Monday, October 31, 2011

Coase, Pigou and Power Outages

During the October Blizzard here in New Jersey I had the opportunity to look at the world from the eyes of Coase and Pigou. I also saw externalities in a real fashion.

Let me explain. You see, as predicted, sometime mid Saturday, October 30, 2011, we lost all power. The proximate cause, falling trees. The real cause was multifold. First the town has a tree loving policy, Namely there is a strong group of folks, the Mayor appears to be at the core, who believe every tree and each of its parts are sacred, at least that is my opinion having attended the town meeting where the decision was made.

Now I like trees, I grow them, hundreds, and give them away. Yet having gotten my degrees in Botany and Horticulture from the school at the New York Botanical Garden, I know something of trees. The locals in town are fans of “native” trees, maples and ash. Now anyone who knows where we live it is the remnants of Lake Passaic, from the last ice age. It is then end of the ice flow from the north, the last of what we know as the New England terrain. Twenty miles south we have sand, here we have rocks and clay, dragged a thousand miles or more from the north by sheets of glaciers. Now the native trees are really grown up weeds.

Ash have invasive roots and maples break is a stiff wind, and with snow the come crashing down. The tree decision has allowed the growth of trees over, under and through all the power lines. Thus the falling trees, thousands, really. Totally predictable, and it happens every other month, not thousands of course but a dozen or so!

Thus the proximate cause is really a result of the decision by the town to allow this to happen. If it were like the adjacent towns we would have trimmed them or eliminated them. The costs to repair is orders of magnitude more than the cost to fix the tree problem. In classic Tort law, the owner of the property upon which the tree was growing would be liable for any direct and consequential damages. However, this may be mitigated by the actions of the town by abrogating the ability of an owner to remove a tree. However a town does not have a sovereign immunity as does the State or Federal Government, it is collectively liable. Thus one ends up litigating against one's self. Perhaps Coase never thought of that.

That leads to externalities. You see people want a town covered in trees. However the choice of having this lovely coverage is loss of power, frequently. The costs of loss of power is substantial. I had to move my company from New Jersey to Prague, could not rely on the power. In my office here I had to get motor generators, an even then we lost Internet access and thus business. Thus it cost me and others for the ability of some to have trees overhanging streets.

The solution is simple, cut the trees. Or if you were Coase, sue those who have trees and lead to loss of power. It is like the railroad and farmer familiar to Coasean arguments. You want trees, and I am harmed, the you pay me for the harm.

Now to Pigou. Let us assume we do not follow Coase, that we follow Pigou. Namely there is a cost to the externalities but there is a cost to remedies. Pre-emptive remedies are always best, namely prevention. That means cutting the trees. Let us put the tree huggers aside. I really hate ash trees, the roots are invaders of all surface areas and basements.

But my personal likes aside, I like metasequoias, but let us assume we cut and or remove the trees overhanging the roads and wires. Who then pays for it, directly and indirectly? Let me make three arguments.

1. The Power Company: We tell JCPL to get rid of all the tree problems. That in the long run saves them money but as a Public Service Commission controlled entity they will but it goes into the rate base calculation. Plus a mark-up. Thus we all get to pay whether they are our trees or not. I get the benefit of better power but at a cost for which I bear no liability. You see power lines are buried in my area and I have chosen trees that are much more durable. Thus I am being “taxed”.

What actually happens is JCPL must love this. It is not their "fault" and the costs become part of the rate base and as such increase rates. Even a one in a hundred year event raises the rates for the remaining 99 years!  Towns are filled with managers who have no idea of unintended consequences, yes they are lawyers. They oft times make their living on these results.

2. The Town: The Town takes the responsibility to remove the trees. They do this by raising the property taxes and hiring more people. Towns never outsource, they just get more people, more trucks, and exploding benefits. Again I get hit with the costs but now for an amount proportional to my property value not my electricity usage. I may be very prudent in electricity, which I am, but this approach will not reflect that point.

3. The Owner: Namely we tell the owner of the property what the standard is and they have the duty to remedy the problem. This allocates the costs to the source. The problem is that it may be a sudden increase in costs but that could be remedied. The picture below is a prime example. The cable and telco brought the lines between this dead tree! Yes a dead tree, which sooner or later will collapse. Is this negligent on their part. Is the owner liable for the damage subsequently caused. Cane we have a class action suit?

Thus the Pigou approach is to tax and cut, trees that is, but the Coasean approach would be either to sue or frankly place the duty where the problem is, and if not compliant and damage occurs then fine or sue. A fine is a zero transaction cost remedy, so that may be the best Coasean approach.

Just a thought.

Unintended Consequences

The drug shortage, especially for chemotherapy, has a strange but predictable source, namely unintended consequences. As NEJM reports:

Before 2003, Medicare reimbursed 95% of the average wholesale price — an unregulated price set by manufacturers — whereas oncologists paid 66 to 88% of that price and thus received $1.6 billion annually in overpayments. To blunt unsustainable cost increases, the Medicare Modernization Act mandated that the Centers for Medicare and Medicaid Services (CMS) set reimbursement at the average sales price plus a 6% markup to cover practice costs. This policy has reduced not only drug payments but also demand for generics. In some cases, the reimbursement is less than the cost of administration. For instance, the price of a vial of carboplatin has fallen from $125 to $3.50, making the 6% payment trivial. So some oncologists switched to higher-margin brand-name drugs. Why use paclitaxel (and receive 6% of $312) when you can use Abraxane (for 6% of $5,824)?

This is abut a small real example of what a failure to think through the process results in. As one of the left wing politicians said when trying to get the recent health care bill passed, she said, "You have to pass it to see what it says." Pass it they did, and if one thinks the current shortage is anything just wait.

China and Space

China Daily and the BBC report on the launch of China's unmanned spacecraft for the ultimate goal of establishing a space station. As China Daily states:

The main tasks of the Shenzhou VIII is to test docking technology and functions of the modified space vessel and rocket, and carry out scientific experiments, Wu said. The unmanned spacecraft is equipped with devices for recording real images and mechanical parameters during its flight, to test the space docking before a manned attempt. Once China has mastered the technologies of rendezvous and docking, it will be equipped with the basic technologies and capacity required for the building of a space station, said Zhou Jianping, chief designer of China's manned space program. "It will make it possible for China to carry out space exploration of larger scale," he said. For this mission, Chinese and German scientists will also conduct 17 space life science experiments on Shenzhou VIII. Among the research programs, 10 will be controlled by China, six by Germany, and one by joint efforts, Wu said.

