Coyote Blog

When it comes to high speed rail, the Left tends to have a Santa Clause mentality.   They want the rail, but refuse to even discuss its costs vs. benefits, as if it is going to be dropped in place by Santa Clause.

I have actually had pro-high-speed rail writers call me a dinosaur for taking a cost-benefit approach.  After a reasoned article on why our rail system, with its focus on freight, makes more sense than China and Europe's focus on high speed passenger rail, Joel Epstein wrote me that I should get out of the country more, as if I am some backwoods rube that would just swoon if I saw a nifty bullet train.  For the record, my actual experience on a high-speed rail train in Europe confirmed that it was a nice experience (I knew it would be) and that it was a financial mess, as my son and I were the only passengers in my car.  I would be all for HSR if Santa Clause dropped in down from the North Pole, but it costs a lot of real money.

How much money?  Well take the system in China that Friedman and Epstein and many others have begged the US to emulate:

The rail ministry that builds and operates the trains has an incredible 2.1 million employees, more than the number of civilians employed by the entire U.S. government. Moreover, the ministry is in debt to the tune of 2.1 trillion yuan ($326 billion), about 5 percent of the country’s GDP.

For some reason I do not fully understand, there are two worlds of gaming - the Wal-Mart/Target/Toys R Us world of Monopoly and Risk, and the geeky world of strategic gaming.

It used to be that the strategic gaming world was just too complicated and arcane for prime time.  I once spent a whole summer playing through a game called "War in Europe" from SPI.  It had a 42-square foot map of Europe, thousands and thousands of counters, hundreds of pages of instructions, and simulated WWII in weekly turns.

However, there is now a whole slew of games in the strategic arena, mostly from Europe, that are very accessible.   A number are not much harder to learn than Risk but are more fun and play a lot faster.  Unfortunately, few of these have migrated to mainstream stores, so you may be missing them.  Here are a few my family plays that are excellent places to start.  I have put them in approximate order of complexity, from low to high.

[By the way, don't have a family or friends?  Your in luck!  At least 3 of the games below have very high quality iPad game apps with good to very good AI competitors]

1. Ticket to Ride. Very easy to learn.  Even visiting kids get the idea immediately.  This is a railroad line building game.  Start with the original North American version, it is the least complicated.  Also, if you have an iPad, there is a very good game app port of this game.
2. Small World. This is an absolute freaking classic. Totally fun, pretty easy to learn, fast to play.  Sort of a wargame ala Risk but it doesn't feel like Risk.  Very repayable because the army or race (e.g. dwarves, elves, giants, etc) you play changes each game as special powers are mixed and matched.  As important to taking territories will be recognizing when your race has become senescent and when it is time to start a new race.  If you have an iPad, there is an awesome Small World game app I heartily recommend.
3. 7 Wonders. A new game that has quickly become a favorite.    This game is typical of many modern strategy games -- there are many ways to score and you only have a limited number of actions, so the trick is figuring out your priorities.  The play rules of this game are dead simple.  The complicated part is deciding what action to take among many alternatives, since the scoring is complicated.  Here is my advice on this game and for many of these games that follow.  Just play the game once.   This is what my kids and I did with 7 Wonders.  They yelled at me at scoring time that they hadn't understood that such and such scored so well or poorly, but they understood it better with one play-through than by any number of times parsing the rules.  This is our current favorite.  Interesting dynamic here as after each card play, everyone passes his or her whole hand to their neighbor.
4. Dominion.  Similar to 7 Wonders in that it is a card game building to victory points.  There is a constant tradeoff of getting victory points now or building up "infrastructure" that will allow more scoring later.  It is more complex than 7 wonders as it has even more options and paths.  I play it with my family but both this and the next game fall out of what are typically called "family" games.
5. Race for the Galaxy.  Again, similar to 7 Wonders and Dominion, just more complicated.  A planet development game.

Here are some other family accessible games I can't recommend as much

1. Settlers of Catan. This is a popular strategy classic, and is simple to learn.  My kids think its kind of meh.  It has a diplomacy negotiating element that does not seem to work well in my family for games
2. Cargo Noir. I have only played this once, so I can't say how it wears.  My kids liked it better than I did.  It is easy to learn, but I thought the strategic options were a bit thin.
3. Carcasonne.  There are very few games I don't care for, but I have tried this game several times and it just does not click for me.  But it is wildly popular, so what do I know?  A game where you add tiles of roads and cities to try to score based one where you have put your mini people (meeple in euro-game speak).   There is a high quality port of this game on iPad.

Here are some games I really love but are not appropriate for the entry level family

1. Twilight Struggle - replay the cold war.  My son and I played this and it was awesome, but it took some time to learn and was pretty wonky.
2. Agricola - one of the reigning kings of hard-core Euro-style strategy games, this game is fairly complicated to learn (not helped by instructions that really need a re-write) and very complicated to master.   The concept -- trying to keep a medieval family alive - bored the hell out of my kids but it is similar to many of the games above in that there are far more ways to score than one can pursue in a turn, and it has a very strong element of balancing immediate returns against investments in the future.   I have never played Puerto Rico but my sense it is in a similar genre.

The Boardgame Geek website is a great place to learn about these games (I have just listed a few of the most popular of literally thousands of games).  Their ranking of top family games is here.  To give you an idea, Monopoly is rates #781 in family games and #7148 overall by their readers (though there is some geek snob factor in this, it really is not a very good game), so you probably have some good games to discover.

PS- Most all of these are on Amazon.

I have to take this with a grain of salt, because it is coming from GE, the current American poster-child for rent-seeking, particularly in attempting to be a magnet for green energy subsidies.   But since the statement can be seen as under-cutting the subsidy argument, I have to take it more seriously:

Solar power may be cheaper than electricity generated by fossil fuels and nuclear reactors within three to five years because of innovations, said Mark M. Little, the global research director for General Electric Co.

“If we can get solar at 15 cents a kilowatt-hour or lower, which I’m hopeful that we will do, you’re going to have a lot of people that are going to want to have solar at home,” Little said yesterday in an interview in Bloomberg’s Washington office.

....GE, based in Fairfield, Connecticut, announced in April that it had boosted the efficiency of thin-film solar panels to a record 12.8 percent....The cost of solar cells, the main component in standard panels, has fallen 21 percent so far this year, and the cost of solar power is now about the same as the rate utilities charge for conventional power in the sunniest parts of California, Italy and Turkey.

