Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Saturday, September 03, 2005

Katrina and Housing Markets

I searched the net for awhile looking for articles about the impact of Katrina on housing markets. I probably didn't search very well, but the articles I found all emphasized the standard material:
After a hurricane, there is a massive increase in demand for building supplies as people try to rebuild their homes.
But that isn't what I was looking for.

Rather, I was interested in the impact that this massive flood of refugees will have on short-term housing prices throughout the southern US. The refugees will not be able to return to their homes for months, if ever. Many of them will find their homes destroyed or impossible to salvage. They will have to find alternative housing, and it cannot be at The Astrodome forever.

The upshot should be a huge increase in the demand for short-term and intermediate-term (whatever that means) housing.

Can agitation for rent controls be far behind?

Update: Also, see this at SCSU Scholars.

I mentioned yesterday that there doesn't appear to have been a housing shortage after the 1906 SF earthquake. Rick Brady, a city planner who's worked with FEMA on disaster housing criteria -- and whose scenario was a Category V hurricane in New Orleans -- works through how FEMA would look at the housing crisis John discusses. It will strike you as triage, but it has a market component.
King Banaian concludes that posting by addressing the accusations of "price-gouging" in the markets for building supplies. Good stuff.

Phil Miller: Metal-head?

At least he refers to it as "youthful indiscretions".

Who Blocked Funding for Levee Projects?

There's probably plenty of blame to go around in the disastrous aftermath of Katrina. But too much of it is being heaped on George Bush:
  • George Bush was calling, pleading for mandatory evacuation very early. From August 28th:

The mayor called the order unprecedented and said anyone who could leave the city should. He exempted hotels from the evacuation order because airlines had already cancelled all flights.

Gov. Kathleen Blanco, standing beside the mayor at a news conference, said President Bush called and personally appealed for a mandatory evacuation for the low-lying city, which is prone to flooding. [emphasis added]

[Notice that the Mayor actually seemed hesitant about a full mandatory evacuation because airlines had cancelled all flights.]

  • The Army Corps of Engineers had its funding proposals for levee upgrading blocked by environmentalists and the Clinton administration.

The Clinton administration also cut back on funding for New Orleans. Here is an excerpt from the EU Rota blog about what the Clinton administration did.

[ht to GayandRight]

What Will Happen to Fannie Mae?

How many mortgages along the Gulf Coast will be in default within the next few months? And how will those defaults affect Fannie Mae? Charles Mackay of The Wall Street Examiner has one suggested answer in a piece called, The Mississippi Bubble Company.

What will happen when Ben Bernanke in the White House, and Alan Greenspan at the Fed, realize that Fannie Mae (NYSE:FNM) is about to sink underwater in the wake of Katrina?

Fannie Mae is bankrupt. With perhaps hundreds of billions of dollars of mortgages literally and figuratively under water along the Gulf Coast, Fannie has unrealized losses that would stagger the imagination.

Perhaps this is why GWB has called a meeting with Alan Greenspan and his economic advisors. It will be "Weekend at Bernie’s" time at the White House today, as GWB leaves it up to Ben ‘The Printer’ Bernanke (Chief of the Council of Economic Advisors) and The Maestro (Alan Greenspan) on how to prop up Fannie’s corpse. I suspect they will hatch a plan for a new Mississippi Bubble company, maybe even distributing stock certificates by helicopter (an armored plated one, of course) over the Mississippi delta. Maybe it will then work something like this: The Bubble Company will pay Fannie for its mortgages, and then all will be well with Fannie. Then Fannie can continue its orderly liquidation, which has been ongoing since about last new year’s day.
My guess is that Mackay is too pessimistic about the narrow case of Fannie Mae but is on the mark in a broader perspective. Many mortgagors will receive considerable financial assistance from various levels of gubmnt. Indirectly, this assistance will be bailing out Fannie Mae at least as much as it bails out the residents.

At least that is what has happened in the past with Farm Aid. The aid merely allowed farmers to avoid bankruptcy, which in the end benefited the banks and other lenders at least as much as it benefited the farmers themselves.

Before and After;
One of the oil rigs

Thanks to an anonymous correspondent for sending these photos.

"How Can Two PhDs Be So Stupid?"

Several days ago, I posted a confession about having set off a noxious spray inside the house. I recently received the following anonymous e-mail message. The content leads me to believe the person knows what s/he is talking about:

I believe that you are correct and that it was animal repellent, also known as pepper (capsaicin) spray [see attached document]. The product may have lost some of it's potency over the years, but it has a good shelf-life and is very effective when it comes in contact with mucous membranes like the eyes or nasal passages.

I have seen [official police] videos of it sprayed into police cadet eyes, and while it is possible for animals (like my brother who is [in law enforcement], protestors, etc.) to fight through the effects, most sane animals would retreat.

I have experienced the much diluted effects first hand. One day a disgruntled patient returned to a hospital where I was working and started spraying the stuff at staff. I was on the fourth floor of the hospital and my eyes were irritated, nurses were complaining of respiratory difficulties, all the doors to patients rooms had to be closed right up to the eighth floor of the hospital, etc. The effect lasted quite a long time (a hour or so).

As an aside, capsaicin (Zostrix) is actually used topically in medicine to treat nerve pain (it depletes the nerve of substance P [a neurotransmitter involved in pain transmition]). It initially causes burning, but as the substance P is depleted over time with regular use, it blocks pain transmission. As you might guess, many patients can't tolerate the initially burning phase.

The above is my best educated guess but thanks for the warning. Pharmacists put stickers on things all the time to remind people not to take their narcotics with alcohol and then operate heavy machinery, so don't feel bad.
Attached to the message was this piece, describing the effects of the spray on free-range black bears.

In a comment to the original piece, Jabber mentioned a bunch of PhDs sitting around who let a deck catch fire from using a chiminea. Well, thanks to him, we just bought one, but had the good sense to buy some concrete patio slabs to set it on. I think that's called "learning from history" so you don't repeat other people's mistakes. Or maybe that's another way of saying "investing in human capital".

Political Risks and Investments in Ecuador

Stephen Poloz of Canada's Export Development Corporation says that just because something is in the best economic interest of people doesn't mean they will do it. He has two examples from Ecuador, both involving short-term disruptions of oil production there.

