Cafe Hayek

Lying Hypocrites

Politicians have no shame.  None.  Here are the first two paragraphs of Betsy McCaughey's article in today's Wall Street Journal:

Last September Sen. Barack Obama promised that under his health-care proposal "you'll be able to get the same kind of coverage that members of Congress give themselves." On Monday, President Obama repeated that promise in a speech to the American Medical Association. It's not true.

The president is barnstorming the nation, urging swift approval of legislation that is taking shape in Congress. This legislation -- the Affordable Health Choices Act that's being drafted by Sen. Edward Kennedy's staff and the Health, Education, Labor and Pensions Committee -- will push Americans into stingy insurance plans with tight, HMO-style controls. It specifically exempts members of Congress (along with federal employees; the exemptions are in section 3116).

Lies.  Special privileges.

Par for the course.

Denationalizing the Drug-Approval Process

Here's my colleague Dan Klein arguing -- effectively, in my opinion -- for denationalizing the process of approving drugs.  The clip lasts about seven-and-a-half minutes.  It is well worth watching.

Wipe that Smile Off of Your Face

We can only hope (however hopelessly) that Chandrama Pyakurail is a master of satire rather than a Person Really and Truly Concerned With the Environment -- and likewise for the folks at Wallypop (here, and here). 

'Personal Security' Reasons for Not Trading?

Howard Harrison (in one of his comments here) worries about the national-security implications of free trade.

I don't worry about such implications.  One reason I don't worry is that the evidence overwhelmingly shows that freer trade is associated with greater prosperity -- and with greater prosperity people are better able to defend themselves from aggressors.

Another reason I don't worry is that the evidence also shows that freer trade is associated with a lower likelihood of war with trading partners.

But another reason I don't worry is that I realize that, whenever I -- Don Boudreaux -- trade with others I expose myself to specific risks that I would otherwise avoid.  That is, if I let myself dwell on the matter, I might conclude that trade outside of my household poses "personal security" -- or "household security" -- risks that, in my ignorance of what I might expose myself to as I trade with strangers across town and across the USA, I'd best avoid.

It is, after all, possible that the can of soup I buy at the supermarket will be tainted with poison; it's possible that going to the Saturday-morning farmers' market near my home will result in my being gunned down by a madman or by a thief who fancies my wallet or my wife.  Perhaps a trip to the multiplex will end with my dying at the hands of an arsonist who, for whatever sick or selfish reason, torches the theater.  How can I be sure that an ordinary trip to the local pharmacy won't turn into my death sentence: a fired employee could well 'go postal.'  And local restaurants?  Fugetaboudem!  Each one is full of strangers who could, at any moment, pull out a knife or a gun or a can of gasoline and start killing everyone in the establishment.

These consequences are indeed possible.  In fact, they actually happen from time to time.  And yet, very few of us conclude from the fact that such a tragedy could befall us that such a tragedy will befall us with sufficient likelihood to justify our closing ourselves off to the world outside of our immediate families.  We'd be much poorer -- and, although safer from being killed by strangers, at much higher risk of dying from the likes of disease, malnutrition, and household injuries.

I’m quite confident that, compared to hunkering down at home 24/7 and being self-sufficient, the higher risks of my or my wife or my son being murdered when we choose to take an ordinary trip to the shopping mall, the supermarket, or a local restaurant exceed  the increased risks of our being killed as result of Uncle Sam permitting Americans to trade freely with people in other countries.  I have no hard evidence to support this hypothesis – but no one has any evidence to contradict it.

Coase and California

One of the deepest insights of Coase's 1960 article on externalities is the understanding that externalities are reciprocal and that rules and norms affect how much care people take in a risky situation when they are linked to others.

McCloskey taught me this in my first grad price theory class arguing that if drivers are liable for hitting pedestrians, then they will be more cautious and pedestrians will be more careless. If drivers bear no liability for hitting pedestrians then drivers will be less careful and pedestrians will take more care.

On the surface, this seems silly. It is wrong to run someone over, so justice requires drivers to be liable.

Yet Coase's point is that it's not clear which set of rules is socially desirable. If the goal is to minimize pedestrian fatalities from cars, it might be better to have drivers take less care and pedestrians take more care.

A key word in the previous sentence is "might." It might not be. It depends on who can avoid the harm most effectively and cheaply. It would seem in this case, that drivers can avoid the harm most cheaply and effectively, so they should be liable. But the other factor is how elastic the response will be from the side that is not liable. If pedestrians respond to driver care by being very reckless, the outcome could still be very costly.

In this particular case, the whole issue seems moot--after all, how reckless can pedestrians be, especially compared to how reckless cars can be?

And the kicker would seem to be that whether drivers are liable or not, they still feel guilt at running someone over. And pedestrians are going to be badly hurt or killed when they get hit, so how reckless can they really be?

But being out in California for a visit, it is obvious how differently people behave here. Here, unlike much or all of the rest of the country, the pedestrian is king. It is partly a social norm, partly the result of social legislation. The mix doesn't matter. What matters is that pedestrians cross streets in ways that are very different than in Washington DC where I live. The driver takes more care here. You have to if you don't want to hit someone.

So here's my hypothesis. Of the people who do get hit by cars here in California, I would guess that a disproportionate share get hit by drivers who are visiting from out-of-state in rental cars who are not used to the California norms and legislation.

I don't know if the data are out there. I think the place to start would be with the rental car companies to see if there are higher accident rates involving civilians per mile traveled in California than elsewhere.

Do YOU See It?

It's discouraging that the USA Today editorialist who penned these paragraphs doesn't see the internal contradiction therein; it's even more discouraging that many readers will miss this contradiction:

While the mad-cow fears in South Korea might be overblown, neither the U.S. cattle industry nor the federal government seems to understand that food is not like steel or plastics. What people eat is an intensely personal matter. In many of the countries that have banned U.S. beef, food is part of the culture and, in some cases, the religion.

In the USA, food might be less spiritual, but it is keenly important. Some consumers are turning away from large-scale agriculture, buying organic products and even dealing directly with local farms through subscription programs known as Community Sponsored Agriculture.

To some degree, those consumers and protesters in the streets of South Korea are sending the same message: They don't want big government and powerful industries telling them what's for dinner.

Capitalism Day

On this Earth Day, I celebrate capitalism -- the institution that, far more than any other, has made human lives clean, safe, dignified, and culturally rich.  Capitalism is also responsible for giving people the wealth and leisure to permit them to mis-perceive nature as loving and bountiful, and to enjoy nature in a way that few of our pre-industrial ancestors could ever have enjoyed it.

