Efficient wage markets?

One grows increasingly skeptical of the claims that wages are a perfect reflection of market values:

The gap between skyrocketing CEO pay and relatively stagnant compensation for everyone else has been widening for decades. While annual CEO compensation increased by 726.7% between 1978 and 2011, average worker compensation only went up 5.7% during the same time, according to a 2012 study by the Economic Policy Institute.

 To make the argument that this is efficient you need to really think one of the following:

1) CEO wages were terribly depressed in the early post-war era
2) Markets have changed to allow CEO's to add more value than before

The first seems questionable: we do not think of 1945 to 1978 as a era of desperate stagnation and sub-optimal economic performance.  If it was hurting the United States, it was fairly subtle and swamped by other effects.

The second is only more plausible in that modern electronics and communications have made it easier for a CEO to influence policy.  But, interestingly, insofar as firms are themselves command economies, this actually suggests that the return to assets on command economies has improved.  I won't speculate further except to say that this is an interesting argument for the average free marketer to make. 

I suspect the real story is that barriers to entry (i.e. patents, ability to buy out competitors with market capital) are allowing senior people to reward themselves more without hurting the firms ability to compete.  Now that is not all bad -- extra resources have done a lot of things throughout history to improve matters, even when inequality is involved.  But it does make a mockery of the idea that the market can find the right price or wage in all circumstances. 

Tactics, Schmactics -- why I don't buy the latest trope on the government shut down

[I haven't seen anyone frame the discussion in the following way, but a lot of the points I want to make in this thread have been made recently by Josh Marshall and Jonathan Chait. Both are on my fairly short list of daily reads and both have a rare gift for, to paraphrase Orwell, seeing what's in front of their noses.]

You've been hearing it everywhere from Paul Krugman to the National Review: the growing rift in the Republican Party is strictly over tactics -- everyone on the right agrees on what they want; they're just fighting over how to get there -- but having looked carefully at this (and I've stared into this abyss longer than I should have), I'm convinced that it's not just wrong but wrong on multiple levels. I don't think it fits the facts but, more importantly, I don't even think it answers a meaningful question.

Here's a rough analogy. Let's say you're standing in a subway station and a man next to you has a seizure, falls to ground and rolls off of the platform. In that situation, "Why would he want to do that?" is not a meaningful question. The idea of explaining actions through desires only make sense if we make certain assumptions about rationality, vantage and control.

When we're talking about groups, particularly groups large enough not to be able to form fully connected graphs, checking similar assumptions becomes even more important. We have a tendency to anthropomorphize institutions. "The business community wants this." "The Tea Party is trying to do that."   Of course, we know this isn't true. The most you can say is that there's a strong consensus or that the group is following the lead of an individual. This doesn't mean that it can't be useful to analyze groups as if they were individual actors; it can often be the best approach, but only if certain conditions are met. The first of these is that the groups have to be, for lack of a better word, functional.

To be functional, the group has to have certain mechanisms in place and working reasonably well:

Mechanisms to bring information into the system, analyze it and make appropriate decisions based on it;

Mechanisms to disseminate instructions for implementing these decisions, and gathering feedback from members to allow adjustments in strategy;

Mechanisms to check those personal agendas when they threaten the overall goals of the group.

My take is that for quite a while now, the Republican party and the conservative movement have not been functional by these standards. I'm not saying that conservatives are stupid or unbalanced or are acting in an irrational or erratic manner. I am saying that the mechanisms needed for functional operation have broken down and, furthermore, they have broken down in entirely predictable ways, as long as you apply the right principles (game theory, social and individual psychology, voting "paradoxes," collective action and principal agent problem, organizational theory, etc.).

For example, the Romney campaign's inability to process poll information clearly indicates a breakdown in the way that information is suppose to flow through a system. More recently, many of the statements being made by prominent conservatives are clearly cathartic; They can only be seen as the actions of people seeking emotional release without regard to the larger strategic goals of the group.

I've got some suggestions as to why this is happening that I will try to flesh out more later (with the caveat that I have no special expertise in any of these areas and I will invariably get in over my head). I've got first drafts of the next couple of posts, but just to restate the underlying thesis, when it comes to recent developments in the GOP, I think that we are less likely to find useful analogies in the Art of War and more likely to find them in When Prophecy Fails.