The first example:

In mid-August, residents in north-east Ecuador carried out a series of sophisticated protests against the country’s management of the oil industry. The protesters blocked roads, seized the region’s two main airports, occupied hundreds of oil wells and blew up a pipeline owned by a Canadian company. Oil production and exports, usually on the order of 500,000 barrels per day, were brought to a virtual standstill.

In response, the Ecuadorian government declared a state of emergency, granting the military special powers to restore calm. This took several days, but the protesters agreed to negotiate a settlement while oil production was being restored. That settlement will increase benefits to the local economy significantly.
And the second example:

Back in 2002, inhabitants of the same region obstructed the construction of a pipeline in which there was again some Canadian participation. After the declaration of a state of emergency the locals successfully negotiated payments of millions of dollars from the oil companies and the government to fund local infrastructure investment.
What his examples really show is that protests and shut-downs have worked for the protesters. The actions have been rewarded by gubmnt and foreign corporations. Steve says as much:

From the point of view of the foreign investor, this process could amount to creeping expropriation – a gradual erosion of the value of their investment. In countries where political institutions are weak and the distribution of income is highly skewed, the risk of creeping expropriation is higher as foreign investors are forced to compensate for the government’s shortfalls.

The result is that investments in Ecuador must bear a hefty risk premium. In a reasonably fluid capital market, this risk premium raises the cost of capital for all projects and impedes economic growth and development.

Friday, September 02, 2005

Time for Google to Smarten Up

I just looked, and all the Google ads on this blog are for New Orleans hotels.

Very Off-Putting,
to say the least

Mahdi Bray, the Poor Old Country Muslim from Norfolk, Virginia... is taking up a collection for the victims of Katrina, but in an unsurprising manifestation of Islam's sharp and all-encompassing distinction between believers and unbelievers, he seems to be chiefly concerned about the Muslim victims. In this press release from the Muslim American Society (thanks to the one who sent this), he says: "It is critical that we all pull together to help the thousands of Muslims and their neighbors who have been devastated by Katrina."

Imagine the outcry that would ensue if any charitable organization declared, "It is critical that we all pull together to help the thousands of Christians and their neighbors who have been devastated by Katrina," or "It is critical that we all pull together to help the thousands of Jews and their neighbors who have been devastated by Katrina." Other groups help everybody they can, without asking about their religion first. But not Good Old Mahdi's MAS.

[h/t to Dhimmi Watch via Silly Little Country]

I know it says "and their neighbors". But what an off-putting way to word a press release.

More on Katrina

I am still feeling terribly overwhelmed by the disaster. I can't imagine losing my house and my job and having to start over again. And that's what would have happened had I evacuated early with my wife, our pets, and a few treasures. If I had waited, I'd have lost even the treasures and the pets, maybe been separated from my wife, maybe had to put up with horrible and frightening conditions, including dehydration and hunger and filth and violence, I have no idea how I would have coped (though I'm certain that I would have.).

Part of the story now must shift to all the places that are taking in the refugees. Houston is only one such place, but I strongly recommend Houston's Clear Thinkers for updates and links about what is happening in Houston.

Be sure to check out where Anne Linehan and Kevin Whited are doing an excellent job of chronicling the local resources in support of Houston's extraordinary Hurricane Katrina relief effort. Anne and Kevin have several posts relating to the relief effort, and they will be adding additional ones over the next several days. Check out their site periodically for updates. A great organization job by two of Houston's best bloggers.

Update: Local blog The Lone Star Times is liveblogging from the Astrodome, providing a fascinating resource for keeping up with the unfolding developments within the largest refugee camp to be established on U.S. soil in many, many years. The Chronicle has also started up the Domeblog that is providing periodic updates from the Astrodome.

But shelters and food and clothing and schools and... and... must be growing issues for many communities that have opened their hearts and doors and community centres for the refugees.

The blog push for donating seems to be over, but once again let me urge you to donate for the relief effort.

Another Reason Oil Will Not Reach $100

The Emirates Economist argued earlier that because of vast reserves in the tar sands of Alberta (making Canada the holder of the second largest source of oil reserves), the price of oil will not reach $100 barrel (in 2005 dollars) within the next ten years.

He recently buttressed his argument with evidence from a Rand study that oil shale in the western US can provide between 500 billion and 1.1 trillion barrels of oil eventually. Recovery of oil from shale will be expensive and have environmental problems that will require costly adjustments. But EmEc is optimistic:

People respond to incentives. Technology to extract the oil has been developed in anticipation that the price of oil would rise to make it profitable to do so. I suspect that the response in production to further price increases would be sufficiently large that ten years from now the price of oil will be below $100/barrel.
Let me add that although he might be right about crude oil, we are rapidly discovering that unless there is more refining capability brought on line, finding more oil reserves won't do one heck of lot toward keeping down the price of gasoline and heating oil.

Foreseeable Risk?

"It's not if it will happen," says University of New
Orleans geologist Shea Penland. "It's when."
There has been considerable debate and discussion in the blogosphere about the extent to which living in New Orleans meant subjecting oneself to a foreseeable risk. Here is a small excerpt from an October 2004 article in National Geographic [thanks to Russ Kuykendall for the pointer] that does a pretty darned good job of describing the situation:

It was a broiling August afternoon in New Orleans, Louisiana, the Big Easy, the City That Care Forgot. Those who ventured outside moved as if they were swimming in tupelo honey. Those inside paid silent homage to the man who invented air-conditioning as they watched TV "storm teams" warn of a hurricane in the Gulf of Mexico. Nothing surprising there: Hurricanes in August are as much a part of life in this town as hangovers on Ash Wednesday.

But the next day the storm gathered steam and drew a bead on the city. As the whirling maelstrom approached the coast, more than a million people evacuated to higher ground. Some 200,000 remained, however—the car-less, the homeless, the aged and infirm, and those die-hard New Orleanians who look for any excuse to throw a party.

The storm hit Breton Sound with the fury of a nuclear warhead, pushing a deadly storm surge into Lake Pontchartrain. The water crept to the top of the massive berm that holds back the lake and then spilled over. Nearly 80 percent of New Orleans lies below sea level—more than eight feet below in places—so the water poured in. A liquid brown wall washed over the brick ranch homes of Gentilly, over the clapboard houses of the Ninth Ward, over the white-columned porches of the Garden District, until it raced through the bars and strip joints on Bourbon Street like the pale rider of the Apocalypse. As it reached 25 feet (eight meters) over parts of the city, people climbed onto roofs to escape it.