So, on this Earth Day, I offer you here my essay, inspired by the work of Julian Simon, entitled "Cleaned by Capitalism."  Here are the central paragraphs:

Before refrigeration, people ran enormous risks of ingesting deadly bacteria whenever they ate meat or dairy products. Refrigeration has dramatically reduced the bacteria pollution that constantly haunted our pre-twentieth-century forebears.

We wear clean clothes; our ancestors wore foul clothes. Pre-industrial humans had no washers, dryers, or sanitary laundry detergent. Clothes were worn day after day without being washed. And when they were washed, the detergent was often made of urine.

Our bodies today are much cleaner. Sanitary soap is dirt cheap (so to speak), as is clean water from household taps. The result is that, unlike our ancestors, we moderns bathe frequently. Not only was soap a luxury until just a few generations ago, but because nearly all of our pre-industrial ancestors could afford nothing larger than minuscule cottages, there were no bathrooms (and certainly no running water). Baths, when taken, were taken in nearby streams, rivers, or ponds, often the same bodies of water used by the farm animals. Forget about shampoo, clean towels, toothpaste, mouthwash, and toilet tissue.

The interiors of our homes are immaculate compared to the squalid interiors of almost all pre-industrial dwellings. These dwellings’ floors were typically just dirt, which made the farm animals feel right at home when they wintered in the house with humans. Of course, there was no indoor plumbing. Nor were there household disinfectants, save sunlight. Unfortunately, because pre-industrial window panes were too expensive for ordinary families and because screens are an invention of the industrial age, sunlight and fresh air could be let into these cottages only by letting in insects too. Also, bizarre as it sounds to us today, the roofs of these dwellings were polluted with all manner of filthy or dangerous things. Here’s the description by historians Frances and Joseph Gies, in Life in a Medieval Village, of the roofs of pre-industrial cottages:

Roofs were thatched, as from ancient times, with straw, broom or heather, or in marsh country reeds or rushes. . . .  Thatched roofs had formidable drawbacks; they rotted from alternations of wet and dry, and harbored a menagerie of mice, rats, hornets, wasps, spiders, and birds; and above all they caught fire. Yet even in London they prevailed.

Peace and free trade.

Shughart on Bailouts

My former GMU colleague (now at the University of Mississippi, and a Senior Fellow at The Independent Institute) Bill Shughart wrote this important warning about government-funded and directed bailouts.  Here's an excerpt:

The record of government bailouts of private financial institutions in the 1930s, of Continental Illinois Bank in 1984 (which cost $8 billion) and of the entire U.S. savings & loan industry in the late 1980s and early 1990s (which cost $125 billion) teaches that emergency loans keep weak institutions alive just long enough for their problems to increase. Bailouts encourage more risk-taking and eliminate the freedom to fail that is just as essential to a free-market economy as the freedom to succeed.

The end result is likely to be further government intrusion into the private economy.

Threat of a law suit

In this earlier post, I mentioned how even one occurrence of an unlikely event, leads to action, no matter how rational or irrational. Michael, commenting on the post, mentions an example I had been thinking about as well, the tragedy of the girl killed by a puck at a hockey game and how that led to nets at the ends of the stadium to protect customers from a one in a million risk.

I wonder how much of this response is due to the threat of a law suit. Once something has happened, no matter how unlikely, the second time is considered negligence. So the first time someone is killed by a hockey puck, it's bad luck. But the second time, no matter how unlikely, you get sued for not having nets up to block the puck. So maybe it's not 'salience' but the legal environment that explains seemingly irrational overreaction to remote risks.

Worst case scenarios

The latest EconTalk is a conversation with Cass Sunstein about his new book, Worst Case Scenarios. The main focus is how hard it is for humans to deal rationally with low probability catastrophic events. When one of these occurs, such as 9-11, we tend to overestimate the risks of another disaster.

Here is a smaller tragedy that I brought up in the conversation. Last summer, a first-base coach in the minor leagues was killed by a line drive. A terrible tragedy. As far as I know, no major league coach has ever been killed by a batted ball. And this may have been the first minor league coach killed by a batted ball. It's a terrible tragedy. But something has to be done, even though the odds are miniscule that such an event will happen again:

Baseball wants to prevent another tragic accident like the one that killed Mike Coolbaugh.

   General managers decided Thursday that first- and third-base coaches will wear some sort of head protection next season, a move that came four months after Coolbaugh was struck in the neck by a line drive during a minor league game.

   Coolbaugh, a former major league player, was a coach for the Colorado Rockies' Double-A team in Tulsa when he died July 22. He had been hit by a liner as he stood in the first-base coach's box during a Texas League game at Arkansas.

   Some major league coaches responded by wearing helmets the rest of the season.

   "There was a sentiment that as a concept this was a good idea," said Joe Garagiola Jr., senior vice president for baseball operations in the commissioner's office.

   GMs will decide on the exact form of protection when they meet next month at the winter meetings.

   "We're going to come back in Nashville with some options: liners, hard caps, helmets without flaps, helmets with flaps," Garagiola said.

It may indeed to be a good idea for coaches to wear helmets. But it may be a bad idea. My guess is that it may cause some coaches to be less vigilant, knowing that they're wearing a helmet. But whether it is a good idea or not, what is more interesting is that something is going to be done to try and prevent something from happening that is unbelievably unlikely.

"It's Getting Better All the Time"

If the New York Times and other major, elite news outlets are to be believed, the only real question today is whether ordinary people will meet their end by being roasted or flooded to death by man-made global warming or by being crushed -- as they crawl in search of crumbs of toxic food not grown locally -- beneath the diamond-studded heels of boots worn by the richest one-percent of the population.

Patrons of the Cafe know that Russ and I are generally skeptical of most of the fear-mongering about the state of humanity.  Admittedly, we are both deeply influenced by the late Julian Simon, who is, in my opinion, the most underrated economist ever to live.

So I'm delighted to learn that Manoj Padki has started the wonderful new blog "It's Getting Better All the Time" (whose title comes from this book written by Julian Simon and his student Stephen Moore).  In this blog, Manoj will report and document many of the countless ways that humans are progressing.  I will visit Manoj's blog at least once each day.

Sunstein nails it

Here is Cass Sunstein in his new book, Worst-Case Scenarios, talking about how we should take into account the well-being of future generations:

If human history is any guide, the future will be much richer than the present; and it makes no sense to say that the relatively impoverished present should transfer its resources to the far wealthier future. And if the present generation sacrifices itself by foregoing economic growth, it is likely to hurt the future too, because long-term economic growth is likely to produce citizens who live healthier, longer, and better lives.

