Mock not Stephen Dorff

Matt Ridley on the National Health Services' war against e-cigarettes:

If somebody invented a pill that could cure a disease that kills five million people a year worldwide, 100,000 of them in this country, the medical powers that be would surely encourage it, pay for it, perhaps even make it compulsory. They certainly would not stand in its way.

A relentless stream of data from around the world is showing that e-cigarettes are robbing tobacco companies of today’s customers — and cancer wards of their future patients. In Britain alone two million now use these devices regularly. In study after study, scientists are finding e-cigarettes to be effective at helping people quit, to show no signs of luring non-smokers into tobacco use and to be much safer than their noxious competitors.

So what in heaven’s name explains the fact that Dame Sally Davies, the government’s chief medical officer, when asked by the New Scientist in March what was the biggest health challenge we face in Britain, named three things, one of which was the electronic cigarette? That’s like criticising contraception because you prefer abstinence.
 

I confess to a few chuckles at occasional sightings of Stephen Dorff's TV ads for Blu, an e-cigarette brand. Now I regret that. The older I get, though, the less ideological and the more pragmatic I become.

By the way, where’s the left in all this? Smoking is increasingly concentrated in lower socioeconomic groups. How can we get e-cigarettes into the hands of the poor quickly? The high up-front costs of e-cigarettes (followed by lower ‘running’ costs) means their take-up by poorer people has been slower. Why are libertarians doing all the hard work?

Next time you hear somebody say that they worry about the potential risks of e-cigarettes, remind them of Voltaire’s dictum — don’t let the best be the enemy of the good.
 

Stephen Dorff > Jenny McCarthy.

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Why cutting government is dangerous

Lots of people seem to think that A) government is very inefficient, and that therefore B) we can make society more efficient by cutting the size of government. But actually, (B) doesn't follow from (A). And in fact, the very thing that makes government inefficient in the first place might make cutting it a bad idea!

Why is government inefficient? Because of incentives. Companies generally make hiring and investment decisions based on a marginal cost/marginal benefit calculation (though corporate institutions can of course get in the way of that, and if there are externalities then it's not efficient, etc. etc.). But government makes its decisions based on some other kind of cost-benefit calculation entirely. Sadly, we don't have a good understanding of government decision-making, and this is an area that could use a LOT more research attention than it is getting.

Anyway, because government doesn't make decisions on a monetary cost/benefit margin, it tends to be inefficient. But because of that, if you take a hacksaw to government, starving it of funds, or demanding that it fire workers and close divisions, these firing and closing decisions will not be made on a cost/benefit margin. If you force a corporation to downsize, it will usually lay off the least productive workers first. But if you force a government to downsize, it very well might lay off the most productive workers while retaining the least productive ones!

The very thing that makes government inefficient can make cutting government inefficient!
 

More here.

Specifically, the government entities that tend to survive a purge are most likely to be entrenched interests, and those are often entities that serve a narrow but politically motivated minority.

As in other fields, the inability to measure productivity accurately across different units of government means great inefficiency in funding allocation. So many problems can be reduced to inaccurate measurement.

Why Do Intellectuals Favor Government Solutions?

That's the title of an interesting post by Julian Sanchez.

Before answering the question, he first provides some context.

One thing to bear in mind is that even informed and intelligent people do not typically arrive at their political views by an in-depth review of the evidence in each particular policy area. Most of us can only be really expert in one or two spheres, and in others must rely heavily on those who possess greater expertise and seem to share our basic values. In practice, most people select a “basket” of policy views in the form of an overarching political ideology—which often amounts to choosing a political community whose members seem like decent people who know what they’re talking about. So we needn’t assume the majority view of the intellectual class represents the outcome of a series of fully independent judgments: A relatively mild bias in one direction or another within the relevant community could easily result in an information cascade that generates much more disproportionate social adoption of the favored views. So any potential biasing factors we consider need not be as dramatic as the ultimate distribution of opinion: Whatever initial net bias may exist is likely to be magnified by bandwagon effects.

It's a worthwhile point. Most people just can't be experts in so many areas, but one thing the Internet has done is made it easier and easier to choose from a wide selection of baskets of viewpoints or opinions. In other words, it's easier now than ever to sound smart on a wide range of topics. That may sound more condescending than I mean it to: often a gateway to forming one's own opinions is trying others on for size, and as with innovation in other fields often it's easier to build off of or react to another person's ideas than to birth one from scratch.

Back to the question posed in the title of Sanchez's post.

Here, then, is an alternative (though perhaps related) source of potential bias. If the best solutions to social problems are generally governmental or political, then in a democratic society, doing the work of a wordsmith intellectual is a way of making an essential contribution to addressing those problems. If the best solutions are generally private, then this is true to a far lesser extent: The most important ways of doing one’s civic duty, in this case, are more likely to encompass more direct forms of participation, like donating money, volunteering, working on technological or medical innovations that improve quality of life, and various kinds of socially conscious entrepreneurial activity.

You might, therefore, expect a natural selection effect: Those who feel strongly morally motivated to contribute to the amelioration of social ills will naturally gravitate toward careers that reflect their view about how this is best achieved. The choice of a career as a wordsmith intellectual may, in itself, be the result of a prior belief that social problems are best addressed via mechanisms that are most dependent on public advocacy, argument and persuasion—which is to say, political mechanisms.

It's worth contrasting the situation with the technology industry where a great deal of quarterback coaching and navel-gazing occurs online. It's not all just people signaling how smart they are: if you have a legitimate issue with something, the densely interconnected network of folks online will likely hear you if you express your opinion cogently.

The role of government in innovation

When it comes to productivity, there is one set of rules, which economists have worked on since Adam Smith. Innovation has a different set of rules. Most economists seem barely aware that the two sets of rules often clash — what is good for productivity is bad for innovation. Let me sketch a few of the innovation rules. Innovation needs freedom, of course, and the ability to profit from your invention, which I’ll call benefit. It is also called self-interest. The importance of benefit/self-interest for innovation is the main point of Why Nations Fail by Acemoglu and Robinson. Innovation is also increased by resources, such as skills, knowledge, space, and equipment. After discussing this with Bryan Caplan, I believe many economists are well aware these three factors (freedom, benefit, resources) affect innovation. All three also increase productivity — for example, more resources, more productivity. Far fewer economists realize that two other things, which act against productivity, are also very helpful for innovation:

1. Pain. Not a lot — not debilitating or all-consuming pain — but enough to make you think hard. Necessity is the mother of invention is the aphorism, which isn’t quite right. Pain, not necessity. Government is useful here, as I said. So is war. Many innovations came from wars. A famous example is the greenback, which came from the Civil War.

2. Stability. To innovate, you need free time, which is different from freedom (ask any prisoner). Free time allows painless failure, very helpful for innovation. To have free time, you need a secure job. Government is useful here, too. So is tenure. Pain plus stability = peacetime military spending. The internet came from peacetime military spending. Professors were the first users. Stability also promotes innovation because it makes it easier to detect small improvements. The quieter it is, the better you can detect soft sounds.

More here from Seth Roberts. It's commonly accepted that constraints can spur creativity, but the idea of government as a useful irritant is not something I'd heard before. 

The tradeoff of freedom and pain with government plays out on a smaller scale with employees and companies. Early in your career, you run into more obstacles in a company given your generally lower position in the organization. Some of them are instructive, others are just friction or the usual coordination costs of an organization.

At some point, for some people, those costs become unbearable and they leave for a position higher up, where there are fewer obstacles, or they start their own company and trade one type of challenge for a different type.