Thousands drowned in the murky brew that was soon contaminated by sewage and industrial waste. Thousands more who survived the flood later perished from dehydration and disease as they waited to be rescued. It took two months to pump the city dry, and by then the Big Easy was buried under a blanket of putrid sediment, a million people were homeless, and 50,000 were dead. It was the worst natural disaster in the history of the United States.

When did this calamity happen? It hasn't—yet. But the doomsday scenario is not far-fetched. The Federal Emergency Management Agency lists a hurricane strike on New Orleans as one of the most dire threats to the nation, up there with a large earthquake in California or a terrorist attack on New York City. Even the Red Cross no longer opens hurricane shelters in the city, claiming the risk to its workers is too great.

"The killer for Louisiana is a Category Three storm at 72 hours before landfall that becomes a Category Four at 48 hours and a Category Five at 24 hours—coming from the worst direction," says Joe Suhayda, a retired coastal engineer at Louisiana State University who has spent 30 years studying the coast. Suhayda is sitting in a lakefront restaurant on an actual August afternoon sipping lemonade and talking about the chinks in the city's hurricane armor.

"I don't think people realize how precarious we are," Suhayda says, watching sailboats glide by. "Our technology is great when it works. But when it fails, it's going to make things much worse."
Update: See this piece, They Saw It Coming, an op-ed by Mark Fischetti in the NYTimes.

Watching the TV images of the storm approaching the Mississippi Delta on Sunday, I was sick to my stomach. Not only because I knew the hell it could unleash (I wrote an article for Scientific American in 2001 that described the very situation that was unfolding) but because I knew that a large-scale engineering plan called Coast 2050 - developed in 1998 by scientists, Army engineers, metropolitan planners and Louisiana officials - might have helped save the city, but had gone unrealized.

Catastrophic Disaster Novels

Many, many years ago, I read The Long, Loud Silence by Wilson Tucker (used copies are available through Amazon). The plot revolves around life after bio-warfare wipes out most of the Eastern US. The dispair and inhumanity of that novel stuck in my mind.

Then about 27 or more years ago, I read Larry Niven's Lucifer's Hammer , an apocalyptic novel about what happens after a comet smashes into the earth.

Both novels portray, in harrowing detail, the base tendencies of humans when there is no legal and social structure.

I keep having flashbacks to those novels when I think of the people still in New Orleans. It must be a horrid, frightening existence.

An assessment of emergency preparedness

Judging from CNN's coverage, you might think there were massive goof-ups everywhere. Here is a different perspective:

New Orleans waited too late to evacuate, and doesn't seem to have had a very good plan for helping people without cars escape the city. The Superdome has been a nightmare, with insufficient supplies or facilities, though at least it's been a living nightmare.

But many commentators have looked at the images of people without food, water, or much of anything and announced that this shouldn't be happening in America -- as if we enjoy some sort of supernatural immunity to natural disaster, or some sort of superhuman ability to make things better.

It doesn't work that way.
He continues with an admonition that individuals prepare on their own:

...FEMA and the Red Cross recommend that you stockpile enough emergency supplies to get through at least a week without food, water, or electricity [because] it generally takes at least that long after a major disaster to get aid flowing. Roads are blocked, bridges are down, power plants -- and lines -- are wrecked, and communications are interrupted. For at least a week (and you're much better off to be prepared for two) you may be on your own.

It's too late for the people affected by Hurricane Katrina to do anything about that now. But it's not too late for the rest of us. Don't pretend you'll never need to be prepared for a disaster. Prepare, and hope that you never need to use it.
The most serious natural disasters we are likely to face in our area are snow and ice storms, power outages, and tornados. In our home we have followed this advice for decades. Our major concern is that we feel somewhat trapped in the peninsula of Southwestern Ontario. Should we want to evacuate the area, we probably would not be able to do so.

The Price Elasticity of Demand for Gasoline is 0.7

Some people will tell you that they "need" gasoline. Some people will tell you that the price doesn't matter -- they will still buy the same amount of gasoline. I don't always believe them.

This item in the Christian Science Monitor [h/t to Jack], written long before Katrina struck the Gulf Coast, gives many examples of how people in Europe have adjusted to higher gasoline prices.

On average, 60 percent of the price European drivers pay at the pump goes to their governments in taxes.

... "Societies adjust over decades to higher fuel prices," says Jos Dings, head of Transport and Energy, a coalition of European environmental NGOs. "They find many mechanisms."

Chief among them, say experts, is the habit of driving smaller and more fuel-efficient cars.

And here is the basis for the elasticity estimate (in absolute value):

"There is really good evidence that higher prices reduce traffic," says Stephen Glaister, a professor of transportation at London's Imperial College. "If fuel prices go up 10 percent ... fuel consumed goes down by about 7 percent, as people start to use fuel more efficiently, not accelerating so aggressively and switching to more fuel-efficient cars. It does change people's behavior."
And now, after Katrina and the big jump in gasoline prices, lets see how the quantity demanded adjusts. Even in the short run, the quantity demanded at higher prices will have to fall -- the supply curve has shifted sharply to the left.

After all, demand curves are downward-sloping; people respond to incentives.

Where is the National Guard?

Charles at Little Green Footballs posted this letter from a physician at the Ritz-Carleton Hotel in New Orleans. The story he tells is very gripping. I have excerpted only slightly from the original.

My family is safe in Jackson, Miss., and I am now a temporary resident of the Ritz Carleton Hotel in New Orleans. I figured if it was my time to go, I wanted to go in a place with a good wine list. In addition, this hotel is in a very old building on Canal Street that could and did sustain little damage. Many of the other hotels sustained significant loss of windows, and we expect that many of the guests may be evacuated here.

Things were obviously bad yesterday, but they are much worse today. Overnight the water arrived. Now Canal Street (true to its origins) is indeed a canal. The first floor of all downtown buildings is underwater. I have heard that Charity Hospital and Tulane are limited in their ability to care for patients because of water. Ochsner is the only hospital that remains fully functional. However, I spoke with them today and they too are on generator and losing food and water fast.