My only footnote is that every generation does transfer resources to the far wealthier future. We do it out of love, mostly and from time to time, some other motivations. But we make all kinds of sacrifices for our children to make their lives better than our own and we do it willingly.

My podcast with Sunstein on the book should be up on November 19th at EconTalk. Feel free to read the book in advance and send me questions you'd like me to ask him.

Hot Heads

Jeff Jacoby's August 15th column on global warming, in the Boston Globe, is outstanding.

Today's edition of the Globe published the letter that I sent after reading Jeff's piece:

JEFF JACOBY courageously denounces the hysterical groupthink so prominent in the crusade against global warming. I am a global-warming skeptic -- not of the science of climate change (for I have no expertise to judge it), but of combating climate change with increased government power.

Al Gore, Robert Kennedy Jr., and too many others dismiss the downside of curtailing capitalism in order to reduce emissions of greenhouse gases. They write and speak as if the material prosperity that capitalism brings is either not threatened by increased government power, or is of only small importance when compared to the threat of global warming.

Truly reasonable people are, and ought to be, skeptical of each of these dogmas.

DONALD J. BOUDREAUX
Fairfax, Va.

The writer is chairman of the department of economics at George Mason University.

And an even better read to be found in today's edition of the Globe is the second installment of Jeff's assessment of the climate-change debate.

My Brand of Economics

How best to protect consumers from unreliable or even unsafe products?  Contrary to the dogma espoused by many people who fancy themselves "progressive," brand names are among consumers' best friends -- as explained in this excellent op-ed, appearing in yesterday's Chicago Tribune, by Edward Snyder, Dean of the University of Chicago Graduate School of Business.

Note that few Chinese producers yet have established brand names in the west.  That's a problem -- but it's a problem best solved, as Snyder argues, by letting the market deal with it.

Here are the final few paragraphs of Snyder's op-ed.

Those who advocate regulation by the West as the solution might be smoking unregulated substances. Aside from the obvious point that we have plenty of inspections and regulations of our own to worry about, the opportunity for Western manufacturers and anti-globalization interests to lobby against particular Chinese imports would be irresistible. They would use the new bureaucracy to reduce the general flow of Chinese goods. That would forward their objectives, but the results would be bad overall policy.

Waiting for the market to fix Chinese product quality -- doing nothing -- sounds like an unattractive solution. But the market is already reacting.

Consumers are thinking twice about buying no-name Chinese products with long lists of ingredients. U.S. distributors are checking their sources. Retailers, especially those who stock a lot of Chinese goods, are becoming a lot more concerned about their reputations. And Chinese firms and their partners are investing in brands.

How does all this happen? Firm by firm, case by case and step by step. You might recall the recent case of the 1.5million Thomas & Friends toy rail cars and accessories with lead paint. Fair or not, Thomas & Friends has lost quite a chunk of its brand-name capital, and its very survival is in question. No doubt Thomas & Friends has some new protocols.

How long will it take for the market to respond? Pretty much the same amount of time it takes other branded toy manufacturers to check and recheck for lead paint on their products.

Here's another Key Fact: Mattel, which produces Barbie dolls and characters from Sesame Street and Nickelodeon, this month stopped about 700,000 toys with lead paint from reaching U.S. consumers and recalled 300,000 additional toys sold through retailers such as Target, Toys "R" Us and Wal-Mart.

So how long will it take for the market to respond? Less time than it would  take for new regulations to take effect.

(HT John DeVries)

Black Swans

The latest EconTalk is a conversation with Nassim Nicholas Taleb about the ideas in his two books, Fooled by Randomness and The Black Swan. He is a very interesting guy. Much of what he said is well known—we have trouble absorbing and thinking about low probability events. But he says it in a way that makes me think about it in a way I hadn't before.

For Free Men and Women

The latest issue of The Freeman -- the venerable (almost-)monthly magazine published by the Foundation for Economic Education since 1956 -- has three especially fine articles.

One is by historian Steve Davies, who wonders how our sense of history would be different if, instead of marking history by important dates in politics and war, we marked it by the dates of important commercial and industrial events that proved to have enormous impact on our lives (such as the advent of container shipping).

The second is by Max Borders who argues, wisely, that "government solutions to climate change are wrong-headed."

In the third, economist David Henderson offers a friendly critique of Russ Roberts's assumption (made in an article appearing in an earlier edition of this magazine) that government generally does provide security.

Lightning Strikes

Just found a remarkable book, Schott's Almanac 2007, written by the amazing Ben Schott, author of Schott's Original Miscellany. It's hard to describe the book other than to say it's an extraordinary array of information and data about the past year, along with lots of other stuff thrown in. An example is a chart on p. 264 of annual fatalities in the United States due to lightning, from 1940-2004.  Population has increased a lot since 1940 but fatalities have fallen pretty steadily from a peak of 432 in 1944 to only 32 in 2004. Why? Schott speculates that there's improved education (don't walk around holding a sword in the air when there's lightning), but he makes the very thoughtful observation that the movement from rural to urban living reduces the chances of being hit by lightning. And these data are presented in an elegant chart that is clear and simple. Every page has something interesting.

The Significance of the "Peltzman Effect"

Wearing a bicycle helmet increases your risk of being hit by a car. (HT: Greg Mankiw)

Even non-economists think seat belts make people drive more dangerously. (HT: Overlawyered)

Levitt argues that the "Peltzman effect" is theoretically possible but trivial, empirically. He concludes:

If, however, I’m wrong and compensating behavior on the part of drivers really does undo or reverse the benefits of seat belts, there is an easy public policy solution: the government should mandate the installation of a razor sharp knife on every steering wheel aimed directly at the heart of the driver. Just think how carefully we would all drive then.

This reductio ad absurdum doesn't prove what Levitt thinks it does. There's an easier public policy solution if the goal is to reduce deaths from automobile travel: ban cars. But the goal of public policy isn't (and shouldn't be) to minimize the death toll from cars. The goal should be to set the safety level of driving to correctly take into account trade-offs between the risk of travel and the benefits of travel. People want safe cars and they also want to be able to drive quickly in order to see friends and family more often and do whatever else they accomplish and benefit from via car travel.

The question is whether the private choices of manufacturers and car buyers can be expected to correctly set those trade-offs. Certainly the trend before government regulation was that increases in income and the demand for safety on the part of car buyers created safer cars and driving behavior and fewer deaths per mile traveled. The importance of Peltzman is in noting that making cars safer than people want is going to induce offsetting behavior.  If that offset is complete so that drivers exactly  compensate for safer cars by driving more recklessly, then it appears that the regulations merely incur the waste of monitoring and paperwork on the part of manufacturers by complying with the regulations.

