamper or prevent small firms or individuals from creating rival goods. Without the funds to hire a legal team, such groups may be susceptible to pressure from more powerful firms and unable to defend legitimate claims.

: 06 Jul 2005 17:30 |  Tags: Computing |  Comments (0) |  Close comments |  Report a problem

More on Supreme Court nominations

Pejman Yousefzadeh of Tech Central Station writes favourably about Justice Clarence Thomas and his decision making track record. According to Pejman, Justice Thomas’ reluctance to further his own ends is an attribute to be looked for in potential Supreme Court nominees.

On Justice Thomas’ dissent in the case Gonzales vs. Raich, (involving interpretation of the US Commerce Clause), Yousefzadeh says,

This originalist understanding of the meaning of "commerce" both grounds Justice Thomas' dissent firmly in the intended Constitutional tradition and interpretation of the Commerce Clause and allows for a more comprehensible and enforceable regulatory scheme for the federal government to follow. Instead of paying heed, however, to Justice Thomas's approach, the majority in Raich went ahead and allowed for the enactment of a far more ambitious and reaching regulatory scheme — one that us with a policy that will lead to an administrative and enforcement nightmare for both the federal government and the citizenry.

Read the full article here.

: 06 Jul 2005 11:54 |  Tags: Economics |  Comments (0) |  Close comments |  Report a problem