I am all for that.  I have always had faith that solar would make sense someday, and that we would be ranking out cheap solar conversion surfaces like carpet out of Dalton, Georgia, but every time I have priced it to date on my house, even with huge government subsidies, it has not made sense.    In Europe, it requires 50-60 cent feed in tariffs (basically a subsidy in the form of above-market electricity prices paid by the utility for solar-sourced electricity) to get solar capacity installed, so 15-cents would be great and is approaching the cost of electricity in some high cost areas.

Here in Phoenix, FirstSolar does a ton of thin film.  I have always had mixed feelings about FirstSolar.  On the one hand, they live off subsidies and would basically not be in business if it were not for huge European subsidies of various forms.  On the other, though, they have been one of the few solar companies that actively have talked for years of a development path to a cost position that does not require subsidies.

Don Boudreaux had these two rejoinders to the notion that the GM bailout is a success simply because GM is making a profit.

Economically literate opponents of the Detroit bailout never denied that pumping hundreds of millions of taxpayer dollars into Detroit automakers would restore those companies to health.  Instead, they argued, first, that bailing out Detroit takes resources from other valuable uses.  Because he doesn’t even recognize that other valuable uses were sacrificed by this bailout, Mr. Dionne offers no reason to think that the value of saving Detroit automakers exceeds the value of what was sacrificed to do so.  No legitimate declaration that the bailout is successful is possible, however, without evidence that the value of what was saved exceeds the value of what was sacrificed.

Economically literate bailout opponents argued also that it sets a bad precedent.  By signaling to big corporations that government stands ready to pay the tab for the consequences of their poor decisions, big corporations will more likely make poor decisions in the future.  It’s far too early for Mr. Dionne to conclude that this prediction is mistaken.

I would offer a third concern -- that the government has kept hundreds of thousands of skilled workers and billions of dollars of physical assets under the management of the same group that have decidedly underutilized these assets in the past.  A bankruptcy without Federal intervention would likely have shifted assets and skilled workers into new companies with different management teams and cultures pursuing different strategies with different information.

I always have trouble explaining this issue to people.   Think of a sports team with great players but a lousy coach and management team.  Having the government ensure that the lousy management stays in control of the great players is a waste for everyone.  I explained it more in depth in this post, where I concluded

A corporation has physical plant (like factories) and workers of various skill levels who have productive potential.  These physical and human assets are overlaid with what we generally shortcut as "management" but which includes not just the actual humans currently managing the company but the organization approach, the culture, the management processes, its systems, the traditions, its contracts, its unions, the intellectual property, etc. etc.  In fact, by calling all this summed together "management", we falsely create the impression that it can easily be changed out, by firing the overpaid bums and getting new smarter guys.  This is not the case – Just ask Ross Perot.  You could fire the top 20 guys at GM and replace them all with the consensus all-brilliant team and I still am not sure they could fix it.

All these management factors, from the managers themselves to process to history to culture could better be called the corporate DNA...

So what if GM dies?  Letting the GM’s of the world die is one of the best possible things we can do for our economy and the wealth of our nation.  Assuming GM’s DNA has a less than one multiplier, then releasing GM’s assets from GM’s control actually increases value.  Talented engineers, after some admittedly painful personal dislocation, find jobs designing things people want and value.  Their output has more value, which in the long run helps everyone, including themselves.

The alternative to not letting GM die is, well, Europe (and Japan).  A LOT of Europe’s productive assets are locked up in a few very large corporations with close ties to the state which are not allowed to fail, which are subsidized, protected from competition, etc.  In conjunction with European laws that limit labor mobility, protecting corporate dinosaurs has locked all of Europe’s most productive human and physical assets into organizations with DNA multipliers less than one.

My Forbes column this week focuses on the US rail system, and argues that despite all the angst that we are somehow missing the boat in emulating Europe, Japan and China in building expensive bullet trains, we actually have the best rail system in the world.

These writers worry that the US is somehow being left behind by China because its government builds more stuff.  We are “asleep.”  Well, here is my retort: Most of the great progress in this country occured when the government was asleep.  The railroads, the steel industry, the auto industry, the computer industry  -  all were built by individuals when the government was at best uninvolved and at worst fighting their progress at every step.

In particular, both Friedman and Epstein think we need to build more high speed passenger trains.  This is exactly the kind of gauzy non-fact-based wishful thinking that makes me extremely pleased that these folks do not have the dictatorial powers they long for.   High speed rail is a terrible investment, a black hole for pouring away money, that has little net impact on efficiency or pollution.   But rail is a powerful example because it demonstrates exactly how this bias for high-profile triumphal projects causes people to miss the obvious.

Which is this:  The US rail system, unlike nearly every other system in the world, was built (mostly) by private individuals with private capital.  It is operated privately, and runs without taxpayer subsidies.    And, it is by far the greatest rail system in the world.  It has by far the cheapest rates in the world (1/2 of China’s, 1/8 of Germany’s).  But here is the real key:  it is almost all freight.

As a percentage, far more freight moves in the US by rail (vs. truck) than almost any other country in the world.  Europe and Japan are not even close.  Specifically, about 40% of US freight moves by rail, vs. just 10% or so in Europe and less than 5% in Japan.   As a result, far more of European and Japanese freight jams up the highways in trucks than in the United States.  For example, the percentage of freight that hits the roads in Japan is nearly double that of the US.

You see, passenger rail is sexy and pretty and visible.  You can build grand stations and entertain visiting dignitaries on your high-speed trains.  This is why statist governments have invested so much in passenger rail — not to be more efficient, but to awe their citizens and foreign observers.

The sun follows an (approximately) 11-year cycle as sunspots ebb and flow.  The peak of these cycles, ie the number of sunspots at the cycle's maximum, is thought to correlate with the strength of the sun's output.  In the past, periods with very low sunspot activity through an entire cycle have correlated with very cold temperatures (e.g. the Maunder Minimum and the Little Ice Age).

Well, NASA has updated its forecast for this cycle and it does not look good:

Current prediction for the next sunspot cycle maximum gives a smoothed sunspot number maximum of about 62 in July of 2013. We are currently over two years into Cycle 24. The predicted size would make this the smallest sunspot cycle in nearly 200 years.

The low cycle 200 years ago coincided with a decade or more of wicked-cold temperatures, particularly in Northern Europe  (think Napoleon's army freezing to death in 1812).

One of the reasons this probably has not gotten much coverage is that climate scientists have worked hard in the media to attribute the vast majority of past warming, particularly in the period 1978-1998, to ppm changes in CO2 concentration.  But this same 2-decade period saw extremely high solar activity (as measured by sunspots) and ocean cycles like the PDO in the warm phase.  To maximize how much past warming was attributed to CO2, warming alarmists had to take the fairly absurd position that these ocean cycles and changes in solar output had only trivial effects on temperatures (much more here).