The BBC states:

It is a learning curve China hopes will eventually lead to the construction of a space station, starting at the end of the decade. At about 60 tonnes in mass, this future station would be considerably smaller than the 400-tonne international platform operated by the US, Russia, Europe, Canada and Japan, but its mere presence in the sky would nonetheless represent a remarkable achievement.

The emergence of China as a player in space has interesting elements. Clearly they see this as an element of national pride. Also they see this as a strategic element of their development as a significant international/global power.

In a way the US and its fumbling NASA programs have changed the attitude of the public to the "show off" space missions, the 1960s type banter from the space platforms, almost Kindergarten in nature.

If space is a strategic element then it should be run that way, and in fact that is what DoD is doing despite the follies of NASA.

Saturday, October 29, 2011

Third World State

Why do businesses leave New Jersey, well in my opinion and experience it is the power problem, and especially JCPL. Power out as expected and on motor generators. I have done this more in New Jersey with JCPL than any other place in the world, from Korea, Thailand, Poland, Russia, and even GREECE!

Go to their site and you get nothing!

One wonders with all the "infrastructure projects" that a little prior planning would prevent poor performance! Just cycle around and every day I see hundreds of trees which would collapse in a moments notice. Perhaps with First Energy one gets Last in Service.

Thank God for my Chinese motor generator.American power just can't deliver.

Al Gore, What About This Snow!

Here we are still in the early Fall and we are getting 1" plus an hour. What happened to that Global Warming stuff? Yes July was hot, but August was downright frigid and well just look now.

And yes, I expect any minute now to lose all power, JCPL seems to have the worst record in the 20+ countries I have operated in. Well on to the motor generator set.

Perhaps a white Christmas too.

When will They Get It Right

I keep wondering if the writers of commentary will ever get anything right. This time it is George Will.

He states:

Every day, 10,000 baby boomers become eligible for Social Security and Medicare, from which they will receive, on average, $1 million of benefits ($550,000 from the former, $450,000 from the latter). Who expects difficult reforms from Romney, whose twists on ethanol make a policy pretzel? 

Now it is clear he does not like Romney, but as to the facts. 

1. Medicare pays $11,000 per year per enrollee. 
2. A man retires at 65 he lives to 82, I corrected that one. That is 17 years.
3. $11,000 times 17 is $187,000. Not the $450,000 above!

Dummy, dummy, dummy!

I wrote a White Paper on this which was picked up by the Fact Checker at the Post a few months ago, and he and I communicated on tightening up the numbers. Where is Will.

Frankly once you read that stupidity you just have to reject the rest of his writing, even if some may be correct. Wrong facts kill all other true observations.

Oh, and by the way, always remember the 3% of all the salaries the person paid into the program. Duh George Will!

Food Inflation 2011 and 2012

The inflation on food has been quite substantial over the past few years. For example a gallon of milk has gone from $3.00 to $4.50 in eighteen months, a 50% inflation and an annualized rate of 32.5%. The USDA has issued a report on food inflation for 2011 and 2012. The results are below:

Note the high levels of inflation, some exceeding 9& pa. Dairy is at 8% but that weights cheese eggs etc. Milk is hidden there.

The USDA report states:

Although food price inflation was relatively weak for most of 2009 and 2010, cost pressures on wholesale and retail food prices due to higher food commodity and energy prices, along with strengthening global food demand, have pushed inflation projections upward for 2011.

The all-food CPI increased 0.8 percent between 2009 and 2010, the lowest food inflation rate since 1962. Food-at-home prices increased by 0.3 percent—the lowest annual increase since 1967—with cereal and bakery product prices declining 0.8 percent and processed fruit and vegetable prices dropping 1.3 percent. Food-away-from-home prices rose 1.3 percent in 2010, the lowest annual increase for restaurant prices since 1955.

For 2012, food price inflation is expected to abate from 2011 levels but is projected to be slightly above the historical average for the past two decades. The all-food CPI is projected to increase 2.5 to 3.5 percent over 2011 levels, with food-at-home prices increasing 3 to 4 percent and food-away-from-home prices increasing 2 to 3 percent. While many inflationary pressures that drove prices up in 2011 are not expected to intensify and may even decrease in 2012, retailers have been slow to pass on cost increases to date. Price levels in 2012 will hinge significantly on several macroeconomic factors such as weather conditions, fuel prices, and the value of the U.S. dollar...

The price of food is a heavy burden on the lower income groups. I expect it to continue at a 10% rate for the foreseeable future.

Friday, October 28, 2011

Healthcare Cost Dynamics

In a recent posting in the Globe and Mail by Auld, the author makes the following argument:

The idea that a healthy lifestyle substantially decreases demand on the health care system has been repeatedly shot, stabbed, and poked at with sharp sticks, but it won't just die.

The zombie argument goes like this: poor health causes more use of the health care system. Poor health can be caused by an unhealthy lifestyle -- smoking, overeating, lack of exercise, and so on. Therefore, unhealthy lifestyles cause increased use of the health care system.

Therefore, policies which induce people to choose healthier lifestyles are rigorously justified since they mitigate such external effects and reduce demand on the public health care system.

The zombie notion that promoting healthy lifestyles is a good way of reducing demand on the health care system should be put to rest.

To simplify it he argues that:

Consider smoking, perhaps the most commonly studied health-affecting behavior. It is very well-established that smoking causes poor health. We can estimate the amount of health care used treating smoking-related illnesses by comparing disease rates for smokers and non-smokers and attributing some fraction of cases of various diseases to smoking. …

However, all people -- and I do not mean to shock anyone -- die some time, even including people who live very healthy lifestyles. Preventing someone from dying of a smoking-related illness only means that they will die of a non-smoking related illness. The effect of smoking on lifecycle health care costs is the difference between costs which are incurred if the person smokes and the costs which would be incurred if the person doesn't smoke. Whether improvements in lifestyle increase or decrease lifetime health care costs depends in a complicated manner on how a healthy lifestyle affects length of life and health care costs at any given age. Whether smoking or other unhealthy behaviors increase or decrease health care costs is an empirical question.

The evidence suggests that unhealthy lifestyles tend to increase health care use at any given age and reduce life expectancy, so more is spent per year but for fewer years.

Thus the argument is simply that:

1. We all die at some time.

2. Spending money to delay death is a waste.

3. In fact bad behavior results in earlier death and thus lower total lifetime costs.

Now perhaps some facts from Medicine would help. Let me compare what we could do in say 1967 when I first started studying the field and today, almost 45 years later.

