Maybe We Should Allow People To Sell Their Organs

Alex Tabarrok had a good article on this in the 1-9/10-2010 edition of the WSJ, p. W1. It was called The Meat Market. Here are the key exerpts:

"Iran has eliminated waiting lists for kidneys entirely by paying its citizens to donate."

"Millions of people suffer from kidney disease, but in 2007 there were just 64,606 kidney-transplant operations in the entire world. In the U.S. alone, 83,000 people wait on the official kidney-transplant list. But just 16,500 people received a kidney transplant in 2008, while almost 5,000 died waiting for one."

"To combat yet another shortfall, some American doctors are routinely removing pieces of tissue from deceased patients for transplant without their, or their families', prior consent. And the practice is perfectly legal."

"The shortage of organs has increased the use of so-called expanded-criteria organs, or organs that used to be considered unsuitable for transplant. Kidneys donated from people over the age of 60 or from people who had various medical problems are more likely to fail than organs from younger, healthier donors, but they are now being used under the pressure."

"Already, the black market may account for 5% to 10% of transplants world-wide."

"Only one country, Iran, has eliminated the shortage of transplant organs—and only Iran has a working and legal payment system for organ donation." (although the payment system works mainly through the government)

"The Iranian system and the black market demonstrate one important fact: The organ shortage can be solved by paying living donors. The Iranian system began in 1988 and eliminated the shortage of kidneys by 1999. Writing in the Journal of Economic Perspectives in 2007, Nobel Laureate economist Gary Becker and Julio Elias estimated that a payment of $15,000 for living donors would alleviate the shortage of kidneys in the U.S. Payment could be made by the federal government to avoid any hint of inequality in kidney allocation. Moreover, this proposal would save the government money since even with a significant payment, transplant is cheaper than the dialysis that is now paid for by Medicare's End Stage Renal Disease program."

Economists See Crisis Response as Risky

That is the title of a WSJ article from 1-6-2010, p. A2. Here is the link: Economists See Crisis Response as Risky . Here are the key exerpts:

"...some suggest governments' response has increased the chances of a repeat, making the banking system more crisis-prone, putting new strains on institutions such as the Federal Reserve and stretching government finances closer to the breaking point."

""Our response has made us more vulnerable to a bigger crisis," said Tom Sargent, a New York University economist."

"By providing massive bailouts to commercial banks and securities firms, the logic goes, governments have given bank executives a sort of catastrophe insurance -- and an incentive to take even greater risks than they did before the crisis."

""If the banks really feel that they are insured, then we have a dangerous situation," said Stanford University's Robert Hall, the association's president. "The incentives are to take a very risky position. They get to pocket it if they win and it's the federal government's problem if they lose."" (Hall is the president of the American Economic Association)

"In the next few years, for example, the gross government debt of both the U.S. and the U.K. will exceed 90% of their annual economic output, an event that could both spook investors and seriously impair economic growth.

When advanced countries cross the 90% threshold, their annual growth tends to be about one percentage point lower, said Mr. Rogoff and Carmen Reinhart of the University of Maryland."

John Taylor Thinks Low Interest Rates Contributed To The Credit Crisis

He wrote an article for the Wall Street Journal called The Fed and the Crisis: A Reply to Ben Bernanke (1-11-2010, p. A19). Low interest rates can mean too many people borrowing money to buy things like houses. Then too many are built and prices collapse, people can't pay their loans back and banks start to lose money. Ben Bernanke said that low interest rates were not the problem. But Taylor, an economics professor at Stanford had this to say to refute Bernanke:

"My critique, which I presented at the annual Jackson Hole conference for central bankers in the summer of 2007, is based on the simple observation that the Fed's target for the federal-funds interest rate was well below what the Taylor rule would call for in 2002-2005. By this measure the interest rate was too low for too long, reducing borrowing costs and accelerating the housing boom. The deviation from the Taylor rule, which had characterized good monetary policy during the previous two decades, was the largest since the turbulent 1970s."

"he put the Fed's forecasts of future inflation into the Taylor rule rather than actual measured inflation."

"First, the Fed's forecasts of inflation were too low. Inflation increased rather than decreased in 2002-2005."

"if one uses the average of private sector inflation forecasts rather than the Fed's forecasts, the interest rate would still have been judged as too low for too long."

"Mr. Bernanke cites no empirical evidence that his alternative to the Taylor rule improves central-bank performance."

"Mr. Bernanke also said that international evidence does not show a statistically significant relationship between policy deviations from the Taylor rule and housing booms. But his speech does not mention that research at the Organization for Economic Cooperation and Development in March 2008 did find a statistically significant relationship."