The city now has no clean water, no sewerage system, no electricity, and no real communications. Bodies are still being recovered floating in the floods. We are worried about a cholera epidemic. Even the police are without effective communications. We have a group of armed police here with us at the hotel that is admirably trying to exert some local law enforcement. This is tough because looting is now rampant. Most of it is not malicious looting. These are poor and desperate people with no housing and no medical care and no food or water trying to take care of themselves and their families. Unfortunately, the people are armed and dangerous. We hear gunshots frequently. Most of Canal street is occupied by armed looters who have a low threshold for discharging their weapons. We hear gunshots frequently. The looters are using makeshift boats made of pieces of styrofoam to access. We are still waiting for a significant national guard presence.

The health care situation here has dramatically worsened overnight. Many people in the hotel are elderly and small children. Many other guests have unusual diseases. ... There are (Infectious Disease) physicians in at this hotel attending an HIV confection. We have commandeered the world famous French Quarter Bar to turn into an makeshift clinic. There is a team of about seven doctors and PAs and pharmacists. We anticipate that this will be the major medical facility in the central business district and French Quarter.

Our biggest adventure today was raiding the Walgreens on Canal under police escort. The pharmacy was dark and full of water. We basically scooped the entire drug sets into garbage bags and removed them. All under police escort. The looters had to be held back at gunpoint. After a dose of prophylactic Cipro I hope to be fine.
In all we are faring well. We have set up a hospital in the French Quarter bar in the hotel, and will start admitting patients today. Many will be from the hotel, but many will not. We are anticipating dealing with multiple medical problems, medications and and acute injuries. Infection and perhaps even cholera are anticipated major problems. Food and water shortages are imminent.

The biggest question to all of us is where is the National Guard. We hear jet fighters and helicopters, but no real armed presence, and hence the rampant looting. There is no Red Cross and no Salvation Army.

In a sort of cliche way, this is an edifying experience. One is rapidly focused away from the transient and material to the bare necessities of life. It has been challenging to me to learn how to be a primary care physician. We are under martial law so return to our homes is impossible. I don’t know how long it will be and this is my greatest fear. Despite it all, this is a soul-edifying experience. The greatest pain is to think about the loss. And how long the rebuild will take. And the horror of so many dead people.

PLEASE SEND THIS DISPATCH TO ALL YOU THINK MAY BE INTERESTED IN A DISPATCH from the front. I will send more according to your interest. Hopefully their collective prayers will be answered. By the way, suture packs, sterile gloves and stethoscopes will be needed as the Ritz turns into a MASH.

Pessimism about Israel and Palestine

Rondi Adamsom visited Israel in July. She has been posting photos and thoughts on her blog since her return. Here is one of the pithiest:

When I was in Israel, what struck me was how many of the officials we met said they believed that Mahmoud Abbas/Abu Mazen was about as good as they could hope for in terms of being a moderate, of achieving some kind of peace with the Palestinians, et cetera. Some even said they believe him to be sincere when he condemns terror. But they also all said they didn't believe he had the necessary support to achieve even a cold peace.

And this is scary.

I mean, first of all, the best we can hope for in a Palestinian leader is a guy whose Ph.D thesis was devoted to defending Holocaust denial? And second, even a man who may sincerely want a better future for the Palestinians will possibly (probably?) be undermined by groups who claim to speak for/care about the Palestinians?

Thursday, September 01, 2005

Katrina Flood Aid

There are many charities to which you can give. If you are in Canada, the Canadian Red Cross has a website that makes donating very easy, and they e-mail you a pdf receipt right away. As I posted two days ago, specify "Hurrican Relief 2005".

For other options, should you wish to donate, check out the links provided by Instapundit.

This natural disaster is going to have a massive impact on the lives of millions.

Update: Charles at Little Green Footballs says,

I’ve been told that we should not attempt to contribute physical goods, like blankets, food, etc. It’s much better to donate cash, and let aid agencies spend it on the supplies that people need most.

And another note: some readers have expressed anger with the Red Cross. But please remember—there is no connection between the International Committee of the Red Cross (a Europe-based organization with an anti-American, anti-Israel agenda) and the
American Red Cross, who support the United States whole-heartedly, and have even withheld dues from the ICRC, out of disgust at their agenda. Don’t target the wrong group, just because they have a similar name.

But... But... It's Not My Fault

A former student writes:

By working in a collections area for the past 4-5 years, I have dealt with the pinnacle of uselessness on a daily basis. The customers who are past due, almost without fail, seem to come up with an excuse that makes their delinquent status someone else’s fault. And they believe it wholeheartedly. Nothing in life is ever your fault – believe it. I won’t get into the disgusting details, but just embrace the fact that even if you f--- up in life, you will find an outlet that will relieve you of your faults – especially in Canada – home of the faultless.

Hispanic Pundit

I have been reading the Hispanic Pundit for nearly a year. His postings consistently present a well-thought-out market-oriented approach. He supports freedom and holds people to a high sense of responsibility.

He recently included The Eclectic Econoclast in a list of five international blogs that he introduced to his readers. Thanks, HP!

What Is With Tony Blair?

From Melanie Phillips's Diary:

Those who think the London bombings finally brought Tony Blair’s government to its senses should think again. Hard on the heels of the appointment of the less than moderate MCB spokesman Inayat Bunglawala to the new Home Office task force set up to combat Muslim extremism, we now learn that the government has also appointed to this same task force none other than Tariq Ramadan. This is beyond a joke. Ramadan, a smooth and sophisticated operator, is also anything but a moderate. He has been banned from America and France because of his seditious views ...
Read more here.

Also see what she wrote back on August 26th.

Chevies, Levees, and Bevies of Levies

For the past few days, beginning while Katrina was still at sea, I have been engaged in an e-mail discussion with Kip Esquire [A Stitch in Haste] and Phil Miller [Market Power] about the appropriate role of the federal gubmnt in disaster relief for New Orleans.

When the risk of a natural disaster can reasonably be anticipated, I would hope for two things:
  1. Individuals would choose how much risk to accept themselves and how much to insure.
  2. Should a disaster strike, private charity would look after the victims.

This view says that there is little reason to require, through the tax system, that people elsewhere contribute to disaster relief. It is similar to that of Dave Friedman (who has a superb defence of this position) and this posting by Kip Esquire last October. Also, see this well-worded editorial, which raises similar issues while asking whether New Orleans should even be rebuilt (a question raised several days earlier by Rebekah K).

Before Katrina hit, I was ready to post something lambasting FEMA and federal insurance programmes. After all, people choose to live in areas that they know are high risk. After all, people have advance warnings about hurricanes. Surely they should be expected to bear or insure against the risks involved with their choices (and the risks in New Orleans were much easier to approximate than the risks of being hit by a tsunami).