Well, we may find out over the next few years just how trivial Mr. Sun is or is not to the climate.  And we may well find out something else many skeptics have said for years -- for activities like agriculture, cooling is way more damaging than warming.  In the Middle Ages, agriculture boomed from 1100-1300 even as temperatures rose higher than they are today (at least in Europe).  In the first decades of the 1300's, cooling led to agricultural failure and famine, famines that are often credited for weakening the population and thus increasing the mortality from the Black Death a few years later.

Corn ethanol

The United States spends about $6 billion a year on federal support for ethanol production through tax credits, tariffs, and other programs. Thanks to this financial assistance, one-sixth of the world's corn supply is burned in American cars. That is enough corn to feed 350 million people for an entire year.

Government support of rapid growth in biofuel production has contributed to disarray in food production. Indeed, as a result of official policy in the United States and Europe, including aggressive production targets, biofuel consumed more than 6.5 percent of global grain output and 8 percent of the world's vegetable oil in 2010, up from 2 percent of grain supplies and virtually no vegetable oil in 2004.

This chart, from a book by Branko Milanovic via Carpe Diem reinforces a point about income distribution I make all the time -  for all we talk about income distribution in this country, our poorest 20% would be middle class in many countries of the world.  While I would love to see our poor doing even better, it begs the question of whether distribution or absolute prosperity is more important.

Just to give you a feel for reading the chart, the US's lowest ventile, or bottom 5%, have income that would put them in the 68th percentile worldwide.    Our poorest 20% (the first 4 ventiles) would be upper middle class or better in Brazil, China, and India.

When comparing to European social democracies, it turns out that while the US's income distribution is wider, that is almost entirely due to the top end being higher.  The poorest 10% make about the same as the poorest 10% in Europe, and I would argue that this analysis (from a leftish think tank) actually underestimates a quality of life advantage for American poor, who come out higher even than the middle class in Europe on things like living space and appliance ownership.

Perhaps more importantly than income inequality, income mobility remains high in this country. More on income inequality concerns here.

I kid you not

So how did Genghis Khan, one of history's cruelest conquerors, earn such a glowing environmental report card? The reality may be a bit difficult for today's environmentalists to stomach, but Khan did it the same way he built his empire — with a high body count.

Over the course of the century and a half run of the Mongol Empire, about 22 percent of the world's total land area had been conquered and an estimated 40 million people were slaughtered by the horse-driven, bow-wielding hordes. Depopulation over such a large swathe of land meant that countless numbers of cultivated fields eventually returned to forests.

In other words, one effect of Genghis Khan's unrelenting invasion was widespread reforestation, and the re-growth of those forests meant that more carbon could be absorbed from the atmosphere.

Weirdly, the author equates cooling the Earth with "a glowing environmental report card?"  How did cold become green?

In fact, the world did substantially cool in the 14th century.  The previous 300 warm years had brought prosperity and growth to Western Europe, in fact the first population growth in Europe since as early as 300AD.  The commercial and intellectual regression that is often called the Dark Ages or the early Middle Ages (say 700-1000AD) is often attributed to a demographic collapse in Western Europe.  There are many who credit, at least in part, this collapse for the fall of the Western Roman Empire.

The years 1000-1300 saw a real recovery, the first population growth for hundreds of years, and a number of important (though to us prosaic) technological, intellectual and societal advances. There are several factors behind this boom, but a large one is the Medieval Warm Period, where we can find records of certain crops (e.g. grapes in England) being grown far north of where they can be even today.

The early 1300's coincided with the return of cold, wet weather to Europe.  Whether this is in part attributable to Genghis Khan's killing rampage, I can't say.  But the effects were clear.  The 1320's and 1330's saw a series of terrible harvests and resulting famines.   By the 1340's, much of Europe was hungry and malnurished, weakening the population for the arrival of some rats carrying Bubonic Plague.  Again, not a few historians have noted that the climate-change-induced famines of the early 1300's likely made the early plagues more virulent.

This world of failed harvests, starving, and plagues -- this is a greener world we should aspire to?

(HT:  A reader)

The Thin Green Line reports that Renault recently fired a number of employees for espionage related to electric vehicles.  The site concludes:

The stakes are high: The French automaker, now partnered with Nissan, is betting its future on the popularity of the electric vehicle. It plans to introduce no fewer than three electric cars in Europe this year: a sedan, a light commercial vehicle, and a city car.

Unless the espionage thwarts its plans, Renault's gamble is probably a good one. Also last week, the judges of the Detroit auto show gave all their top awards to EVs and hybrids — proof, according the Guardian, that "analysts [are] bet[ting] on rising oil prices and wider acceptance of electric cars." Nissan's Leaf took second place to the Chevy Volt.

As I wrote in the comments, electric cars are a huge opportunity - there are tens of billions of dollars of corporate welfare from countries around the world to be captured. When it is the Left that is actively supporting huge transfers of funds from taxpayers to large corporations, that is an unprecedented rent-seeking opportunity that European companies, already well-schooled in how to be successful within a corporate state, are sure to avidly pursue. Not since corn ethanol has there been a similar gold-rush for taxpayer funds.

I have argued for a while that Obama is building a European-style corporate state, where a troika of powerful government officials, unions, and the largest corporations run the country for their own benefit.  As far as the economy is concerned, this means legislation that cements the position of large, powerful competitors against smaller competitors or future upstarts.  You can see this in Europe, where for decades the list of largest corporations seldom turns over, as they have entrenched themselves in government to protect their position  ().

Here is today's episode, from the Obamacare law:

Under the headline, "Construction Stops at Physician Hospitals," Politico reports today that "Physician Hospitals of America says that construction had to stop at 45 hospitals nationwide or they would not be able to bill Medicare for treatments." Stopping construction at doctor-owned hospitals might not seem like the best way to boost the economy or to promote greater access and choice in health care, but that exactly what Obamacare is doing.

Kenneth Artz of the Heartland Institute explains, "Section 6001 of the health care law effectively bans new physician-owned hospitals (POHs) from starting up, and it keeps existing ones from expanding." Politico adds, "Friday [New Year's Eve] marked the last day physician-owned hospitals could get Medicare certification covering their new or expanded hospitals, one of the latest provisions of the reform law to go into effect."

This little-noticed but particularly egregious aspect of Obamacare is, by all accounts, a concession to the powerful American Hospital Association (AHA), a supporter of Obamacare, which prefers to have its member hospitals operate without competition from hospitals owned by doctors.