"two of the economists he cites—Frank Smets, director of research at the European Central Bank, and his colleague Marek Jarocinski—reported in the July/August issue of the St. Louis Fed Review that "evidence that monetary policy has significant effects on housing investment and house prices and that easy monetary policy designed to stave off perceived risks of deflation in 2002-04 has contributed to the boom in the housing market in 2004 and 2005.""

"The real interest rate during this period was persistently less than zero, thereby subsidizing borrowers."

" an objective observer of all this evidence would have to at least admit the possibility that monetary policy was too easy and a possible contributor to the crisis."

"Indeed, one of the lines from Mr. Bernanke's speech most picked up by Fed watchers is that "we must remain open to using monetary policy as a supplementary tool for addressing those risks." We have very limited ability to fine tune monetary policy in such an interventionist way."

"it is wishful thinking that some new and untried macro-prudential systemic risk regulation will prevent bubbles."

Why Minimum Wage Laws Are a Bad Idea

"... research shows that in the long run the adverse effects of a higher minimum wage are quite substantial." (page 84, The Economics of Public Issues, 13e, by Roger LeRoy Miller, Daniel K. Benjamin, and Douglass C. North).

"In a new report, economists David Neumark of the University of California at Irvine and William Wascher of the Federal Reserve Board say a review of more than 90 studies in more than 15 countries since the early 1990s shows nearly two-thirds of the studies find a "consistent" though not always statistically significant negative impact on employment. Fewer than 10 found a consistently positive impact. While there's "no consensus," they say, "the weight of empirical evidence" supports the traditional view." (The Wall Street Journal, p. A4, Nov. 3, 2006)

From Greg Mankiw's blog:

"Economists Richard Burkhauser (Cornell University) and Joseph Sabia (University of Georgia) report:

a beneficiary from a proposed federal minimum wage hike to $7.25 an hour is far more likely to be in a family earning more than three times the poverty line than in a poor family. In total, only 12.7 percent of the benefits from a federal minimum wage increase to $7.25 an hour would go to poor families. In contrast, 63 percent of benefits would go to families earning more than twice the poverty line and 42 percent would go to families earning more than three times the poverty line."

Paul Krugman said "government should typically leave markets alone"

"Careful study of how markets work has led microeconomists to the conclusion that government should typically leave markets alone. Except in certain well-defined cases, government intervention in markets usually leaves society as a whole worse off. There are, to be sure, important tasks for microeconomic policy-ensuring that markets perform well and intervening appropriately in the well-defined cases in which markets don't work well. But the area of microeconomics, in general, suggests a limited role for government intervention."

Page 141 of Macroeconomics by Paul Krugman and Robin Wells

Study of the Great Depression Shapes Bernanke's Views: Federal Reserve Chair Ben Bernanke agrees with important monetarist idea

Milton Friedman and Anna Jacobson Schwartz upended that view in 1963 (that the Depression was the inevitable consequence of excess investment, flawed corporate governance and speculation in the 1920s). In "A Monetary History of the United States, 1867-1960," they argued that the Depression was far from inevitable, but brought about by an "inept" Federal Reserve. First, they said, the Fed foolishly raised interest rates in 1928 to end speculation on Wall Street, causing a recession the next year that precipitated the crash. Then, it let thousands of banks fail and the money supply shrink. In part, it thought weak banks should be allowed to fail. It also feared that lower interest rates might lead foreigners to dump dollars, straining the currency's link to gold.

Bernanke read the book as a graduate student at Massachusetts Institute of Technology in the 1970s. "I was hooked, and I have been a student of monetary economics and economic history ever since," he recalled at a 2002 conference honoring Friedman's 90th birthday. Bernanke, by then one of the Fed's seven governors, told Friedman: "Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."

Copyright 2005 Charleston Newspapers Charleston Gazette (West Virginia)
December 11, 2005, Sunday SECTION: NEWS; Pg. P8E
BYLINE: Greg Ip, The Wall Street Journal

RUBEN NAVARRETTE Says Envy, Class Jealousy Are Wrong

Click here to read the article

He says some people earn more than others because:

"Much of it is tied to individuals' decisions about how much education they're going to pursue, and how hard they're going to pursue it. Most obstacles people face are self-imposed and self-designed. We can't say that enough, especially at a time when too many Americans blame others for their troubles, failings and shortcomings."

and

"Whether movie stars, professional athletes or television and radio personalities, a simple formula decides someone's worth: It's what someone else is willing to pay them. I bet that makes sense to most people. But for others, there is an emotion that always seems to get in the way. It's class envy - the sense that it's simply not fair that some earn in an hour what it takes others to earn in a month. It doesn't help that plenty of politicians and pundits shamelessly try to cultivate that resentment and use it for their own purposes."