BP spill

I haven't posted a public policy post lately, but the Congressional hearings on the BP skill are driving me a bit crazy.

Yeah, I know I know these things are always about demogogueing and pounding the podium for campaign material, not actual fact finding. But the questions they are asking are just ridiculous.

If you are hiring a CEO for a huge corporation, what would you tell him or her to spend his/her time focused on:

• making large strategic decisions about the company's future
• second guessing the technical experts about technical decisions
• studying the technical decisions so you understand them

I vote for #1. #2 is definitely off the table. And #3 sounds good, but it would take all day so I would rather skip it and stick with #1.

So why ask the BP CEO why they went with this kind of collar and grade of steel v another? What they should be asking him is how the balance between safety, cost, and profit potential was established and how it was communicated and implemented to the technical experts. Were they rewarded for taking short cuts? Were they discouraged from looking into the risks of shortcuts they took? How were risk mgmt procedures selected and managed?

This is what the CEO should either know or be able to find out. If they want to know about the collars, they need to bring in the BP technicians and ask them how and why they chose. Ask them how they justify the reduced safety of their choices. What were the tradeoffs they made at those times?

Allocating health care resources

When deciding if health care resource allocation policies are fair, the average person rates them as more fair when framed positively than when it is framed negatively, even though there is no real difference in the result.

For example, if you describe a policy as the one that will be used to decide who gets a heart transplant, it will seem more fair than if you describe the same policy as the one that will be used to decide who doesn't get one. This is the case even if they know that there are only X number of hearts available (so for each person who gets one, there is by definition a person who doesn't).

What does this show? In addition to showing that the average person's decision making processes are flawed, it also present policy guidance. The way you sell the policy has as much to do with whether it is accepted by the public as the policy itself. Maybe more.

Fashion Copyrights

Great guest post over at Freakonomics on copyright issues in the fashion industry. The blogger, an expert on the fashion business, explains why fashion copyrights are counterproductive. Fashions change very quickly, especially at the high end, that are most dependent on their intellectual property. By the time the pirates come out with volume copying, the high end has already moved on. So it doesn’t really hurt.

And it also helps. The pirating brings attention to the original designer and gives him or her the credibility and authority as a top designer. So by enhancing his/her street cred, it makes his/her new desgns that much more attractive. They call this the piracy paradox, but it makes perfect sense to me.

It is a good example of how copyright law has to be designed in consideration of the economics and dynamics of the industry. Let’s hope that policymakers and activist judges don’t mess it up. And also that they generalize this approach to other areas that probably need copyright protections to be relaxed a bit – think digital music!!

science is just no fun anymore

Just what we need, another reason to fall behind the BRIC countries. This paper reports that the science disciplines set up creative and inventive people to fail because the process to become an independent researcher is so tedious, boring, and time consuming.

Happy Birthday Ronald Coase

I have always been a Pigouvian, but Coase had some great insights into methods for eliminating externalities - which is a geeky way to say making life fair through policy.

No wonder he won a Nobel.

Macroeconomics and Fed policy

Another intelligent debate, this one on macroeconomics. I can't afford the time to add a new blog to my daily list (it seems he posts multiple topics per day), but I may not be able to help myself.

Intelligent Health Care debate

It's too bad that all debates on health care reform are not as intelligent as this one. Steven Landsburg's blog is one of my favorites and I am going to have to check out Cutler.