Incentives matter


Famine stalks Ethiopia once again:

The spectre of famine has returned to the Horn of Africa nearly a quarter of a century after the world's pop stars gathered to banish it at Live Aid, raising £150m for relief efforts in 1985. Millions of impoverished Ethiopians face the threat of malnutrition and possibly starvation this winter in what is shaping up to be the country's worst food crisis for decades.

Yes, of course we should buy food and feed it to the starving. It's difficult to think of any system of morals worthy of being called such that would deny them that or us that duty. However, while we go looking down the back of the couch for that spare change which will keep our fellow human beings alive, it's still worth pondering why this keeps on happening.

Land ownership is another important election issue. The opposition believes the best way to fight poverty is ending the state's ownership of all land, and argues farmers must be free to buy and sell property and develop wealth. The government insists the state must own land, arguing it gives more security to farmers.

Yes, all land is State owned. There is no incentive for a farmer to invest in improving the productivity of his land for it simply ain't his land. In more detail, Meles Zenawi, the Ethiopian Prime Minister:

Now we have, as I am sure all of you know, rejected the concept of changing land into a commodity in Ethiopia. We feel that this choice in our context is not economically rational. That is why we don’t accept it. Why do we think it is not economically rational? By fully privatizing land ownership, one starts the process of differentiation. The creative, vigorous peasant farmer gets to own larger pieces of land and the less effective get to be left to live in doubt.

He then goes on to reject this and insist that as they have lots of peasants thus they should have lots of peasant farms. Oh, and, while the land is held by the peasant "in perpetuity" the government still reserves the right to reallocate at any time. So it's not actually in perpetuity and of course as it cannot be owned privately it cannot be used as security for a loan to improve its productivity.

Until those incentives are sorted out Ethiopia is condemned to have repetetive famines, sadly.

Just for a little further illumination, Zenawi, after a couple of years medical studies, joined the "Marxist Leninist League of Tigray" where he presumably got his education in economics. The MLLT were Hoxaist. That is, the people who thought that Joe Stalin had actually got it right on agriculture.

Which, if you want to starve the peasantry, is probably correct.

When two sides go to war


On Tuesday evening of this past week two groups of males decided that, at that moment in the celestial calendar, it was the most pertinent time to attempt to beat the other into submission. When two tribes go to war! And that's where the problem lies, if there is no tribe then there is struggle to come up with a reason to be violent, there is no attachment to a cause. In this case the groups concerned decided a re-enactment of the heady days of the 1970s would be in order and they adorned themselves in the colours of two football clubs: West Ham and Millwall.

Both inside the ground during the game, and outside, before and after, there were clashes between the two groups as well as with the police. As a libertarian if two groups of people wish to do battle to discover who is the better, as long as no innocent bystanders come to harm then there is no problem with consensual violence. It is when thousands of innocent people who wish to watch a football match or indeed go about their daily business in the environs of a football stadium get caught up in it it becomes a problem.

There has long been an association between football and violence, not just in England but across the world, for most who watch it (and play it) it is theIR way of releasing tension, for some though this manifests itself in violence. These people aren't football fans. They hold more empathy to the violence than they do to the football. These people should be allowed to set up their own alternative sport, something that revolves around groups who can meet up in a field and belt seven shades of leather out of each other. Basically hooliganism needs to become a sport in its own right as long as they all have private health insurance.

In case you wondering: West Ham won the football. As to which group of knuckle dragging cavemen came out on top in the fighting: it was a no- score draw for intelligence.

Evolution and creationism


James Murdoch comes up with an apposite analogy in his recent speech:

The number who reject Darwin and cling to the concept of creationism is substantial. And it crops up in some surprising places. For example, right here in the broadcasting sector in the UK. The consensus appears to be that creationism - the belief in a managed process with an omniscient authority - is the only way to achieve successful outcomes. There is general agreement that the natural operation of the market is inadequate, and that a better outcome can be achieved through the wisdom and activity of governments and regulators.

As in so many things the confusion over beliefs is more extreme in the US than the UK but it still exists here. Creationism itself is more associated with sects on the right, even while such loudly abhor government planning of the economy. But those who are most strident in their insistence that the natural world is simply a result of random chance filtered through survival of the fittest also seem to be those who insist that the economy is not such.

All of which is really rather puzzling. It would seem logical that believing that one huge, chaotic and extraordinarily complex system has arisen without planning would lead on to the acceptance that if it can happen once it can happen twice. If humans are simply the result of competition in spreading gametes for 4 billion years, then it should be easier to accept that an economy is a result of similar if subtly different competition.

Yet, as above, it just doesn't quite seem to work out that way. Perhaps it is just that the human brain is uncomfortable with quite so much randomness: if we are planned to be here than we can accept the random nature of the world, while if we are randomly here then there must be planned order in the world?