But if Peltzman's original paper is correct, the costs and benefits of the regulation don't just fall on drivers, they fall on pedestrians and cyclists. If that's right, then automobile safety regulation creates a grotesque externality.

Listen to Peltzman here.

Wise Words on Global Warming

The Foundation for Economic Education's Sheldon Richman has some wise words about the global-warming debate.  Here's the crux:

More than a few reputable scientists see potential problems in the climate change that is occurring. Thus the issue needs to be evaluated on its merits. I know of no a priori reason to rule out the possibility that human activity is producing enough greenhouse gases to warm the atmosphere to an extent that will have bad consequences. That doesn't mean it's happening, just that it's not impossible.

For every factoid about ice sheets or sea levels or sun spots I can pull from the skeptics' literature, someone else can produce a counter-factoid. How is a nonscientist to decide which is accurate?

This is not to say the skeptics don't raise apparently compelling points. They do, and the believers should address them. But that still leaves the problem of how a layman is to sort the wheat from the chaff.

For advocates of individual liberty it is tempting to believe the skeptics are right because the other side is associated with statist solutions to climate change. Most solutions call for government control over the burning of fossil fuels. No advocate of free markets can be comfortable with a position that entails substantial taxes and subsidies to achieve a political objective -- reduction of carbon emissions -- especially when the solutions promise no more than negligible reductions in temperature. (Temperature, not emissions per se, is supposed to be the believers' cause for concern.)

But picking sides in a scientific debate on the basis of proposed remedies is the wrong way to go about things. A believer in global warming could get the science right but the remedy wrong. That government shouldn't ban smoking doesn't mean smoking isn't bad for you. There is nothing incoherent about favoring free markets and thinking that global warming is a problem.

Sheldon's absolutely correct.

Relatedly, my GMU colleague, law professor Bruce Johnsen, sent this response to the George Mason University Faculty Senate.  Bruce's note is self-explanatory -- and also wise:

Dear Faculty Senate,

I emphatically decline to sign the Climate Change petition and would like to be on record for so declining.  I object to the Faculty Senate presuming to speak for individual faculty members on matters such as this that are both debatable by any reasonable person standard and highly political.  They are best left to individuals' actions as citizens independent of their connection to GMU.  This kind of group-think is most offensive and in my view the Faculty Senate has no authority to engage in it.

Although climate scientists are competent to tell us whether the earth is, for the time being, warming, or whether it is warming outside some historically normal parameters, they are not competent to forecast the economic consequences of such warming or to suggest what should be done in response.  When they try to do so they are not acting as scientists but as political advocates.  Even if it is true that global warming will generate "large-scale disruptions," the consensus among economists -- whose expertise is at evaluating trade-offs --  is that taking the steps necessary to avoid such disruptions will lead to substantially larger disruptions.

Cordially,
D. Bruce Johnsen
GMU School of Law

What Peltzman Found

There's some confusion about what Sam Peltzman said/found in his work on automobile safety discussed in the comments to this post.

Peltzman argued that mandatory safety devices such as seat belts reduced the probability of harm to the driver if the car crashed. That in turn would encourage people to drive more recklessly. The effect on the number of deaths was an empirical question. Which effect would be larger—the harm from the increase in the number of accidents or the reduction in harm when an accident occurred?

Holding other factors constant that might change the number of accidents (and this is never easy but he did the best he could with the data at hand), Sam found that mandatory seat belts did indeed cause more accidents. But this effect was roughly the same as the effect in the opposite direction, that accidents were less harmful. So the net number of fatalities of drivers was unaffected by the law. Sam found some evidence that the effect of the law might be to reduce driver fatalities. Unfortunately, because drivers were more reckless, there were more accidents involving pedestrians and cyclists. So their death rate due to cars increased. Total deaths were unchanged.

You may find this intuitive or unintuitive. You can challenge the empirical analysis. But at the time, the findings were shocking (and distasteful) to the safety community and to academics who had confidently predicted that safety regulations would produce dramatic significant reductions in driver deaths. These engineering predictions ignored any possible behavioral response by drivers. Whether Sam measured these behavioral responses accurately is always an open question. But his insight that people respond to incentives is always a very good place to start.

The second issue that came up in our podcast was airbags. In general, airbags have the same effect as seatbelts—they reduce the likelihood of injury and death from an accident which in turn increases reckless driving and the number of accidents. But in the early days of airbags, they could kill you, especially if you were a small person or a child. That led to some tragic deaths of kids in the passenger seat and small women in the driver seat. That in turn led to the government changing the requirements on the speed and force of the airbag deployment. Sam pointed out in the podcast that this is one of the problems that can arise when a national standard is mandated. Unlike the case where a car company might try something like this and learn from its mistake or a state might impose such a regulation, here everyone was forced to provide airbags, and the deaths from a badly designed regulation were magnified.

I encourage readers to read Sam's original article. Unfortunately, the only online copy I can find is at JStor.

Peltzman on Regulation

Here's the latest episode of EconTalk: an interview with Sam Peltzman. We discuss automobile safety and his startling finding that making cars safer can lead to more death. We discuss how the requirement that drug makers prove drug efficacy kills people. And we talk about the political economy of regulation—why bad laws persist. Two parts of the interview I liked:

• Sam's point that a national safety requirement like air bags is particularly harmful when it turns out to produce unintended consequences (killing women and children, initially, because of the power of the airbags). If one state or one manufacturer had made air bags too powerful, we'd have learned from it and fixed it. But more people die when it's nationally mandated.

• Sam's insight that the mobilization of the AIDS lobby to get the FDA to give people who are dying access to life-saving drugs ahead of normal approval times proves how dysfunctional the current system is—you have to have an enormous political effort in the midst of a horrific tragedy to get redress. The rest of us just have to wait.

Here's an earlier post on Sam's overview of the relationship between opulence and regulation.

Bastiat vs. Krugman

Last December, Paul Krugman was admirably forthright about his disdain for the competence of ordinary men and women.  Writing in the New York Times about health-care decisions, Krugman rhetorically asked:

is giving individuals responsibility for their own health spending really the answer to rising costs? No.

....it's neither fair nor realistic to expect ordinary citizens to have enough medical expertise to make life-or-death decisions about their own treatment. A well-known experiment with alternative health insurance schemes, carried out by the RAND Corporation, found that when individuals pay a higher share of medical costs out of pocket, they cut back on necessary as well as unnecessary health spending.

