Pigou, the Government and Economists

I am not a fan of Pigou taxes. Also many alleged right wing leaning economists support this tax. Yes it is a tax. A tax is anything the Government takes from a provider of goods or services, or an individual or company, and then decides on its own how to use those funds. Taxes do not solve problems they provide a currency for politicians to garner favor.

In a recent piece by Masur and Posner (Toward a Pigouvian State, U Penn Law Rev, V 164, p 93) the authors extol the virtues of such a tax. They state:

A Pigouvian tax is a tax equal to the harm that the firm imposes on third parties. For example, if a
manufacturer pollutes, and the pollution causes a harm of $100 per unit of pollution to people who live in the area, then the firm should pay a tax of $100 per unit of pollution. This ensures that the manufacturer pollutes only if the value of the pollution-generating activities exceeds the harm, such that the social value of those activities is positive.

Now simply the Pigou tax is a way to control the costs of externalities. The classic case is a railroad whose trains emit sparks and the sparks ignite corn fields. The Pigou tax would have the Government assign a tax on the railroad as an incentive to improve the rails and eliminate the tax. What happens? The Government collects the money, the railroad increases its prices, the corn still burns down but the politicians have more money to spread around for votes! Not very efficient unless you are a politician.

The Coase approach is to allow each person harmed to sue the railroad at some minimal cost and to have laws allowing that. Then the railroads will get tired of the law suits, the farmers will get reimbursed and we employ more lawyers outside of the Government. Somewhat of a win-win type result.

The authors of this piece state:

Finally, a more fundamental objection to Pigouvian taxes comes from Ronald Coase’s classic article, The Problem of Social Cost. Coase attacked Pigouvian taxes because they do not take into account the possibility of bargaining.  Consider the example of the factory that pollutes and causes harm to neighboring residents. According to Coase, the neighbors could pay the factory to reduce pollution; if they do so, the socially optimal level of taxation is achieved without the necessity of government intervention in the form of a tax. And if (as seems likely) the government may err in setting the tax, then the outcome will be inferior to one that is reached through bargaining.

What Pigou taxes do for pollution and emissions is to tax those who could least afford it, and make them pay for the benefit of the politician. Coase is correct. Pigou is just another tax and spend liberal supported by Republicans, especially economists!

Newspapers Should Not Give Medical Advice

In an editorial, yes an editorial, in the NY Times they state:

An editorial in the journal (JAMA)  suggested that the pendulum has swung too far against prostate cancer screening and that it is time to focus on ways to use the screening test more effectively, perhaps by reserving it for men at high risk based on such factors as race, ethnicity, age, family history and the results of rectal exams. Men facing only an average risk of dying from prostate cancer might simply have blood tests and possibly biopsies every other year and undergo surgery or radiation only if there is evidence that they have a tumor that is growing and becoming more aggressive.

The problem is identifying risk.  We try Bayesian risk analyses. Namely if a patient has a family member with an aggressive form of PCa and that is a first degree relative then we assign that patient as high risk. Sometimes that works, but not always. The real risk is the genetic profile of the cancer cells distant from the prostate. But how do we find them, and in fact what specific profiles are we looking for? Frankly there are no answers.

Recently we examined a patient profile that was confusing to any Bayesian, and I am one. Let me reiterate it simply:

1. The Pt had a father with a highly aggressive form leading to death. From a Bayesian perspective this gave the Pt a 20-30% chance.

2. The Pt had a biopsy with HGPIN. This raised the risk to 50%.

3.  The HGPIN was no longer apparent on a second 24 core US biopsy. This lowered the risk to 20-30% again.

4. The Pt saw a PSA velocity well above the maximum, now raising PCa risk to 50%+.

5. The Pt was assayed with a 4K test which resulted in a less than 1 percent range.

6. However a concomitant MRI in anticipation of a biopsy revealed 3 small lesions. This raised the Bayesian risk to 75 percent.

7. An integrated MRI/US 24 core biopsy was all normal and this reduced the Bayesian risk back to  a less than 1 percent range.

