Tyler Cowen's Blog, page 346

India to send the world’s last telegram on July 14th

At the Bharat Sanchar Nigam Limited (BSNL), India‘s state-owned telecom company, a message emerges from a dot matrix printer addressing a soldier’s Army unit in Delhi. ”GRANDMOTHER SERIOUS. 15 DAYS LEAVE EXTENSION,” it reads. It’s one of about 5,000 such missives still being sent every day by telegram – a format favored for its “sense of urgency and authenticity,” explains a BSNL official.

But the days of such communication are numbered: The world’s last telegram message will be sent somewhere in India on July 14.

That missive will come 144 years after Samuel Morse sent the first telegram in Washington, and seven years after Western Union shuttered its services in the United States. In India, telegraph services were introduced by William O’Shaughnessy,  a British doctor and inventor who used a different code for the first time in 1850 to send a message.

The BSNL board, after dilly-dallying for two years, decided to shut down the service as it was no longer commercially viable.

“We were incurring losses of over $23 million a year because SMS and smartphones have rendered this service redundant,” Shamim Akhtar, general manager of BSNL’s telegraph services, told the Monitor.

And for a little bit of history:

At their peak in 1985, 60 million telegrams were being sent and received a year in India from 45,000 offices. Today, only 75 offices exist, though they are located in each of India’s 671 districts through franchises. And an industry that once employed 12,500 people, today has only 998 workers.

By the way:

Sixty-five percent of daily telegrams are sent by the government.

The full story is here, and the pointer is from Michael Clemens.

Detroit facts for today

…the city’s per capita income, averaged over its 684,799 residents, is just $15,261 per year. (That’s less than half the income of neighboring Livonia.) Auto insurance alone eats up a good $4,000 of that, for residents with a car.

And then comes the litany of municipal woes: Detroit has the highest violent crime rate of any major US city, at five times the national average; there were 344 murders in 2011, of which just 39 were solved. Right now, the average response time, if you put in an emergency call to the Detroit Police Department, is 58 minutes.

Detroit’s infrastructure is crumbling: 40% of its street lights are out of order, and it has 78,000 abandoned and blighted structures, of which 38,000 are considered dangerous buildings. Those buildings account for a large proportion of the 12,000 fires Detroit has every year. At the moment, firefighters are instructed not to use the hydraulic ladders on their firetrucks unless there is an immediate threat to life, because the ladders have not received safety inspections for years. Detroit also has just 36 ambulances, of which generally no more than 14 are in operation at any given time. And in terms of the city’s IT infrastructure — well, you can probably guess; suffice to say that a recent IRS audit characterized the city’s income tax system as “catastrophic”.

As far as Detroit’s balance sheet is concerned, there is $9 billion of debt, excluding pension liabilities, and also excluding healthcare and life insurance obligations which are calculated at roughly $6 billion. Debt service in 2013 is projected at more than $240 million, or about 22% of total revenues. Worryingly, under the section of the proposal headed “Realization of Value of Assets”, one finds the priceless collection owned by the Detroit Institute of Arts…

That is all from Felix Salmon.

Who are the three highest paid officials on the Pentagon budget?

The football coaches at Army, Navy and Air Force.

Here is more (mostly on other topics), hat tip to @jtlevy.  Here are some comparable answers for state government employees.

Assorted links

1. Jamal Anderlini at the FT on Chinese overcapacity.

2. Education and the job market in China, and theft of caterpillar fungus by brutal gang.

3. Did the Hanging Gardens of Babylon even exist?

4. The TV culture that is Norway.

5. Inside Tokyo’s luxury fruit parlor (with photos too).

6. What is the bond market telling the Fed?

The Oocyte Cartel

The Society for Assisted Reproductive Technology (SART) represents more than 85 percent of the assisted reproduction industry. SART requires that its members work only with agencies that limit compensation to egg-donors to around $5000 or a maximum of $10,000 (figures decided upon by the ethics committee of an affiliated organization, The American Society for Reproductive Medicine (ASRM)). In other words, ASRM-SART acts as a buyer’s cartel.

In 2011, Lindsay Kamakahi launched a class action suit against ASRM-SART challenging  their horizontal price-fixing agreement as per se illegal under the Sherman Antitrust Act. ASRM-SART tried to have the case dismissed but a judge recently denied the dismissal in the process making it clear that the plaintiffs have a good case.

ASRM-SART argue that their maximum price is really about protecting women and that compensation “should not be so excessive as to constitute undue inducement.” Egg donation does involve extensive screening, time and some health risks. One would think, however, that the proper response for those interested in protecting women would be to ensure that the women are fully informed and that they are paid high wages not low wages.

The paternalistic policy of the ASRM-SART especially rankles because it applies only to women, sperm donations are not regulated. Of course, sperm donation isn’t risky but we also don’t see laws limiting the wages of miners to protect miners (mostly men) from “undue inducement.” The societal expectation seems to be that men are appropriately motivated by self-interest but women may be appropriately motivated only by altruism.