Krugman dismisses without comment the likelihood that the vast majority of people will seek the advice of experts -- MDs -- when making deisions about health care, just as ordinarly people seek the advice of experts -- say, electricians -- when seeking advice about how to repair electrical wiring in their houses.

I recalled Krugman's distrust for ordinary people's decision-making capacities when I read this passage in Chapter 10 of Frederic Bastiat's book Economic Harmonies.  It's interesting -- and, I  believe, proper -- that Bastiat saw freedom of choice as intimately connected with competition:

After all, what is competition? Is it something that exists and has a life of its own, like cholera? No. Competition is merely the absence of oppression. In things that concern me, I want to make my own choice, and I do not want another to make it for me without regard for my wishes; that is all. And if someone proposes to substitute his judgment for mine in matters that concern me, I shall demand to substitute my judgment for his in matters that concern him. What guarantee is there that this will make things go any better? It is evident that competition is freedom. To destroy freedom of action is to destroy the possibility, and consequently the power, of choosing, of judging, of comparing; it amounts to destroying reason, to destroying thought, to destroying man himself. Whatever their starting point, this is the ultimate conclusion our modern reformers always reach; for the sake of improving society they begin by destroying the individual, on the pretext that all evils come from him, as if all good things did not likewise come from him [emphasis added].

Tierney on Mueller and Terrorism

John Mueller is one of my favorite political scientists and John Tierney is one of my favorite columnists.  Today, you can get two for the price of one by reading Tierney's column in the New York Times.

Here are some key paragraphs from that column:

So what’s keeping [terrorists from striking Americans more frequently]? That’s the question raised by Mueller, a political scientist at Ohio State University, in the current issue of Foreign Affairs.

“Why,” he asks, “have they not been sniping at people in shopping centers, collapsing tunnels, poisoning the food supply, cutting electrical lines, derailing trains, blowing up oil pipelines, causing massive traffic jams, or exploiting the countless other vulnerabilities that, according to security experts, could so easily be exploited?”

The Bush administration likes to take credit for stopping domestic plots, but it’s hard to gauge whether these are much more than the fantasies of a few klutzes. Bush also claims that the war in Iraq has diverted terrorists’ attention there, but why wouldn’t global jihadists want the added publicity from attacking America at home, too? Al Qaeda’s leaders threatened in 2003 to attack America — along with a half dozen other countries that haven’t been attacked either.

Mueller’s conclusion is that there just aren’t that many terrorists out there with the zeal and the competence to attack the United States. In his forthcoming book, “Overblown,” he argues that the risk of terrorism didn’t increase after Sept. 11 — if anything, it declined because of a backlash against Al Qaeda, making it a smaller and less capable threat than before. But the terrorism industry has been too busy hyping Sept. 11 and several other attacks to notice.

And Tierney's conclusion:

As it is, [Mueller] figures, the odds of an American being killed by international terrorism are about one in 80,000. And even if there were attacks on the scale of Sept. 11 every three months for the next five years, the odds for any individual dying would be one in 5,000.

Compared with past threats — like Communist sociopaths with nuclear arsenals — Al Qaeda’s terrorists are a minor problem. They certainly don’t justify the hyperbolic warnings that America’s “existence” or “way of life” is in jeopardy, or that America must transform the Middle East in order to survive.

There undoubtedly will be more terrorist attacks, either from Al Qaeda or others, just as there were before 2001. Terrorists might strike Monday. There will always be homicidal zealots like Mohamed Atta or Timothy McVeigh, and some of them will succeed, terribly. But this is not a new era. The terrorist threat is still small. It’s the terrorism industry that got big.

Global Warming and Hurricanes

With the one-year anniversary of hurricane Katrina fast approaching, I want to share some findings reported by Bjorn Lomborg in his 2001 book The Skeptical Environmentalist (pages 294-295).

The observed evidence counts against the idea of increased frequency of tropical cyclones.  Generally, it has been impossible to establish a reliable global record of variability of tropical cyclones through the twentieth century because of changing observing systems and population changes in tropical areas.  Based on relatively short time series, the Northwest Pacific basin has shown an increase in tropical cyclones since 1980, preceded by an almost identical decrease in frequency from about 1960 to 1980.  Since the 1960s, the Northeast Pacific has experienced a significant upward trend in tropical cyclone frequency, the North Indian Ocean a significant downward trend, and not appreciable long-term variation was observed in the Southwest Indian Ocean and Southwest Pacific.  Finally, the numbers of tropical cyclones occurring in the Australian region have decreased since the mid-1980s.

However, the North Atlantic has good cyclone data because weather aircraft have reconnoitered there since the 1940s. Here, it turns out that although there are great decadal variations, the trends are generally declining, with a noticeable quiet period in the 1970s and 1980s.  Particularly, it turns out that the number of intense cyclones (those that cause the greatest damage) has been declining, as has the number of cyclone days.  Equally, and as shown in Figure 152 [unavailable on line], the average [maximum sustained] wind [speed] of an Atlantic cyclone has been decreasing over the past half-century.

These data, of course, are pre-Katrina (which was a category three storm when it made landfall on August 29, 2005, just east of New Orleans – and which, despite being a major tragedy, doesn’t come close to being a killer of the magnitude of the hurricane that hit Galveston, Texas, in 1900).

A Note on Global Warming

I confess that I don’t keep up with the data on global warming, or even with the debate.  Even so, I still have something to say about the issue.

Let’s assume that global warming is happening and that it’s caused by modern human industry and commerce.  Is there a case to be made for the United States government to continue to avoid signing the Kyoto Protocol?  More generally, is there a case to be made to shrug our shoulders and say “best not to do anything through government about global warming”?

I think so.

One legitimate reason for refusing to endorse massive, worldwide government-led efforts to reduce greenhouse-gas emissions is that any such effort will inevitably be politicized.  Even if the possibility exists for such regulation to make the world a better place, this possibility is remote compared to the likelihood that grandstanding politicians, special-interest groups, arrogant environmentalists who are intolerant of commercial values, and well-meaning but misinformed voters will combine to generate policies that do more harm than good.

More fundamentally, the relevant question – as always – is ‘compared to what?’  The polar ice caps might well be melting, the earth’s temperature might well be rising, and human industry and commerce might well be the culprit.  But this ‘culprit’ is also humankind’s great savior.  It keeps us from the fates suffered by the vast majority of our ancestors: famine, plague, filth, drudgery, and ignorance.  If global warming is a consequence of capitalism, I agree that it’s likely one that should be registered as a cost (although not everyone agrees that global warming is undesirable).