And then the levees broke.

Judging from this, the breaking of the levees and the flooding of New Orleans was a foreseeable risk. So why should people outside New Orleans or outside Louisiana be forced by the tax system to contribute to the disaster relief? The people living there (and their elected representatives) chose to live there and chose to take the risks involved with not building stronger levees.

Kip and Phil both argued that because the levees are part of the US federal waterways system, the federal gubmnt built the levees and had the responsibility. I'm not persuaded by the economics of this argument.

And yet...

In my gut, this is one time I'm glad FEMA is there. Not for the looters. Not for the folks who refused to heed warnings and leave. But for those who left and have nothing to return to, even if they bought flood insurance.

I guess this makes me not a very good Libertarian.

Why Do People Hate Wal-Mart but not Ikea?

Kevin Brancato at Always Low Prices presents evidence that more people hate Wal-Mart than Ikea:
I decided to assemble a post about the lack of IKEA-hatred. Before we get started, let's look at the magnitude of the hatred. Right now, "I hate IKEA" turns up 766 Google hits, while "I hate Wal-Mart" turns up 7000, and "I hate Walmart" brings up 4000. That's 11,000 to 766, or 14 to 1 more hatred for Wal-Mart than IKEA (from English writers; I haven't tried Spanish, German, Swedish, or any other language). So IKEA-hatred is dwarfed by Wal-Mart hatred. Why?

... It seems to me the primary reason is that IKEA's footprint in the US is small -- only 24 stores! Really (see
map)! But they're in California, Chicago, Seattle, Houston, Dallas, and the Northeast bringing a European simplicity, exclusivity, and style to the "coastal elites" and other cosmopolitan types -- a combination of low-cost and internationalism not available in the rural, so-called red-states. In contrast, Wal-Mart is perceived by those self-same people as bringing "hick" values -- and garbage goods -- to big-cities.
He offers other reasons as well, but that one seems pretty good to me.

Wednesday, August 31, 2005

What a Frickin' Idiot

RFK Jr. writes:

As Hurricane Katrina dismantles Mississippi’s Gulf Coast, it’s worth recalling the central role that Mississippi Governor Haley Barbour played in derailing the Kyoto Protocol and kiboshing President Bush’s iron-clad campaign promise to regulate CO2.
Huh? Somebody please explain non sequitur to the man.

h/t to JJ for the link.

Update: for more, see this.

UPDATE links and blogs about the flood

From Movie Guy at Calculated Risk [Thanks to JJ], here is a lengthy compilation of websites and blogs that have information about the flood, New Orleans, and other related analysis.

Remember that Katrina dumped a LOT of rain on the Mississippi valley and its tributaries.

Hurricane Katrina Aftermath

"The already dire situation in New Orleans has taken a turn for the worse this morning as the breach in the 17th Street Canal Levee is now 200 feet wide and slowly flooding the entire city. In short, the worst-case scenario may be occurring as flood waters completely fill the below sea-level bowl that is New Orleans, potentially turning Lake Pontchartrain and the city into one big toxic lake." -- 12:05 PM, Tuesday, 30 August 2005, Tom Kirkendall of Houston's Clear Thinkers

New Orleans:

New Orleans Convention and Visitors Bureau
** Excellent details on current status.

The Irish Trojan's Blog
backup link:


Houston's Clear Thinkers New Orleans updates

The Times-Picayune

The Weather Channel -
** Do check this out.

Louisiana Weather Warnings

Mississippi Weather Warnings

National Weather Service

Maps - West to East:

New Orleans Maps

Katrina & Louisianna Petroleum Resources Map
* Couresty of Oil Drum/Econbrowser/Calculated Risk (see links below)

New Orleans Evacuation Map

Lake Pontchartrain Causeway

Area East of New Orleans Map

Gulf Coast MS-AL Map

Mississippi Map

Mississippi Highways

Mississippi Gulf Coast Highways

Alabama Map

Mobile, Alabama Map

Fuel Supply Analysis:

Calculated Risk


Oil Drum

General Economic Analysis:

Full Disclosure

Insurance Journal

Government Agencies and Red Cross:

Alabama Emergency Management Agency news releases

Alabama Emergency Road Closure Information

Florida Division of Emergency Management

Louisiana Office of Emergency Preparedness news releases

Louisiana Road Closure Information

Mississippi Emergency Management Agency news releases

Mississippi Road Closure Information

Tennessee Emergency Management Agency



Where are the donation buttons?

Remember how everyone around the world pledged and donated so much money to help the tsunami victims last December and January? I've searched a bit and haven't found an equal outpouring of aid from outside the US for the victims of Katrina. Even if the US is, on average, wealthy, that's no reason to be uncaring about the victims. They are facing massive losses and disruptions over the next months.

At the very least, Amazon and Walmart could set up web-site donation buttons as they did for the tsunami victims.

This has been a serious tragedy. If you want to do something,
check this site.

Update: In Canada, you can donate to the Canadian Red Cross and specify "2005 hurricane relief".

The Economist thinks it is serious enough that it might send the U.S. and global economies into recession [thanks to MA for the pointer]:

Hurricane Katrina is already known to have killed dozens along the Gulf of Mexico coast, with the death toll expected to rise as rescuers reach more affected areas. Besides its devastating cost in lives, Katrina could push the American economy—maybe even the world economy—into recession

Update again: The USA Today has lots of photos.

Reductio Ad Absurdum

From the Onion [h/t to Jack]
Christian Science Pharmacist Refuses To Fill Any Prescription

Academic Intifada

An excellent and unnerving assessment of rising anti-Semitism among western universities appears in Commentary, written by Efraim Karsh. The article particularly addresses the blatant bigotry in the middle east studies programme at Columbia University, but it extends to broad issues as well. Here is his conclusion, but the entire piece deserves attention.

Even if the Columbia leadership were to do the decent thing, by acknowledging the ongoing bigotry of its professors and by disciplining the offenders, such action would only address the symptoms and not the causes of the pervasive anti-Israel and anti-Jewish bias in the field of modern Middle East studies. Not only is the academic intifada against the Jewish state thriving, the reigning terms of discussion it has introduced for understanding Middle Eastern reality have become perfectly normal, perfectly conventional, perfectly accepted in academic discourse.

