The ethics and practice of blood donation

We’ve one of those lovely Guardian discussions over the morality of commercial practices. You can guess the tone just from the headline:

Blood money: is it wrong to pay donors?

And we of course observe the comments section filling up with outraged screams that of course it’s morally wrong.

Which isn’t actually the point that should be under discussion. What we’d really like to know is whether paid blood donation is efficient. And the answer there is that no, it’s not really. When offered a choice those who purchase blood place a higher price on blood that has been donated rather than that which has come from paid donors. Such pricing is because donations do tend to be og higher quality. So, if we could fulfill our requirements for blood and blood products purely from donations we would, by preference, do so.

But we can’t so fill our preferences. So, for blood products specifically in the UK, we purchase from paid donors in other countries. Shrug. It’s either that or simply don’t offer the treatment and it’s hardly moral to deny treatment because of some squeamishness that cash was involved in the process.

The important of this observation isn’t confined just to blood of course. We tend to think that kidney transplants are better than he slow death which is dialysis. But many do die simply because there aren’t enough kidneys available for transplant. And this would be true even if ever potentially usable organ was stripped from corpses, the wishes of their now deceased former owner be damned. To fill this gap we must therefore ask for live donations (much the same being true of liver and lung transplants, heart such cannot of course be carried out from a live donor). But there’s a rather limited supply of people willing to live donate a kidney.

When, as we do from time to time, we suggest that the obvious answer is simply to pay donors, as they do in Iran, we’re told that paying for kidneys would simply be immoral. As with those shouting about blood. Shrug: this means that people will die because of some squeamishness over cash having been involved.

Oh yes, most moral that outcome is.

It’s the absence of markets that causes poverty

There’s an excellent discussion of a recent finding in development economics over here.

If markets are missing completely, or so unreliable as to effectively be missing, then household separation fails. The extreme case is easiest to think of. If a household is completely autarkic, and can trade with no one else, then it can only consume what it produces. The two decisions are inseparable. If they want a new TV, then they’d better have a source of rare earth elements in their back yard and a passion for soldering.

The importance of knowing if household separation holds or not is that it tells us something fundamentally important about why a developing area is poor.

What’s being looked at is that horrible, $1 a day, poverty that far too many of our fellow humans are stuck in. The big question being, well, are they stuck there because of the way that markets operate? Perhaps “the market” means they can’t get enough fertiliser for example. Or is it that markets simply do not exist and thus they cannot reap the benefits of the division and specialisation of labour and the subsequent trade in the increased production?

The answer appears to be the absence of markets rather than any failure in them. Which leads to an interesting thought about what should be the right way to aid them.

Instead of sending money with which to buy them stuff we should be trying to work out how to create markets. And the most important part of that is in fact information. Not from us to them, but within such communities. And that ties in neatly with something that is becoming apparent from another part of the literature. It may well be that the mobile telephone is the greatest poverty reducing technology of our times. Simply because it does do exactly that, allow the spread of the information that enables markets to do their wealth creation thing. As this excellent paper makes clear.

It’s not quite as simple as “make sure there’s a phone network everywhere and the poor will get rich” but we’re increasingly coming to the view that that’s a damn good start to solving the problem.

Two cheers for Paul Krugman

Paul Krugman says that this (from this Branco Milanovic paper) gives you recent history in one chart, and it’s hard to disagree:

010115krugman1-tmagArticle

Everyone got richer in real terms, although some a lot more than others – and this doesn’t fully include technological developments that make pocket supercomputers cheap enough that even people on quite low incomes (for rich countries) can afford them. Like Scott I am more interested in the bottom 80 percent than the top 20 percent, so this is broadly good news. The bottom 10 percent do seem to be left behind to some extent, but African poverty has still fallen by 38% during this period, and most health-related metrics have improved. Maybe issuing more unskilled work visas to poor Africans and Indians would help to boost the incomes of the bottom 10 percent even more.

In another post, Krugman points out that the left’s “econoheroes” tend to be of a pretty good academic calibre (he cites himself and Joe Stiglitz, both Nobel Prize winners), whereas the most popular economists on the right tend to be slightly less impressive supply-siders. I think that’s fair, and it’s a pity. When’s the last time you heard a right-wing pundit citing Nobel Prize winner (and not-so-secret free marketeer) Eugene Fama’s work on the efficiency of financial markets? Or, indeed, Milton Friedman’s monetary prescription for stagnant economies like Japan or, now, the Eurozone?