But if the only way to prevent or slow global warming is through political action, it is neither absurd nor irresponsible to argue that the best course of action is to ignore the problem.

Hurricane Intensity and Deadliness

As I write, Hurricane Rita is pounding the southwestern Louisiana and southeastern Texas. Its consequences, in lives lost and property damaged, are not yet known. But I predict that Rita will not go down in history as one of the most deadliest.

CNN.com has a list of the ten most intense hurricanes to hit the U.S. since 1900, and a list of the ten most deadly. (Go here, and then scroll down to find the "Special Report" box on the right; then click on "Top 10 Worst Hurricanes.")

It is interesting to compare the two lists. (Note: it’s not yet clear where to rank Katrina, especially on the intensity scale. She was the third most intense storm ever recorded in the U.S., but this recording was over the Gulf of Mexico. By the time Katrina struck land, her intensity weakened; she was a category 4 storm. Apparently, an official measure of her intensity at landfall isn’t yet available.)

Ten Most Intense

1. Florida Keys 1935

2. Hurricane Camille 1969

3. Hurricane Andrew 1992

4. Florida and Texas 1919

5. Lake Okeechobee 1928

6. Hurricane Donna 1960

7. Louisiana 1915

8. Hurricane Carla 1961

9. Hurricane Hugo 1989

10. Southeast U.S. 1926

Ten Deadliest

1. Galveston, TX 1900 (between 8,000 and 12,000 dead)

2. Florida 1928 (1,836 dead)

(When Katrina’s official death toll is known, it’ll likely rank in third place.)

3. New England 1938 (at least 600)

4. Florida Keys 1935 (423 dead)

5. Hurricane Audrey 1957 (390)

6. Southeast U.S. 1926 (372)

7. Louisiana 1909 (at least 350)

8. Atlantic gulf 1919 (at least 287)

9. Louisiana 1915 (275)

10. Galveston 1915 (275)

(Note: CNN’s Ten Deadliest ranking is confusing, for it lists the New England hurricane of 1938 as the tenth deadliest, but gives its death toll as "at least 600" – which makes it the third-deadliest hurricane to make landfall in the U.S. since 1900, excluding Katrina.  So I modify the list above to reflect this fact.)

One thing striking about these lists is that at least half of the top-ten most intense storms to hit U.S. land occurred within the past half-century (Camille, Andrew, Donna, Carla, Hugo [and possibly Katrina]) – and yet all but two of the top-ten deadliest storms – Katrina (2005) and Audrey (1957) – occurred much more than a half-century ago.

This fact becomes more remarkable if, as I suspect, the population along the Atlantic and Gulf coasts is higher in the past 50 years than in the first half of the 20^th century.

Surely a variety of reasons explain this pattern, but I have no doubt that part of the explanation of the reduced deadliness of hurricanes is our greater material prosperity – stronger building materials, better automobiles and better roads for evacuation and for search and rescue; radio, television, and the Internet for readier spread of information; more advanced technology for forecasting weather; better medical care – some of the fruits of capitalism.

Random Thoughts on New Orleans

Listening to the President threatening 'gougers' and begging people not to drive sets back economic education in America 20 years.  Or maybe it's 200.  Having the Wall Street Journal (sr) write on Page 1, top story in "What's News" that "Katrina pushed the U.S. closer to a 1970s-style energy crisis" tells you how far we have to go.  Or maybe the Journal is presciently anticipating price controls.  The implicit price controls of Attorneys General threatening 'gougers' (defined as people who sell something at a price above what they paid for it) is already causing rationing, shortages and lines in some markets.

All of the local politicians, the governors and the mayors involved in this story are toast.  See Bilandic, Michael—Chicago, 1979.  They will take blame whether they deserve it or not.  Bush is also damaged tremendously but he can't run again anyway and may find opportunities for redemption over the next three years.

Bush is getting blamed for cutting FEMA funds to fight the war in Iraq  Or for cutting levee funds to fight the war in Iraq.  Is there any truth to this?  Does anyone know what has happened to FEMA's budget or the "non-terrorist" part of FEMA's budget?  Does anyone really think that if FEMA had say twice as much money as it does now, the evacuation and recovery would have gone smoothly?

Some people are speculating as to whether New Orleans will ever recover.  Why wouldn't it?  The people who own property there aren't going to walk away from it, shrugging.  Dennis Hastert wondered whether it was a good idea:

"We need to rethink how we rebuild New Orleans, that we may not build it or rebuild it ... to put a half a million people and build their homes seven feet under sea level without doing the double or the triple levees that they need to ensure protection probably wouldn't be very smart."

This remark gave a few Louisiana politicians the moral high ground for a while.  But Hastert's question is a good one if you underline the word "we" which of course distorts his meaning.  But that's a good question—should WE rebuild New Orleans?  Or should it be left to less centralized decisionmakers, the people who live there and the people who insure them?  Every time the government bails out people who live in parts of the country prone to natural disasters (usually CA and FL) we encourage people to live and build there, knowing that the risk of damage is born by others.

Why did the levees fail?  Poor maintenance?  An impossible burden that is inevitable every 300 years.  This will the fundamental question once the city dries out.

The way the politicians and AGs treat gasoline is the same way they treated the vaccine "shortage" last winter.  They created the shortage, damaging a critical part of many people's lives by thinking they could manage the market better than when it was left alone.  Then they tried to save the situation by begging people to do what rising prices do automatically.  The result is disorder and a breakdown in people's ability to live their lives normally, making plans for today and tomorrow.  Adam Smith said it best (from The Theory of Moral Sentiments):

The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.

To Sinclair: Ain't that the Dickens?!

Speaking of The Economist’s Question – "As compared to what?" – I recall a conversation I had last month with a young American college student who asked if I approve of the working conditions described in Upton Sinclair’s novel The Jungle. (The Jungle, you’ll recall, contains dismaying descriptions of working conditions in early 20^th-century slaughterhouses in the United States.)

I granted my young friend his assumption that Sinclair’s descriptions are accurate. But I then asked: As compared to what? What were the alternatives 100 years ago for those men and women who chose to work in slaughterhouses?

Before the centralization of butchering – which was a major economic event begun in the early 1880s, made possible by Gustavus Swift’s successful development of economically efficient refrigerated railroad cars – almost all consumption of fresh meat took place within a few days and a few miles of its slaughter. Lack of refrigeration required that butchering be local. And butchering back then was real butchering – actually killing animals on the spot – rather than merely carving up carcasses delivered to local supermarkets from afar.