1. Lung Cancer: Once detected first with a simple chest X ray and then with a lavage of the lung, a very painful process then and now, we might operate, after all whenever a surgeon sees a patient they see the opportunity to cut, but it was almost always nonproductive. Thus the patient died in 3 to 6 months and the best you could do was use morphine which just shortened the inevitable. The advantage was they really did not need much care, the medications were minimal and they ged before Medicare or Social Security kicked in.

2. Type Diabetes and Sequelae: Here is a counter example. In 1967 there frankly were few obese people, and children were almost never obese. Thus there was a low incidence in Type 2 Diabetes. In fact we treated Type 1 and almost ignored Type 2 until it was too late, namely kidney failure. There were no kidney transplants and dialysis was just coming out. However now with the epidemic of obesity and the resulting Type 2 diabetes and its sequelae, we have more patients, and we can now keep them alive for quite a long time at a tremendous cost. Here is a counter example to the lung cancer cases. If we were to change behavior then we could indeed save money. In a way this is the total counter to lung cancer.

3. STDs: Sexually transmitted diseases are causes of a variety of chronic and fatal diseases. Hep B, AIDS, HIV syndromes, Herpes, HPV, cervical cancers and oral-pharyngeal cancers to name a few. Now will promoting better health help here? Possibly, especially since AIDS maintenance is quite costly, and the Hep B liver cancers can be costly, etc it is possible to demonstrate a savings in a lifetime. Remember we all eventually die of something.

4. Alcohol and Other Drug Abuse: This has been an on and off again issue. Cirrhosis is a terminal state for some, it is the liver effectively decomposing and raising all the toxins in the system. Alcohol is a significant factor. Can health living deal with this? Possibly, but like  other drug abusers they generally peak out in mid-life and become terminal.

5. Cancer Screening: This is the preventive care problem as evidenced with the current debate over PSA screening. Does cancer screening as part of a healthy lifestyle work? Let me give a low cost example. Melanoma is growing in North American and may most likely continue. The incidence is increasing but the survival is also. Early detection, a semi-annual skin exam, for a ten minute procedure, can find the lesions while still Melanoma in situ and the lesion can be excised while still 100% curable. That is a good investment, and the lifestyle part of that decision is to stay out of the sun, perhaps less of a problem for Canadians than for Australians.

6. Congestive Heart Failure: Cholesterol, triglycerides, and the many other elements which give rise to cardiac problems leading to congestive heart failure are now part of management of a healthy life style. Why? Well in 1967 when you were diagnosed with Stage IV congestive heart failure you were sent home to put your affairs in order with some relatively inexpensive morphine. That’s all. Today we can manage it for quite a while even to the limit of getting a new heart. We are bombarded with ads saying to exercise, watch our weight, take lipid lowering drugs and the like. Does this save costs? Good question. The unhealthy behavior of eating pizza every day, smoking, processed foods, fats etc may lead to an MI, congestive heart failure, but now we can keep you going at a substantial cost. In 1967 we just sent you home!

Note what is happening, we are being able to keep people who live unhealthy lifestyles alive but at a tremendous cost. This is a clear example of externalities. Namely they get to live the lifestyle and we all end up with the costs. 
Let me give one more conflicting example. A 50 year old man decides to take up jogging because he thinks it is good for his heart. At 60 he gets prostate cancer and we pay for that. At 70 he gets retinal failure and we pay for that. At 80, now his hips are gone, and we pay for double hip replacements. Then the surgery was compromised and we have dual hip infiltration of some nosocomial infection, we pay for that. The list goes on. If he had not jogged he would not have needed the hip replacement and he may have even died at 55 from heart problems. So what is the answer?

Thus to reiterate the author:

Whether improvements in lifestyle increase or decrease lifetime health care costs depends in a complicated manner on how a healthy lifestyle affects length of life and health care costs at any given age. Whether smoking or other unhealthy behaviors increase or decrease health care costs is an empirical question.

In fact the question, as shown above, is also disease dependent as well.

The question that Chris Auld's article raised in my mind was: why? Why is it so hard to convince people that public health measures, like reducing smoking, might lead to increased health care costs in the long-run? I can think of a number of explanations.

1. Policy makers are stupid. That's not a good economic explanation; the basic premise of economics is that people are (usually) not (that) stupid. But it might be right.

There may be some validity here, I spent my time in Washington and saw for myself. But generally policy makers in the US are responding to a great number of influences and it is the amalgam of these influences which result in a final policy. Stupid, possibly, but influenced definitely.

2. Policy makers aren't stupid, but they want to raise money by suing tobacco companies.

Yes, that is a possibility. But what of the other healthy lifestyle issues. Take alcohol, we banned it under the Constitution, we saw what that did. The costs and social destruction was monumental. Could we argue the same for drugs as the libertarians do? Possibly.

3. Policy makers are paternalistic. Unhealthy behaviors are bad, either because they are morally reprehensible (the sin of gluttony), or because unhealthy behaviors make people unhappy. The zombie argument - "quit smoking for the good of the health care system" - is trotted out in order to induce people to behave better. Or in order to justify our moralistic views.
3a. Because people believe unhealthy behaviors are bad, the idea that these behaviors could be beneficial - that they could, for example, reduce health care spending - causes cognitive dissonance. Thus people refuse to believe it.

Now this is not a simple question. I have often tried to understand what makes a libertarian and what makes a progressive. Progressives believe that Government, assuming they are in charge, knows best and can do what needs be done. Libertarians view Government as a necessary evil and that the individual knows best. So what makes one person a libertarian and another a conservative, my two children are one of each, so it cannot be environment or genetics. Paternalistic may be for some but not all.

4. Policy makers have high discount rates. The person who quits smoking today will soon be at lower risk of suffering a heart attack - and at increased risk of living long enough to get Alzheimer's disease. But if a policy maker has, say, a 10 percent discount rate, $100,000 in health care expenses in 20 years’ time is equivalent to less than $15,000 in health care expenditures today. So present costs matter far more than future costs.

Yes, they do have high discount rates, Cust the costs now and just push it down the road to someone else. Yet if we have a good CBO one would think it would be their job to ferret out those costs and let the public know.

5. Policy makers only care about certain costs. Some types of illness place large burdens on Canada's publicly funded health care system - cancer, for example, which is largely treated in hospitals. Other forms of illness place burdens on informal caregiving networks. If you or someone you love is diagnosed with Alzheimer's for example, it will generally be up to you to provide home care, or arrange and pay for at least part the cost of long term residential care. If quitting smoking reduces cancer treatment costs by $1 and increases long-term care costs by $1.50, the publicly funded health care system might still have saved money. 

