The Passing Scene Cafe extends a huge hug

to those of you have had moments of sadness in the last few years. We are always here to sing with you.

Can't believe it's over
I watched the whole thing fall
And I never saw the writing that was on the wall
If I'd only knew
The days were slipping past
That the good things never last
That you were crying

Summer turned to winter
And the snow it turned to rain
Then the rain turned into tears upon your face
I hardly recognize the girl you are today
And God I hope it's not too late
It's not too late
'Cause you are not alone
I'm always there with you
And we'll get lost together
'Till the light comes pouring through
'Cause when you feel like you're done
And the darkness has won
Babe, you're not lost
When your world's crashing down
And you can't bear the thought
I said, babe, you're not lost

Life can show no mercy
It can tear your soul apart
It can make you feel like you've gone crazy
But you're not
Things have seemed to change
There's one thing that's still the same
In my heart you have remained
And we can fly fly fly away

'Cause you are not alone
And I am there with you
And we'll get lost together
'Till the light comes pouring through
'Cause when you feel like you're done
And the darkness has won
Babe, you're not lost
When the world's crashing down
And you can not bear to crawl
I said, baby, you're not lost

Economics of Ticket Prices

Justin Dantonio and I had a brief discussion of the music and ticketing industry here.

Justin stumbled across an interesting blog called http://www.ticketeconomist.com/. One particular post, called the Battle of the Ticket Geeks, reviews two of the secondary market "price forcasters," called FanSnap and SeatGeek.

"The challenge is that most of the academic research I have performed or read indicates that resold ticket prices usually go down following the on-sale date. Though this is mostly true for concert tickets, I have seen these price patterns occur with sporting event tickets, too. However, sporting events can be subject to price fluctuations driven by unique influences such as weather and rankings, so that is likely where there is a value in forecasting. As cool as the forecasting piece could be down the road, I don’t agree that SeatGeek is (right now) as impressive as its competitor, FanSnap."

Here is a link to a podcast which discusses the economics of Ticketmaster.

Game Theory

http://imgs.xkcd.com/comics/game_theory.png

Stanford Economist Finds Charter Schools Effective

Study Shows Better Scores for Charter School Students

By the third grade, according to the study, the average charter school student was 5.3 points ahead on state exams in English compared with students who were not admitted to the charter schools. In math, the students were 5.8 points ahead. Most tests are scored on a scale of roughly 475 to 800.

The gap between students in charter schools and those in traditional public schools widened the longer students remained in the charter schools, according to the report.

Early Eductation and the Private Sector

Courtesy of BusinessWeek.Blog

Early Childhood Investment and the Private Sector

Posted by: Michael Mandel on September 23

When I was out in Telluride this week at the Economic Summit on Early Childhood Investment(no, please don’t show me any sympathy), I heard a very interesting talk from Congressman Jared Polis. Polis, with a long history as an entrepreneur and an education supporter, was discussing ways to get the private sector to invest in desirable social goods, such as early childhood education. His point (broadly interpreted by me) was that there is a systematic market failure: Even if the social return on investment in early childhood education is high, as the data seems to show, there’s no way for private investors to take advantage of these opportunities.

In particular, the data seems to show that improving early childhood education seems to reduce a wide variety of government expenses, including crime and prisons. Polis suggested creating securities where private investors could put money into early childhood education, and at some point in the future get a share of the cost savings. In the language of economics, he’d create private property rights in future tangible fiscal benefits from social investment (my words, not his).

This is an idea which I don’t remember having seen before. It would have two advantages. First, it would provide more money. Second, it provides a market assessment of the return on early education spending, which could guide the public sector.

I thought this was a really interesting proposal which would have broader applications than early childhood education. I’m not sure I quite get the mechanics, but we need more innovative ways of getting the private sector aligned with public issues.

and and excellent point in the comments section:

The problem is the benefits of early childhood education seem to be more than income, they also include not-spending on things like prison or law enforcement. It's much harder for a government to budget money that it would have not spent compared to an alternate reality. Also this method would exaggerate the amount spent on the children of the wealthy as they are more likely to become wealthy.