So any sound analysis of the work conditions of early 20^th-century slaughterhouses must ask and reasonably answer these (and other) questions:

- What jobs would slaughterhouse workers perform had they not been employed in slaughterhouses? How dangerous were these other jobs?  What did these other jobs pay?

- How dangerous was butchering before the rise of the slaughterhouses? Were pre-slaughterhouse butchers less likely or more likely than slaughterhouse workers to have fingers or arms severed?

- What were other effects of slaughterhouses?

One other likely effect is that slaughterhouses made cities and towns cleaner. With butchering centralized in midwestern factories, New York, Boston, Richmond, and other cities and towns throughout America had less need of local butchering places. This fact, in turn, meant less smell (and, probably, disease) from the local slaughtering of large mammals.

While it’s hardly conclusive evidence, this quotation from Charles Dickens’s Great Expectations (1860-61) suggests that cities in pre-slaughterhouse times featured an unpleasantness that we today are thankfully unaware of. In this passage, the narrator (Pip) mentions his first encounter with London’s Smithfield area – that is, that part of London in which animals were butchered for meat:

So, I came into Smithfield; and the shameful place, being all asmear with filth and fat and blood and foam, seemed to stick to me.

Centralized butchering rescues cities and towns from this smelly and bacteria-laden "filth and fat and blood and foam."

Walter Williams on Terrorism Risks

My colleague -- "the people's economist," Walter Williams -- explains that overestimating the risk of terror attacks is just as dangerous as underestimating it.  Walter's warning to avoid overestimation of this risk is appropriate and wise.

Thank you, NHTSA?

According to a new study by the National Highway Traffic Safety Administration (NHTSA), federal automobile safety requirements have saved 329,000 lives over the last 45 years.  No free lunch, though, as the WSJ (sr) reports:

Government-mandated safety features have added $839 and 125 pounds to today's average passenger car compared with pre-1968 vehicles.

The NHTSA said that average cost is similar to what many people pay for popular options, including sun roofs, compact-disc players or custom wheels. The agency also calculated the cost at $544,000 for every life saved.

The study didn't look at the newest safety features, such as side air bags or electronic stability control. It also didn't take into account the government's fuel-economy regulations, which NHTSA research has said lightened vehicles and made them more prone to deadly crashes.

Alas, the other factor ignored by the study is the lives that would have been saved had the government done absolutely nothing and merely relied on the desire of automobile manufacturers to please their customers by making safer cars.  From 1920 to 1960, automobile fatalities per million miles driven plummeted in the absence of federal regulation.  (You can find the chart in this old post of mine—scroll down to the next entry from the bottom and you'll find the data).  Basically, there's nothing in the crude data to suggest that federal regulation (or Ralph Nader for that matter) had a large impact. 

There could still be some impact teased out of the numbers in a more sophisticated analysis.  But to ignore the trend that comes from our rising standard of living and the resulting demand for safety is to grossly overstate the effectiveness of federal regulation.  And that means the estimate of $544,000 per life saved is an underestimate.  Then again, the $839 overstates the cost, because some of the improvements would have taken place voluntarily.  And it understates the cost because it does not include compliance costs or lobbying costs by manufacturers.

Here is the NHTSA press release which includes the URL for the study.

A Question about the FDA

In response to Russ Roberts's commentary that aired Tuesday on NPR's Morning Edition -- and to my posting it here on Cafe Hayek -- I've gotten a surprising amount of feedback.  Most of it positive, none of it hostile.  But some of it skeptical.

"Can people really be trusted to make such life-and-death decisions?" is the best one-line summary of this skepticism.

Much can said in favor of answering 'yes' to this question -- and perhaps I'll add more in a later post.  (Hint: any such answer begins with its own question: As compared to what?)  But recognizing that 'irrational' behavior does exist -- pretty foolish to deny it -- I here ask you to ponder the following:

Suppose that Mr. Jones is so eager for relief of his arthritis pain that he downs Vioxx before seeking the advice of an MD or searching out other sources of information on it.  Further suppose that had Mr. Jones known of the likely side-effects of Vioxx, he would voluntarily refrain from taking it.  That is, he takes it 'foolishly.'  Mr. Jones is precisely the sort of person that FDA-proponents want to protect.

Suppose also that Ms. Smith has her own 'irrationality' -- her own mistaken knowledge or distorted judgment.  This distorted judgment is such a deep suspicion of profit-seeking pharmaceutical companies that she refuses to take a drug that will save her life even though, in fact, this drug has almost no serious side-effects.  She will die soon simply because she refuses to take this drug.  And, were she 'rationally' better informed about the true state of the world, she would take the drug; she doesn't want to die.  Her irrationality, her mis-information, her distorted judgment will kill her.

If we correct for Mr. Jones's irrationality by preventing him from taking Vioxx, should we also correct for Ms. Smith's irrationality by forcing her to take the drug that will save her life?  If not, why not?

RR on FDA on NPR

Here's Cafe Hayek's own Russ Roberts commenting on the FDA.  Russ's comment aired this morning on NPR's Morning Edition.

Nice going, Russ!

Drawing Lessons Carefully

Jared Diamond’s Collapse is attracting plenty of attention. Among the best analyses, not surprisingly, is Tyler Cowen’s.

Francis Fukuyama’s review in yesterday’s Wall Street Journal (paid subscription required) is also quite good, if "too gentle" (to quote my buddy Gerry Ohrstrom). This Fukuyama passage hits the nail on the head:

Mr. Diamond seems to think that globalization and free trade increase the risk of global collapse because they create interdependencies and hence vulnerability. Yet a properly functioning global trading system should do precisely the opposite, by providing multiple sources of critical supplies, all flexibly mediated through a price mechanism. To the extent that there is a looming global food problem, it has less to do with environmental limits than with agricultural protectionism in rich countries -- i.e., too little rather than too much free trade.

Right.

More generally, in drawing analogies between Easter Islanders, Mayans, Norse, and other pre-modern societies and our own, Diamond is too cavalier. The fact that these pre-industrial folk abused their environments and collapsed is not irrelevant, but there’s much too much difference between them and us, then and now, to justify taking their experiences wholesale as warnings for our future.

Suppose some sincere pundit makes the following assertion: "We must take seriously the lessons of communist societies. We know now that these societies were bleak, tyrannized, poor, and doomed. And for all of the differences among them, each relied heavily upon government coercion; in each, individual initiative and responsibility were denigrated and often punished. Private property was abolished. The lesson, therefore, is that giving any power to the state -- and any scaling back of private property rights -- creates too great a risk of tyranny, impoverishment, and, ultimately, collapse."