Possibly, and in fact in the US the concern is about deficit at the current time and long term debt. Not total costs. Frances ends with:

I don't know what the right answer is. But I did find Chris Auld's exploration of the issue well worth reading.

Like Frances I also do not know the right answer. In the end we are all dead.

Thursday, October 27, 2011

GDP Issues: 3Q 2011

The GDP has grown at an annualized rate of 2.5% in Q3 as of the current estimates from the BEA. The above is the real and the chained data, chained being effectively adjusted for inflation. The good news is that the chained has returned to where it was before the collapse.

The above is M2 and its annualized change. M2 has been growing with a large increase in Q2 and early Q3. Now it has again flattened. That most likely indicates slowing of the potential for inflation.

The Monetary Base has stopped its growth since the FED has stopped its policy of dumping cash into banks.

Inflation and its components generated from M2, Velocity and Y or GDP change are shown above. Calculated inflation is about 2-3%.

Thus we see some growth, we see little inflation pressure, and yet we see a stalled economy. As I have indicated before the major source of hesitancy is from the current Administration and its punitive policies.

Prostate Cancer and Ancient Egypt

There is an interesting article in Science Now regarding the diagnosis of prostate cancer in a mummy some 2250 years old.

They state:

Now an international research team has diagnosed what ailed M1: the oldest known case of prostate cancer in ancient Egypt and the second oldest case in the world. (The earliest diagnosis of prostate cancer came from the 2700-year-old skeleton of a Scythian king in Russia.) Moreover, the new study now in press in the International Journal of Paleopathology, suggests that earlier investigators may have underestimated the prevalence of cancer in ancient populations because high-resolution computerized tomography (CT) scanners capable of finding tumors measuring just 1 to 2 millimeters in diameter only became available in 2005. "I think earlier researchers probably missed a lot without this technology," says team leader Carlos Prates, a radiologist in private practice at Imagens M├ędicas Integradas in Lisbon.

Interesting to see what the did and the now revised view of prevalence. Also the age given the now indolent view the Government has.

Monday, October 24, 2011

How About Giving Me Money for My New Car!

Anyone who  buys a new car knows that once they drive it out of the showroom and around the block they lost 10% of the value. Less than 1,000 feet, and wham, it is underwater! Then there is underwear, just buy it, wear it for just one day, and think you will get your money back, they are underwater. How about that pizza, buy it at 8 PM, just a few bites, and wham, underwater.

But when someone buys a house, and it goes under water we want the Government to make them whole again, whatever that means.

Now the fundamental idea was that when you bought the house and agreed to the payment terms, the value of the house became relatively irrelevant. Who cares what the house is worth, you owe the money back.

But not any more, some how in the entitled generation if you make a dumb mistake, even if you committed fraud, well we expect the Government to make us whole.

That is just another element of the victim and welfare state, take from those who paid and give it to those who will not. The old adage of reward success and punish failure is gone. But someone mus eventually pay. The Government really does not exist as a payer, it is a fund transferer. It takes from the rich and gives to the poor. But the rich, whoever they may be, got that way for many by creating and working hard, and yes many had gotten burned, that is the way you learn.

Survival of the fittest, Spenser and Social Darwinism, yes it has some merit.

Pigou, Coal, Coase, and What Next?

I am not a fan of Pigou and his tax. Frankly it just is another way for the Government to take money under false pretenses. It will not do what the promoters intend especially when it comes to reducing energy use.

My standard argument is that if it is cold we just heat the house. We must drive to work so we use the car. Will doubling the cost of energy by taxing it exorbitantly change much, never really did. Perhaps a few may die from freezing, that will reduce demand, and more will be unemployed which is another decrease. Simple logic dictates that demand is just not that flexible. Will it force Harvard economics faculty to drive from Newton to Cambridge in a car pool, no way, take the T, unlikely.

There is a review in the NY Review of Books of a few recent additions to this nonsense:

... a tax specialist, and his chapter on energy taxation is especially interesting. Environmental economists have emphasized the use of externality taxes (sometimes called Pigovian taxes after their first important advocate, English economist Alfred Pigou). The idea is to levy a tax on “bads” that have negative externalities, where the tax is equal to the size of the external costs. In the case of coal, the “bad” is largely sulfur dioxide. If the pollution from coal were currently taxed proportionally to its damages, the price of coal-fired electricity would increase from 9.0 cents to 15.2 cents per kilowatt-hour (kwh).
If we were to calculate the externality taxes implied by the costs shown in the table (on sulfur, carbon dioxide, and other harmful pollutants), these would raise over $300 billion per year in revenues. Somewhat more than half of this would be taxes on the global warming externality, while somewhat less would be charges on the conventional pollutants.

A second point is that environmental taxes can play a central role in reducing the fiscal gap in the years to come. These are efficient taxes because they tax “bads” rather than “goods.” Environmental taxes have the unique feature of raising revenues, increasing economic efficiency, and improving the public health.

Now let me return to my argument. If global warming exists, no I do not believe in it, it either exists or does not and if it does it is either man made or not, and those are matters of science and not belief, so I leave the answer to science and the scientific method, not the political or religious method. But in a strange was if we get warmer up here in the north then we will have more trees and warmer winters thus using less energy and absorbing more CO2. Perhaps a negative feedback loop, perhaps a boon for Canada.

Yet back to Pigou. The increase in taxes as stated in the review will raise $300 billion in tax, so why not just call it a tax. It will not make the drive from Manchester NH to Cambridge any shorter, just more expensive. So the more well off with move there driving up real estate and driving the poor folks farther north at greater distances. The Government ill get more taxes and overspend even on those.

Now to the externalities. Let me use the oft quoted Coase example, the railroad and the farmer. A railroad has a right of way through a farmers field. The farmer grows wheat and the train kicks sparks onto the wheat field. A fire starts and burns the farmer's wheat. The farmer can sue the railroad for damages, and if one assume zero transaction costs the railroad will most likely lose. The railroad can then either continue to pay farmers or fix the train. The costs of this externality, fires in farmers fields, can be mitigated either way.

Moreover the farmer can attach a cost to the damage. Wheat yields some many bushels per acre, the price of wheat is so much a bushel, the fire covered so many acres. Plain and simple, just do the arithmetic. The key to Coasean damages is the ability to define value, and value is the estimation of future cash flows.