An army of sock puppets

I'm working on a thread on the role of information and misinformation in GOP dysfunction. In the course of that thread, I'll probably be linking to this passage from NPR reporter David Folkenflick's "Murdoch's World":

On the blogs, the fight was particularly fierce. Fox PR staffers were expected to counter not just negative and even neutral blog postings but the anti-Fox comments beneath them. One former staffer recalled using twenty different aliases to post pro-Fox rants. Another had one hundred. Several employees had to acquire a cell phone thumb drive to provide a wireless broadband connection that could not be traced back to a Fox News or News Corp account. Another used an AOL dial-up connection, even in the age of widespread broadband access, on the rationale it would be harder to pinpoint its origins. Old laptops were distributed for these cyber operations. Even blogs with minor followings were reviewed to ensure no claim went unchecked.

One of the many problematic aspects of the increasingly self-serving ethics code of the mainstream press (yes, I'm back on that again) is the "professional courtesy" extended to organizations like News Corp. It's OK to be patronizing (at the NYT, it seems to be a job requirement), but you must always stop short of the five-letter-word for spade.

This "courtesy" is self-serving because:

Murdoch and Ailes like to hit back hard and dirty;

Many friends and former co-workers of mainstream journalists now work for Fox and honest descriptions would make for some very uncomfortable socializing;

The day may come when these journalists find themselves in the Howard Kurtz role, disgraced and largely unemployable anywhere but Fox.

Weekend blogging: spies and fugatives

Joseph and I are long time fans of the show Burn Notice and both of us were very pleased with the series finale. If you have watched the show, even intermittently, you should definitely check it out. It offered a genuine resolution to the story with considerable resonance. Matt Nix, series creator and one of the best of a truly exceptional generation of show runners, wrote and directed the episode and delivered on all fronts. On top of all that, he provided one of my favorite series-ending lines.

Of course, given my diagnosed pop-culture affliction, all this talk of finales immediately got me thinking about Roy Huggins and the Fugitive.

Often working under the pen name John Thomas James, Huggins created one of the most memorable bodies of work in television. His specialty was casting some of the most charismatically masculine actors working in film and television  -- in shows like Maverick, the Fugitive, Run for Your Life, and the Rockford Files -- then carefully deconstructing the standard definition of a masculine hero. Heroes were supposed to be brave and invulnerable (the second somewhat undercutting the first) and to always fight fair,* none of which you could count on in a Huggins production.





James Garner was arguably the definitive Huggins hero, but it was David Janssen's Richard Kimble who veered the farthest from the macho standard. Janssen spent the run of the show being as forgettable and nonconfrontational as possible and running away at any sign of trouble. It was an extraordinary performance, balanced by nuanced and occasionally (and improbably) sympathetic work by Barry Morse as Lt. Gerard. Morse and show runner Alan Armer somehow managed to make Gerard obsessed with duty without having him lose his objectivity. Other than one obvious blind spot he kept a clear and realistic view of the man he pursued. In the end, he even... but I'm getting ahead of myself.



In addition to an innovative and much imitated structure, Huggins had another groundbreaking idea. The Fugitive was always meant to be a story with an ending. After four seasons (hit shows had much shorter runs inn the Sixties), a two-part episode wrapped up all of the loose ends in a way that guaranteed that TV executives would take notice.

Part two of the finale was the most-watched television series episode at that time. It was viewed by 25.70 million households (45.9 percent of American households with a television set and a 72 percent share), meaning that more than 78 million people tuned in.

For those far too interested in television, here's Huggins' account of the unlikely origin of the show:



* as always, I reserve the right to unapologetically split my infinitives.

NYT correction watch: Did Dickens meet Dostoevsky? -- Opinions still differ

About six months ago, University of California Berkeley Prof. Eric Naiman revealed that much of the literary world, including the New York Times, had been taken in by massive hoax.(you can read my take here but you should read Naiman's piece first. It's exceptionally good). When scholars first started raising questions about the hoaxster's claim, which appeared in the NYT, that Dickens met Dostoevsky, the paper published a weaselly update:

Correction: October 29, 2011

The Books of The Times review on Tuesday, about “Becoming Dickens: The Invention of a Novelist” by Robert Douglas-Fairhurst, and “Charles Dickens” by Claire Tomalin, recounted an anecdote in Ms. Tomalin’s book in which Dostoyevsky told of meeting Dickens. While others have also written of such a meeting and of a letter in which Dostoyevsky was said to have described it, some scholars have questioned the authenticity of the letter and whether the meeting ever occurred.  