[h/t to MA for the pointer]

The New Orleans Saints

The NFL's New Orleans Saints left town last Sunday.
With Hurricane Katrina hitting the Gulf Coast, the club's entire football operations staff went to San Jose, Calif. on Sunday in preparation for the Saints' final preseason contest at Oakland on Thursday night.
Overall my mind has been numbed by the enormity of the losses from Katrina. I know football seems pretty unimportant in the grand scheme of things, and I have no idea why or how this occurred to me. The Saints' next home game isn't until September 18th, against the New York Giants. I can imagine that work crews could get the Superdome in good enough shape to play the game there. And yet, given some reports, I wonder whether people will even be allowed back into the city by then.

What do you figure are the odds the Saints will play that game in the Superdome?

Bubble of Bubbles Due to Asset Inflation:
Morgan Stanley Says Bubbles Will Likely Burst Soon

Andy Xie of Morgan Stanley says the global economy has been in a bubble of bubbles for over a decade, due to constant inflation of the money supply and low interest rates.

The world may be in the middle of the biggest bubble in history. The bubble (e.g., property, stock, commodities) could exceed 50% of global GDP in value. The key cause of the bubble is that the major central banks failed to lower inflation targets to account for the combination of productivity acceleration due to IT and the new upward stickiness in wages due to the influx of three billion people into the global economy since the mid-1990s.

The major central banks mistakenly released too much money in the past decade, justifying it with the low inflation relative to the recent past. The monetary excesses have led to the rapid expansion of asset valuation relative to income. The global economy has become dependent on the demand spillover from asset inflation.
The bubble began in the 1990s as a part of the stock-market run-up:

Something unusual happened in the mid 1990s: the ratio of the US stock market capitalization to its GDP began to surge above its normal range. Mr. Greenspan made his famous speech on the ‘irrational exuberance’ in the stock market in 1996. The market shivered briefly but resumed climbing. It culminated in early 2000 when the listed stocks in the US exceeded 160% of GDP in value – more than twice the historical normal level.
And then, because money supplies were still growing, people started buying real estate instead of stocks, leading to the rapid increases in housing prices:

After the tech bubble burst, US housing value began a similar upward move in relation to the US GDP. The ratio of US housing value to GDP could exceed 160% this year, up from 120% in the 1990s. The average of this ratio was 105% between 1950 and 1999 and the highest level during this period was 130% in 1989, right before the S&L crisis.
The source of the bubbles was asset inflation:

The fundamental changes in the 1990s severed the short-term relationship between money supply and inflation. Indeed, the monetarist explanation for inflation championed by Milton Freidman was discarded in the 1990s as inflation rates failed to respond to surging money supplies.

However, money did cause inflation in asset markets.
Asset inflation has fueled the consumer boom as people borrow against (and/or count on) the rising asset values to finance growing consumption. And Morgan-Stanley's Andy Xie thinks it is all about to come crashing down or maybe slowly slithering down:

The end of the global bubble economy may be near. Mr. Greenspan recently recognized the role of the Fed’s monetary policy in the US housing boom, its associated consumption boom and the US savings shortfall. The Fed may be in a campaign to pop the bubble. The global economy could experience a big downturn or many years of slow growth to correct the past excesses.
There is much more at the original site. [Thanks to MA for the pointer.]

Update: For a similar perspective, see this piece from The Economist.

Okay, Folks, You Can Stop Sending This Material to Carolyn Parrish Now

The Jerk-O-Meter. Not what you think. [thanks to MA for the link, though I am just a little concerned that he felt the need to send it to me].
Are you a jerk on the phone? You might want to be a bit nicer the next time you take that call.

That's because there's new technology coming out of the Massachusetts Institute of Technology called the "Jerk-O-Meter." The software measures stress levels in your voice and rates you on a scale of zero to 100 to let you know just how annoying you might be sounding.
I don't even know how to pronounce it. Is it JERK-oh-mee-ter, or is it jerk-AH-meh-ter?

This product sounds like a loser to me. I can't imagine (m)any people would pay much for this product. Actually, it sounds like just the thing to be produced by one of those left-wing interventionist academies. Next thing you know they'll be lobbying Congress to get regulations requiring its use.

Tuesday, August 30, 2005

Oil Prices Will Not Reach $100 in Next 10 Years:
The Emirates Economist

The Emirates Economist, drawing on information provided by Macleans, notes that many experts estimate Alberta has oil-sand-based oil reserves vast enough that the province is likely the second-largest holder of oil reserves in the world, second only to Saudi Arabia. He also notes that recovery of the oil-sand reserves is easily economically feasible at current oil prices. He concludes:

The Canadian tar sands are one reason I don't think oil will reach $100 per barrel in the next 10 years.
Take that, Matt Simmons.

Oil Prices, Gasoline Prices, and Katrina

The television journalists I have been watching do not understand.

Oil is traded in a world market. Katrina had little effect there, as can be seen here which lists oil futures prices. There was a minimal impact on oil futures for January '06.

Gasoline is traded regionally in the U.S., and gasoline futures for January '06 rose by nearly 20%.

The major energy effect of Katrina will be on U.S. (and probably Canadian) gasoline prices because of the impact on refining capacity, not because of the minor impact of world pumping capacity or reserves.

For much more, see James Hamilton's Econobrowser.

Poor folk can't afford to live in L.A.

Under the assumption that lower income people are more likely to move themselves using U-Haul, here is some evidence that lower-income people are leaving L.A.
One-Way Trip Price:

Los Angeles to Las Vegas $454.00

Las Vegas to Los Angeles $119.00
The original, quoted by Alex Tabarrok at Marginal Revolution, attributes the difference to California's punitive taxes.

Dontcha think that maybe differential housing costs might also play a role?
Not to mention smog and the threat of earthquakes?

Compensating Variations and Job Search:
Maids in Dubai

The Emirates Economist links to an article in the Gulf News, telling us that many ex-patriate maids in Dubai specifically advertise that they would like to work for American or British families. Or maybe even European. Or possibily Chinese or Indian.

Many housemaids are now expressing a preference for one nationality or another in personal adverts that are on display in some of Dubai's shops. For example, there is the "experienced maid" who is seeking "immediate employment with accommodation from a European family".

... "Some of the families from other countries pay you less salary but make you work harder," ... Francesca, who is currently in the UAE on a visit visa, said she would also happily work for a Chinese family, having spent 16 years employed by one in the past. Radhika, 45, a Sri Lankan maid, said she preferred working with British, European and even Indian families because they treated maids well.
The article does not say that they would not like to work for Arab families. The first comment on his posting explains one reason they might not want to, though.