The problem with the Pigou tax is several fold. First that it really does little. Second is that the Government just ups the tax ante, and third the concept of externalities fails. What is the cost, like that field of wheat, there we have a good measure, with CO2 we have academics and Government hacks coming up with nonsense, been there done that. There is no simple calculation, there is not clear person harmed and the harm is highly contingent and speculative at best.

Thus despite the wonderful world of Harvard economists and their schemes, this one still stands wanting.

Sunday, October 23, 2011

Cloud Computing and Being a Spy

Now one may wonder what cloud computing and the business of spying have to do with one another. The answer is "words to live by".

What motivated this was an article by Friedman in the NY Times. He states:

The latest phase in the I.T. revolution is being driven by the convergence of social media — Facebook, Twitter, LinkedIn, Groupon, Zynga — with the proliferation of cheap wireless connectivity and Web-enabled smartphones and “the cloud” — those enormous server farms that hold and constantly update thousands of software applications, which are then downloaded (as if from a cloud) by users on their smartphones, making them into incredibly powerful devices that can perform myriad tasks.

The emergence of the cloud, explained Alan Cohen, a vice president of Nicira, a new networking company, “means than anyone can have the computing resources of Google and rent it by the hour.” This is speeding up everything — innovation, product cycles and competition. 

 Now I am reminded the Gilder a decade or so ago who espoused all the wonders of wireless, I wrote a piece about the "Gilder Conjecture" and its less than on target analysis. But this one is dangerous.

Exuberance is always fun, exciting and has the potential for danger, just look at the collapse of our recent financial engine.

Now to spy craft. There are three rules a good spy should live by:

1. Trust no one, not even your father.

2. Never put it in writing, namely do not leave a trail or evidence.

3. Always have a second exit.

Cloud computing violates each of these rules. Is that bad? Well if there is an enemy who wants to do you harm, say like what a spy does. Is this the case in cloud computing world? Think China, think of all those computer science students we educate in the US with DoD money and then ship back to China because unions do not want those types here. If they can be unionized it is fine but if they think, get rid of them.

So what is wrong with Friedman, well simply he, like Gilder, seems to have little to  no technical understanding of what he speaks, in my opinion, namely in the technical areas most critical to security, and second, he takes what he is told almost at face value.

One must remember there is a dark side. In the 1970s with Soviet threats we worried about secure kernelized operating systems in red and black environments. Secure to the nth degree, limited access, tickets, and the list went on. Since 9/11 we are sharing everything with everybody, thus Wikileaks.

The risk of the cloud is that it is easy to compromise and worse. Remember the three rules of spying and beware the cloud.

Saturday, October 22, 2011

Rowe and Bygones: What is Real Estate Worth?

As I have noted from time to time I am a fan of all Canadian economists, at least all that I know. And especially Nick Row who comes up with some of the best and most thoughtful ideas, and he is still undoubtedly the best economist on the planet. Now he has an interesting discussion on whether God over-invested in land. Now I view this a bit differently but first Rowe: 

Question. "What is the economic difference between capital and land?" If you answered: "People made capital and God made land", you are wrong.

Economists have known that answer is wrong since 1871, when we discovered that bygones are forever bygones, and switched to the forward-looking marginalist theory of value. In 1871 we stopped saying that the value of goods is determined by what they cost to produce in the past. Instead we said the value of goods is determined by their marginal utility in the present and expected future. (OK, there are two blades of the Marshallian scissors, demand and supply, but both blades are made of the same stuff (Mark Blaug?), because marginal costs are really opportunity costs, and are the foregone marginal utility of the other goods we could make with the same resources.)

It doesn't matter whether people or God made stuff in the past, and what it cost to produce it. The only things that matter are: the present; and present expectations about the future. If archaeologists discovered that Prince Edward Island was an artificial island, rather than a geological formation, it shouldn't matter at all for the allocation of resources going forward. (OK, some geologists would have extra work to do, to revise their theories.)

Now I have never been to PEI but we have family a bit south in Nova Scotia, Breir Island, out there in the GM.

Now as an investor, I guess that is a good description now that I am almost 70 since no one wants an old guy really running a company, unless you are a Murdoch, and besides I do not want to do it anyway, I almost every day have to give an answer to "what is it worth?" and place personal capital at risk.

So how do I do it. Simple, discounted cash flow. I look at future cash flows, discount them and then that is what it is worth. Does it work? Sometimes. I looked at real estate once, 1987, before it crashed, in fact just before t crashed, and I used a 10% pa increase in value.Well I was underwater for a while, no Government bail outs then, just ride the curve.

Now I looked at other investments in similar manners for the next decades, namely DCF and NPV. There is always the question of good projections, discount factors and terminal values. Never really got it prefect but did get it better.

So what to me is the difference between capital and land. As a DCF freak it is as follows:

1. Land has value based on the demand at some future time and the discount factor. What will someone pay for it at a later date. Land is one of those things that are in limited supply, and some land more limited than others. Location is the key phrase we always hear and yes that is a good part of the value. Will it look better to others at some future time, and better by an amount that exceeds the discount?

2. Capital, well cash qua cash does not increase, in fact holding just dollars depreciates over time in its ability to buy some milk was $3.00 a gallon a year ago and now it is $4.80, gasoline the same. Despite Krugmann we do have inflation. Perhaps he never went shopping, they never do down there in Princeton. Thus unlike real property capital is worth what it is worth when you have it, and like a new car it just is worth less when you hold onto it.

But Nick continues:

And firms find their capital stocks seem to be far too small, so they do a lot of investing to get them back up to normal. And households find they are crammed into houses that are smaller than they need be, because there are a lot of houses sitting empty, but they soon sort that one out. And are driving old cars, and wearing old underwear, and so start investing in a lot of new stuff.

I missed the point here. But wearing old underwear sounds quite common, as is crammed into houses. I forget who may have said it, George Carlin I believe,  but the reason we get new and bigger houses is because we get more "stuff". "Stuff" is the driver of getting more "stuff". Perhaps there is some irrational subliminal driver to getting "stuff" that is really at the root of all this, not any rational theory of economics.

For the proof of that I look at the chipmunk. You see we have dozens and even more in New Hampshire. The chipmunk has one primary goal in life, find food and bring it back to the nest. They have those pouches on the sides of their mouths to accumulate food, not consume it, accumulate it. Chipmunks accumulates tens of times more than they consume in their lifetime. What is the food worth? I leave that question to Rowe.

