Thursday, October 07, 2010

Quotes of the day

You can run an electrical current through a chemical bath and synthesize the basic amino acids that form the building-blocks of human life. You cannot synthesize a llama. So in the field of human knowledge. New ideas are limited by the supply of existing ideas and by the speed with which those ideas can combine to form new ones. The ancients could build accurate astronomical models but could not generate a theory of gravity; they needed better telescopes, better measurements and a theory of calculus. "If I see farther than other men," said Isaac Newton, "it is because I stood on the shoulders of giants." This idea, the importance of proximity, is one of the first concepts that Steven Johnson introduces in "Where Good Ideas Come From." In many ways, it is the heart of the book, defining not just what innovations are possible at a given time, but also how innovation gets done within the current frontiers of human knowledge. In Mr. Johnson's telling, innovation is most likely to occur when ideas from different people, and even different fields, are rapidly banging against one another; every so often the ideas will spawn some radical new combination. The most innovative institutions will create settings where ideas are free to move, and connect, in unexpected ways.--Megan McArdle

One of the big myths, I think, about colds is that having a weakened immune system means being susceptible to colds. And that's really not the case. The wisdom now is if you want to tamp down a cold, boosting any element in the immune system may be the last thing you want to do. In fact, you could create cold symptoms without injecting a cold virus at all. Just injecting the body's own inflammatory agents will give you the symptoms of the cold. So exciting those agents, by boosting immunity, may only worsen the effects. ... the number of years that the parents owned their own house when they were growing up was correlated with whether or not you would develop a cold when you were an adult. The greater number of years the parents owned a home, the lower your risk. And the really important years were the early years, from birth to age 6. ... A huge misconception in the general public is that antibacterial soaps and antibiotics in general are effective against colds. They aren't. They're aimed at killing bacteria. --Jennifer Ackerman

The big political issue here is the president promised no one would lose the coverage they've got. Here we are a month before the election, and these companies represent 1 million people who would lose the coverage they've got.--Robert Laszewski

Health insurers Wellpoint, Cigna, Aetna, Humana and CoventryOne will stop writing policies for all children. Why? Because Obamacare requires that they insure already sick children for the same price as well children. That sounds compassionate, but — in case Obamacare fanatics haven't noticed — sick children need more medical care. Insurance is about risk, and already sick children are 100 percent certain to be sick when their coverage begins. So if the government mandates that insurance companies cover sick children at the lower well-children price, insurers will quit the market rather than sandbag their shareholders. This is not callousness — it's fiduciary responsibility. Insurance companies are not charities. So, thanks to the compassionate Congress and president, parents of sick children will be saved from expensive insurance — by being unable to obtain any insurance! That's how government compassion works. In 2014, the same rule will kick in for adults. You now know what to expect. This is just the beginning of reality's backlash. President Obama promised that under his scheme no one will have to change medical plans, but some 840,000 Americans are already left without coverage because their insurer, the Principal Financial Group, decided to leave the market. --John Stossel

So which do you think is worse: not providing health care to someone who doesn't pay or forcibly preventing someone from getting health care who is willing to pay? I think the second is worse. Interestingly, though, Paul Krugman didn't bother to write about Briana's case. Now, maybe that's just because we have to pick our topics and he didn't have time. But in Canada every day, the government forcibly prevents people from buying health care. When my father needed surgery for his leg, for example, he was not allowed to go to a doctor or hospital and pay for it. For the vast majority of medical services in Canada, people are not allowed to pay. That's what single payer means: the government pays and individuals are not allowed to. Not surprisingly, that's why Canadians line up for health care. I've never seen Paul Krugman criticize this aspect of Canada's health care system. In fact, to the extent he has addressed Canada's system, he has praised it. So given his criticism of the Tennessee fire case and his analogy to health care, I take it that in Krugman's mind, forcibly preventing someone from buying health care, the essence of Canada's system, is not as bad as refusing to provide health care to those who don't pay for it.--David Henderson

Why exactly does Secretary Geithner want the dollar to fall and the yuan to rise? Your guess is a good as mine on that topic, but let’s think through what this means. To start, the dollar is falling versus the yuan. Apparently, not enough for Tim Geithner though. Unfortunately, the dollar is falling versus other currencies too. It’s falling against the Japanese yen, the Euro, the Swiss Franc and other currencies. Conversely, gold, oil and other commodities are rising because the dollar is weak. A weaker dollar means we pay more for foreign oil. Great. But we also pay more for any goods denominated in any rising currency. With a falling dollar, 300 million American consumers must pay more for goods made in China, Japan and elsewhere. Is that a good thing? I really don’t think so, but apparently our Treasury Secretary does.--Kurt Brouwer

Cossacks on a shtetl.--Cliff Asness, describing President Obama's economic team

U-Haul pricing is an interesting way of talking about "demand and supply, the difficulties of identifying price discrimination, and why it's efficient to have "women enter free" nights at clubs." I leave the latter as an exercise.--Tyler Cowen

Separate studies of 11,253 Germans and 12,686 U.S. residents led by Timothy A. Judge of the University of Florida found very thin women, weighing 25 pounds less than the group norm, earned an average $15,572 a year more than women of normal weight. Women continued to experience a pay penalty as their weight increased above average levels, although a smaller one — presumably because they had already violated social norms for the ideal female appearance. A woman who gained 25 pounds above the average weight earned an average $13,847 less than an average-weight female. Men were also penalized for violating stereotypes about ideal male appearance, but in a different way. Thin guys earned $8,437 less than average-weight men. But they were consistently rewarded for getting heavier, a trend that tapered off only when their weight hit the obese level. In one study, the highest pay point, on average, was reached for guys who weighed a strapping 207 pounds.--Sue Shellenbarger

Status plateaus may be profit-maximizing when large numbers of upper-middle class customers wish to believe that they are enjoying the truly cutting edge technology and they are willing to pay for it. Creating the "iPhone plus for billionaires" would lower the demand for iPhones proper.--Tyler Cowen

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