PFS 2010 - Terence Kealey, Science is a Private Good – Or: Why Government Science is Wasteful from Sean Gabb on Vimeo.

And do read Sex, science and profits.

For Obama pandering to the unions is more important than cleaning up the oil spil:

1. "The Merchant Marine Act of 1920 is a United States Federal statute that regulates maritime commerce in U.S. waters and between U.S. ports. Section 27, also known as the Jones Act, requires that all goods transported by water between U.S. ports be carried in U.S.-flag ships, constructed in the United States, owned by U.S. citizens, and crewed by U.S. citizens and U.S. permanent residents. The purpose of the law is to support provide protectionism for the U.S. merchant marine industry."
 
2. David Warren:  "We learned a simple thing this week: that the BP clean-up effort in the Gulf of Mexico is hampered by the Jones Act. This is a piece of 1920s protectionist legislation, that requires all vessels working in U.S. waters to be American-built, and American-crewed. So while, for instance, the U.S. Coast Guard can accept such help as three kilometres of containment boom from Canada, they can’t accept, and therefore don’t ask for, the assistance of high-tech European vessels specifically designed for the task in hand."

3. Howard Portnoy: "In order to accept offers of help, which have come from Belgian, Dutch, and Norwegian firms that claim to possess some of the world’s most advanced oil skimming ships, Obama would need to waive the Merchant Marine Act of 1920 (also known as the Jones Act).  So why not simply waive the act? Other presidents have under similar circumstances. George W. Bush waived the Jones Act following Hurricane Katrina, allowing foreign ships into Gulf waters to aid in the relief effort. 
 
The explanation of Obama’s reluctance to seek this remedy is his cozy relationship with labor unions. Joseph Carafano of the Heritage Foundation is quoted as saying: “The unions see it as … protecting jobs. They hate when the Jones Act gets waived, and they pound on politicians when they do that. So … are we giving in to unions and not doing everything we can, or is there some kind of impediment that we don’t know about?"

At least in Britain. Here’s part of the maiden speech of a new Conservative MP:

Unlike the situation in respect of any other commodity, in the case of money, price controls do not drive the product off the market. Artificially lowered interest rates increase the demand for credit, and decrease the supply of savings, but the legal privilege granted to banks means that they can meet demand by extending credit that is unbacked by real savings. There is a good argument to say that that causes the boom-and-bust cycle, the misdirection of resources in the capital structure of production, and over-consumption by consumers. That is the biggest problem that we face today...

Today, money is a product of the state. The Bank of England controls the price, quantity and quality of money. Perhaps if we were talking about any other commodity, there would be far less confusion over and questioning of the cause of the crisis. If money is a product of the state, we should ask ourselves, "Is this a good idea?"

Hayek would say: no.

Krugman: not guilty. But the Fed says guilty.

The companies’ liabilities stem in large part from loans and mortgage-backed securities issued between 2005 and 2007. Directed by Congress to encourage lending to minorities and low- income borrowers at the same time private companies were gaining market share by pushing into subprime loans, Fannie and Freddie lowered their standards to take on high-risk mortgages.

Many of those went to borrowers with poor credit or little equity in their homes, according to company filings. By early 2008, more than $500 billion of loans guaranteed or held by Fannie and Freddie, about 10 percent of the total, were in subprime mortgages, according to Fed reports.

Fannie and Freddie also raised billions of dollars by selling their own corporate debt to investors around the world. The bonds are seen as safe because of an implicit government guarantee against default. Foreign governments, including China’s and Japan’s, hold $908 billion of such bonds, according to Fed data.

At least the Isreali leaders. The Wall Street Journal reports:

Israel and Egypt began the blockade of the Gaza Strip three years ago in an effort to cripple Hamas, but the economic isolation has claimed a different victim: the territory’s merchant class.

(...)

Israel defends the blockade as a way to prevent Hamas, the militant Palestinian group in charge here, from getting weapons. But Western officials, aid agencies and analysts have criticized the policy as a form of collective punishment that is doing little to weaken the group.

Hamas can get what it needs, including weapons and cash, via elaborate smuggling tunnels to Egypt. And Hamas’s public resistance to the blockade boosts its popularity here.

The blockade has also decimated Gaza’s private sector, key to weaning the territory from its dependence on imports and aid. The merchant class here has long provided a chunk of Gaza’s employment, and it is one of the few sectors that fostered constructive contact with Israel, through trade.

(...)

Businesses can’t import raw materials or export finished goods. Since the blockade, more than 3,000 private-sector enterprises, including factories and small businesses, have closed, contributing to an unemployment rate of 44%, according to the United Nations Relief and Works Agency in Gaza.

Many of the businesses that have managed to stay open have turned to smugglers to bring in machines, spare parts and raw materials from Egypt, severing trade ties between Gaza and Israeli manufacturers and traders.