The "some scholars" line badly understated the case but it was at least technically accurate at the time. Now, though, we know that all of the primary sources for this anecdote came from a serial fantasist writing under a string of assumed identities and we've known this since last April (the story even made Slate). That would seem to be plenty of time for the NYT to update their correction so I googled "Dickens Dostoevsky" and Michiko Kakutani (the writer in question). Here's what I saw:

Correction: October 29, 2011

The Books of The Times review on Tuesday, about “Becoming Dickens: The Invention of a Novelist” by Robert Douglas-Fairhurst, and “Charles Dickens” by Claire Tomalin, recounted an anecdote in Ms. Tomalin’s book in which Dostoyevsky told of meeting Dickens. While others have also written of such a meeting and of a letter in which Dostoyevsky was said to have described it, some scholars have questioned the authenticity of the letter and whether the meeting ever occurred.  

Maybe they'll get around to fixing it next year.

Medical Innovation is expensive

Megan McArdle has some strong opinions on how high drug prices have managed to help drive medical innovation:

Drug development is essentially a giant international collective-action problem. The U.S. has kept it from being a total disaster because we don’t have good centralized control of our insurance market, and our political system is pretty disorganized and easy to lobby. If that changes -- and maybe we just changed it! -- we’ll knock down the prices of drugs to near the marginal cost using government fiat, and I expect that innovation in this sector will grind to a halt. Stuff will still be coming out of academic labs, but no one is going to take those promising targets and turn them into actual drugs.

and

There are some promising alternatives. The main two that have been suggested are prizes and having the U.S. government get into the business of developing actual drugs, rather than just funding basic research. I’m in favor of trying both of these approaches. But so far, prizes have not proved themselves as ways to fund what is essentially commercial product development -- at least, not at the same level that patents do. Nor has the government. As we’ve just seen from the government’s attempt to develop a Travelocity-like site for health insurance, there are reasons to think that government might not be very good at that sort of thing. I don’t mean to slur the government -- governments absolutely have developed drugs in the past. But these are not the majority, and government processes often make it hard to do things that companies do easily.

Now I don't want to knock pharmaceutical companies.  A lot of good work is done by these companies.  On the other hand, medical costs in the United States are really, really high.  And the National Institutes of Health has proven itself as a really effective model of targeted and efficient medical research.  Now it is true that the cost of doing this would not be trivial.  Randomized controlled trials are extremely expensive and crucial to ensuring that only safe medications reach the open market. 

So this would be expensive.  But I am unclear as to whether it would be more expensive than the current model of drug development.  And these subsidies could go to many of the same companies that develop drugs now.  I think that this conversation would be much better informed with some actual calculations as to cost/benefit.  This is a bit outside of my expertise, but I see it as a key step to really advancing the conversation. 

Did Andrew Gelman catch me doing something I've complained about other people doing?

Maybe. In reply to this post where I suggested that Motley Fool's Netflix Emmy coverage was an example of the following:

One of Motley Fool's favorite strategies is to pick a hot company like Netflix or Disney and relentlessly talk it up. Unlike the traditional pump-and-dump, the goal isn't to drive up that individual stock (it's hard to move a Disney); instead what's being pumped is the idea that you're losing money by not being in. This frame of mind makes readers receptive to buying MF's investment books and $199 newsletters even though, based on their columns, they have little to offer other than conventional wisdom and questionable analysis. 

 Gelman offered an alternate suggestion:

But I wonder if there’s something else going on. I don’t read The Motley Fool—actually, I’ve never looked at it before, but I did click on it just now when preparing this post—but I do subscribe to the New York Times. The Motley Fool’s motto is “to educate, amuse & enrich.” The Times is not enriching me, but I do read it to be educated and amused. I wonder whether the Fool’s pushing of Netflix is part of the educate-and-amuse bit. Okay, the story is not very amusing and apparently not educational at all—but, from the reader’s perspective, what the Fool is providing with the Netflix story is an ongoing saga, a mini-soap-opera.

The best analogy might be the newspaper coverage of a sports team. Yeah, the Tigers are gonna go all the way this year, check out their new pitching staff, etc. These kinds of stories have their own internal logic and they can be pegged to local news. Thus, the Emmys can be spun as evidence for a pre-existing story where Netflix is a hero, just as the local newspaper can spin a hot streak by the third baseman as good news for the home team.

I generally get annoyed with people who read hidden meaning into a story element when there's an obvious narrative or commercial reason for including that element. My go-to example is critics who read puritanical agendas into teen-slasher films, ignoring the facts that:

Exploitation film-makers are constantly looking for a way to incorporate sex and nudity or "the suggestion thereof" into scripts;

They are also looking for ways to scare the audience and for directors of limited talent, one of the easiest methods for making an audience jump is to spring the monster out when the victims have been lulled into a false sense of security;

In order to stretch this kind of story out to feature length, it helps if you can find an excuse to have one or two character at a time slip away from the group.

