Thursday, May 17, 2018

Phages: One More Example of Misguided FDC Regulation

Mother Jones has an article about phage treatments for bacteriological infections. Phage treatments predated antibiotics, but the advent of antibiotics eliminated research interest in them. They are based on a discovery of French researcher  Félix d’Herelle, who had worked at Yale but was induced to move to Russia because  Stalin provided funding. Stalin murdered D'Herelle's chief protege,  Georgi Eliava, in a purge. However, the Eliava Institute still exists.

The phage treatment may present a way to treat the new, antibiotic-resistant bacteria that are beginning to infect Americans.  However, they are unavailable in the US because the FDA will not allow them, despite any evidence of their being harmful.

This is one more example of murderous effects of government regulation.  Maryn McKenna writes in Mother Jones: 

But for phage therapy to be deployed routinely in the United States, phages would have to be approved as drugs by the FDA. To treat an American patient with them now requires emergency compassionate-use authorization—effectively an acknowledgment that nothing with an FDA license can save the patient’s life. And Strathdee [an American who required treatment] was about to learn that because phages have no such approval, awareness of them is scarce and unevenly distributed, and finding the right researchers and physicians requires extraordinary luck.

Sunday, May 13, 2018

Mandatory Voting: One More Misguided, Coercive State Policy

Dambisa Moyo appeared on Kitco to discuss her recent book and advocate mandatory voting.  She claims that the current American system permits voters' apathetic shirking, with the result that politicians think short-term and pander to the extremes in the two parties.

The question of long-term versus short-term thinking by politicians is related to issues that Madison and Hamilton discuss in The Federalist.  They feared mass democracy because the general public tends to think short-term, so they believed that mob rule would likely result from mass democracy.

Long-term thinking favors free markets; short-term thinking favors coercion and government management. Since America was made more democratic during the Progressive era,  short-term rather than long-term thinking has tended to prevail. When the US was more in the nature of a republic than a democracy, laissez-faire policies that, in the long-term, generated 0.5% to 2.0% annual real wage increases resulted. When the country adopted Progressivism in the late 19th century and adopted the 17th Amendment in 1913, real wages were growing.  Sixty years after the passage of the 17th Amendment, which made election of Senators more democratic by ending their election by the state legislatures, real wages stopped growing.

The reason real wages stopped growing in 1973 was the passage of popular, but ham-handed, regulation in the 1960s.  President Nixon's termination of the gold standard in 1971 did not meet public disapproval, and it led to the ability of sophisticated financial elites to divert wealth to themselves. As well, government beneficiaries, defense  contractors, and other privileged interests have benefited, but the public is mostly unaware that the gains it was earning under free market capitalism ground to a halt after the Great Society regulatory expansion of the 1960s.

More democracy meant shorter-term thinking, just as Madison feared. Republics work better than democracies.

If we look at the 22  countries that have mandatory voting, they are mostly low-GDP or very small countries.  The high-GDP countries that have mandatory voting are small,so the effects of complex lobbying and media manipulation processes, as occurred during the 2008-9 bailout and routinely occur vis-a-vis monetary policy, are also small.  In a small country it is hard to favor policies that favor yourself at others' expense; the country is so small that harm will come to everyone.

As you can see in the chart below, which I copped off PBS,  there is mandatory voting in countries with insane and corrupt legal and monetary policies like Argentina, the Congo, Greece, and Mexico.  The relatively well-run countries with mandatory voting are small.  These include Singapore, Australia,and Luxembourg.

Increasing the number of voters will not change much. It may reduce the time horizon of elected officials.  The cost of voting may reduce marginal voters' time investment in learning about issues.  In small countries costs of voting for misguided policies are quickly borne by everyone, but in large countries  some groups can impose costs onto others.   Thus, voters can be convinced to vote for policies like the minimum wage that harm a small number of people but make themselves feel good. Policies that squash innovation are among these.

Even in a small country like Greece, which only has a population of 11 million, the public wasn't able to foresee that pension underfunding and excessive government wages would soon result in bankruptcy.

Most of the other countries on the list of countries with mandatory voting have not been able to develop because of the sclerotic, big-government bloat that most people believe benefits them. They believe so because they are unable to think long-term.   If anything, forcing more widespread voter participation, which will make the voter base more manipulable because it will force those with the least interest in voting to vote, will appeal  to elite interests that stand to benefit from loose monetary policy and government favoritism.

CountryAge of
Eligibility for
Mandatory Voting

Congo, Democratic
Republic of the
Costa Rica18
Dominican Republic18
Source: CIA World Factbook via PBS

Friday, May 11, 2018

Education Increases Ideological Prejudice

Sean Stevens of Heterodox Academy has written a summary of  a study, which appears in the December 2017 (81:4) issue of Public Opinion Quarterly,  by PJ Henry and Jaime Napier of NYU.  The study finds that while education reduces ethnic, racial, and anti-immigrant prejudice, it increases ideological prejudice.  Stevens suggests that the results require rethinking about why education reduces prejudice in some areas but increases it in others.

The study is based on data in the American National Elections Studies survey. The authors study a 40-year period, from 1972 to 2012.  Henry and Napier base the study on self-reports of ideology and measures of feelings toward people with left- and right-wing ideologies.  They find that education is weakly associated with left orientation, and the effect comes mostly from college graduation.  In other words, people who are able to see through four years of college tend to be more left oriented, either because they are better able to stand the environment or because they learn to be left oriented in college.

Increased education is found to correlate with increased ideological prejudice for both left and right, but the effect is stronger for leftists. When the authors control for time, they find that the effect has significantly increased over time for leftists but not for conservatives.

Stevens notes that the results call into question the notion that education promotes tolerance toward those who are different.  Rather, it seems to promote certain patterns of tolerance in specific areas, often called politically correct.  In other areas, which are not within the rote, left-wing, politically correct catechism, education does not improve tolerance of others' beliefs.

Thursday, May 10, 2018

World War I and the Era of Bounded Rationality

I just finished listening to a Great Courses lecture series about World War I by Prof. Vejas G. Liulevicius of the University of Tennessee.  The course is a great learning experience. Understanding the tragic miscalculations of World War I is necessary to understanding the history of government, management and economics during the last century, including the expansion of state power and the rejection of classical liberalism on behalf of state activism, which is necessarily militaristic despite ideologically motivated claims to the contrary.  

 March and Simon’s concept of bounded or cognitive limits on rationality, which is usually applied to business strategy, is omnipresent in the history of World War I.   Bounded rationality, or the physical, financial, and mental constraints on rational choice,  is tightened with respect to the larger-scale decisions of government.  

Many aspects of the Great War suggest  a sharp expansion in the importance of cognitive limits on rationality.  These include the mistaken enthusiasm of the August Madness, i.e., the international public enthusiasm about the war when it first began; the difficulty of strategic and tactical adjustment to the technology of mechanized warfare; the resultant failure of many of the military strategies such as at the Battles of Verdun, Gallipoli, and the Spring Offensive; the Germans’ secretive propaganda efforts, which led to the stab in the back theory (itself reflecting limited rationality); the Germans’ strategic miscalculation with respect to the harshness  of the the Brest-Litovsk treaty with Russia, which led to the Allies' greater harshness at Versailles; both the reasoning for starting the war (leading to the termination of the Empires, which had seen the war as a means of expansion) and the Allies’ treaties, which led to the next war; and the naïve post-war idealism of both Lenin and Wilson. 

I would conclude that the Great War was a comedy of errors, except that few narratives are as tragic, and few have made me more pessimistic about the human condition.