This Bayesian approach shows the problems, not only with PSA, but what we understand about a priori data and its influence. The suggestion above from the Times:

Men facing only an average risk of dying from prostate cancer might simply have blood tests and possibly biopsies every other year and undergo surgery or radiation only if there is evidence that they have a tumor that is growing and becoming more aggressive.

is in my opinion based upon years of extensive review and analysis a nonsense proposal. Why? Simply, the literature is full of the complexity of PCa genomics. PCa can metastasize in less than three months in certain cases. It can enter the blood stream and seek a nice home in the bone. Then the game is lost. Why is an editorial board even suggesting this without any detailed evidence. In fact the evidence is still conflicted. So it is best to keep quiet or follow a conservative path, even for a liberal paper.

Wilson and History

My grandmother, Hattie Kruger, is shown above just prior to her arrest and incarceration without trial by Woodrow Wilson and his minions. They became the Lorton 7, jailed for demanding the vote, force fed with rubber hoses, and watered down with fire hoses. Left to rot until Wilson in his regal manner decided to send them on their way.

So I am amazed to find the Times finally coming to the realization that this dyed in the wool Virginian from 19th Century roots may have had a checkered past as far as it goes. One wonders where the women have been for the past fifty years and why now it come to light that perhaps he is not the type of person one may want to honor.

History has a way of slowly getting to the point. And one of the points is that Wilson was not a really nice person. Hopefully Princeton gets the point.

Unlike some, I never thought there could be a for and against Princeton or any other institution keeping a Wilson accolade. His actions with women and African Americans are the antithesis of what American stands for, or at least should. Removal is the only alternative and it is an imperative.

Oh and yes, Happy Thanksgiving!

Guest Blogger 2

Hello I'm Bella I've blogged on here before. Today I spent a day with my wonderful grandfather, we made molecules and did spectro photography. Spectro photography is measuring the color. We measured the color of some of the day lilies he owns. We wanted to see what the day lilies absorbed. We put the methanol and the daylily pigment in to a machine which measured the pigment which is in the graph below.

The higher the bar the more absorption. The Indian Giver below absorbs a lot of purples, blues, yellow, and green. It then goes down hill and does not absorb much red, this is why it was a dark red. Thanks for reading my guest blog.

Getting Out of Hand

The Inquirer remarks about the EU now investigating Google about Google Maps. They remark:

Brussels asks Google's mapping rivals whether they feel bullied. EUROPEAN REGULATORS are investigating whether Google has been supplanting native mapping applications and devices with its own Google Maps, thus causing a competition vacuum. A questionnaire obtained by Bloomberg has been sent to rival companies asking for any evidence that the prevalence of Google Maps has damaged sales of rival devices such as TomTom, Garmin and HERE. Officials will also be looking for data on user numbers, preinstallation of mapping apps and the costs faced by cartographers to make mobile-ready versions of their work.

You really can't make this up. This is what happens when people have too much time on their hands. They should be out shearing sheep or something. One wonders how an entity providing a free service that works well can threaten others. Now I use Garmin as a GPS device, refuse to get an android phone and pay Verizon an exorbitant amount. But if one wants to then go use Google and not Garmin. But then why not feel bullied by Verizon, sorry it would be BT, or DT, or whatever other state entity controls the phone systems.

But no, get those nasty Americans, after all they are free! Perhaps not for long, depends on the elections.

Employment November 2015: Not Really That Good

If we look at the most recent numbers we see a 5% unemployment but a still weak participation rate. Seven years later we are seeing the Romer predictions of January 2009. So much for economists.

The participation rate is still bottomed out and we really see little movement. This is a structural problem.

Although Government employment remains flat as a percent we see Education and Health keep climbing. This is a real problem since they are now paid more and more by the taxpayer.

The plot above is core vs Government by people and the ratio of core to Govt is flattening.

The above shows the percent change over the last ten years and E&H has the largest percent and Manufacturing the greatest decline. This is the concern that few mention. It was manufacturing that paid for H&E and this switch is also a systemic problem.

The above is the comparison between now and ten years ago. Again Ed and Health shows a great pop up.

Finally the above shows the current details.

Overall the 5% is nice but participation is too low and the growth is in the wrong places. Why we get no discussion of this is amazing! There is still a very rocky road.

Get a Job!

Institutions like Harvard and Princeton were originally founded to train people for the Ministry and Law. It was not until almost 200 years later that Hopkins started in Medicine. MIT, yes a Technical Institute in 1865 started as a Land Grant school to train in the sciences and technology.