The Obama White House and the Arts

As a staunch supporter of the National Endowment of the Arts and its mission, I find this very troubling. Using a federal agency as a tool for propaganda violates all kinds of lobbying and civil service laws. And the mainstream media, still in a sycophantic posture, will not report on this story until they find that angle that embarrasses the Republican party

Andrew Klavan
The Art of Corruption
The National Endowment for the Arts violates its founding principle.
21 September 2009

There are all kinds of corruption. Some are pretty easy to identify. You can’t miss it when a congressman sells the public’s vote for money, say, or a husband sets his personal promises at nothing in order to score some extracurricular sex. But the slow rot that enters the soul of individuals when the tendrils of the state overcreep the life of a society—that’s a little tougher to define. It may just be the toadying deference that steals into your behavior with the guard who searches you at the airport. Or it could be the baksheesh you pay the safety inspector to keep your business from being shut down. But as subtle as the effects may be, the rule is ironclad: the more areas of life are funded and regulated by government, the less free you are, and the more corrupt and servile you ultimately become.

Through the work of artist and blogger Patrick Courrielche, Andrew Breitbart’s new website Big Government—reporting the news so the mainstream media won’t have to—has just released a sickening transcript of an August 10 conference call jointly hosted by the National Endowment for the Arts, the White House’s Office of Public Engagement, and United We Serve, an initiative overseen by the Corporation for National and Community Service, a federal agency. The purpose of the call was to urge a group of pro-Obama artists to get out there and start creating art that would support the president’s agenda on health care, the environment, education, and community services. Speaking at the request of “folks in the White House and folks in the NEA,” Michael Skolnick, political director for Obama-mad hip-hop mogul Russell Simmons, told the assembled artists, “All of us who are on this phone call were selected for a reason, and you are the ones that lead by example in your communities. You are the thought leaders. You are the ones that, if you create a piece of art, or promote a piece of art or create a campaign for a company, and tell our country and our young people sort of what do and what to be into, and what’s cool and what’s not cool.”

As an artist, I feel it incumbent upon myself to pause here to become violently ill. Never mind that the phone call may have broken several lobbying laws. Forget that the NEA’s Yosi Sergant is now proven to have lied when he denied the NEA’s role in initiating the call. Let’s not even concern ourselves with the fact that White House official Buffy Wicks directed the artists to channel their efforts through Serve.gov, a White House website with ties to the corrupt Acorn.

No, let’s just talk about art. It’s hard out here on us creative types right now. When times are tough, truth and beauty sink pretty low on the national shopping list. The NEA, according to its own website, is “the nation’s largest annual funder of the arts.” It gives tens of millions of dollars a year in grants to artists and art organizations. It does this, according to the legislation that established it, to “help create and sustain not only a climate encouraging freedom of thought, imagination, and inquiry but also the material conditions facilitating the release of this creative talent.” It is there, in other words, to protect artists’ freedom from the corrupting influence of financial deprivation.

The transcript of this phone call proves that the NEA has deeply betrayed that mission. Corrupted by the White House, it has moved to corrupt the artists who look to it for their daily bread. It doesn’t matter that it didn’t actually offer these artists money in exchange for propaganda; its very presence on the line constituted an implied offer of access. It doesn’t matter that the artists on the call were already Obama supporters. Simply by presenting a mission that excluded those who did not support the president’s agenda, the NEA violated the very first principle of its establishing legislation: “The arts and the humanities belong to all the people of the United States.”

And whether or not these artists will bite into the apple of governmental corruption—whether or not they’ll allow their creativity to be guided by the blandishments of the state—the phone call is proof of the depths of this administration’s intentions to corrupt. It seeks, as statist government always seeks, to modify and control human behavior through the doling out and withholding of money and favor. And in seeking to enlist the arts, it has taken this overbearing and ultimately corrupting practice to the deepest and most spiritual level we know.

Andrew Klavan is a City Journal contributing editor and the author of such best-selling novels as Don’t Say a Word and Empire of Lies. His latest book is The Last Thing I Remember.

Young Guitar Gods

Art and Islamic Fundamentalism

It turns out, the two don't mix.

Pakistani artists persevere amid increasing militancy

At a university in Punjab, the music department is off-campus, relegated to a dank basement. Singers and playwrights face the risk of attacks from militants who deem the activity un-Islamic.

By Mark Magnier

September 13, 2009

Reporting from Lahore, Pakistan

To find the music department of the University of the Punjab, travel several miles from the main campus to a red-brick building, down some dark stairs, left through a shadowy corridor and into a warren of small, windowless rooms.