The experience of communist regimes tells us too little about just how much power governments can exercise before creating a serious risk of tyranny and deep and widespread impoverishment. Personally, I believe that very little good ever comes from any exercise of government power.  But I also believe that a largely free, market-oriented society can absorb lots of foolishness without being doomed to impoverishment and brutality and collapse.

But were I to adopt Diamond’s standards for drawing from society A lessons for society B, I would be as justified in warning apocalyptically about the imminent perils of expanding government power as he justified is in warning about the dangers of modern consumerism, capitalism, and resource use.

Relief Efforts for Victims of Over-regulation?

The death and destruction caused by the recent tsunamis are truly awful. Tsunamis are also awfully dramatic.

A much-less-dramatic killer is restriction on economic freedom. Here’s a letter that I sent today to the New York Times on the matter – inspired by two letters-to-the-editor in today’s NYT. One writer is angry that rich countries spend so much effort "exporting" globalization rather than "precious information"; another writer suggests that global warming (and, by implication, the economic freedom that allegedly contributes to it) makes the world more perilous for human habitation.

To the Editor:

Sujatha Byravan suggests that rich countries should export "precious information" rather than globalization to poor countries (Letters, Dec. 29th). She’s confused. The most precious information we can export is about the benefits of economic freedom, including globalization.

Economic freedom saves lives by promoting prosperity – for example, better nutrition, better housing, and less-dangerous work conditions. It’s no surprise, therefore, a strong, positive correlation exists between economic freedom and life expectancy – ranging from 53.7 years in the world’s least-free countries to 75.9 years in the world’s most free. India, Indonesia, and Sri Lanka are only moderately free; as a result, life expectancies there are kept unnecessarily low. In India it is 63.2; in Indonesia 67.2; in Sri Lanka 69.8.

If Indians, Indonesians, and Sri Lankans enjoyed the same freedom enjoyed by people in the world’s freest countries, millions more of them would today be alive. These dead millions were killed by something far more deadly, although less dramatic, than a tsunami: restrictions on their freedom.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, VA 22030

........

Data showing the positive correlation between economic freedom and life expectancy are found in the valuable Economic Freedom of the World study, by James Gwartney and Robert Lawson, published annually by the Cato Institute.

Unintended Consequences

My student Carol Shin pointed out an unintended negative consequence of statutes that make illegal the act of driving while simultaneously holding a cell-phone to your ear. (Washington, DC, recently enacted such a prohibition.)

Carol reports that, since DC’s prohibition went into effect this past summer, she and her friends -- when driving in DC -- in fact spend less time chatting with each other by cell phone, but spend more time text-messaging each other. Because text-messaging draws each messager’s eyes from the road (and on to the touch pad of the cell-phone) more than does talking on the phone, it is surely more dangerous to text-message while driving than to talk on the phone.

Not Another Safety Argument

The President's Commission on Moon, Mars and Beyond recently recommended that much of NASA’s operations be privatized. As reported in the New York Times:

It [the Commission] said NASA should make itself a leaner organization that concentrates on research and developing space technology that is not readily available. Any technology or services useful to the space program that are available from private industry should be contracted out, it said.

But manned space flight should continue to be the responsibility of government. Again, as reported by the New York Times, the Commission said that

launching human crews should continue to be primarily the job of the government, at least in the near future. This recommendation appears to acknowledge criticism by the Columbia Accident Investigation Board, which laid part of the blame for the loss of the space shuttle and its crew last year to NASA's turning over too much of its safety oversight to private contractors.

This point about safety baffles me. As with the debate a few years ago over contracting-out airport-security services to private firms versus having these services performed by government employees, there is no obvious reason why government employees are generally to be expected to perform better at checking systems for safety than are employees of private contractors.

A person’s diligence, energy, intelligence, savvy, ability, and concern for others do not automatically increase just because his or her paycheck is drawn on U.S. Treasury. What matters for assuring adequate levels of safety (apart from a reliable process for discovering just what levels of safety are best), is assuring that all workers with safety responsibilities have appropriate incentives and ability to carry out these responsibilities. Is there a reason that NASA cannot generally specify desired safety levels, institute appropriate means of checking that these levels are met, and implement a series of penalties and rewards to private contractors -- penalties and rewards triggered by safety failures and safety successes?

Perhaps there is such a reason, but the argument against privatization too often rests on nothing more than the mere presumption that "of course a government employee will be better at assuring safety than will a private employee." It's a lousy presumption.

In short, if NASA is unable to contract with private firms in ways that give these firms incentives to achieve the level of safety that NASA desires, what is it generally about having employees actually working for NASA that makes space flight more safe?

Are SUVs more dangerous?

Reuters reports that the roads are getting more dangerous. The headline: Highway Deaths Hit 13-Year High in 2003. I was surprised when I saw the headline. Usually the trend over time is toward more safety. What might explain such an increase? A reduction in enforcing safety or speeding laws, maybe. A change in demographic composition—more younger drivers who tend to drive more recklessly relatively to older drivers.

The article implies that the increase is due to more SUVs on the road and their propensity to roll over, interviewing Jeffery Runge, the head of the National Highway Traffic Safety Administration :

Runge, an emergency room physician, has also raised the potential dangers of light trucks sharing the road with smaller passenger cars and has addressed the propensity of SUVs to roll.

Sport utility deaths went up by 456 with more than two- thirds of victims not wearing seat belts, the safety agency said.

"A large part of the problem is keeping all four wheels on the roadway," Runge told reporters about the rollover propensity of SUVs. Some manufacturers have addressed the problem but Runge wants more safety changes. For instance, his agency is proposing a standard to improve the strength of vehicle roofs to reduce rollover deaths.

Cars have a slight edge in sales over light trucks, which include SUVs, pickups and minivans. But SUV sales rose more than 10 percent last year.

Consumer and safety groups have long targeted SUVs as unsafe, and are pressuring the government to mandate tougher design changes. SUV safety and other provisions are included in highway legislation awaiting final consideration in Congress.

"Affordable, feasible safety improvements could help prevent the rising death toll in SUVs," said Joan Claybrook, president of consumer group Public Citizen.

But earlier in the article, the real cause of the rise in highway deaths is given, though it is hidden a bit from sight:

Despite the increase in the annual death count, the fatality rate per 100 million vehicle miles traveled remained constant at 1.5 deaths because more people were on the road.

So the real cause of the increase in deaths is more people on the road. The riskiness of the roads hasn't changed at all. The roads are no more dangerous or safer than they were before. And SUVs are irrelevant to safety. SUV sales are up 10% but there's no change in the death rate. If anything, the crude data suggest that SUVs are no more dangerous and no safer than other cars.