My wife and I are off to Tuscany for the holidays, so don’t expect any posts until after the 4th of January. We have visited other regions of Italy, but never Tuscany, so have been looking forward to this trip.
All the best – especially good health – to everyone in this holiday season and throughout the new year.
The Financial Times today published a thorough if depressing description of the final hours of the Copenhagen conference.
It was an extraordinary sight: the leaders of more than 20 countries, including US president Barack Obama and the heads of most of the world’s other biggest economies, herded with an adviser or two each into a small room on Friday morning, poring over a short piece of prose with red pens. ….
What emerged late on Friday night, after hours of hard bargaining, including a showdown between Mr Obama and the leaders of China and the other big developing economies, was a document to be known as the Copenhagen accord . ….
By Saturday morning Su Wei, China’s chief negotiator, was distancing his country from the deal. “This is not an agreed accord, it is not an agreed document, it is not formally endorsed or adopted,” he said. “It is prepared or discussed by a group of people who have been specially invited.” His point was that the accord was not a formal UN decision but a voluntary agreement. He went on to suggest countries that sign up might have reservations, and might resign from it at any point. ….
[The accord] can easily be sidelined, an impression reinforced by China’s words. That leaves the UN with a further six months of tough and possibly hopeless negotiations to win acceptance, to be followed by the nearly impossible task of turning any such acceptance into a treaty. It also leaves the world without a global framework to tackle climate change.
It is these conclusions, after two weeks of unprecedented scenes, that have led some to question whether the UN, with processes vulnerable to delays, grandstanding and blackmail by special interests, is the forum in which to reach a treaty. There is talk from developed country officials of pressing ahead with a much smaller group of the leading economies, such as the Group of 20, responsible for the majority of global emissions – a “coalition of the willing” for the climate.
Fiona Harvey, Ed Crooks and Andrew Ward, “Copenhagen: A discordant accord”, Financial Times, 21 December 2009.
The initial stumbling block for consensus was not China, but four countries –Venezuela, Bolivia, Cuba and Nicaragua– “implacably opposed to the accord”.
A federal advisory panel [in the USA] recently set off a controversy by recommending that most women without special risk factors delay breast cancer screening until they turn 50, not 40 — and that mammograms then take place only every other year.
These guidelines, which differ from those of some other professional or advocacy organizations, have been called a rash misjudgment and an example of ostrich-like thinking. But this criticism is unfair, both to the scientists who prepared the report and to ostriches (who don’t actually bury their heads in the sand in an attempt to hide).
Richard H. Thaler, “Economic View: Gauging the Odds (and the Costs) in Health Screening”, New York Times, 20 December 2009.
Behavioural economist Richard Thayler continues with a concise “discussion of the underlying numbers and a bit of probability theory”. He complains “anyone who even suggests that some test be done less often is accused of condoning ‘rationing’, an all-purpose slur against any change that might reduce costs”.
Thaler teaches economics in the University of Chicago Graduate School of Business. He is co-author, with legal scholar Cass Sunstein, of Nudge: Improving Decisions About Health, Wealth, and Happiness (Yale University Press, 2008; updated edition, Penguin, 2009).
Zoologist Bernd Heinrich today focuses on biofuels, but his words apply equally to Joseph Heath’s call for “a simple, cogent line of reasoning that defends the practice [of paper recycling] against the ‘economic’ objection”.
Trees are often called a “carbon sink” — implying that they will sop up carbon from the atmosphere for all eternity. This is not true: the carbon they take up when they are alive is released after they die, whether from natural causes or by the hand of man. The only true solution to achieving global “carbon balance” is to leave the fossil carbon where it is — underground.
[snip]
[The Kyoto Protocol of 1997 does not provide] carbon-reduction credits for saving existing forests. Since planting new trees does get one credits, Kyoto actually created a rationale for clear-cutting old growth.
