Tyler Cowen's Blog, page 209

Still Burned by the FDA

Excellent piece in the Washington Post on the FDA and sunscreen:

…American beachgoers will have to make do with sunscreens that dermatologists and cancer-research groups say are less effective and have changed little over the past decade.

That’s because applications for the newer sunscreen ingredients have languished for years in the bureaucracy of the Food and Drug Administration, which must approve the products before they reach consumers.

…The agency has not expanded its list of approved sunscreen ingredients since 1999. Eight ingredient applications are pending, some dating to 2003. Many of the ingredients are designed to provide broader protection from certain types of UV rays and were approved years ago in Europe, Asia, South America and elsewhere.

If you want to understand how dysfunctional regulation has become ponder this sentence:

“This is a very intractable problem. I think, if possible, we are more frustrated than the manufacturers and you all are about this situation,”

Who said it? Janet Woodcock, director of the FDA’s Center for Drug Evaluation and Research! Or how about this:

Eleven months ago, in a hearing on Capitol Hill, FDA Commissioner Margaret A. Hamburg told lawmakers that sorting out the sunscreen issue was “one of the highest priorities.”

If this is high priority what happens to all the “low priority” drugs and medical devices?

The whole piece in the Washington Post is very good, read it all. I first wrote about this issue last year.

Addendum: See FDAReview.org for more on the FDA regulatory process and its reform.

Corvid time preference is for quality, not quantity

Or so it seems from one study:

How do the corvids stack up against us? “Crows and ravens performed comparably to primates and children tested in [similar] tasks,” Hillemann said. But one difference between the avian brain and the primate brain may be the way that they consider quality versus quantity. Birds usually aren’t willing to wait in order to increase the amount of food, only to optimize the quality of their reward. “This may be unique to birds,” she adds, “because carrying a large amount of food can be disadvantageous in flight.” On the other hand, a human child can fit two marshmallows in his mouth just as easily as one. While more research is needed, this lends support to the notion that this sort of impulse control is a case of convergent evolution, having evolved independently in the avian lineage and in our primate lineage.

I found the entire post of interest.

How much is Chinese defense spending really going up?

I don’t feel I have gotten to the bottom of this, but here is an interesting contrarian perspective:

“According to my records, 2013 is the second year in a row in which China’s actual defense spending wound up being significantly less than was announced at the beginning of the year,” said Roger Cliff, senior fellow with the Asia Security Initiative at the Atlantic Council.

“The announced budget in March 2013 was … an increase of 10.7 percent over 2012. Actual expenditure in 2013 was … an increase of only 7.6 percent over 2012.”

The announced increases also never account for inflation, Cliff said. “Inflation in 2013 was expected to be 3.2 percent, official inflation figures for 2013 haven’t been released yet, as far as I know, so the increase in defense spending from 2012 to 2013 was only 4.3 percent in real terms.

“In fact, since 2009, China’s defense budget has grown by an average of only 4.7 percent in real terms,” Cliff said. “And yet, because the increases are always announced in nominal terms, not real terms, and the budgets announced at the beginning of the year have been exceeding the amount actually spent, everyone is still talking about ‘annual double-digit increases in China’s defense spending.’ ”

The full article is here.

Are the Long-Term Unemployed on the Margins of the Labor Market?

There is new Brookings research by Alan B. Krueger, Judd Cramer, and David Cho:

The short-term unemployment rate is a much stronger predictor of inflation and real wage growth than the overall unemployment rate in the U.S. Even in good times, the long-term unemployed are on the margins of the labor market, with diminished job prospects and high labor force withdrawal rates, and as a result they exert little pressure on wage growth or inflation.

Consistent with my earlier views, this work is suggesting that many of the long-term unemployed are/have become an economically segmented group.  This is noteworthy too, as it implies the problem is not merely initial discrimination:

…even after finding another job, reemployment does not fully reset the clock for the long-term unemployed, who are frequently jobless again soon after they gain reemployment: only 11 percent of those who were long-term unemployed in a given month returned to steady, full-time employment a year later.

I would consider that evidence for a notion of zero marginal product workers.  Furthermore, in my view (I am not speaking for the authors here), right now further inflation is as likely to harm as to help these individuals.  To ask whether the Fed “should give up” on the long-term unemployed is a biased framing which is more likely to mislead us than anything else.

There is a good piece up at 538:

Krueger and his coauthors, Princeton economists Judd Cramer and David Cho, find evidence that the long-term unemployed aren’t getting jobs even in parts of the country where the job market is comparatively healthy, suggesting that a stronger economic rebound won’t be enough to put them back to work.

Sentences to ponder

She discovered that dogs were more likely to yawn after hearing the yawn of a familiar human than of an unfamiliar human.

There is more here, and I thank Vic Sarjoo, a loyal MR reader.

Assorted links

1. Japan photos from the 1950s.

2. Food porn meets ruin porn meets profanity.  The burgeoning culture that is Detroit.

3. James Meek on Putin’s counter-revolution.  And a decentralization recipe for Ukraine, more information here.  Roger Myerson is involved.

4. Mike Konczal criticizes David Beito and the “voluntarism fantasy.”

5. Does the measured financial cost of natural disasters rise with wealth?

6. Can you use GameStop as a bank?

7. David Roodman on the new Easterly book.

Those new service sector jobs, once again — stunt nudity experts

Taub and Smith, stunt nudity experts, wore clothing that could be taken off quickly. “The photographer said, ‘Once people start getting on the bus, get naked and jump in line and pretend like you’re getting on the bus,’” Taub said.

The photo at the link does show nudity from behind, though not obscenity.  Maybe it is not safe for work.  The article has some other interesting angles:

But it was the Google-bound commuters who surprised Taub the most.