If, for whatever reason, one set of working conditions is less desireable than another might be, it is not at all surprising that workers would spend more time searching for the more desireable positions, ceteris paribus, rather than accept immediately available work with poorer working conditions.

A Jewish Doctor in Auschwitz

Jake highly recommends this book. Here's the description from Amazon:

A Jewish Doctor in Auschwitz : The Testimony of Sima Vaisman

Written just days after her liberation but not discovered by her family until 50 years later, this riveting manuscript by Sima Vaisman, a Jew who suffered the worst of Nazi persecution, first fleeing the Nazis as they invaded her native Poland, then escaping to Paris only to be arrested and deported to Auschwitz, is her story of being a doctor forced to work in the hospital run by the infamous "Angel of Death," Dr. Josef Mengele.

Told in detached, clinical language that holds nothing back, this gripping memoir provides key information and chilling details about how the infamous death camps worked—revealing, for example, how the lethal gas was actually administered by two Nazis in early-version chemical suits in the death chambers. Vaisman also shares the details of her liberation when the camp was captured by the Russian army, as well as her return to Paris, where she subsequently said little about her testimony until her family discovered it.

Her story is supplemented by a moving foreword by famed Nazi hunter Serge Klarsfeld, who gives her account a full historical context. The author's cousin, famed fashion designer Diane Von Furstenberg, herself the daughter of an Auschwitz survivor, provides a moving afterword that gives a stirring portrait of the Vaisman she knew.

About the Author:
Sima Vaisman was a medical doctor and Auschwitz survivor.

. . . . . .

We're Number 1422!!!

I'm a ranker from way back.*

Over two decades ago, Stan Liebowitz and I published several articles, including a path-breaker in the Journal of Economic Literature, on ranking journals and economics departments. I know that most rankings are pretty closely correlated with each other, regardless of the criteria used, but there can be some wide swings as the criteria change.

Back in April, I posted a piece noting that The Eclectic Econoclast ranked 74th by some criterion [that same source recently ranked this blog at 66th].

Then on July 25th, Craig Newmark posted a set of rankings of economics blogs. Depending on the criteria used, The Eclectic Econoclast ranked anywhere from 16th to 33rd. In other words, this blog qualified as one of the fifty that would or could claim it is in the top twenty.

But that was among economics blogs.

Here is a ranking from "Truth Laid Bare" to help put things into a somewhat different and more sobering perspective: by average daily unique visits, The Eclectic Econoclast recently ranked #1422 among all blogs. Actually, that ranking by hit counts is not nearly so low as this blog's ranking by "unique links", where it ranked #4434 the last time I looked.

*"ranker" in the sense of ordinalizing things, not in the Gabe Kaplan sense of hurling insults.

Monday, August 29, 2005

Rice Cooking

Camera unveils some pretty shoddy and distorted reporting by the NYTimes:

When New York Times reporters Joel Brinkley and Steven Weisman interviewed Secretary of State Condoleezza Rice a few days ago, she apparently didn’t say what they wanted to hear regarding Israel. So the enterprising reporters twisted her words to fit their own political agenda. (Credit for spotting their dishonest recounting of the Secretary’s words goes to blogger Rick Richman.)

... they quote Rice as saying: “Everyone empathizes with what the Israelis are facing”, Ms. Rice said in an interview. But she added, “It cannot be Gaza only.”

Did Ms. Rice really say “It cannot be Gaza only?” Not quite. Here’s the exact quote:

The other thing is, just to close off this question, the question has been put repeatedly to the Israelis and to us that it cannot be Gaza only and everybody says no, it cannot be Gaza only. There is, after all, even a link to the West Bank and the four settlements that are going to be dismantled in the West Bank. Everybody, I believe, understands that what we're trying to do is to create momentum toward reenergizing the roadmap and through that momentum toward the eventual establishment of a Palestinian state.

What the Times portrays as Ms. Rice’s statement was actually her recounting of what others are saying “to the Israelis and to us.” Yes, she expresses the US position in favor of the Roadmap and the “the eventual establishment of a Palestinian state,” but that’s a far cry from immediate pressure on Israel to go beyond the Gaza withdrawal, which is what “It cannot be Gaza only” clearly means in this context.

When the Price of a Complement falls...
When the Price of a Substitute Rises...

Here is a plausible sequence of events:

  • a glut of savings in Asia leads to low interest rates everywhere in the world.
  • low interest rates lead to an increased demand for housing. See here and also see here [h/t to BenS].
  • at the same time, reduced expectations about stock market returns lead to a further increased demand for housing.
  • low total costs of housing lead to reduced demand for rental units.
  • rising housing prices and continued low interest rates lead to expectations of higher future housing prices. But as Bill Maher says [reg. req'd - thanks MA],
    This bubble isn't all across the country. Score one here for the red states, because it's apparently only in the savvy, liberal do-gooder coastal blue areas that greed and stupidity have taken over.
  • expectations of rising housing prices, coupled with continuing low rents, lead people to convert apartments to condominium units.
  • concerns about comparatively high house prices, coupled with expectations of rising interest rates reverse the process and lead to increased demand for rental units.
  • increased demand and reduced supply lead to rising rental rates

That seems to be the sequence underlying this article in the NYTimes (reg. req.) about rising rents.

But rents have clearly changed direction, even if the increases have been relatively small. With the economy growing and mortgage rates inching up, more people are looking to rent apartments and homes rather than buy them. At the same time, many buildings are being turned into condominiums, reducing the supply of rental property.

But what caused the glut of savings in Asia in the first place? High growth rates surely contributed.

Note that Arnold Kling does not buy the NYTimes story. He thinks that if rents are rising, either the bubble is already ended or never existed. My own take is that IF some major cities have been experiencing a bubble, one reason for the bubble to fizzle would be that people switch from buying to renting. The NYTimes story is consistent with this time path; surely the two could be concurrent.

But be sure to read the piece just below this one, arguing that the bubble has already burst, consistent with Arnold Kling's piece.

Has the Housing Bubble Already Burst?

The Wall Street Examiner says it has:

The biggest financial disaster in history is unfolding in real time right before our eyes. Due to the lingering effects of mass hysteria, denial remains widespread. But the numbers don't lie.