The dank basement befits a department exiled after a militant student group called it un-Islamic, un-Pakistani and unwanted. There were threats, protests, machine-gun-toting bodyguards. Then, the basement.

These are the front lines of Pakistan's culture wars, a very real battlefield with bombs and bloodshed where musicians, filmmakers, painters and theater groups face off against the Taliban and other militants.

But even as violence spurs self-censorship and spreads fear, it's also prompting some artists to push back, sometimes at great personal risk.

"We have to be prepared and dig in our heels," said Shahid Nadeem, an avant-garde playwright. "If we start retreating, there will be no end."

On a recent morning, students in the music department basement acknowledged that they feel beleaguered. Graduate student Nazia Muzaffar's mother warns her that she'll never find a suitor if she keeps studying music, which some Pakistanis see as salacious, immoral and a conduit for Western values. Classmate Sheraz Hector doesn't tell strangers what degree he's pursuing.

"If we had classes on the main campus, there would definitely be a problem," Hector said, sitting in a room littered with sheet-music stands, broken electronics and music-related posters. "Two bombs went off near here. Why they haven't hit us yet is beyond my understanding."

Several miles away on the university's main campus, Abdul Basit, 27, a member of the hard-line Islamic student group Jameer-i-Islami, sat with friends at a grubby outdoor cafe sipping Coca-Cola. Members of the group reportedly have beaten up male students for talking to female students and, in one case, for taking a co-ed group photo.

The young men, dressed in the traditional pants and tunic known as a shalwar kameez, viewed a foreigner warily before expressing surprise that the university had a music department.

"Our culture doesn't need music departments," Abdul Basit said before excusing himself to attend afternoon prayers. "If those people want to sing, they should go elsewhere."

Although the arts community in Pakistan has often come under fire from the government, military and religious fundamentalists, there's a general recognition that things are getting worse as Islamic fundamentalism makes inroads in a larger swath of the country.

Pakistan's creative types may be excused these days for looking over their shoulders.

Scores of cinemas in Lahore, Peshawar, Karachi and Islamabad have been bombed or intimidated into closing, leaving Pakistan with fewer than 200 movie houses by some estimates, compared with 1,500 several years ago.

"The entertainment business depends on peace, and cinema is the first to suffer," said Shahzad Gull, a film studio owner who is filming and releasing his movies abroad to survive.

In April, an art exhibition in Karachi was attacked by thugs incensed by a painting of assassinated former leader Benazir Bhutto sitting on the lap of the late dictator Gen. Zia ul-Haq.

Late last year, Lahore's annual World Performing Arts Festival was bombed, undercutting organizer Rafi Peer Group's effort to show "Pakistan's softer side" and calling into question the festival's future.

An international Sufi music festival has also been threatened by extremists who abhor the tolerant Islamic sect, prompting cancellations by foreign visitors and performers.

"It's a huge setback when even Muslims from abroad didn't want to come to a country that's Muslim," said Faizaan Peerzada, the group's chief executive, now struggling to meet payroll. "I don't know what the future will bring."

In addition to fearing for their lives, artists say they find themselves more isolated artistically as foreign visas become harder to procure given the rise in violence in their country, even as fewer foreign artists venture here.

The social chill is producing some unintended benefits, artists say. Shuttered cinemas, concert halls and galleries means they have more time to paint, write, jam and experiment with fellow artists.

"Creativity, if anything, is more grounded now," said Zeb Bangash, a folk singer sometimes referred to as Pakistan's Joan Baez. "It's pretty underground again. It's very exciting."

Bangash headed over to a large house in a posh suburb of Lahore to cheer on several friends in niche rock group Coven. With gigs canceled and albums delayed, band members say they've used the time to start a school for wannabe rockers.

"Down from the mountains on their feet, sir, the militants have multiplied!" lead guitarist and vocalist Hamza Jafri shouted into the microphone as the three-man band jammed in a library filled with DVDs, empty beer cans and a hairball of wires. "We are ready, ready to die."

While some artists have gone underground, others are defiant. Playwright Nadeem and his wife, theater director Madeeha Gauhar, have made extremism and intolerance a central theme of their work.