Friday, October 21, 2011

Children of Rawls

There is an article in the NY Times arguing the Rawslain nature of the Ant Capitalism Demonstrators who have taken up residence in public spaces around the country. They state:

Rawls’s boldest claim — that inequality in society is only justified if its least well-off members fare better than they would under any other scheme — could provide a lodestar for the protests. Rawls was no Marxist: this “difference principle” acknowledges that a productive, free society will be home to at least some degree of inequality. But the principle insists that if the rich get richer while wages and social capital of the poor and middle class are stagnant or falling, there is something seriously wrong.

Now the above is somewhat slight from the mark. Rawls was a redistributionist and his view was to maximize the social and economic benefits to all by taking from the producers and given to the consumers, my words.  In my work on Individualism and Neo Progressivism I discussed this in detail. This country was for years a bastion of individualism. This was recognized by de Tocqueville, and most likely was a direct reult of the fact that the immigrants perforce of the vacantness and isolation of the country were forced to be that way, and the result was the strength of this country.

The counter to Rawls was his Harvard colleague Robert Nozick who looked towards individualism.

Nozick establishes his "entitlement" rules for the Lockean distribution of property by the individual.

Specifically Nozick states them as:

1. An individual acquires property via the principle of justice in acquisition is then entitled to that property;
2. An individual who acquires property via the principle of justice in transfer is then entitled to that property;
3. An individual who acquires property via the principle of justice in retribution is then entitled to that property.

These were true elements of individualism. Now the Times continues:

Inequality becomes injustice when the cooperative nature of society breaks down and a significant segment of the population finds itself unable to thrive, despite its best efforts. Rawls does not prescribe particular policies to heal the divide, but structural changes in campaign financing, the banking system and the tax code are natural places to begin the discussion. Whatever platform Occupy Wall Street adopts, Rawlsian principles might help clarify the values of the movement and navigate it away from divisive or intellectually bankrupt rhetoric.

"Unable to survive", it hardly looks as if these people are unable to survive, for one wonders who is supporting them now. What significant percent of the population? In many ways the people appear and lost but bound together by a rhetoric that is divisive, lacking focus, and perhaps a metaphor for their own lives, lives without positive self direction, lives rejecting the challenge of individualism. They are children of Rawls, as Rawls was of Marx.

Wednesday, October 19, 2011

Public Servants?

The Hill recounts the current Vice President's demand to spend hundreds of billion stimulating the economy by paying for more teachers (my daughter is one), police officers (he calls them cops, but as the son and grand son of New York City police officers I prefer to use the non-derogatory term), firemen ( both my uncles were New York City firemen, never used the term fire fighters, they were a Captain and Battalion Chief), I find this rather unsettling.

"... chastised Senate Republicans Wednesday for putting millionaires before teachers and first responders because of their opposition to the latest Democratic jobs bill.

“I don’t know where these guys live,” said Biden, implying that GOP leaders have fallen out of touch with the concerns of average Americans. 

“The critics say this costs money. Surprise, surprise — it does cost money,” Biden added. “My dad used to say if everything’s equally important to you, nothing’s important. Everything’s about priorities.”

Well my dad used to say the Government always spent too much and especially on themselves. In New Jersey we have police officers who get $125,000 per year and more and retire with half million dollar pensions because the find ways to jack up the last years salary which is all they need. Teachers have several assistants, aides, and administrators and they get well over $100,000 per year plus full free benefits and pensions that exceed their salaries.

And not one of these people created a job. My father did, he started his own electricians business and hired quite a few people and created value. Police, well it depends. In New York, Newark, and a few other places I would agree. But in many towns there are probably too many and most are over paid, especially in New Jersey. Teachers, well my daughter teaches in est Virginia, and I gather the pay is not New Jersey, New York, Massachusetts, and the like.

The problem is not buying off more union votes it is frankly just the opposite. It is paying them less, as was the case with my father, who in what little spare time he had he created his own company. That created jobs, not the New York City Police Force, God bless them.

The current insanity in Washington is to spend more money for things that will never create jobs. They just do not get it, I guess that is what comes from never having had one.

Tuesday, October 18, 2011

Krugman on Blogs

Krugman has written an interesting piece regarding blogs. Simply stated he argues, justly so, that blogs open the process up from where it was. He recounts the progress:

1. Peer Reviewed Journal articles: I gave up on them years ago except for certain areas. They manage to establish two things; (i) get "junk out of circulation and (ii) establish a "repository" for the work. But blogs do that equally well. First one is attacked for making errors. Just try one and see. And it is instantaneous,  have corrected a few of mine here. Second the record is permanent and is universally available. Thus blogs frankly out do such journals.

2. Closely Circulate Working Papers: NBER is a classic example here as is say many Rand papers and the like. This was a great way to get ideas out there because they could be of any length, could be critiqued by the best and they got ideas flowing. Yet they had two problems. First it was just for the club. Second there was no real repository, libraries usually did not have shelf access.

As Krugman relates:

Since there’s some kind of conservation principle here, the fact that it’s easier for people with less formal credentials to get heard means that people who have those credentials are less guaranteed of respectful treatment. So yes, we’ve seen some famous names run into firestorms of criticism — *justified* criticism – even as some “nobodies” become players. That’s a good thing! Famous economists have been saying foolish things forever; now they get called on it.

And this process has showed what things are really like. If some famous economists seem to be showing themselves intellectually naked, it’s not really a change in their wardrobe, it’s the fact that it’s easier than it used to be for little boys to get a word in.

As you can see, I think this is all positive. The econoblogosphere makes it a lot harder for economists to shout down other people by pulling rank — although some of them still try — but that’s a good thing.

The issue is one of changing media, media that allow the free flow of ideas. It has lowered the barrier to entry to the market of thought and has allowed anyone to judge for themselves. It is thus no wonder that when looking at the decisions of late there is so much skepticism, that those in economics prognosticate from a dream world.

Blogs have opened the world to on line white papers. People have responded reasonably well. Journals I am afraid are just a way to go through the check-marks of tenure. They may be a dying breed. Books moreover may be transforming from heavy tomes to on line fabrics of wisdom.

Sunday, October 16, 2011

China's Trade

It is always worth reading China Daily for today they announced that Chine has beat out the US as the largest trade partner to Europe.

They state:

The overall value of China-EU trade in July exceeded that of the EU and the United States by 800 million euros, accounting for 13.4 percent of the region's total imports and exports, according to data released by the EU's statistics office.

However, bilateral trade shrank for a second consecutive month in July, falling 0.8 percent from the same period last year.

Meanwhile, China remained the EU's second largest export market. EU exports to China totaled 11.7 billion euros in July, up 12.3 percent year-on-year, which is higher than EU's total export growth rate of 4.1 percent.