Or perhaps it's that those who accept both Darwin (correctly) and planning (incorrectly) are not quite so free of religious desires as they think themselves to be. There still needs to be a caste to protect them from the vagaries of the universe, to intercede against randomness, but they'll term them planners instead of priests?

Legislation fiasco


The never ending blame game that is politics has turned now to DVD ratings. Lady Thatcher, David Cameron and the current government have all come in for criticism over the fact that legislation was not passed on properly to our masters on the continent.For most anti-censorship types the ratings system is better off on the ctting room floor and for good reasons too. Ignoring the efficacy of banning stuff in the age of the interent, its arbitrary nature has been shown to be questionable. Caligula was banned while torture porn like Hostel (I,II) and the Saw series have been approved.

If there is a banned film you have always wanted, now might be the time to go seek it out. Be careful though, the government is claiming that it will carry on fining people regardless of the fact that no longer have the legal footin to do so. Graham Barnfield has an excellent and comprehensive article on this over at Spiked. His conclusion is to be aplauded:

The idiocies of the BBFC would be less frustrating were they not also the springboard for prosecutions. Why should the subjective decisions of a quango form the basis for fines and incarceration? The bottom line is that criminal law needs to butt out of the cinema and home entertainment industries. If consenting participants in film productions emerge unharmed from the production process, then the resulting films would meet a revised, forward-looking minimum legal threshold in future. (Whether they should go ahead on aesthetic or commercial grounds is a separate issue.) This latest humiliation for the Video Recordings Act 1984 should be a chance to wipe the tape clean and treat adult viewers as adults.

Controlling healthcare costs


As I've blogged before, would-be reformers need to realize that we should not isolate people from the cost of healthcare, otherwise prices tend to spiral out of control. That is true whether you are relying on tax or insurance to fund your healthcare. Both systems rely on third-party payment, and both therefore cause the same problem.

Imagine a typical third-party payment scenario. You go to the doctors, feeling unwell. You've already paid your taxes or your insurance premium, so you'll want to feel like you're getting your money's worth. In other words, you'll want to maximise the amount of care you receive, regardless of the cost. Now look at it from the doctor's perspective: it is also in his interest to provide as many and as expensive services as possible. The more he does, the more money he earns from the insurance company or the government.

Put simply, in a third-party payment context, both parties to the healthcare transaction have an incentive to maximise costs, while neither has an incentive to contain them. And that feeds back into higher taxes, or higher insurance premiums – neither of which are remotely desirable.

Clearly, third-party payment is good for big-ticket health expenditure. Very few people could cover the cost of a serious illness out-of-pocket, so pooling risk and resources makes perfect sense. On the other hand, it's not sensible at all for dealing with lesser ailments, where its bureaucratic cost can often outweigh the cost of the services provided.

How do you translate this into policy? In the US, the best way would be to stop subsidizing employer-provided insurance, and encourage individual/family insurance instead (perhaps through a tax-credit). You would also want to encourage people to combine high-deductible insurance plans with health savings accounts, so that third-party payment is kept to a minimum. Studies have shown that health plans like this produce 3-year savings of $1m per 1000 participants.

In government-dominated systems like the UK's, it is a little more difficult. Assuming outright privatization is not on the cards (and it should be, at the very least in primary care) then the introduction of user charges and co-payments are the way to go. And really, that is not nearly such a radical suggestion as British politicians seem to think: pretty much every other European country has them.

Don't ask


Never give a bureaucrat the opportunity to say no. (See here for the other 44 points in Blackwell's guide). Unfortunately for the parents of a Dutch girl they failed to understand that by seeking to play by the rules they would lose their decision making powers over their own daughter for two months. Laura Dekker is a keen sailor, and has been sailing since she was born (she was born on a yacht) she's so competent that at 13 she wants to sail the world. However it's not the seas or the winds, her boat or even her lack of courage that is stopping her from going. It is the Dutch authorities who after denying a request from Laura's parents that she be allowed to take two years of school to complete this challenge then found in favour of the Dutch Child Protection Agency that she become a ward of court.

Of course, I'm sure Miss Dekker has been followed everyday since birth by this agency and they, and the child psychologist who will assess, her, must know her far better than her parents do. In fact, I imagine that Miss Dekker expressed a fear that she was in fact possessed by the spirit of Willem Janszoon and he was controlling her every action! Therefore the safest course must have been to take was this, she needs to be protected. It is such a pity that her parents did not pay any regard to their child when she was growing up as they would then know whether she is capable and mature enough to sail around the world. She has been saved and she will now spend the next two years of her life in school. She might of course ignore everything and learn very little, but it's where the state says she is supposed to be.

Her parents should have pushed her off at the quayside and told her to write rather than doing things by the book. Perhaps others will learn from this and disregard the state as being nothing other than a service for idiots run by idiots. The Dutch should celebrate as another child's life is successfully destroyed.