We have all heard environmentalists and other American intellectual snobs lamenting that we just are not as smart as Europeans because we have so much less passenger rail.  But because freight and high-speed passenger rail service does not coexist well on the same tracks, urging more passenger rail on the US rail net is effectively asking for more freight to be dumped onto the highways.

Megan McArdle writes:

Moving freight by rail rather than by truck is an enormous carbon saving; one locomotive can haul as much as hundreds of trucks.  It also reduces highway congestion.  Unfortunately, it's hard for passengers and freight to share tracks.  In part, it's difficult simply because it's expensive to upgrade track to handle passenger speeds, but also because freight moves much more slowly, and on an irregular schedule.
I might well argue that if we were simply trying to maximize environmental benefit, we'd ignore passenger rail, and focus on upgrading our freight systems, which sorely need it.  Moreover, these upgrades could largely be made without the massive procedural obstacles that block new high speed rail lines.

But freight rail is not sexy.  It does not excite donors, and it does not excite most of the voters who are motivated by high speed rail.  Politicians win votes by delivering (or at least promising) highly visible improvements; not by silently enhancing the movement of goods from port to Wal-Mart.

As can be expected, the media really did a poor job of covering the GM IPO, consistently underestimating the total public cost of the bailout (e.g. no one is mentioning the $45 billion in tax-loss carryforwards GM was allowed to keep, against all precedent).

But the real cost of the handling of the GM bankruptcy is in 1) the terrible precedents it set in hammering secured creditors to the benefit of favored political allies of the Administration and 2) the loss of the opportunity to get billions of dollars in production assets out of the hands of the people who have be sub-optimizing them.

It was this latter issue I have focused the most on, particularly in this post where I argued for letting GM die.  I said in part:

All these management factors, from the managers themselves to process to history to culture could better be called the corporate DNA.  ...

Corporate DNA acts as a value multiplier.  The best corporate DNA has a multiplier greater than one, meaning that it increases the value of the people and physical assets in the corporation.  When I was at a company called Emerson Electric (an industrial conglomerate, not the consumer electronics guys) they were famous in the business world for having a corporate DNA that added value to certain types of industrial companies through cost reduction and intelligent investment.  Emerson's management, though, was always aware of the limits of their DNA, and paid careful attention to where their DNA would have a multiplier effect and where it would not.  Every company that has ever grown rapidly has had a DNA that provided a multiplier greater than one"¦ for a while.

But things change.  Sometimes that change is slow, like a creeping climate change, or sometimes it is rapid, like the dinosaur-killing comet.  DNA that was robust no longer matches what the market needs, or some other entity with better DNA comes along and out-competes you.  When this happens, when a corporation becomes senescent, when its DNA is out of date, then its multiplier slips below one.  The corporation is killing the value of its assets.  Smart people are made stupid by a bad organization and systems and culture.  In the case of GM, hordes of brilliant engineers teamed with highly-skilled production workers and modern robotic manufacturing plants are turning out cars no one wants, at prices no one wants to pay.

Changing your DNA is tough.  It is sometimes possible, with the right managers and a crisis mentality, to evolve DNA over a period of 20-30 years.  One could argue that GE did this, avoiding becoming an old-industry dinosaur.  GM has had a 30 year window (dating from the mid-seventies oil price rise and influx of imported cars) to make a change, and it has not been enough.  GM's DNA was programmed to make big, ugly (IMO) cars, and that is what it has continued to do.  If its leaders were not able or willing to change its DNA over the last 30 years, no one, no matter how brilliant, is going to do it in the next 2-3.

So what if GM dies?  Letting the GM's of the world die is one of the best possible things we can do for our economy and the wealth of our nation.  Assuming GM's DNA has a less than one multiplier, then releasing GM's assets from GM's control actually increases value.  Talented engineers, after some admittedly painful personal dislocation, find jobs designing things people want and value.  Their output has more value, which in the long run helps everyone, including themselves.

The alternative to not letting GM die is, well, Europe (and Japan).  A LOT of Europe's productive assets are locked up in a few very large corporations with close ties to the state which are not allowed to fail, which are subsidized, protected from competition, etc.  In conjunction with European laws that limit labor mobility, protecting corporate dinosaurs has locked all of Europe's most productive human and physical assets into organizations with DNA multipliers less than one.

This is a follow-up to my opinion piece in Forbes the other day.  Remember, this outcome is not somehow preventable by having "our, smarter guys" in charge -- it is an inevitable result of the information and incentives of government organizations.

Three days after the BP oil spill in the Gulf of Mexico began on April 20, the Netherlands offered the U.S. government ships equipped to handle a major spill, one much larger than the BP spill that then appeared to be underway. "Our system can handle 400 cubic metres per hour," Weird Koops, the chairman of Spill Response Group Holland, told Radio Netherlands Worldwide, giving each Dutch ship more cleanup capacity than all the ships that the U.S. was then employing in the Gulf to combat the spill....

In sharp contrast to Dutch preparedness before the fact and the Dutch instinct to dive into action once an emergency becomes apparent, witness the American reaction to the Dutch offer of help. The U.S. government responded with "Thanks but no thanks," remarked Visser, despite BP's desire to bring in the Dutch equipment and despite the no-lose nature of the Dutch offer --the Dutch government offered the use of its equipment at no charge. Even after the U.S. refused, the Dutch kept their vessels on standby, hoping the Americans would come round. By May 5, the U.S. had not come round. To the contrary, the U.S. had also turned down offers of help from 12 other governments, most of them with superior expertise and equipment --unlike the U.S., Europe has robust fleets of Oil Spill Response Vessels that sail circles around their make-shift U.S. counterparts.

Why does neither the U.S. government nor U.S. energy companies have on hand the cleanup technology available in Europe? Ironically, the superior European technology runs afoul of U.S. environmental rules. The voracious Dutch vessels, for example, continuously suck up vast quantities of oily water, extract most of the oil and then spit overboard vast quantities of nearly oil-free water. Nearly oil-free isn't good enough for the U.S. regulators, who have a standard of 15 parts per million -- if water isn't at least 99.9985% pure, it may not be returned to the Gulf of Mexico....

The Americans, overwhelmed by the catastrophic consequences of the BP spill, finally relented and took the Dutch up on their offer -- but only partly. Because the U.S. didn't want Dutch ships working the Gulf, the U.S. airlifted the Dutch equipment to the Gulf and then retrofitted it to U.S. vessels. And rather than have experienced Dutch crews immediately operate the oil-skimming equipment, to appease labour unions the U.S. postponed the clean-up operation to allow U.S. crews to be trained.