The Lahore-based theater company recently performed its play "Burqavaganza" in Islamabad, the capital, despite threats and well-founded fears that a suicide bomber might target the production.

The play depicts politicians, American astronauts, Pakistani army officers and a "Burka bin Laden" character wearing a burka -- the all-covering garment worn by conservative Muslim women that's mandatory in Taliban-controlled areas.

"The message is that burka don't just cover women, they cover minds," Gauhar said. "Despite the threat, the audience still came out."

Even the bravest, however, say they're not stupid. Shock for shock's sake has never been part of the arts scene in conservative Islamic Pakistan, and self-censorship is nothing new in a society that's weathered dictators and religious fundamentalists for decades.

Among the red lines most say they avoid are nudity, Pakistan's nuclear weapons program and direct criticism of Islam, though its interpretation is fair game if handled carefully.

"We're not going to put an actress on the stage in a bikini," said Gauhar, a veteran with her husband of imprisonment, beatings and blackballing during Zia's 1977-88 rule. "You obviously need to be mature and sensible."

Some also take refuge in relative anonymity. The owner of an art gallery in downtown Lahore shows off several rooms of landscapes and portraits before revealing a pair of oil paintings depicting nude or partially nude women in an alcove not visible from the street.

"This is very dangerous for us," he said. "Someone could come with a gun and attack me, but you can't spend your life hiding."

Western artists living in almost-anything-goes societies might view self-censorship as a sellout, artists here say, but then, the foreigners' work isn't being slashed and bombed. And making the same point in a less overt way ultimately reduces the risk for Pakistani artists, or so they hope, creating more opportunity over the long run for the community.

Salima Hashmi, dean of the arts faculty at Lahore's private Beaconhouse National University, said she recently persuaded one of her students not to enter a controversial picture in an exhibition of a sacred Islamic text by posing two questions: Can you make the same point less obviously, and do you really want to endanger the show's other artists?

Pakistan's artists know they walk a fine line. But if that's what it takes, they will walk it.

"We just want our lives to be as normal as possible, with laughter, merriment, music, dance and poetry," said Sarwat Ali, head of musicology at Lahore's proudly secular National College of Arts.

"There's going to be a struggle. It's not going to be handed to us on a platter. This is the fate of living in this era."

Live Nation and Ticketmaster

The Price of the Ticket

What does it take to get to see your favorite band?

by John Seabrook August 10, 2009

ABSTRACT: ANNALS OF ENTERTAINMENT about Live Nation, Ticketmaster, and the live-music industry. With the collapse of the record business, the business of selling live music has become the main source of revenue for the popular music industry. This year, Live Nation, the world’s largest concert promoter, will promote some twenty-two thousand concerts. Last year, Ticketmaster Entertainment, the world’s largest ticket seller, sold more than a hundred and forty-nine million tickets. Yet almost everyone agrees that the business of live music is dysfunctional. Live Nation and Ticketmaster are loathed by fans and their stock prices are depressed. Two recent shows that Bruce Springsteen and the E Street Band performed at the Izod Center, in the New Jersey Meadowlands, on May 21st and May 23rd, have come to serve as a referendum on what’s wrong with the live music business. Discusses the decision by Springsteen and other prominent artists to price their tickets below market value, inadvertently creating a thriving secondary market for tickets. Tells about the history of scalping and the numerous attempts by public officials to prevent it through anti-scalping laws. The Internet, through sites such as StubHub and TicketsNow (which is owned by Ticketmaster), has made ticket scalping for events as common as day trading. However, the rock-concert industry has not, by and large, been able to take advantage of this new market. Writer describes a Springsteen fan, Maria Shwalb, attempting to obtain tickets to one of the Izod Center shows via the Ticketmaster Web site. She was redirected to TicketsNow, where tickets for the shows were available at much higher prices even though tickets at face value were still available. Tells how Live Nation and Ticketmaster came to achieve their places of prominence and the federal investigation into the proposed merger of Ticketmaster and Live Nation. Describes the controversy caused by the redirect of numerous Springsteen ticket buyers to TicketsNow. Springsteen himself posted a letter saying that he and his team were “furious.” More than two thousand complaints were filed with the New Jersey Division of Consumer affairs. A bill to make ticket selling more transparent was introduced in Congress. Ticketmaster, which blamed the redirect on a software malfunction, denied any wrongdoing but came to an agreement with the New Jersey Attorney General’s office to stop linking fans to TicketsNow for one year. Writer interviews independent promoter John Scher, who believes that the concert business was never right for consolidation. He also interviews Irving Azoff, the C.E.O. of Ticketmaster Entertainment. Azoff suggests that a dynamic pricing system, in which prices would fluctuate with demand, might be the future of concert ticketing.