I am in agreement with Kimberly D. Krawiec who writes in her excellent paper Sunny Samaritans and Egomaniacs: Price-Fixing in the Gamete Market:

It is ASRM’s paternalistic and misguided attempts to control oocyte donor compensation through the same type of professional guidelines that courts have rejected when employed by engineers, lawyers, dentists, and doctors that should raise an ethical red flag.

ASRM-SART surely believe that they are doing good but I think it no accident that they also do well from a policy that reduces the price of their inputs. A price controlled below the market price generates rents. In the traditional analysis, the rents are dissipated away by long-lines, a form of rent seeking (see Modern Principles–first edition now a bargain!). It’s also possible, however, for suppliers to grab up the rents, especially suppliers of complementary goods.

For example, it’s often been pointed out that in the organ donor market the hospitals, surgeons and executives all get paid and paid well; the only person not getting paid is the person who provides the transplant organ. But we can say more–one of the reasons the hospitals, surgeons and executives get paid well is precisely that the donor is not paid. The shortage created by the price control drives the demander’s willingness to pay upward and some of the difference between the willingness to pay and the maximum legal price is captured by the suppliers of complementary inputs. How do we know? In the 1990s, entry into the transplant business grew much faster than did the supply of transplant organs. In fact, transplants were so profitable there was a rush to transplant that increased the number of centers but drove down center volume thereby reducing patient survival rates.

Similarly, by limiting egg-supply the suppliers of assisted reproductive services may be able to increase their share of the total gains from trade.

Although ASRM-SART may profit from restricting donor compensation there is another issue at large, the repugnance constraint. The repugnance and disgust centers of the brain are old and deep and often revolve around issues of body integrity, body products, hygiene, sex and death. Birth treads uneasily in many of these waters already and egg donation adds to this volatile mix issues of gender, personhood, identity and genetics all of which prime for a repugnance storm. The plaintiff’s case is sound but if the antitrust laws prevent ASRM-SART from limiting prices–or saying that they limit prices–and if egg donation were to become even more of a market in everything might there not be a backlash and an outright ban on compensated donors, as is the case in many other countries and for transplant organs in this country? I hope not but it is a real possibility.

The ban on compensated transplant organ donation has led to hundreds of thousands of excess deaths. A ban on compensated sperm and egg donation would lead to a dearth of lives.

Delaying The Great Reset

Some 74 percent of professors aged 49-67 plan to delay retirement past age 65 or never retire at all, according to a new Fidelity Investments study of higher education faculty. While 69 percent of those surveyed cited financial concerns, an even higher percentage of professors said love of their careers factored into their decision.

Here is more.

Sentences of interest

It’s worth emphasizing that the recent rise in interest rates has been a global phenomenon, not just something seen in the United States.

That is from James Hamilton.

Who are the new economic optimists?

Here is a very good discussion by Nelson Schwartz, here is one excerpt:

He is not predicting an imminent resurgence. Like most academic economists, Mr. Cowen focuses on the next quarter-century rather than the next quarter. But new technologies like artificial intelligence and online education, increased domestic energy production and slowing growth in the cost of health care have prompted Mr. Cowen to reappraise the country’s prospects.

“It’s better than it looked,” Mr. Cowen said. “Technological progress comes in batches and it’s just a little more rapid than it looked two years ago.” His next book, “Average Is Over: Powering America Beyond the Age of the Great Stagnation,” is due out in September.

The link is added by me, and the article covers other individuals too.  There is also this:

“The great stagnation will end for a lot of people but not everyone,” Mr. Cowen said. “I think there will be great breakthroughs but the distribution of those gains will go to owners of capital and intellectual property.”

Assorted links

1. The forthcoming push for (more) Chinese urbanization.

2. In The Great Reset, there is probably no Nashville Symphony Orchestra.

3. Robin Hanson TEDx talk on robot society.

4. Markets in everything: guinea pig armor edition, and more on seasteading.

5. The face slimmer exercise mouthpiece from Japan.

6. Medicare cost growth is driven mostly by “n.”

7. Open archive from The Spectator.

Dani Rodrik has been right all along

For a few years now Dani Rodrik has been tweeting about how second-rate, illegitimate, and undemocratic the current Turkish regime is.  He never convinced me, not because I held firmly to some opposing perspective, but simply because I don’t follow Turkish politics closely enough for claims of any kind to have had traction on my views.

It now seems he has been quite clearly correct all along.  The Turkish state has behaved very badly in response to recent protests and shown how deeply it is infected by many of the characteristics of autocratic and authoritarian regimes.  The treatment of children, doctors, foreign and domestic journalists, the use of chemicals in the water cannon, the indiscriminate use of the riot police, and the generalized paranoid suspicion of the Turkish population — among other factors — all point in this direction.  Democracy is about more than just elections.

Here is a short update on recent events.  Here is a short piece on the not very impressive response of the Turkish media.

For some coverage of what is going on you can follow @memmetsimsek or Rodrik himself.  Michael Clemens has connections to Turkey and he is also a useful source.

If nothing else, it can be forecast that the variance of possible outcomes for Turkey has gone up.