I will tell you, those who agree with me on the immigration issue in the Democratic Party are trying as hard as they can to turn me against immigration.  This same thing happened in the Iraq war.  I was against the war, as I thought it a poor use of resources (there are just too many bad governments in the world to take them all down that way).  But when my fellow anti-war travelers agreed with me for stupid reasons (we must defer to Europe, Sadam is not a bad guy, etc.) it almost made me change my mind.  If the people who agree with me are idiots, is that a bad sign?

TJIC has similar thoughts here, and I watched in amazement as the Mexican President yesterday criticized US immigration policy for being to harsh, despite the fact it is far more open than Mexico's own immigration policy.

Life is too short to spend much time on the Democratic Underground, but this article by Ernest Partridge popped up in one of my Google watch lists.  I highlight only because it contains this straw man:

The dogmatism of free market absolutism resides in the belief that the unregulated market never fails to be beneficial to all; the belief, in other words, that there are no malevolent effects of unconstrained market activity, no "back of the invisible hand." From this belief follows the insistence that the free market is self-correcting, and that there is thus no need for regulation � that, in Ronald Reagan�s enduring words, "government is not the solution to our problems, government is the problem."

I can't think of any thoughtful defender of capitalism and free markets that ever would have said that the market "never fails" or that it is "beneficial to all" or that there are never bad outcomes or that the market is perfectly self-correcting.

Bad, stupid shit happens all the time in free markets.  For example, BP idiotically dumps a few zillion barrels of oil into the Gulf of Mexico.  In a free society, BP will be out billions of dollars in cleanup costs and damage settlements -- it might even bankrupt itself if governments allow that to happen, and thus will never again be able to do something so careless.  Markets can't prevent a first dumb action, like huge leveraged bets on ever-increasing housing prices, but markets can make sure the folks involved don't have the resources to do it again -- that is, except if governments bail them out from their mistakes.

The point is not that markets are perfect -- the point is that they are superior in both function and the retention of personal liberty to the alternative of giving governments coercive power to use force against individuals to change market outcomes.  The point is not that individuals don't do destructive things within the context of free markets.  The point is that they have a lot less power to do harmful things over long periods of time than if one gave that person coercive power in a government job backed by police forces and armies.   There is only a limited amount of damage anyone can do when they depend on the uncoerced cooperation and agreement of their counter-party.   A tobacco company CEO doesn't have a hundredth the power to ruin peoples lives as does one member of Congress. Fifty years of slimy cigarette advertising doesn't have the power of one Congressional mandate.  Go to Chicago, Detroit, Baltimore -- which has been worse for these cities -- the private campaign to sell cigarettes or the government led war on drugs?

Its clear from later in the article that the author is yet another person with a list of pet peeves who wants to use force on the American citizenry to get his way.  The author doesn't like cigarettes, so intervention with tobacco companies is a valid role for government.  OK, well I can't stand reality TV shows, so much so that I would rather be in a room of smokers than a room with "the biggest loser" on TV, but you don't see me wanting to give government power to do something about it.

But what is amazing to me is how much his examples actually make the libertarian point for limitation of government.  Try his first one:

Private Prisons. Good for the corporations: more prisoners, "three strikes" laws, mandatory sentencing. The cost to society: less rehabilitation and early release, increased government expenditures and taxes. It is noteworthy that the United States has the largest prisoner to population ratio in the industrialized world.

You have to really re-read history to come to the conclusion that American incarceration rates are mainly driven by privatization of prisons.   My sense is the causality is the other direction - we have passed crazy drug laws and mandatory sentencing for sometimes petty crimes and have had to turn to private actors with private capital to keep up with the demand to construct new prisons.

Like the author, I hate this incarceration trend, but its really a stretch to blame this on privatization.  And, I am the first to deride the symbiotic relationship between powerful corporations and the government.  I have written on any number of occasions that both political parties in this country seem to be trying to build a European-style corporate state.  So, even if I don't think he has history quite right here, I am willing to concede the point.  Because, in fact, this seems to me an indictment of exactly what he is trying to defend -- the government interventionist state.

The only reason corporations lobby the government is that the government has the unique power to coercively intervene in markets.  Corporations try to engage this power for their own benefit and to step on competitors, both current and future.  The root cause failure here is not the fact that private companies try to engage this power, but that this power exists at all.

Amazingly, he makes the same argument about war:

War, Inc. Good for the corporations (i.e., the military-industrial complex and "private contractors" such as Halliburton and Blackwater): more wars, expenditure of rockets, bombs and ammunition (requiring restocking of inventories). Cost to society: avoidance of diplomatic solutions, increased military budget and battlefield casualties, disobedience to international law (e.g., the Geneva and Nuremberg protocols).

I am staggered to see that someone who is defending giving more power to the government is simultaneously highlighting examples where this power is misused so horribly  (and what could be a more despicable crime by legislators than incarcerating more people or starting wars just to help a favored corporate interests).  I don't think wars are started primarily to help armaments manufacturers, but if they are, then this kind of failure by politicians is FAR worse than any he could point out in unregulated markets, only making my point for me.  Markets are not perfect, but the cure of government use of force is worse than the disease.

Since the author dwells on cigarettes, just look at the so-called tobacco settlement.  Supposedly, this was the great government hammer wielded against cigarette companies to punish them for years of selling a dangerous product.  But in fact, all the settlement did was cement the market position of largest tobacco companies.  The settlement effectively made government a financial partner with tobacco companies, and since it was implemented, the government has wielded its power to protect the companies who were involved in the settlement against competition (particularly from low-price upstarts) so as to protect its own cash flow.  The position of the major tobacco companies has never been as secure and profitable.

I think the author's response would be that if we ban corporate election spending, then all would be well.  This does not pass any kind of smell test.  First, corporate giving has been effectively banned (or at least severely limited) for 20 years, and we see the staggering influence corporations have none-the-less.  We only have to look at Europe, where the troika of politicians, large corporations, and large unions run those states to their own benefit, to the detriment of all others (e.g. smaller businesses, business without political contacts, workers outside of favored fields like autos, young workers, etc.)  This symbiotic relationship occurs without campaign cash being a major element.

If you want to understand how this works, just look at recent legislation like cap-and-trad and health care.  Legislators propose some populist interventions in a market to help themselves get re-elected.  Corporations who might naturally oppose such interventions agree to support legislation in exchange for a number of subsidies and special protections. Trades occur that have little to do with campaign contributions.  Just look at the influence GE wields in getting special deals for itself.