Liberal Arts education was not something for the masses. After WW II most of the men going to college did so to get a job, to improve themselves and their families in an economic sense.

In a recent speech at Stanford the individual states:

The original rationale behind an American liberal arts education – to play a vital role in democratizing privilege – "is under attack, or is being forgotten," Robinson said. Now, universities by and large do not attempt to "prepare people for citizenship and democracy." Instead, they educate them to be members of a "docile, most skilled, working class."

Frankly that illusion is one reason why we may have so many unemployed. Many who have the chance to go to College think they must be broadly educated. Then they become aware after graduation that they are unemployable. Studying Medieval History is enlightening and entertaining but as we have seen it may not prepare you well to manage a multi-billion dollar high tech company.

Stanford, MIT, and other technically focused institutions hardly put out docile anything. Look around and what do you see? Creative and questioning but technically competent and productive creators of value.

What is under attack is the idea that going to college is an interlude in life, that it should be some mind exploring period between adolescence and adulthood. In reality it is a training ground for life, highly competitive and a means to an end, namely a job. Sorry about that but the illusion is why we have some many disappointed and unemployed kids at home.

"The Smartphone"; An Appliance?

Appliances are very useful human tools. However a good appliance does one thing very well. Take a toaster. A toaster makes toast. Just that. But if it is a good toaster is makes good toast. A refrigerator keep things cold. A stove heats things up. My digital camera takes wonderful pictures at very high resolution of plants. My microscope camera takes great high resolution pictures of slides. My toothbrush does a great job on my teeth.

Get the point.

Now a smartphone is really an appliance integrator. It is a phone, a camera, a video recorder, a message device, a web browser, and email device, a player of tunes, a display device for images, and it wants to take over all my bodily functions.

Now PCWorld reports:


The percentage of US adults who own a smartphone or tablet has skyrocketed in recent years, while PC ownership has held more or less steady. That’s the takeaway of a new Pew Research Center surveyWhy this matters: that clearly illustrates the rapid rise of “post-PC” devices.According to the survey, 68 percent of adults in the United States currently own a smartphone, up from 35 percent four years ago. Meanwhile, 45 percent own some form of tablet, up from three percent in 2010. Pew’s data shows that desktop and laptop ownership has remained more or less flat over the last decade. According to Pew, 73 percent of survey respondents currently own a desktop or laptop, compared to 71 percent in 2004. Traditional PC ownership trended slightly upward until the early part of this decade before tailing off somewhat the last two or three years.  Pew’s data reinforces what we already know—that fewer people are buying new PCs, and that more people are turning to mobile devices like smartphones. IDC, the research arm of PCWorld’s parent company, predicted in August that PC sales would slip by 8.7 percent this year and decline an additional 1.1 percent in 2016 before bouncing back some in 2017. 

I do not own a smartphone, in fact I despise them. For example on any subway in New York just look down and there you have every passenger playing on the device. Fiver years ago it was some other Apple device playing music, not it's Candy Crush. There are millions clicking on the screen and strange noises bleeping out. No one reads the newspaper anymore on the train, no a single person. A person could walk through bare naked and not a single person would notice! Yes that happens a few times each day but it is New York.

So what about this appliance thing? Well I have a desktop machine for heavy duty stuff. I have a large laptop for on the road heavy duty stuff. I have an all solid state high end lap top/tablet for go to meeting stuff, like emails and web browsing, like a large smartphone but with brains. Then I have an appliance that is used for phone calls, a cell phone. I can partition my appliances and this allows me to look around on the subway at the humans focused on Candy Crush.

So what is the point? PC sales excluding laptops are appliances for doing complex things. I do complex word processing, spreadsheets, Python programming, complex data editing, image processing, and the like. My high end laptop/tablet (Dell XPS 13) is light and functional to do some complex tasks. As for the phone, call me if you have a problem, but you better have a proposed solution. Unlike some of the folks I see in the AM on my bike exercise who walk on their smartphones endlessly gabbing, my calls last less than 90 sec! Have a nice day. Oh yes, and unlike some of the Presidential candidates, I do not use twitter! And I have not figured out how my smartphone can make toast.