Well, we try to here at the Adam Smith Institute, and a very honourable mention goes to the excellent James Pethokoukis at the American Enterprise Institute. There are others, but in general I think Krugman’s point is pretty fair. For example, I often meet right-wingers who think using monetary policy to generate extra inflation during demand-side recessions is somehow a left-wing idea. This would come as a surprise to Milton Friedman!

I have a theory about why: the post-Cold War consensus has been so good for us – that is, the “Overton Window” of debate has shifted so far rightwards — that the best ideas have been absorbed by the ‘centre’ and the less compelling ones are all that’s left over. That seems unsatisfactory to me, but it does leave me wondering what it means to be a free marketeer, if not a strong preoccupation with the supply side. Maybe Hayek has an answer.

It’s terribly difficult to argue that markets are too short term

There’s lovely little essay talking about how difficult it is to believe that financial markets are too short term in their outlook. To do so demands that said markets are entirely inefficient in their processing of information. And as this is something that no one but would be commissars still believes then it isn’t really possible to insist that markets are short term in their outlook.

Here’s a part of said essay:

Basically, if capital markets price things well (with few ex ante errors, or put differently, the market is close to “efficient”) then maximizing shareholder value is a very good idea. Believing that markets make common and giant predictable errors is the only legitimate beef one can have with maximizing shareholder value, and it’s absolutely fair to debate this tenet.

But instead of confining the debate to this central point, or even realizing that this is the central point, critics attack shareholder value for many ancillary reasons. For instance, they laugh off the concept as vacuous, the absence of a strategy. They attack share‑based and particularly options‑based compensation. They attack markets and managers for being too “short-term.”

The obvious point is that if markets are anywhere near efficient (and just about everybody agrees with the weak version and some more with the semi-strong) in the processing of information then the current market valuation is the value of that company from now into the indefinite future. And, given that we are measuring that flow of funds from that company off into that indefinite future then how on earth can this be short term thinking?

Sure, if you are a would be commissar then you can argue that markets aren’t efficient at processing information. At which point you’re going to have to explain the difference in food supply in London in 1990 and in Moscow in 1990. When that famous question got asked, “Who is in charge of the bread supply for London?”.

Quite, markets are, observably, somewhat efficient at processing information. Thus they are forward looking and as such cannot possibly be short term. QED.

No, really, markets do sort themselves out

You’ll recall the terrified bleating from the usual suspects over the way that the supermarkets were sitting on all that land that could be used? As we recall said bleating the first set of allegations were that they had the land banks to make sure that other supermarket chains couldn’t build stores in an area. Our reaction to that was, well, issue more planning chittys then.

More recently the story moved on to how the supermarkets were sitting on all that land that should be used for housing instead. To which our reaction was, well, issue more planning chittys then. We’re really not short of land to build on in this country, we’re only short of land someone is allowed to build upon.

And what is happening now?

Britain’s supermarkets are building on just 6pc of the land they control across the UK, underlining the problem they face with undeveloped sites as the industry battles tumbling sales.

New figures show that the pipeline of new grocery stores in the UK is 46.61m sq ft, the equivalent of more than 1,000 acres. However, just 2.8m sq ft of these new stores are actually under construction.

Building work on stores has fallen by 20pc compared to a year ago as the “big four” supermarket chains – Tesco, Asda, J Sainsbury and Wm Morrison – suffer from tumbling sales and profits.

This means that 43.81m sq ft of land across the country is sitting unutilised by grocery retailers according to property agent CBRE. This land is either subject to a proposal for a new food store, or planning permission has already been granted.

The supermarkets simply do not want to build more stores on that land that they own. That land will, therefore, in the fullness of time (given the time and effort it will take to change said planning chittys, this system is not known for its efficiency) be developed to some other purpose, most likely that housing that was being called for.

And all being done without a politician or a bureaucrat making a plan, without considering social usefulness and entirely cocking a snook at the desires of our betters in the Great and the Good.

We the peasantry have decided that we’re not all that interested in more supermarkets. So, therefore, there won’t be that many more supermarkets. Markets really do just sort themselves out, we get supplied with what we actually want for that’s what we spend our money on, what we want.

Well, markets do sort themselves out if they’re allowed to. Who’s willing to bet on the campaigns against those now won’t be supermarket sites being turned into the housing that people insist we need?