The GM bankruptcy was a classic example.   GM is given a big taxpayer bailout and some cuts in labor costs.  In exchange for labor cost cuts, unions get the government to squash secured creditors of GM in their favor in dividing up ownership and also get some special considerations in pending health care legislation.  Secured creditors allow this to occur because they got TARP funds from the government.   Politicians get active support from GM and the UAW in getting out the vote, positive PR, etc.  The only people who lose are taxpayers, all the other automobile competitors, and workers in every other industry who must pay taxes to support auto workers special deal.

By the way, don't tell me that this is not what you want, that if only we have the right people (e.g. yourself) in power this will never happen.  Wrong.  It always happens.  Every dang time.  The incentives are overwhelming.  Given politicians the power to do that one good intervention you want, and you have also given them the power to do a thousand that you don't want.

Postscript: By the way, please do not ever take a "progressive" seriously when they say they care about the poor.  Take this for example:

Outsourcing of jobs. Good for the corporation: increased profits and return on investment of stockholders. Cost to society: poverty, loss of educational opportunities, redistribution of wealth "upward," shrinkage of customer base, economic depression.

Another way of stating outsourcing is say that it is "transferring a job from a rich American to a poor person in a developing nation."  As a country becomes richer and more educated, low-skilled jobs are not going to continue to get done by college grads.  PhD's, in general, are not going to stitch underwear.  Low skilled jobs in a wealthy society do get outsourced, and these new low-skilled jobs in developing nations become the seed or the catalyst for future wealth-creation and development.

This is one ironic problem that progressives in this country have -- even the poorest Americans would be middle class in many of the countries of the world.  If progressives really want to transfer wealth from the rich to the poor, everyone in the US would pay and no one would receive a dime, it would all flow to other countries.

Apparently the nations of Europe have committed their citizens to helping pay the inflated salaries of a bloated Greek public workforce to the tune of $146 billion.

The package is predicated on the Greeks getting their spending under control, which almost certainly will not happen since the bailout establishes the precedent that if Greece fails to act rationally, it will get bailed out.

Nothing better illustrates the succesful rebranding of most of the principles of socialism into environmentalism than Earth Day, itself a rebranding of Lenin's birthday.

It is no accident that all the things we supposedly have to do to fight climate change are the exact same things socialists used to demand under the banner of Marxism.

After the failure of communism in Eastern Europe, promoters found their message -- to give up our freedoms for the collective -- didn't really have much power.  I guess they deserve some credit as marketers to have successfully gotten so many people who rejected the socialist message to buy into the plea that they need to give up all their freedoms for a 0.01% change in atmospheric CO2 concentration.

As Obama pushes the US into a corporate state model like those in Europe, here is one cost we will face: increases in long-term unemployment.  Already we see higher structural barriers being created to employment (preference for preferred unions, higher minimum wage, reduced internships) combined with increasing incentives to remain unemployed (extension of unemployment benefits, subsidized medical services).

Most countries who move to this model experience very high long-term structural unemployment.   The costs to add an employee in Europe are really, really high, meaning that it is only done reluctantly and the preference is for highly skilled workers  (who is going to give a job for life to an untested, unskilled young worker?)  Further, these states are run by a troika of large corporations, unions, and government insiders who protect each other from competition.  Young unskilled workers are a competitive threat to established unions.  Since these unions workers get above-market wages, they are protected from younger workers who are willing to offer their admittedly less skilled labor much cheaper.

I was playing around with data released from the World Bank, and compared the US to a number of other industrialized countries on this metric.  Even in past recessions, long-term unemployment has remained low in the US (click to enlarge).  The metric is percent of total unemployed that are unemployed for longer than 1 year.

I am really swamped at work, but I have a number of good things saved that I want to share.

1.  This picture is the best single explanation of what is wrong with the stimulus jobs creation numbers -- the stimulus money comes from somewhere, and starves efficient businesses of capital in favor of politically connected endeavors.  HT Russ Roberts

2.  More on what I call the only good idea for reducing health care spending -- making individuals responsible for making price-value purchasing tradeoffs like we do, oh say, with absolutely everything else we buy.  This article on on HSA's in Indiana:

State employees enrolled in the consumer-driven plan will save more than $8 million in 2010 compared to their coworkers in the old-fashioned preferred provider organization (PPO) alternative. In the second straight year in which we've been forced to skip salary increases, workers switching to the HSA are adding thousands of dollars to their take-home pay.

Most important, we are seeing significant changes in behavior, and consequently lower total costs. In 2009, for example, state workers with the HSA visited emergency rooms and physicians 67% less frequently than co-workers with traditional health care. They were much more likely to use generic drugs than those enrolled in the conventional plan, resulting in an average lower cost per prescription of $18. They were admitted to hospitals less than half as frequently as their colleagues. Differences in health status between the groups account for part of this disparity, but consumer decision-making is, we've found, also a major factor.

Mark Perry reports in a later post that Congress is declaring war on HSA's

3.  There has been a lot of good stuff lately on the growing rift between the two America's -- those in government or with access to government patronage and those who actually make a living by being productive.  I am increasingly convinced that Obama and Congress are working to create a European-style corporate state, where government insiders, a few large corporations, and a few large unions protect themselves against everyone else.  Katherine Mangu-Ward looks at a study of government vs. private pay for the same jobs.  It used to be government paid less in return for having to work less hard and being impossible to fire.  Now government workers have it all.

There are two million civilian federal workers. 1.1 million of them have direct private sector equivalents. And they are laughing their asses off at those private sector suckers, who are doing similar jobs for less pay"”often a lot less.

"Accountants, nurses, chemists, surveyors, cooks, clerks and janitors are among the wide range of jobs that get paid more on average in the federal government than in the private sector," according to a USA Today report. In jobs where there are private equivalents, the feds are earning $7,645 more on average than their private counterparts.

Her post has more data. And an update and response to criticisms is here.  Mark Perry looks at wage growth, and the difference is amazing.  Government employees are the new robber barons, and this time, the title is appropriate.

And speaking of the corporate state, this was an interesting essay at the Claremont Institute, via Maggies Farm.

Joseph Schumpeter ominously speculated that as capitalism succeeded, democracies in time would come to expect its end (wealth) but reject its means (free-market competition). He worried that because of the inequality and creative destruction it brings, capitalism would provoke a kind of adverse reaction. A popular call would arise for government to plan market outcomes according to some utopian view of society's good, and this democratically guided central planning would inevitably slow economic growth. Schumpeter predicted, in turn, that if economic expansion faltered, individual liberty would be directly imperiled or quietly ceded by citizens resigned to having their diminished economic position protected by the state.