The EU imported 23.9 billion euros in Chinese goods, down 6.2 percent from the previous year. But China still held the top spot as the region's import source, making up 17.4 percent of the EU's total imports.

 This puts substantial pressure on the US GDP growth. It will be just one more factor in the slowing economy.

Thursday, October 13, 2011

Medical Care, Waiting and Rationing

The Guardian has a piece indicating the ongoing deterioration of the National Health Service in the UK. They state:

The number of patients waiting more than the recommended maximum of 18 weeks for NHS treatment has soared by 48% since last year.

Figures released by the Department of Health came as a separate report by the King's Fund found that in more than 45 hospital trusts, more than 10% of patients were not admitted within 18 weeks of being referred by their GPs, breaching legally binding targets in the NHS constitution. The figures have more than doubled on the previous year.

The report found that while the NHS overall had managed to meet targets on waiting times and infections despite hospitals having to find savings of between 6% and 7% this year, this masked "considerable variation" at a local level.

Using government data, the Guardian found that 28,635 patients in England who were treated in an NHS hospital during August had been waiting more than 18 weeks, compared with 19,355 in the same month in 2010 – a rise of 48%.

 One can readily see that this will be part of the new Health Care system as well. We have a model to watch, and it is not a pretty one.

Tuesday, October 11, 2011

An Interesting Idea

New York City is not Palo Alto. So one wondered what will happen when Stanford joins the old CCNY to create a high tech university in the City (yes, this is a picture of the GW Bridge taken from Manhattan).

Stanford announced:

In response to New York Mayor Michael Bloomberg's call to strengthen that city's economy by creating a world-class applied science and engineering school, Stanford President John L. Hennessy, The City University of New York Chancellor Matthew Goldstein and City College President Lisa S. Coico today announced the creation of the Stanford-CUNY Collaboration at City College, or Stanford@CCNY.

Joining East and West Coast resources in an innovative new arrangement, Stanford@CCNY has the potential to offer the students and faculties of both universities transformative opportunities to partner at the undergraduate, graduate and postdoctoral level and would provide start-up space for Stanford's proposed applied science campus.

New York used to have a great engineering school at CCNY but somehow it has mellowed, Brooklyn Poly got absorbed into NYU and will most likely be displaced to Long Island, Columbia is well, Columbia, and there really is not much else, yes Manhattan College in the Bronx is a Catholic college but it has a mediocre at best engineering department, which generally was a feeder for city engineers and Con Ed.

So it will be interesting to see what happens. NYC is rather ethnic, just look at Poly, and it is a rather more intense mix than Palo Alto. It will be interesting to watch.

Screening for Prostate Cancer: The Task Force Report

The U.S. Preventive Services Task Force has issued its report regarding screening for prostate cancer. I will make a few observations here based upon the work I have done previously and other recent efforts. Let me begins by saying that not all prostate cancer is the same and at this time no one really knows how to determine the difference. This is a genetic pathway problem and the issue is that many elements of the pathway are yet to be identified and moreover the dynamics of the pathway are still unclear.

1. Does screening for prostate cancer with PSA, as a single-threshold test or as a function of multiple tests over time, decrease morbidity or mortality?

2. What are the magnitude and nature of harms associated with prostate cancer screening, other than overtreatment?

3. What is the natural history of PSA-detected, nonpalpable, localized prostate cancer?

Let us examines these questions based upon the Task Force’s approach and based upon our analyses and compare them.

1. Does screening for prostate cancer with PSA, as a single-threshold test or as a function of multiple tests over time, decrease morbidity or mortality?

Task Force:

No good- or fair-quality RCTs addressed this question. Two poor-quality RCTs with important flaws in design and analysis  do not show a mortality benefit from PSA screening independently or in a meta-analysis. We identified no RCTs that measured health outcomes from PSA screening by means other than single-threshold tests.

Now would one be willing to bet one’s life on 2 poor tests! Also as we have noted elsewhere the tests reported in NEJM a year or so ago were flawed for several reasons, mainly they used a fixed and out dated threshold, and in fact asked the wrong question, and also especially in the European study tests at too high a level and tested too infrequently.

The medical issue is that the PCa which is the most deadly is also the fastest growing and it should be tested at a lower level and more frequently. The remaining PCa is really indolent, no one denies that, but the determination of which is which is difficult without sophisticated genetic tests.

2. What are the magnitude and nature of harms associated with prostate cancer screening, other than overtreatment?

Task Force:

One cross-sectional and 2 prospective cohort studies of fair-to-good quality reported short- and long-term psychological harms from prostate cancer screening. Although abnormal screening results did not affect summary measures of anxiety or health-related quality of life, men with false-positive PSA screening test results were more likely to worry specifically about prostate cancer, have a higher perceived risk for prostate cancer, and report problems with sexual function compared with control participants for up to 1 year after the test. In 1 study, 26% of men with false-positive screening results reported moderate- to-severe pain during the prostate biopsy; men with false-positive results were also more likely to undergo repeated PSA testing and additional biopsies.

The counter to this is simple, many people are just terrified about death, yet it comes to all. Are there issue for some men, yes, but those most likely are the same men who smoke, drink in excess, are obese, and the list goes on. Is a prostate biopsy painful, it is a state of mind and medication. That is why God made the poppy!

This second issue seems to be a contrived issue. People have the same issue regarding colonoscopies, which have been clinically effective in reducing death from colon cancer. Yet we seem not to hear this issue. The Task force also had the same concern about mammographies.

Frankly why should this be an issue for the Task Force at all. The public will talk but let an educate patient decide, it is ultimately the patients choice.

3. What is the natural history of PSA-detected, nonpalpable, localized prostate cancer?

Task Force:

Three fair-quality cohort studies with small-to-medium sample sizes, highly self-selected elderly patients, and high drop-out rates show that some men with PSA detected, nonpalpable, localized (stage T1c) prostate cancer have good health outcomes up to 10 years after diagnosis. We did not identify any population-based studies in which patients with stage T1c prostate cancer were followed longitudinally with no intervention in order to determine health outcomes resulting from the natural progression of disease.

It appears that the Task Force has no answer here. In fact the asked the wrong question. They should have asked what genetic markers were prognostic of a virulent form of PCa? Simple question, but we as of yet really do not know. Assume we knew? Then What? Can we test every cell for these genes. What of the issue of a cancer stem cell, thus there being say just a few hundred or ten of them, and must we find them? Do they give off a measurable inter-cellular market to express their presence?

