Tyler Cowen's Blog, page 524

*A Capitalism for the People*

The author is Luigi Zingales, and the subtitle is Recapturing the Lost Genius of American Prosperity.  I know you have book fatigue, popular economics book fatigue, policy book fatigue, and books-with-subtitles-like-this fatigue, all at once.  But this book is really, really good.  It hits all the right notes, is clearly written, and refers to academics as the new crony capitalists."  I agreed with almost all of it.

If I had to pick out one book, of this entire lot of books, to explain what is going on right now to a popular audience of non-economists, this might well be it.  It is due out in June.

 

A future without ACA?

As predicted by Ezra Klein:

I think that path would look something like this: With health-care reform either repealed or overturned, both Democrats and Republicans shy away from proposing any big changes to the health-care system for the next decade or so. But with continued increases in the cost of health insurance and a steady erosion in employer-based coverage, Democrats begin dipping their toes in the water with a strategy based around incremental expansions of Medicare, Medicaid, and the Children's Health Insurance Program. They move these policies through budget reconciliation, where they can be passed with 51 votes in the Senate, and, over time, this leads to more and more Americans being covered through public insurance. Eventually, we end up with something close to a single-payer system, as a majority of Americans — and particularly a majority of Americans who have significant health risks — are covered by the government.

One question is whether having both Medicaid and Medicare (and other programs) function as a "single payer" system, but that is arguably semantics.  In any case the American system is likely to remain fragmented.  I am also not sure if this process would take a decade, as sometimes a single election cycle can feel like an eternity.  In any case, I see that as likely a superior outcome to the current ACA track.  I have never thought that a mandate is workable in a fragmented system with employer-based care and high health care costs and high income inequality.

I also would not be surprised to see Romney, if elected, and if ACA is struck down, resurrect some version of the McCain health care plan with tax credits, maybe some more federalism, and less of a Medicaid extension than was in ACA.  I don't know if that would pass but I suppose I think not.  I also don't see much hope for a much-needed "supply-side" competitiveness plan.

What happens to books when they come out of copyright?

For the United States, 1922 is the cut-off year for the end of public domain:

Here is more from Eric Crampton, drawing upon Paul Heald.

Assorted links

1. Does New Zealand policy stand within the ambit of the Democratic Party?

2. Profile of Jonathan Gruber.

3. Michael Spence on Twitter.

4. How pop music is made.

5. The decline of human piano tuners.

6. Kaufmann webblogger forum, live broadcast tomorrow, many luminaries.

Markets in everything there is no great stagnation

You can now get rolls of toilet paper especially printed with the Twitter feed of your choice.

That is from Tim Worstall.

Good overview of the legal battle over eBooks

You will find it here, by Tim Carmody, and there are more issues involved than I had thought:

Knebel says there are three major points of law at stake in both the class-action suit and the Justice Department investigation against Apple and the five publishers:

Whether and how the agency model applies to virtual goods;
Whether Apple and publishers engaged in a "hub-and-spoke" conspiracy or simply "conscious parallelism";
The status of the "most-favored nation" clause, common to many legal contracts today, which Apple used to ensure that books could not be sold elsewhere at a lower price than in the iBooks store.

On the latter point there is this:

The last point at issue is Apple's agreement with publishers that their books be sold at the same price to all other competitors. In contract law, this is called "the most-favored nation" clause.

"The most-favored nation clause has been suspicious under antitrust laws for years," says Knebel. But at the same time, it's extraordinarily common. "Most law firms, including mine, will agree to charge one client the lowest possible price for the same services," he says.

So even though Apple's insistence that HarperCollins, Hachette Book Group, Macmillan, Penguin Group Inc. and Simon & Schuster Inc all charge the same prices for their books at all e-book stores is what seems on its face the fishiest about the whole affair, it's actually the part that, in the absence of a conspiracy, is most hallowed by practice. A change in its status under federal antitrust law would require the largest revision to current legal agreements, in industries widely separated from publishing and software.

My view is simple, namely that in the face of massive disruptive innovation, antitrust law rarely does a good job.  The law should stay out of this.  In any case the prices of books have been falling for some time.

Why hasn't Britain recovered more quickly?

Ryan Avent has an excellent post, channeling an Adam Posen report (pdf).  Here is one summary bit:

Financial issues, euro crisis, austerity and oil can account for a lot. It seems possible that structural factors are more of an issue in Britain than in America.

It's worth noting that the main "austerity" culprit here seems to be the increase in the VAT, not the spending cuts (proposed or real) per se.

The Coase theorem in Somalia

Whether Somalia's home-grown al-Qaeda franchise, al-Shabaab, had a hand in the abduction is a moot point. While the group denies involvement, many believe it was a militia allied to al-Shabaab that launched the original kidnap operation, in return for providing it with a cut of any ransom money. That militia is then said to have sold Mrs Tebbutt on to a pirate group for $300,000 shortly after, knowing the pirates could negotiate a considerably higher ransom. Then again, al-Shabaab was never likely to claim responsibility; while British government policy does not forbid the payment of ransoms to criminal gangs such as pirates, it does forbid them to terrorist groups.

Here is more, interesting throughout, and for the pointer I thank Ashok Hariharan.

What is the causal link between parental income and education?

…the connection between income and student performance "is no less true in the Age of Obama than it was in the Age of Pericles." But, he points out, most of the connection is not causal, but due to other factors.  He cites a study by Julia Isaacs and Katherine Magnuson (Brookings Institution, 2011), that examines an array of family characteristics – such as race, mother's and father's education, single parent or two-parent family, smoking during pregnancy – on school readiness and achievement.  The Brookings study finds that the distinctive impact of family income is just 6.4 percent of a standard deviation, generally regarded as a small effect.  In addition, Peterson calls attention to earlier research by Susan Mayer, former dean of the Harris School at the University of Chicago, which also found that the direct relationship between family income and education success for children varied between negligible and small.

Responding to Ladd's claim that the gap in reading achievement between students from families in the lowest and highest income deciles is larger for those born in 2001 than for those born in earlier decades, Peterson points out that the achievement gap between income groups was growing at exactly the same time the federal government was rapidly expanding services to the poor – Medicaid, food stamps, Head Start, housing subsidies, and many other programs.

"A better case can be made that any increase in the achievement gap between high- and low-income groups is more the result of changing family structure than of inadequate medical services or preschool education," Peterson says.  In 1969, 85 percent of children under the age of 18 were living with two married parents; by 2010, that percentage had declined to 65 percent.  The median income level of a single-parent family is just over $27,000 (using 1992 dollars), compared to more than $61,000 for a two-parent family; and the risk of dropping out of high school increases from 11 percent to 28 percent if a white student comes from a single-parent family instead of a two-parent family.  For blacks, the increment is from 17 percent to 30 percent, and for Hispanics, the risk rises from 25 percent to 49 percent.

That is from Harvard's Kennedy School, from Paul Peterson.  Here is more, and for the pointer I thank Ilya Novak.

*Being Global*

The authors are Angel Cabrera and Gregory Unruh, and the subtitle is How to Think, Act, and Lead in a Transformed World.  Cabrera is the incoming president of GMU, as of this summer, so of course I am keen to read this book, which arrived in my pile today.

You can follow Cabrera on Twitter here, among other topics he covers leadership, globalization, and also the Spanish economy.