The one mistake writers often make is to call capitalism a "system."  Capitalism is the un-system.  It is the lack of a system.  It is the natural self-organization of individuals when they freely follow their own self-interest.

4.  The individual responsibility story of the day, via Overlawyered

In 2004, truck driver Simon Loza Mejia violated company regulations, and took his eight-year-old Diana Yuleidy Loza-Jimenez along on a long-haul trip from Oregon to Bakersfield. That November 27, he was pulling away in the truck, but apparently didn't bother to check where his daughter was, and ran over her. This was, argued her attorneys, the fault of her father's employer"”and a Sacramento County judge agreed with the argument that it was legally irrelevant that her father was the one who ran her over. Unsurprisingly, a jury ignorant of the facts awarded Diana, whose lower body was crushed, a jackpot verdict of $24.3 million.

5.  Charter schools in Harlem.  Never have so many kids been held hostage to so few, in this case a few union officials and their captive legislators.

The United Federation of Teachers and its political acolytes in the New York state legislature are hell-bent on blocking school choice for underprivileged families. Worried that high-performing charters are "saturating" Harlem, State Sen. Bill Perkins and State Assemblyman Keith Wright have backed legislation that would gut state per-pupil funding at charter schools and allow a single charter operator to educate no more than 5% of a district's students. Unions dislike charter schools because many aren't organized. But how does limiting the replication of successful public education models benefit ghetto kids?

These obstructionists, Mr. Clark says, aren't doing the community any favors. "The teachers unions ought to be ashamed of themselves because they know better than I do how bad these schools are," he says. "Everybody on my block and in my building and around the corner . . . they all want charter schools. They don't want a political debate."

Separately, John Stoessel digs into Diane Ravitch's shilling for the teachers unions.

6.  I could have sworn the politicians swore up and down they would never ever interfere with business decisions at GM.

General Motors Co. will reinstate 661 dealerships it sought to drop from its sales network.GM executives said Friday that the dealerships -- more than half of those seeking to stay with the automaker -- will receive letters giving them the option to remain open. GM said it would not have enough time to negotiate with all 1,100 dealerships that appealed the automaker's decision to close them within a four-month window imposed by the federal government....

"It's not exactly what they wanted to do, and it's always I think a little embarrassing when you have to make changes based on an arbitration process, but they've had to adjust and move forward," he said.

Well, at least the Congress and the DOT is hammering GM's competitor Toyota, so I guess they can call it even.  Welcome to Europe, guys.  I have said it before, but this is exactly the kind of BS European nations do all the time - hammering foreign competitors of their domestic politically connected manufacturers in exchange for substantial ability to regulate and modify these companies decisions.  Soon to follow - Europe's lower growth rates and higher structural unemployment.

7.  Dog bites man:  Paul Krugman still a political hack who is willing to eschew everything he knows or has written about economics to support his team.

I have to tell one of my favorite stories of chutzpah.  In the 1940's and 1950's, railroads were making the transition from steam engines to diesel engines.  One of the changes was that a diesel engine only needed a driver, it did not need a fireman as steam engines did to shovel coal and keep the boiler running well.   The unions of course saw this coming.  So what did they do?  They preemptively made the demand that diesel engines should have to have TWO fireman.  Railroads spent so much time fighting this insane proposal that it took them years to get the firemen per locomotive to the correct number (ie zero).

I am reminded of this story when I think of how the Obama administration has handled the issue of CO2 abatement.  Reasonable people understand that CO2 abatement will be horrifically expensive - it just will not be cheap in terms of cost or lost economic output and lost personal liberties to take the country back to a CO2 per capita it last had in the 19th century.     But rather than taking this on, the Obama administration preemtively attacked, saying that in fact Co2 abatement would lead to economic growth and job creation.  This was the broken windows fallacy on steroids, but the usual progressive illiterates and consumers of party talking points have run with it.

We are finally getting folks to start to address the true costs of CO2 abatement, and they are enormous.  People who push the precautionary principle try to say that even a small risk of climate catastrophe outweighs some minor abatement costs.  But does a small change of manmade warming outweigh a near certainty of enormous economic costs?

I have said for years that to really get to an 80% reduction target, gas prices would have to rise over $20 a gallon  (they are at $10 already in Europe and they are no where near the targets).  Some researchers looked at the gas price implications of more modest CO2 targets:

To meet the Obama administration's targets for cutting greenhouse gas emissions, some researchers say, Americans may have to experience a sobering reality: gas at $7 a gallon.

To reduce carbon dioxide emissions in the transportation sector 14 percent from 2005 levels by 2020, the cost of driving must simply increase, according to a forthcoming report by researchers at Harvard's Belfer Center for Science and International Affairs.

And this is with a straight tax, probably the most efficient way to hit the targets.  The study agreed that other intervenist approaches didn't seem to work as well as a straight tax:

In the modeling, it turned out that issuing tax credits could backfire, while taxes on fuel proved beneficial.

NY Times | Paul Krugman | Learning From Europe

Europe's economic success should be obvious even without statistics. For those Americans who have visited Paris: did it look poor and backward? What about Frankfurt or London? You should always bear in mind that when the question is which to believe "” official economic statistics or your own lying eyes "” the eyes have it.

This is just silly.  Its like walking out on a single day and saying, "well, it doesn't seem any hotter to me" as a rebuttal to manmade global warming theory.  I am sure I can walk the tourist and financial districts of a lot of European cities with their triumphal centuries-old architecture and somehow be impressed with their wealth.  But the number of upscale shopping options on the Champs-Élysées has little to do with the standard of living of the average Frenchman.

South Bend Seven put it well:

Okay, where did you go in London? Covent Garden? St. James? Soho? Westminster? The City?

Oh, you didn't go to North Peckham, or Newham, or Hackney? You went to the rich areas of the most prosperous city in the country, and not, I don't know, Liverpool, or Leicester, or Middlesbrough? No, you've never been to those places, have you?

Well several million people live there, and no offense to them, but they're not quite as charming as the tourist districts in London. I don't think they'd look to kindly on some rich American spending a vacation watching the Changing of the Guard and taking in a show on Haymarket and concluding he knows about their country and their life.

This really gets back to my post the other day on triumphalism.  This is EXACTLY why states build pretty high-speed trains and grand municipal buildings and huge triumphal arches  -- as a way to distract both their own citizens (and outsiders) from their own well-being relative to others.  Its the magician waving something shiny around in his left hand to take your eyes off the right.  And it is pathetic that not only does a former Nobel Laureate fall for it, but he doubles down by telling everyone else to fall for it.