The answer seem to be we do not yet know. How will we find out? More studies with more men. Yes more biopsies where the samples are analyzed genetically in a large scale study. Yet with the admonitions given off by the Task Force that may soon become unlikely.

A recent study on the genetic level in Oncology states:

Arul M. Chinnaiyan and colleages sought to develop a new read-out for prostate cancer due to the non-specificity and unclear mortality benefit of PSA testing. The goal was to find a novel biomarker or biomarkers that can facilitate the individualization of PSA levels.  

The test the researchers developed is a clinical-grade, transcription-mediated amplification assay that can detect prostate cancer non-invasively in the urine. The read-out of the test is the quantitative measure of a TMPRSS2:ERG fusion transcript that is unique to prostate cancer. More than 50% of PSA-screen prostate cancer harbors this fusion between the transmembrane protease, serine 2 (TMPRSS2) and the v-ets erythroblastosis virus E26 oncogene homolog (avian) (EGR) gene.

Thus we are beginning to see such tests arising. Yet not a comment from the Task Force regarding this work. This is the essence of the Translational approach, the translating of science into the practice of medicine. This is another shortfall of the Task Force.

Now let us return an review what the Task Force said. The Task Force total basis of their conclusion seems to be as follows:

Effectiveness of Early Detection and Treatment: A meta-analysis of 2 poor-quality RCTs (random controlled trials) of population- based screening for prostate cancer using PSA and digital rectal examination found no reduction in prostate cancer mortality in men invited versus men not invited for screening (relative risk, 1.01 [95% CI, 0.80 to 1.29]). A recent RCT reported that men who received PSA screening had a decreased risk for receiving a diagnosis of metastatic prostate cancer. The USPSTF assessed the study as providing inconclusive evidence of benefit from screening because of a high likelihood of unequal outcome ascertainment and small absolute numbers of an imperfect intermediate health outcome (metastatic prostate cancer is an imperfect surrogate of prostate cancer mortality because of both high initial response rates to androgen deprivation therapy and competing causes of death). No RCTs have reported health outcomes from the variations of PSA screening that consist of multiple measurements over time (for example, measurements of PSA velocity, PSA slope, or PSA doubling time).

However that is the point. We examined many of these trials and we concluded:

1. PSA thresholds must be age dependent as well a family history dependent.

2. PSA velocity is an essential element of the analysis and it means that PSA tests should be performed annually starting say at 30 to 35. Thus PSA velocity can be reasonably determined.

3. PSA testing needs a better baseline as a test. There is substantial variation between PSA values based on different testing methods.

4. PSA measurements including % Free PSA are also useful and should equally be used.

5. PSA algorithms can assist in ascertaining what may be a cancer but a biopsy is usually required.

6. Biopsies

One of the conclusions is as follows:

How Does Evidence Fit with Biological Understanding? Prostate-specific antigen screening presupposes that most asymptomatic prostate cancer cases will ultimately become symptomatic cases that lead to poor health outcomes. However, the natural history of PSA-detected, nonpalpable, localized prostate cancer is poorly described. No prospective studies have followed a population-based cohort of patients with screening-detected cancer who have had no intervention in order to determine health outcomes resulting from natural progression of the disease. Evidence from small, selected cohorts of men with arbitrarily defined “favorable risk” (that is, with prostate cancer likely to be clinically indolent) suggest a good prognosis for some men with screening-detected cancer; however, the longest of these studies has reported health outcomes from 2 to 10 years after diagnosis only.

The statement is evidential hearsay at best. The problem is that prostate cancer, like so many cancers, is still somewhat of an enigma, but it is fair to say that it is a genetic pathway breakdown and this breakdown results in expanding cells that lose the ability to understand where they belong, thus metastasis. The Report totally fails to join this issue. The above is about as close as it appears to get.

Now the Press as usual is in the fray. The NY Times reports :

But doctors are divided about when to recommend watchful waiting. The decision can be guided by an indicator called the Gleason score, a measure of the aggressiveness of the cancer found in a biopsy, but there is often disagreement about how to care for men whose scores are in the middle — neither highly aggressive nor probably not aggressive. In addition, the biopsy process itself is imprecise; a standard “12-core biopsy” gives information about only one three-thousandth of the prostate, says Dr. Eric Klein of the Cleveland Clinic. According to research at Johns Hopkins, staging and grading mistakes occur in about 20 percent of specimens.

The Gleason score is a microscopic pathological marker. Simply put are the prostate glands normal, small opening with evenly distributed basal cells with luminal cells atop? Or are the glands reproducing, many small immature glands, then expansion of half formed glands, and then just a mass of uncontrolled cells, moving from Gleason 1 through 5 and Gleason 2 through 10 on its score. That may be useful but it totally fails to tell us the genetic makeup of the cancer stem cell controlling this entire process.

The goal is determining the genetic makeup, that is what should be the topic, not this foolishness.

As a final conclusion: one should look at the number of studies used, 3 for the first question, three for the second, and 3 for the third. Yes they scanned a thousand or so but 9 studies were used! If a doctoral student came to me with what they thought was an earth changing conclusion based on 9 disparate studies, some rated poor, I would wonder if that student were up to the challenge. I would not shout to the four winds the student's erstwhile world changing conclusion. Then again that is just me.

Welch, one of the authors of "Overdiagnosed" wrote today in the NY Times:

It’s a stark juxtaposition: screening is good for women and bad for men. But just how different are these two cancer screening tests? 

The answer is: not very. Neither is like the decision of whether or not to be treated for really high blood pressure. That’s an easy one — do it. Instead, both breast and prostate cancer screening are really difficult calls, and the statistical differences between them are only of degrees. Reasonable individuals, in the same situation, could make different decisions based on their valuation of the benefits and harms of screening. 

Personally, as a 56-year-old man, I choose not to be screened for prostate cancer (and, were I female, I believe I would choose not to be screened for breast cancer). Some of my patients have made the same choice, while others choose to be screened. That’s O.K., because there is no single right answer.
Screening is like gambling: there are winners and there are losers.
 I never gambled a penny in Las Vegas, I know the odds. However I have seen PCa patients with mets and DIC, not a pretty sight. The problem is that the question is NOT PSA. It is effective screening and what facilitates that. Somehow we have taken a crude but somewhat useful screening test and made it an all or nothing, a sine qua non. 
It is akin to throwing out the X Ray because we really cannot use a plain film to diagnose a block or bleed well enough in a stroke. Then along came CAT and MRI scans. The issue must not be PSA, the issue must be proper screening. We are not there yet, and we are wasting too much time arguing over what we know to have problems.