Jasper Smith

Commentary on politics, economics, culture and sports.

Archive for October 2006

Just say no

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Megan McArdle questions the wisdom of the “just say no” approach to alcohol and drug education, and also doubts the possibilities for teaching our young people the virtues of moderation:

Let’s be honest: for many of us, our happiest college memories ended up face down in a toilet. But that’s neither here nor there. DARE’s job is to prevent drug addiction, not maximise the net amount of happiness in society. From what I know of the programme, it doesn’t actually do either very well, or in fact, at all. But I misdoubt it would be any better if it preached moderation.Kids binge drink because they are gigantic bundles of anxious energy, and drinking allows them to free their id from its neurotic chains for a while without social consequences. Well, I mean, there are social consequences, of course, but you can get away with setting cars on fire or sleeping with half the track team with surprisingly little social opprobrium. (…)

So colour me sceptical that we could prevent binge drinking if we could only teach 18 year olds to drink like 35 year olds.

I’m not so sure I agree with Megan on this one. I tend to think oo much emphasis is put on avoiding intoxicants. The emphasis rather should be on avoiding intoxication.

In other words, their message should be that getting drunk/stoned/high/intoxicated is very very bad, dangerous, etc., and that sobriety is very very good, positive, integral to financial and social success, etc.

But by banging the drum incessantly on a “stay away from this or that substance at all costs” message, they emphasize the wrong strategy.

I strongly suspect the number of successful, non-addicted people who have tried cannabis, or who enjoy a beer or a glass of wine now and then, vastly outnumbers the number of successful, non-addicted people who who have never tried intoxicants. It seems like becoming a member of the former group is a more realistic option than becoming a member of the latter, and is likely to be the basis of a more successful public health strategy.

I honestly think that many young people really never hear a sensible message about why it’s dangerous or foolhardy to get drunk or high. They do hear messages about abstaining from drugs and alcohol, but they’re likewise aware than most adults don’t follow this advice. So, when they, too, decide not to eschew trying these substances, they possess little in the way of awareness of the critical importance of moderation.

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Written by Jasper

October 31, 2006 at 9:37 am

Posted in Health Care, Policy

Drum on income inequality

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Kevin Drum discusses the oft-discussed subject of income inequality:

Whenever you hear someone propose an explanation for skyrocking income inequality over the past few decades, try to think about whether it explains the fact that inequality has gotten immensely worse not just between the top 20% and the bottom 20%, but between the top 1% and the 9% just below them. For example:

Greater returns to education? Do you really think that the top 1% are better educated on average than the next 9%?

Greater rewards for technical skills? Do you really think the top 1% have greater technical skills than the next 9%?

Globalization?

More stable families?

Race and gender?

A failure to take account of the growing value of health benefits?

Do any of these things plausibly seem like big differences between the top 1% and the next 9%? Pretty clearly they aren’t. So why is the top 1% outpacing even the well-to-do who inhabit the next 9%? What’s the big difference between these groups?

I can’t agree with Kevin that none of the factors he cites adequately explains the phenomenon. I reckon it really is globalization.

The term “global economy” implies a single, planet-wide market for everything, including labor. We’re far from arriving at such a destination, of course, but we’re seeing its harbingers with increasing regularity (e.g., U.S. programmers priced out of a job by people with equal skills in far away India).

Theoretically, at some point in the future, price differentials world wide should become tiny, and eventually vanish. Hence, a Big Mac will cost the same in Peru and Norway; an hour of acupuncture the same in Hong Kong or Nigeria; fifteen minutes of tech support the same in Long Island or Mongolia. The price of labor (wages) is naturally not exempt from this trend.

If we are indeed moving toward such a world, then ordinary folks living in rich countries can expect to see income/wage differences flattening between themselves and those in the developing world. Likewise the differences in income between wealthy people in rich countries and their wealthy counterparts in the developing world are diminishing; places like China, Russia and India are home to lots of tycoons. For this latter group — global high earners — the potential gains are truly staggering. Globalization itself — the fact that the entire human race increasingly is participating in market capitalism — means there is far more wealth up for grabs than ever before. All things being equal, economically successful “winners” benefiting from a market of 6.5 billion souls will enjoy bigger paychecks than their counterparts from the days when the same market counted only 2 billion.