Relevant actual data, via Mark Perry (click to enlarge, this is 1999 data from a 2004 Swedish study but I don't think the relative positions have changed):

Triumphal arches and high-speed trains don't make people wealthy.  Wal-Mart has done far more to make the average person wealthier than any number of government projects you can mention.

Along these lines, I have said for years that one of the reasons we spend more on health care than Europe is because we can.  We are wealthier, and (rationally in my mind) people choose to spend this incremental wealth on their health and well-being.

We associate photos like this one with the devastation of post-war Europe.

In fact, this is a post-war photo, but it is of Charleston, South Carolina after the Civil War.   We seldom think of such scenes as being relevent to the US, but the South was at least as destroyed after the Civil War as Germany was after WWII.   Sherman's march to the sea in Georgia was famous for its devastation, but in their letters, many of Sherman's soldiers say they were particularly ferocious in South Carolina, the state that they most associated with the war and its start  (though much of the devastation in Charleston was self-inflicted, as a fire to burn the remaining cotton and keep it out of Yankee hands spread to the rest of the city).

Full sized image at Shorpy

I am done using the phrase "dangers of government trying to pick winners" because it implies that they sometimes might be successful.  They never are.  When governments choose, they choose losers.

I get a lot of pushback on this, because it seems to offend people's intuition.  They will say they know lots of good people they trust in government -- there is no way that all these smart, well-intentioned people are going to be so consistently wrong.

But the argument against government in this case (and in most other cases) is not based on the IQ or goodness of the individuals that populate it.  The argument is that even good people in groups make terrible decisions due to problems with their information and incentives.

The information problem is one that Hayek is famous for addressing.  In short, there is simply too much to know to make decisions for the entire economy.  In fact, folks with high IQ's often do especially poorly in this context, because they tend to overestimate their own knowledge and problem-solving ability.   And, even if one could be omniscient, it is still impossible to pick winners because 300 million people have different preferences and so one solution based on one set of idealized or mean preferences is going to sub-optimize for a lot of people  (remember this now that we all have to have health insurance plans on the exact same terms and coverage).

The incentives issue is perhaps an even more powerful problem.  We only have to look at the most recent health care bill and its progress through the legislative process to understand the power of incentives to shape rules and legislation in absurd ways.

Ethanol is a great illustration.  Scorned by scientists as both bad energy policy and bad environmental policy, ethanol mandates and subsidies do nothing but hurt the environment.  Ethanol generally takes more fossil fuels to produce than it replaces, it does almost nothing to reduce CO2 emissions, and it creates new environmental issues with land use as well as social issues from rising food prices.  If you listed a hundred potential legislative initiatives to improve the environment and energy policy, ethanol would likely be in the bottom 10.  But never-the-less, it is consistently the number 1 legislative solution adopted by western democracies, including the supposedly science-based Obama administration.

I used to say that if we could move the first Presidential primary out of Iowa, ethanol might go away, but obviously that understated the appeal of subsidizing the agricultural industry under the thin veneer of environmental policy, as demonstrated by these nutty large subsidies in Europe.  Via Carpe Diem:

Biofuels production in Europe is heavily subsidized. Support has also been increasing in the past years and today stand at approximately EUR4 billion ($5.76B). Another way to look at subsidies is that every litre of ethanol consumed in Europe gets 0.74 EUR (about $4 per gallon) and every litre of biodiesel 0.5 EUR ($2.72 per gallon). The effective rate of assistance to biofuels (taking account of all measures of support) adds up to more than 250% for ethanol (see chart above). Biodiesel, and especially rapeseed crops, have lower effective rates of assistance (up to approximately 60%).

This structure of support and protection is not economically sustainable. It is rather close to economic madness to pursue the sort of self-sufficiency or industrial policy ambitions that have guided EU policy towards biofuels. The total cost of every unit of biofuel becomes far too high, which slows down the readiness to shift away from fossil fuels.

The biofuels policy in the European Union is a classic example of "green protectionism" "“ protectionism that is not motivated for the benefit of the environment, but which uses environmental concerns to pursue non-environmental objectives. The European Union runs an extensive policy for subsidies to biofuel production. Border protection increases the level of subsidy by giving a market support from consumers to producers. Standards are used to favour domestically produced biofuels. It is difficult to escape the picture of a policy driven by industrial ambitions rather than environmental concerns. The intention and/or the effect of Europe's policy is associated with beliefs of self-sufficiency. Obviously, trade is not considered to be an integral part of an environmental ambition to shift from fossil fuels to biofuels.

Perhaps the scariest potential effect of the proposed health care bills is the negative effect they likely will have on innovation.  And if we adopt the bill, we will never know what we have lost.  Unlike budgets, which with near certainty will become overdrawn quickly, we will never be able to point to the health care innovation we didn't have.

I want to quote liberally from a Ronald Bailey post, but I encourage you to read the whole thing:

Yet, the elements of market competition that still manage to survive have had the salubrious effect of driving medical innovation and improving patient health outcomes. A new study by the free market Cato Institute, "Bending the Productivity Curve: Why America Leads the World in Medical Innovation" reports:

...In three of the four general categories of innovation examined in this paper "” basic science, diagnostics, and therapeutics "” the United States has contributed more than any other country, and in some cases, more than all other countries combined. In the last category, business models, we lack the data to say whether the United States has been more or less innovative than other nations; innovation in this area appears weak across nations....

...Harvard University economist Kenneth Rogoff observed:

"[I]f all countries squeezed profits in the health sector the way Europe and Canada do, there would be much less global innovation in medical technology. Today, the whole world benefits freely from advances in health technology that are driven largely by the allure of the profitable U.S. market. If the United States joins other nations in having more socialized medicine, the current pace of technology improvements might well grind to a halt."

In my column, "2005 Medical Care Forever," I suggested this thought experiment:

...what if the United States had nationalized its health care system in 1960? That would be the moral equivalent of freezing (or at least drastically slowing) medical innovation at 1960 levels. The private sector and governments would not now be spending so much more money on health care. There might well have been no organ transplants, no MRIs, no laparoscopic surgery, no cholesterol lowering drugs, hepatitis C vaccine, no in vitro fertilization, no HIV treatments and so forth. Even Canadians and Britons would not be satisfied with receiving the same quality of medical care that they got 45 years ago....

As Rogoff suggests, the nationalized health care systems extolled by progressives have been living off the innovations developed by the "only country without a universal health care system." I wonder how Americans would vote if they were asked if they would be happy freezing medical care at 2005 levels forever?