This is horrifying. The world’s forests are a key to our survival, and that of millions of other species. Not only are they critical to providing us with building material, paper, food, recreation and oxygen, they also ground us spiritually and connect us to our primal past. Never before in earth’s history have our forests been under such attack. And the global-warming folks at Copenhagen seem oblivious, buying into the corporate view of forests as an exploitable resource.
Bernd Heinrich, “Clear-Cutting the Truth About Trees”, New York Times, 20 December 2009.
Ewald Rametsteiner’s comments on my 20 August 2009 recycling post make more sense to me now that I have read this column.
Professor Heinrich lives in a 300-acre (120 hectare) Vermont forest. He is author of numerous books, including The Trees in My Forest (Harper, 1997) and Summer World: A Season of Bounty (Ecco, 2009).
[T]he split infinitive … isn’t quite the perennial bugbear we imagine. [Jack] Lynch notes it has “come and gone through the history of the language”. Popular in the age of Chaucer, it disappeared around 1500. Shakespeare’s works contain only one split infinitive: in Sonnet 142, “Thy pity may deserve to pitied be”. It had become common again by the end of the 18th century, only to become taboo in the 19th; the first explicit prohibition was in an anonymous article published in 1834 in the New-England Magazine, and the first time it was actually termed a “split infinitive” was in 1897, when a critic in the magazine Academy pointed a finger at Lord Byron as the father of this solecism.
Henry Hitchings, “To boldly grow”, Financial Times, 19 December 2009.
Henry Hitchings, author of The Secret Life of Words: How English Became English (John Murray, 2008) is reviewing The Lexicographer’s Dilemma: The Evolution of ‘Proper’ English from Shakespeare to South Park by Jack Lynch (Bloomsbury, 2009)
“Solecism” is an interesting word. The Merriam-Webster online dictionary explains that it dates from circa 1555. Solecism entered English from the Latin soloecismus via the Greek soloikismos, from soloikos, speaking incorrectly, literally, inhabitant of Soloi, from Soloi, a city in ancient Cilicia where a substandard form of Attic was spoken.
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MYTH: User fees would stop waste and ensure better use of the healthcare system
There’s an old idea that frequently sparks debate: that patients rampantly abuse the healthcare system. They indulge in unnecessary, expensive medical procedures all because they can get them for free. So why not teach Canadians to be more responsible by making them pay a charge for every health service used?
Because the idea just doesn’t hold water. Research has long proven that user fees won’t eliminate inappropriate care nor do much to reduce costs, and even the claim that patients waste healthcare resources is faulty.
Canadian Health Services Research Foundation, Mythbusters, September 2001.
Co-payments are not required of resident Canadians who access medical and hospital services. For details, see the full two-page essay, which includes a helpful graph and 9 references for further reading. Additional Mythbusters can be downloaded here.
Though completed in Brazil many years ago, this study may still be of some relevance. It explains my interest in John Kay’s column today.
More than a quarter of the [4,342 industrial] establishments reported the systematic development of new products, and more than two-thirds reported at least some activity in this area, yet fewer than ten percent of the firms registered R&D expenses on their balance sheets. Obviously there is considerable technological effort that never enters formal accounts, probably because most of the smaller firms have neither a research department, nor full-time employees dedicated to research and development.
Helson Braga and Larry Willmore, “Technological Imports and Technological Effort: An Analysis of Their Determinants in Brazilian Firms”, Journal of Industrial Economics, June 1991, p. 423.
But is R&D innovation? John Kay explains.
When we talk about innovation, we visualise men and women in white coats with test tubes and microscopes. Outside many university cities around the world there are biotechnology estates established by governments that believe high technology is the key to a competitive future. The funds that governments provide to support innovation are all too often appropriated by large companies that are better at forming committees to pontificate about what the global village will want in the future than they are at assessing what their customers want today. ….