My friend Justin Dantonio, something of a music industry buff, read the article and responded below:

"that was a really interesting article. it is unique in that it at times seems to paint Ticketmaster as almost misunderstood. I would argue there are some serious logic jumps in the article. Mainly, the author seems so focused on the ticketing industry he fails to recognize a few really important things about other aspects of the music industry such as selling records and radio. The premise that piracy killed the record industry, for example, is extremely misleading and perpetuated by the record industry themselves.

The record industry killed themselves through a terrible business model and by pissing off their consumers. All technology did was provide consumers with the ability to by-pass the record executive. Consumers of music will continue to support artists like via concert tickets, singles downloads, merchandise, etc it just needs to be done different than it was done from the late 60s til the early aughts (2003 or so). Artists will make less money than they did in the 80s and 90s but much like the housing and stock markets, a realignment was necessary. EVERYTHING was inflated. True story --- Napster went to major labels before Napster went live in 99 or so and said 'here is our technology, this is what it's going to do' and tried to make a deal to sell music as digital downlaods or subscriptions in return for access to major label's catalouges. This would have made Napster much more like iTunes about 5-6 years before iTunes existed. The labels laughed them off and turned them down. The labels made the mistake of believing that their was more value in the service they provided (marketing a band like a used car, getting radio play -- sometimes illegally [see: payola] and overcharging for a CD). The consumers want what the artists produces, not the record label.

The people who stand to lose the most are the major record labels. They are no longer needed. There are millions of people who want to and enjoy the practice of discovering bands on their own or through their friends. Marketing bands like you market laundry detergent holds increasingly less weight in this culture. Artist will still be paid enough to live off of, major record label types though serve little-to-no purpose.

But anyway, I'll probably write you a really long email tonight/tomorrow with more thoughts on this. I have to jet for now.

I have to say I have no problem with the idea of ticket prices fluctating based on demand, seat location, etc via a company like Ticketmaster. Unfortunatly my distrust of greedy people leads me to believe this won't really happen; ie - I dont believe Ticketmaster would really lower the price of a ticket if the demand wasnt there. I think they'd just let it go unsold. They could do that right now if the 40% of all seats being unsold was something they were that concered about. If it was that big of a deal, why not slash the cheap seats in the final 5 days before a show that was not sold to a level they were satisifed with? Also, the line about the TicketsNow link for the Springsteen show being a technology glitch seems like BS. I've seen it happen for years and I've seen TicketsNow and StubHub advertise tickets they don't own yet for years too"

I am inclined to agree with Justin since he is much more knowledgeable on the subject than me. I wrote an analysis both Justin's comments and the article below. Enjoy.

The music business is an industry with so many variables with so many moving parts and variables that it’s difficult to make sense of it all. However, as Justin observed above, even casual followers of the music scene will note that

• 1) The rise of the “file to file sharing” movement sometime in the late 90s allowed for the free distribution of music files and, as a result, an increase level of piracy.
• 2) Concert ticket prices remain stratospheric---not only is there a difference between seat price and the purchase price of a ticket (fees, tack-ons, surcharges) but there exists a “spread” between the purchase price and often what the ticket fetches on the secondary market, e.g. craigslist, StubHub, TicketNow, and other brokers.

At first glance, these two points appear to be unrelated, i.e. the profits made from record sales do not correlate well with market prices and quantities for concert ticket sales. But I will try to connect the two below.
One would be hard-pressed to find someone who hasn’t burned a c.d. for someone else or downloaded a song/album for free off of Napster, Kazaa, or bit-torrent sites. Okay, let’s face it: we’ve all done it. The question then becomes, “what has this meant for the music business?” Justin observes in his review of the article that, “the premise that piracy killed the record industry, for example, is extremely misleading and perpetuated by the record industry themselves.” I might argue with Justin here although I think he and I would reach the same conclusion. Throughout much of the modern music era the production of music and its promotion was controlled by four major recording labels and their subsidiaries: Universal Music Group, Sony Music Entertainment, Warner Music Group and EMI group. This oligopoly served as a de facto gateway for aspiring musicians and exerted an enormous ability to control the terms of an artist’s recording contract. Want to record a few albums and be heard on the radio? You have to go thru them, and not without selling a pound of flesh.