So, if you’re living in a rich country and you don’t count yourself among the ranks of the wealthy, you’re undoubtedly going to find that the income gap between you and the tycoon class is growing, but that the gap between you and the rest of the world’s non-rich is getting smaller. We all gonna be one big happy proletariat!

What this scenario does not imply or require, however, is absolute declines in living standards. In other words, we might expect that over the long run, the wages of, say, Vietnamese workers will rise faster than those of Swedes or Americans, but Swedish and American wages (and, more importantly, Swedish and American living standards) can (and should) continue to grow in absolute terms.

In short, as long as you don’t mind the fact that the salary gap between you and a CEO is likely to expand from today’s differential of (say) 500 to (say) 3,000 in the year 2029, you’ve got an excellent chance of enjoying a higher standard of living that year than you do now. But in 2029 you’re also likely to make only two times more than a Malaysian doing similar work, instead of six times like you do now.

Written by Jasper

October 29, 2006 at 12:14 am

Posted in Economics

London contra New York

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I’ve noticed a bit of news buzz lately about London’s rise to preeminence as the world capital of, well, capital — presumably at the expense of New York City. London’s advantages are reckoned to include:

1) Time zone — much easier, it appears, for Europeans and Asians to do business with London because of the smaller time difference.

2) Immigration — much easier, it appears, to get valued employees transferred to London than in post-911 America, with its onerous visa regulations.

3) London’s “lighter touch”, less heavy-handed approach to financial regulation.

New York’s disadvantages are the opposite of London’s advantages. In a post 911 world, it’s apparently a hassle for New York-based firms to transfer in human capital from overseas. And the Elliot Spitzeresque, Sarbanes-Oxleyesque, post Enron/WorldComesque U.S. regulatory environment (complete with quarter century prison terms for white collar criminals!) really makes London the increasing no-brainer for global plutocrats.

Now, I think a lot of this may be overdone. New York remains a larger metropolis than London (at least a third again as large), and packs a more powerful economic punch in terms of overall output (I’d guesstimate the NYC region’s gross output somewhere north of 1 trillion USD, and the London region’s at no more than 700 billion USD). Moreover, the national economy it anchors is a lot bigger than Britain’s — and the economies of nation states still count for at least something.

Still, New York surely has slipped relative to its across-the-pond neighbor.

Now, there’s not much New York can do about the time zone in which it finds itself. And I suspect the gradually growing cries for reform of Sarbanes-Oxley will ultimately result in legislation friendly to the U.S. financial industry — and this should provide relief to New York.

But there’s one other factor that New York can’t do anything about, and that undoubtedly hurts it in the long run: New York’s place in America, while lofty and important, will never rival London’s place in the United Kingdom. To a very considerable degree, U.S. policy makers must necessarily concern themselves with the country’s overall well-being — not just Manhattan’s. The New York region accounts for less than 10% of America’s output, and its people make up only 7% of the country’s population. For the London region, the corresponding figures are more like 40% and 25%. To British policy makers, insuring the vigor of London’s financial services sector is largely synonymous with insuring the vigor of the British financial services sector as a whole. Britain, after all, possesses nothing quite like America’s second tier of financial services centers (Chicago, LA, Miami, Boston — all of which are financial centers of global importance.)

As long as the U.S. as a whole retains a vibrant and productive financial sector vis-à-vis that of other nations, the fact that New York is a bit behind London will be more of a concern to Manhattan restaurateurs and BMW dealers than it will be to housewives in Fresno — or indeed to Congressmen from Texas. After all, a Dallas entrepreneur can benefit from London’s strength by availing himself of the services of a London-based financial wizard to raise capital (or from the lower fees he’ll be charged by a Manhattan financial wizard because of all that annoying British competition!). It’s a bit of a stretch to argue that a strong London financial sector really hurts Americans. Indeed, to the extent that New York City faces fierce competition for world financial services dominance, it’s undoubtedly a good thing for capitalists, consumers, and just plain folks — all over the planet.

Written by Jasper

October 26, 2006 at 4:40 am

Posted in Economics