Last month the [UK's] National Endowment for Science, Technology and the Arts picked up this point. For years research and development scorecards have dutifully recorded how much pharmaceuticals companies spend on the search for new drugs and the expenditure of governments on defence electronics. But a Nesta report, presenting plans for a new innovation index has now recognised that most of the spending that promotes innovation does not take place in science departments. The financial services industry may have been Britain’s most innovative industry in the past two decades – perhaps too innovative – but practically none of the expenditure behind that innovation comes under “R&D”. And the same is true in retailing, media and a host of other innovative industries.
John Kay, “Innovation is not about wearing a white coat”, Financial Times, 16 December 2009.
An ungated version of this column will soon be posted here.
A pilot version of pilot version of NESTA’s Innovation Index can be downloaded here.
Data will be added over the next 12 months, and the Index will be extended to incorporate public sector innovation. NESTA promises then to update the Index each year with new data.
I was excited and eager to learn more, but became very disillusioned by the time I reached page 14 of the pilot report:
The second component is what macroeconomists describe as Total Factor Productivity (TFP). This is the measure of productivity growth that is not accounted for by the growth in factor inputs, such as physical capital or labour quality, and is generally attributed to better ways of doing things, including the broader benefits of technological advances and improved processes. In the approach used in the Innovation Index, in which the private benefits of investments such as R&D are captured separately, TFP includes the spillover benefits of innovation investment.
This methodology shows that between 2000 and 2007, labour productivity grew at an annual average of 2.7 per cent per year. Innovation contributed 1.8 per cent, or approximately two-thirds of the growth experienced.
NESTA, “The Innovation Index: Measuring the UK’s investment in innovation and its effects”, November 2009.
TFP is the residual that is left after regressing output on inputs, i.e. the residual of an aggregate production function. I have discussed all the problems with this methodology in a series of seven thoughts titled “economics as faith”. To locate these posts, type “economics as faith” into the search bar, or click on the “production functions” tag.
The first component of the Index is somewhat better. It consists of adding up all expenditure on R&D (really!), plus all expenditure on design, training, market research, etc. etc.. “However, R&D represents only 11 per cent of the investment in innovation ….” In other words, 89% of all innovation expenditure is excluded from the R&D budgets of private firms. So far, so good. But NESTA then uses “a growth accounting approach … to understand the effect of these [expenditures] on productivity growth.” This requires measures of aggregate productivity, reliance again on “economics as faith”.
I did not look at the third and last component of the Index, “a set of metrics that can be tracked to assess how favourable a climate the UK is for innovation”, so will not comment on that. I also do not know how – or whether – the three components will be combined to form a single index.
Outrageous news from the USA.
Although Medicare is primarily an insurance program for older Americans and the disabled, it has since 1973 covered those with end-stage renal disease, regardless of their age or condition.
The federal program now pays for most costs associated with dialysis and transplantation. But for patients younger than 65, coverage of the anti-rejection dugs — which can run from $1,000 to $3,000 a month — ends after three years. If patients cannot afford the medications, they may lose their donated kidneys and have to return to dialysis while awaiting another transplant.
The policy is widely regarded as pound-foolish. Medicare spends an average of $17,000 a year on kidney transplant recipients, most of it for the anti-rejection drugs, compared with $71,000 a year on dialysis patients and $106,000 for a transplant.
Kevin Sack, “Plan for Kidney Drugs Spurs Division”, New York Times, 15 December 2009.
House Democrats have tabled a proposal to extend Medicare coverage of transplant patients beyond the current limit of 36 months. To pay for the extra coverage, the proposal requires Medicare to “set a flat fee for dialysis treatments and related medications that some providers say would not cover costs”. Those in the business of providing dialysis are lobbying against the proposal. This “supporters of the measure fear … may make it easy for Congress to kill the provision altogether”.
The news story raises a number of questions. Isn’t it possible for a country as wealthy as the USA to provide proper medical care for those who suffer from kidney disease? Why does provision of anti-rejection drugs to transplant recipients have to come at the expense of caring for those who lack a functioning kidney? Can’t US taxpayers afford to support both groups?