Under these constraints (and generally assuming none-too-gifted screenwriters composing as fast as they can type), it would be surprising not to see the sex-then-death plot device showing up in cheap horror films.

So am I guilty of the same kind of over-reading with Motley Fool and Netflix? Maybe a little but there are a couple of caveats that need to be thrown in.

First of all, a good sales pitch is generally a good story but it has to be a special kind of story, one that ends with the customer in just the right frame of mind. Unless I'm missing a revenue stream here, these MF posts exist solely to drive people, directly or indirectly, to purchasing an MF publication. They have to be entertaining enough to hold the readers' interest but, unlike a movie or a TV show or a magazine article, they have to do more than just entertain; they have to sell. Given that constraint, you can't analyze the story without analyzing the pitch.

Second, are stories of glamorous successes  a good way of giving investment advice? I recall Peter Lynch saying that he preferred unglamorous companies that other investors were likely to overlook (if memory serves, he specifically said that the corniness of the name "Moe" in the Pep Boys logo made him much more eager to buy the stock). Given that the vast majority of us have no business picking stocks, is it responsible to sell the amateur investor on buying the superstars corporations that everybody's talking about?

The importance of measurement

Exactly how you measure a parameter is both important and difficult:

Well, one of the reasons some Americans feel they’re being taxed to death is that if you add up our taxes, which are low compared to other modern countries, and then you add in private expenditures for things the tax system pays for in other countries — a lot of our health care costs, higher education costs, admissions and fees and tickets and licenses for a lot of things — lo and behold, we end up being a relatively high-tax country. But it depends on how you analyze the data.

And let me give you one killer figure: We spend so much money on our health care in this country — or as I prefer to think of it, sick care in this country — that for every dollar that the other 33 modern economies spend for universal coverage, we spend $2.64. And this is done using something called “purchasing parity dollars,” so they’re truly comparable. So we spend $2.64 per person and still have almost 50 million people with no coverage and 30 million with limited coverage, and these other countries spend far less with universal coverage.

This is definitely a different perspective than I have had on this issue before.  In a way I have been trapped in the paradigm of public versus private provision (and so a small public sector seems to suggest a low tax country to me).  But a basket of goods and services can be difficult to break into such pieces. 

An excellent example of this problem is the extraordinary costs of health care in the United States.  Finding ways to properly tackle the problem of medical expenses is difficult, frustrating, and has some really nasty trade-offs. Trying to solve it is important. 

But in the meantime, pushing economic growth for the lower and middle classes is a good second best way to proceed forward while we seek solutions to these fundamental issues.   

Deficits and Climate Change

Larry Summers makes the link and it is not the one you might expect; instead he is looking at the innate uncertainty in policy projections:

These figures lie well within any reasonable confidence interval for deficit forecasts. The most recent comprehensive CBO evaluation found that, leaving aside any errors due to policy changes, the expected error in projections out only five years is 3.5 per cent of GDP. Put another way, given the magnitude of forecast uncertainties there is a chance of close to 40 per cent that with no new policy actions the ratio of debt-to-GDP will decline over 25 or 75 years.

Of course, debt problems could also be much worse than is now forecast.

But in most areas policy makers avoid taking strong actions unless there is statistically compelling evidence to support them. Few would favor action to curb greenhouse gas emissions without evidence establishing that substantial climate change is overwhelmingly likely. Yet it is conventional wisdom that urgent action must be taken to cut the deficit, even as prevailing short-run deficit forecasts suggest no problems and long-run forecasts are within margins of error.

When the variance in the projection models are explicitly discussed, it makes the whole matter seem more prosaic.  After all, if we were frequentists we would reject the hypothesis of an increase in debt to GDP deficit at 10 years as not statistically significant (versus the null hypothesis that this change = 0). 

Much of this uncertainty is on the growth side of the equation, which may actually be the easiest policy lever to move in the short term.  It seems to me, as a student of history, that it is rarely the case that a country has been ruined by a burst of prosperity, growth, and development of human capital.

But the second part of Dr. Summers' argument is really the best -- Climate change is at least as likely as an increase in the debt to GDP ratio in the next 75 years.  I think the balance is much higher and the possible side effects of climate change are pretty dire for some really key places in America (think Miami).  Yet it is not the flashpoint for this discussion and that, I believe, is what gives the game away. 