All this has bolstered Hamas, businessmen here and aid agencies say. Hamas exerts oversight over the tunnels and their operators. It has expanded its own public-sector payroll, earning local praise for creating new jobs. It has also extended economic tentacles into new businesses.

Yaser Alwadeya, chairman of Alwadeya Group, a 54-year-old trading and manufacturing conglomerate, calls the new economic reality here "the Hamas private sector." Before the blockade, his company made 171 different brands of food, including chips and candy. Some 60% of his products went to Israel or the West Bank.

Much of his manufacturing line was destroyed by Israeli airstrikes during the December 2008-January 2009 Gaza war, he says. Facilities that survived are now starved of basic raw materials like cocoa powder, reducing his product line to just 11 items. That includes ice cream sold in clear plastic bags, because, Mr. Alwadeya says, Israel won’t allow in proper packaging.

He no longer exports anything, and he now employs 45 people, down from 276 before the blockade. "Where do you think they are?" asks Mr. Alwadeya of the employees he has had to fire. "Either on the streets or with Hamas."

U.S. Support for Legalizing Marijuana Reaches New High:

Gallup’s October Crime poll finds 44% of Americans in favor of making marijuana legal and 54% opposed. U.S. public support for legalizing marijuana was fixed in the 25% range from the late 1970s to the mid-1990s, but acceptance jumped to 31% in 2000 and has continued to grow throughout this decade.

Illegal is not the same as immoral:

Buildings nests helps animals survive. Fighting over nests is costly. The rule "don’t take other people’s nests" encourages nest building, minimizes blood shed, and is found in many species. The biologist Maynard Smith first proposed this idea in the 1970s. More recently Herb Gintis and other economists have used it to explain the evolution of property rights.

But if people respect property rights because our animal brains tell us taking another person’s stuff is wrong (and potentially dangerous), laws against downloading will always be difficult to enforce.

When I copy music from a CD onto my computer, it doesn’t feel as if I’m taking someone else’s stuff, because I’m not. As the cartoon says, theft removes the original, piracy makes a copy. Sure, I know the intellectual arguments: copying music without paying for it reduces musicians’ royalty revenues, and thereby decreases the incentives for musical performance, excellence and innovation. But those intellectual arguments don’t register in the primitive part of my brain, the part that tells me taking $1 from the guitar case of a street musician is wrong.

Evolutionary theory suggests that property rights come from creation or production - I own my nest because I’ve made it. This is another reason why laws against downloading feel wrong. I make something when I produce a mixed tape, burn a CD, re-arrange or re-mix music. Our animal brains tell us that when we produce something, we should get to keep it.If the fundamental basis of property rights is an evolutionary rule "don’t take other people’s nests," the attempt to re-interpret property rights as "don’t copy other people’s nests" is fraught with difficulties.

From an evolutionary point of view, copying a better nest design is a good idea. Working against people’s innate tendencies is much harder than working with them. And that has implications for the way copyright laws are enforced. If people have no innate respect for copyright, what can be used to compel compliance? Tear-jerking ads of unemployed movie worker? Fear? (simple economics of crime: risk-neutral people will download as long as the marginal benefits are greater than or equal to the probability of getting caught times the fine if caught).

Tom Palmer:

The trade embargo against the people of Gaza is itself a crime, and the incompetence and avoidable deadly violence of the Israeli authorities in dealing with the aid flotilla are further arguments that it should be lifted.

Searching for weapons is one thing, but embargoing trade and aid altogether is another. How can the Israeli authorities expect peace from people who, in the end, feel that they have nothing to lose? Free the trade with Gaza and let the people there work, produce, and flourish. Let them trade with Israelis. Search for weapons, but do so with intelligence, not rank incompetence that results in the spilling of blood.

Once again, the Israeli authorities have shown that, when a trap is set, they are quite willing to step into it. A bad policy coupled with utter stupidity and incompetence will prove disastrous for everyone. Perhaps the Israeli authorities may learn something from what happened. I hope so.

There is a great deal of evidence that freeing trade creates or supports peace. The Israeli authorities should consult it.

Steve Sailer reports:

Here’s an interesting table from p. 240 of David Willetts’s The Pinch of average male life expectancy at the age of 65 in the UK (in other words, in 1950, 65-year-old British men were expected to live to 77.0):

1950: 12.0

1960: 12.2 (+0.2 v. decade earlier)

1970: 12.8 (+0.6)

1980: 14.0 (+1.2)

1990: 15.8 (+1.8)

2000: 18.2 (+2.4)

2010: 21.7 (+3.5) [projected from growth from 18.2 in 2000 to 21.0 in 2008]

So, for every four days you live, you only get three days closer to death? What better excuse for procrastinating?

Now, that’s pretty weird. Instead of diminishing marginal returns, we (or at least Brits) are currently enjoying increasing marginal returns.