“They were quite uptight. Your average San Francisco bus — we would have gotten more of a reaction. People would clap or take pictures,” she said. “These buses, it was more like very uncomfortable.”

Jessica Powell, vice president of product and corporate communications at Google, said that this is not something Google condones.

“No, no nudes on the bus. It might interfere with the Wi-Fi.”

For the pointer I thank Samir Varma.

Jeff Bezos, The Washington Post, and his plan to take over the media world (speculative)

Remember Sherlock Holmes and the dog which did not bark?  WaPo remains very much in the running to be the up-and-coming mega-web site which succeeds.  Perhaps the model is a Coasean one:

Much of the media world has been waiting with bated breath since Jeff Bezos bought the Washington Post for $250 million last year, eager to see some sign of the Amazon founder and CEO’s hand at work. The first tangible evidence appeared on Tuesday, when the newspaper announced a major national subscription partnership that will offer free digital access to readers of other newspapers in major U.S. cities.

While this may not be as dramatic as shutting down the printing presses to go web-only, or offering everyone a free Kindle with their subscription, it’s still a fairly dramatic departure from the approach taken not just by the Washington Post but by most newspapers with traditional management.

The partnership — which will see the Post provide free digital access to subscribers of newspapers like The Dallas Morning News, the Minneapolis Star Tribune and the Pittsburgh Post-Gazette — allows the Post to (theoretically at least) build a broader online readership outside of its core subscription area. As the Nieman Journalism Lab notes, the Post effectively ceded the national newspaper market to the New York Times by not launching a national edition, but the partnership could give it a way of achieving the same thing at much lower cost.

One possible model at work here is simply to buy the best content from everyone else, at cut-rate prices, relying on the willingness of outside sources to price discriminate and shed some marginal IP rights for some marginal revenue.  Before the rest of the world is fully aware of what is going on, suddenly you have one of the best news web sites.

But wait, doesn’t this article say the Post is giving free access to its content to other newspapers?  Here is where Coasean contracting, and symmetry of externalities, enters the picture.  WaPo giving free access to the Minneapolis Star-Tribune, or vice versa, end up being pretty much the same thing (over time, with renegotiations) in a world of Coasean contracting.  WaPo will end up becoming the hub and the others will be feeder spokes, with Wapo paying a fraction of the cost for the content it receives from each one.  (And I suspect there will be no easy “cross-access” of say the Minneapolis paper to the Pittsburgh paper, and so on, to limit the evolution of a rival hub.)  Furthermore, at least in the short run, the marketing work is being done by other newspapers, not by WaPo.

Over time the WaPo web site can buy bits of content from Le Monde and FAZ (translated by software programs, of course), The Guardian, The (London) Times, various local U.S. papers, London Review of Books, Boston Review, and who knows where else?  Probably only a few outlets, such as WSJ and NYT, will refuse to sell content to them at cut-rate prices.  If there is low marginal cost there will be price discrimination, so why not be the one buying on the low part of the demand curve and avoiding most of the costs?

Plus hire a few blogs while you are at it, see how that goes, and maybe over time reel in a few hundred of them.  Why not?  We’ve already seen some moves in this direction, with The Monkey Cage and Volokh Conspiracy.

How about some music streaming while we are at it?

How about calling it…”Amazon for News”?  And for other stuff too.  By the way, this hypothesis helps explain why Bezos doesn’t feel any great need to shake up the current WaPo newsroom.

In this model there is a cannibalization effect and the price and value of content end up falling.  Does that sound familiar?

Never underestimate how smart really smart people are.

For a further explication of what I take to be the Bezos business model, see my old MR post, “Luring Alex to Lunch,” still one of my favorites and a meditation on whether or not you should produce and write all of your own content.  (We don’t, and our model is sustainable.)  And thus, sometimes, I manage to lure Alex to lunch.  Here is how Alex feels about lunch.  That hasn’t changed.

Mark Toma’s *Monetary Policy and the Onset of the Great Depression*

The subtitle is The Myth of Benjamin Strong as Decisive Leader.  Here is a summary from the book’s back cover:

Monetary Policy and the Onset of the Great Depression challenges Milton Friedman and Anna Schwartz’s now-consensus view that the high tide of the Federal Reserve System in the 1920s was due to the leadership skills of Benjamin Strong, head of the Federal Reserve Bank of New York. In this new work, Toma develops a self-regulated model of the Federal Reserve, which stands in contrast to a conventional discretionary model. Given the easy redemption of dollars for gold and the competition among Reserve banks, the self-regulated model implies that the early Fed could control neither the money supply nor the price level. Exploiting an untapped data set, later chapters test the thesis of self-regulation by focusing on the monetary decisions of individual Reserve banks.

The micro-based evidence indicates that “Reserve banks really did compete” – and that Benjamin Strong as decisive leader during the 1920s is a myth. This finding, with its emphasis on monetary policy in the years leading up to the Great Depression, will be of interest to scholars, students, and sophisticated lay readers with an interest in macroeconomic and monetary economic policy issues, specifically to those with an interest in economic history.

I have not read it yet, but it is sure to be controversial.

Claims about Goethe

In 1979, director Francis Ford Coppola, in the grip of clinical manic depression and anxiety over his incomplete opus Apocalypse Now, and while purportedly under the influence of his girlfriend, screenwriter Melissa Mathison, proposed making a “ten-hour film version of Goethe’s Elective Affinities, in 3D“.

There is more here.  And here is the famed Walter Benjamin essay on Elective Affinities.

The new and excellent Howard Eiland and Michael W. Jennings biography of Benjamin has a good discussion of that essay.