Whatever people are fighting about, it is not the long term state of the debt.  Sure, it would be nice to reduce it but obvious tactics (raising taxes) are completely off of the table and there is a constant return to trying to cut specific government programs.  This has all of the hallmarks of a policy duel and not a real worry about the long term future.

But one way or the other, the discussion has been way too focused on the point estimates of the statistical models and not the confidence intervals.  Epidemiologists have already learned, to their regret, how dangerous that can be. 

P.S. And no, I am not suggesting a p-value based approach either, but rather measures of certainty that are explainable in ordinary language and make clear that these are projections, so that the level of sacrifice to improve the point estimate can be properly evaluated. 

A mean looking kid walking by a row of glass houses with a big ol' bag of rocks

TPM has a short but fascinating revelation

MSNBC host Joe Scarborough said Thursday that a public editor at the New York Times considers liberal columnist Paul Krugman's work to be an ongoing "nightmare."

During a segment on "Morning Joe," conservative historian Niall Ferguson joined Scarborough to pile on Krugman. Ferguson said that Krugman lacks "humility, honesty and civility."

"And there's no accountability," Ferguson said. "No one seems to edit that blog at the New York Times. And it's time that somebody called him out. People are afraid of him. I'm not."

Scarborough then recalled a conversation he had with a Times editor following his televised debate with Krugman earlier this year.

"I actually won't tell you which public editor it was but one of the public editors of the New York Times told me off the record after my debate that their biggest nightmare was his column every week," Scarborough said.

Assuming that Scarborough is on the level (and putting aside Ferguson's self-awareness issues), this would seem to echo the New York Times' reaction to Nate Silver. In both cases, the supposedly liberal staff seemed to take an instant dislike to highly respected liberal writer/researchers who appear to have brought in a large number of traditional and digital subscribers. What's going on?

As regulars have probably guessed, I see this as another result of an increasingly dysfunctional culture of journalism, specifically the way that journalists react to having someone on the inside who ignores the implicit code of conduct.

This is not a left/right matter -- it cuts across pretty much all of the media establishment -- but conservatives have tended to make better tactical use of the rules we're talking about, for instance, using pox-on-both-their-houses conventions to provide cover for unpopular positions. As a result, there are more obvious targets on the right but that's a fairly trivial factor.

Silver and Krugman prompted such a strong reaction not because they were too liberal (despite seeing the world through an overwhelmingly upper class perspective, the NYT cannot be considered a right-wing paper); but because they were insiders who refused to follow the rules of the culture, and who therefore threatened that culture.

Over the past two decades, journalists have fashioned a remarkably self-serving code of conduct: de- emphasizing factual accuracy; embracing a lazy herd mentality with talk of narratives and memes; avoiding tough confrontations through false equivalencies; and passing the buck on keeping their audience informed.

When Nate Silver pointed out both that the data didn't support many of the popular narratives and that the journalists pushing those narratives were contributing nothing, he threatened reputations, business models and the underlying culture of the institutions. The fact that he was right was beside the point; he was ignoring the conventions of the journalistic establishment and there is no greater bastion of that establishment than the New York Times. By the same token, when Krugman points out that "centrist" pundits have a huge personal and professional interest in pushing the "Paul Ryan, serious policy guy" narrative, he was expressing a fact that was widely known but which was not supposed to be said aloud.

The paper has never been exactly friendly to blunt, independent writers with satirical tendencies as Molly Ivins discovered way back in the Seventies, but things have only gotten worse since then. Almost everybody lives in glass houses now and Paul Krugman does not look like someone you'd trust with a rock in that situation.

Weekend blogging -- "nudity or the suggestion thereof"

Eventually this is going to tie back in with a recent Andrew Gelman post at the Monkey Cage and possibly with a post I need to write one of these days on the business lessons of Roger Corman, legendary maker of exploitation pictures (often but incorrectly identified as 'B-movies'*). In the meantime, I think this anecdote can probably stand on its own.

When Martin Scorsese first met Corman, he expected to meet the maniacal, seat-of-the-pants yahoo type that the stories might suggest. "Instead," Scorsese recalls, "I found him a very courteous and gentlemanly guy, but a very stern and tough customer who was quite polite as he explained these outrageous tactics of exploitation in cold, calm terms. . . . 'Martin, (Corman told him,) it's important that every fifteen pages there should be a touch of nudity or the suggestion thereof. Like a shoulder or leg exposed. It keeps the interest.' "

* B's are films made to fill out the second half of a double feature and, as Corman himself likes to point out, that format had fallen out of favor well before he started making films.