The U.S. Commerce Department announced Wednesday that sales of homes increased 6.5 percent in the last month, while median prices fell 7.2 percent, down three months in a row and falling below year-ago levels.

Increased volume selling into a falling market looks to me like the beginning of a good old-fashioned collapse.

The current inventory of houses waiting for buyers is 460,000 -- an all-time record.

Risk, Efficient Accidents, and Identity Theft

Everything we do involves a huge range of potential risks that something might cause us some sort of harm or loss. For each one of those possible detrimental events, it is possible to estimate (very roughly) in our own minds whether we think it is efficient to try to reduce the risk of that harm. If we conclude that the expected benefits of reducing the risk outweigh the expected costs, we take the action that will reduce the risks. If, however, we conclude the that the expected costs outweight the expected benefits of reducing the risk, then we conclude that the accident (should it occur) was an efficient accident.

If it is efficient to prevent the accident, economic analysis of law leads us to ask, a la Carroll Towing and the Hand Formula, "Who is the least-cost preventer of the accident?"

If it is not efficient to prevent the accident, we ask, "Who is the least-cost insurer?" If I choose to do nothing to reduce the risk, then I might or might not choose or be able to buy insurance against the loss.

There is a possible application of these concepts to computer identity theft as described in the Washington Post [reg. req'd]. The article describes the problems of identity theft and some of the measures that large firms like AOL and E-Trade are taking to reduce the risk of identity theft. The focus of the article is the RSA token:

Both are inviting their users to try out a different way to log in to their sites. In addition to typing a user name and password, they can obtain a key-chain-sized token with a tiny screen that displays a new six-digit number every minute.

That number acts as an extra, one-time password by matching up with an identical number generated at the same time by a computer at AOL or E-Trade's offices.

These devices are attempts to reduce the risk of identity theft. But you know what? I would hate them. I hate having to remember different passwords (or more like trying to remember where I've hidden them], and having to type in even more would be very annoying.

The Stamford, Conn., research firm Gartner conducted a survey and found that devices like the RSA token are unpopular with consumers -- even the ones who say they want more security options.

... Avivah Litan, a fraud analyst at Gartner, ... said a login token could help more if users have to enter its six-digit number whenever they conduct a high-value transaction, just to make sure that their accounts are not hijacked.

But then again, that might be the sort of added complexity that would make the prospect of using these things even less appealing.
Added to the inconveniences of using the token, my pockets are already too full of geeky things -- I do not want to have to carry yet another thing that allegedly fits on my keychain -- it is plenty full already.

So if that is the state of the art, I would prefer to say that using the RSA token would be inefficient for me, given my expectation of the risks, the costs, and the benefits. But one reason I make this assessment is that I do not use AOL, I do not use E-Trade, and I know from past experience that my credit card company has several very good checks in place, should someone try to use my credit card number.

Also, there is a bit of moral hazard at work. For me, the risk of identity theft is at least partially insured. And that insurance has affected my assessment about whether it would be efficient for me to take additional steps to prevent identity theft.

Sunday, August 28, 2005

Do Not Let These People Near Heavy Machinery

The other day, Ms. Eclectic and I were preparing for a long-ish hike on one of the trails in our area. We dug out a small old pack that we used to carry that had maps, supplies, an extra sweater, a place for water, etc.

As we were cleaning it out, we came across a black thing with a red button on it. At first we couldn't remember what it was. Then it occurred to one of us that it was something to ward off vicious stray dogs or animals or mashers. But we honestly could not remember what it was.

So, smart guy that I am [after all, I do have a PhD], I said,

"Plug your ears, and I'll see if it still works."

So I pushed on the little red button. It didn't make a loud noise at all. Instead, it emitted a fine spray with some force toward one of the kitchen cabinets [yes, we did this indoors! You can see just how smart we really are....]. And then....

Nothing happened. We realized this was supposed to be some sort of noxious spray, not a loud horn, but I guess we both thought it had lost its oomph. So then Ms. Eclectic [who is also pretty smart and also has a PhD] leaned over into the mist left from the spray and sniffed.

She gagged a bit. We realized the spray was mace or pepper or something noxious. Then it hit both of us. With a vengeance.

Coughing, choking, nausea, dripping mucous, you get the idea. What the heck is that stuff??

Damned short-term memory!

Later, a friend stopped by for a quick visit and wondered why we were sitting on the front veranda.

Where Do Islamist Journalism Students Go?
to NPR, of course!

Solomonia has this piece about a former journalism student at the University of Illinois who published unsubstantiated rumours, fabricated quotations, and outright lies about Israel. Her work was shabby at best and scurrilous by just about any standard.

She is now working for an NPR affiliate.

Surprise, Surprise.

Next thing you know, she'll get an offer from the BBC.

Thanks to MA who pointed me to this piece at Little Green Footballs:

We all know that National Public Radio is incredibly biased toward the Palestinian side of the Arab-Israeli conflict, but this is a real jaw-dropper; their affiliate WILL has now hired Mariam Sobh, a member of the radical Islamic front group known as the Muslim Student Association who, while working at the University of Illinois’ Daily Illini, was caught recycling fabricated quotes and attributing them to Ariel Sharon.

Are Lawyers Next?
Or Are They about to be Replaced?

BenS sent me this story from the NYTimes (registration required):

Flesh-eating maggots and bloodsucking leeches, long thought of as the tools of bygone medicine, have experienced a quiet renaissance among high-tech surgeons, and for two days beginning Thursday a federal board of medical advisers will discuss how to regulate them.Leeches, it turns out, are particularly good at draining excess blood from surgically reattached or transplanted appendages. As microsurgeons tackle feats like reattaching hands, scalps and even faces, leeches have become indispensable.

And maggots clean festering wounds that fail to heal, as among diabetics, better than almost anything else, although their use in the United States has been slight, in part because of squeamishness.

But of course the NYTimes seems to lament the lack of regulation:
But neither leeches nor maggots have ever been subject to thorough regulation by the Food and Drug Administration. So the medical advisers are being asked to create general guidelines about how they should be safely grown, transported and sold.

Gee, it seems to me this market has been functioning very well without guidelines and regulations. One reason is likely that the threat of malpractice suits encourages microsurgeons to keep up with changes in technologies and with standard practices. When the tort system works effectively, there is little or no reason for regulation, too.

But it might very well be the threat of litigation that encourages microsurgeons to want to establish "guidelines" so as to have a standard against which to defend themselves.
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