Solving California’s Water Shortage

Forbes reports that “California is perpetually portrayed as suffering from a shortage of water. Case in point: Gov. Arnold Schwarzenegger recently declared a statewide drought, telling citizens to prepare for rationing.”  As any economist would tell you, the solution to the water shortage problem is simple: raise the price of water. The largest culprits of…

Out of Poverty

Paul Polak’s book Out of Poverty could have just as easily been titled “How to get rich: a guide for small-time farmers in developing countries” or “Marketing to dollar-a-day earners.” Polak’s book states that donations –especially those run through the developing country government–will not end poverty. They have not so far. One reason is that…

Risk Preferences and Technology Adoption in China

Development economists have long sought the answers as to why new innovations do or do not get implemented in developing countries. Giliches (1957) found that hybrid corn adoption has an S-shaped function over time. Other studies have found that an individual’s social network is the primary determinant of technology adoption. If your friends try out…

Don’t always believe your local economist

The N.Y. Times ran an interesting pair of articles Sunday regarding how economists “got it wrong.” Conflict of Interest Ben Stein (in “The Long and Short of It at Goldman Sachs“) comments on the economic analysis conducted by economist Jan Hatzius of Goldman Sachs. Dr. Hatzuis concludes that the sub-prime mortgage ‘crisis’ will not only…

The Fox in the Henhouse

“We want the protection the government provides, and we want freedom. Put those together, and what we really want is for our government, and the whole public sector, from firefighters to voluntary organizations, to be both responsible and responsive.” I recently finished reading the book The Fox in the Henhouse: How Privatization Threatens Democracy by…

A week of Corruption

As an economist with libertarian leanings, last week was a great one to display the imperfection of government action. Below are some of the lowlights: Scooter Libby was convicted for leaking the identity of a CIA agent (Washington Post article). A Justice Department audit found that “the FBI broke the law to secretly pry out…

CAFTA

Yesterday, the president of the Dominican Republic Leonel Fernández announced that the DR-CAFTA free trade agreement between the DR and the U.S. will now take effect as of March 1st, 2007 (see RDnoticias.com).  Is this a good thing for the DR and the U.S.?  A recent Wall Street Journal article (“One Year After CAFTA“) claimed…

How much does your country help the third world?

The Center for Global Development has an interesting measure of how much twenty one first world countries are helping their counterparts in the developing world. The measure is named the Commitment to Development Index (CDI). The index ranks each country the basis of seven categories: aid, trade, investment, migration, the environment, security and technology. More…

Sight for sore eyes

The Economist magazine (“Pyramid power“) has an interesting article on how to get reading glasses to poor individuals in third world countries. Below are two excerpts: Government health clinics are understandably preoccupied with life-threatening maladies and urban optical shops typically shun simple reading glasses in favour of costly, high-margin prescription glasses. But this neglect takes…

Physician licensure and quality: Part VI

On February 4th, I wrote on the American Medical Association’s (AMA) role in modern medicine. Today I will give further commentary regarding the AMA by reviewing a seminal paper by Reuben Kessel (1958). The paper describing the AMA’s development in the first half of the twentieth century. The AMA has two main goals: 1) a…