Ecomonies and Pharmacoepidemiology: today's link.

Beat the Press points out just how much health care costs are driving the United States fiscal situation:

But suppose we humor our friends at the Post. If our per person costs were the same as Canada's, or 53.1 percent of U.S. costs ($4,521.6/$8507.6) , then we would be looking at primary budget surpluses of more 2.0 percent of GDP over the next decade. These rise to more 3 percent of GDP in the 2040s and would eventually exceed 4 percent of GDP ($640 billion a year in today's economy).

If our per person health care costs were the same as in the U.K. then we would be spending just 40.0 percent as much on health care ($3,405.5/$8507.6). In this case our primary budget surplus would be over 3 percent of GDP for the next 15 years, rising to over 4 percent of GDP in the 2040s and eventually exceeding 6 percent of GDP by the end of the forecast period ($960 billion in today's economy).

I think that this rather dramatically illustrates that there are a lot of ways to meet the challenges of the long term budget deficit.  It's not that we can become Canada or the UK tomorrow, but that this difference in costs (with the attendant lack of access) is not ideal.  If we do decide that it is worth it to put this focus on medical costs then it makes sense to realize that taxes are needed.  In isolation, most taxes hurt somebody.  In isolation, most government programs benefit somebody.  The trick is to find a way to balance these two elements.

It is very much like pharmacoepidemiology.  Our focus on the adverse effects of medication use can often blind us to the real benefits of appropriately prescribed and used medications.  But balancing the two pieces is not at all trivial, so it can be too easy to just weigh one side of the equation. 

What does a position entail?

I am big fan of thinking through an argument from start to finish as well as assessing the implications of the argument.  Matt Yglesias did a good job with this approach with this post:

After all, the assumption that economic growth will continue undergirds conventional wisdom about economic policy in a really profound way—namely it's the key reason to limit political interest in redistribution of economic resources. There are a lot of metaphors about rising tides lifting all boats and baking a bigger pie instead of arguing about how to divide up a small one, and they're all pointing to the same issue—distributional issues matter, but in the long-term, economic growth matters much much more. Average living standards in the West are much higher in 2013 than they were in 1863 not because we abandoned capitalism and workers seized control of the factories, but because society as a whole is much more prosperous than it was 150 years ago.

It is an absolutely correct argument -- if there is no longer any potential for growth than pro-growth wealth distributions are kind of pointless and it becomes cruel to allow for high concentrations of wealth.  Now it is a different argument to claim that wealth concentration is required to encourage growth, but then the absence of growth should be a huge problem for low-tax/high-growth crowd.  Appeals to the long run get less compelling when the long run never actually arrives . . .

An interesting point on redistribution

Chris Dillow:

Now, libertarians might object that such redistributions are the effect of meddlesome government. In their ideal polity, we'd simply have secure property rights and no redistribution. I'm not sure. In a minimal state, we'd still have technical change. And this itself creates de facto rights. For example, in the 19th century mid-west, the invention of barbed wire (pdf) allowed land-owners to enclose large areas, thus strengthening their property rights. In the 21st century, file-sharing gives young people the idea that they have a right to free music. Faced with such technical change, even a libertarian state would have to choose how to allocate new rights - for example, the right to shared files versus the right to protect one's intellectual property. However it chooses, there's redistribution.

I say this to endorse Frances' claim; governments don't "defend" property rights but create them.

I think that there is a real sense that this point is very useful -- property is entirely a social construct.  There is no sense, in the state of nature, where a given piece of land is owned by a specific individual.  A system of property rights has many great features but the choice of what can be owned is, itself, rather important as are the socially acceptable steps that can be taken to defend these rights.

In practice going back to first principles on these types of rights can be very difficult and is likely to be somewhat misleading.  However, it is always worth noting that the outcomes that we currently have are because of system of values interested to maximize aggregate welfare and not some sort of natural entitlement. 

Solar: a continuing update

Brad Delong points us towards a great chart of the cost of solar energy.  The key quote:

The price of solar photovoltaic cells has dropped 99% in the past quarter century. So in an increasing number of markets around the country, solar is at or very close to grid parity.

In particular, the article focuses on a Colorado discovery that solar is looking competitive with natural gas fired plants.  And, in the United States, the heavy use of air conditioning likely means that peak sun and peak energy demand will line up reasonably well.

There remain technical challenges, but this is a very encouraging place to be.