American bombers close in on the target and drop their cargo... of poisonous chemicals that destroys a poppy field. The result is that the Taliban, that protects the growers of opiates, gets another supporter. If the West is fighting two wars in Afghanistan, it will lose both. It´s time to end the war on opium. As Anne Applebaum wrote, “... the US, UN and Turkey solved the same problem in 1974 by licensing Turkish poppy growers and buying their produce for morphine and other legal opiates.” That´s more constructive than bombing them.
Cabbies in Vietnam
It is always lovely to witness our theories come alive. When I visited Vietnam in January, the way we got around in the cities was mainly using the private and extremely inexpensive taxis.
I noticed that taxi drivers torture and stress the cabs. They will consistently not choose the gear that is appropriate for the speed at which they are driving, but always choose a too high one. I witnessed one driver going 30km per hour in the 5th gear position! The engine was very obviously extremely unhappy with this, but the driver didn’t care at all. The allocation of ownership and property rights to the vehicles may explain this behaviour: Drivers usually do not own the vehicle they drive, but rent it from the owner on a short-term basis.
However, they do pay variable costs, notably gasoline. Given that it is costly to measure the wear and tear of the engine—which is effectively placed in what the leading property rights theorist today, Yoram Barzel, calls the “public domain”—drivers maximize their utility by capturing property rights from vehicle owners through the gasoline-saving practice of not matching gears and speed.
Perhaps, owners should get rid of those stick shifts and adopt automatic ones?
Computers, growth and Google
Back in the early 1990’s, growth economists kept quoting (Robert) Solow on the puzzling failure of the computer to boost productivity: “We see the computer age everywhere except in the productivity statistics.”
On my train ride home, I read a fascinating dissection of this claim in Olaf Gersemann’s Cowboy Capitalism: “(T)he ICT (information and communication technologies) revolution has, in some ways at least, surpassed earlier technological revolutions. The British economic historian Nicholas Crafts, for instance, has calculated that the contribution of ICT to economic growth in the US over the last 25 years “has exceeded that of steam and at least matched that of electricity over comparable periods. The Solow productivity paradox stems largely from unrealistic expectations,” Crafts concludes.
It’s worth adding that ICT’s contribution to economic well-being is probably grossly understated in national-income statistics, because so much of the benefit consists in unmeasured gains such as quality improvements and greater product variety.
Think about Google. What was the closest substitute available in 1985? An encyclopedia? The library? Asking your 10 best-read friends?