Very few industry observers would argue that musicians were “coerced” into signing recording contracts at disadvantageous terms (I’ll leave the thuggish and knee-capping tactics of Suge Knight out of the analysis for the moment). Furthermore, I fully support the doctrine of free contract: two capable parties who CONSENSUALLY enter into a contractual arrangement ought not to have that arrangement altered by external forces. However, an artist’s first record deal was notoriously stacked in favor of the recording labels, e.g. musicians earning less than $1 for every $13 LP or compact disc sold, and artists had no alternatives save for producing their own cd’s and selling them out of their garages or vans.
Even the staunchest free market advocates, such as me, had considerable trouble watching David Geffen and his ilk reap billions off his artists and then threaten to sue them into the Stone Age for breach of contract if the artist’s production lapsed. A couple of highly publicized squabbles between artists and labels, such as the one between Prince and Warner brothers, coincided with a populist backlash against the music empire. Over time, however, the music industry evolved the way most industries evolve when only a few firms make windfall profits: market participants innovate and find ways to increase reward and lower cost. The rise of the internet and file sharing programs shattered the status quo and threatened record producers’ bulldog grip on profits. Every musicphile by now has heard of Napster or Kazaa, and technologically astute music lovers have found ways to avoid paying altogether for a record or album .
Justin Dantonio argues the following:

“The premise that piracy killed the record industry, for example, is extremely misleading and perpetuated by the record industry. All technology did was provide consumers with the ability to by-pass the record executive.”

The idea that the prevalence of free, perhaps unlawful, distribution of music “killed” the record industry (I don’t have knowledge of the industry’s sales and profits over the last 20 years) seems intuitively correct to me. I would guess that the profits of the recording industry declined along with its intrinsic relevance to the production process. Musicians don’t need big record labels carry them anymore. An array of musical production software programs can assist any aspiring musician, and the internet provides plenty of forums to promote and publicize.
Justin also attributes the decline of record industry profits to a “bad business model,” specifically the failure of major record labels to adapt to technological change. Specifically, he mentions the record labels’ refusal to “read the tea leaves” and cooperate with the developers of file-to-file software, particularly Napster. I am inclined to agree with Justin on this particular anecdote since he is more knowledgeable on the subject that me.

However, Justin and the article miss an important development. The record companies filed a copyright suit against Napster and won a fairly large settlement. I should also note that Napster lost its appeal in the appellate court for the Ninth Circuit, a court that is notorious for its left-leaning and presumably anti-business opinions. In fact, the New Yorker article fails to even mention the Napster/Metallica/record label lawsuit and its implications. So while I agree with Justin that it is difficult for anyone to view the record labels as victims of the millions of digital pirates, there is an important intellectual property factor that is being overlooked. Napster did not receive cooperation from the record companies for the distribution of their library, so they acted illegally and contributed to its theft. It’s a bit like saying the banks aren’t making the huge profits they used because bankrobbers, hustlers, and other miscreants stole from them----then turning around and blaming the record labels for a bad business model.

Profit is a dirty word to many. The argument goes something like this: music is a form of art and should not be subject to the ruthless ways of profit-maximization and capitalism. But I am not as reflexively anti-corporate as Justin. Everyone is entitled to make as much money as they want. A brazen disregard for intellectual property and the sanctity of contract is undesirable, even if it presumably benefits consumers of art and music.

Sidenote: Time Magazine contributing editor Mark Helprin wrote an intriguing book on copyright and the public domain in book entitled Digital Barbarism; A Writer’s Manifesto. Joseph Epstein reviewed the book in the Claremont Review of Books here.

LiveNation, Ticketmaster, and concert ticketing is a different story. Ticketmaster seems to have made some very shrewd moves in the late 1980s with the acquisition of several of its smaller, poorly run competitors. I will also assume that the Justice Department and the Federal Trade Commission examined these mergers at the time and concluded they did not or would not restrict competition.
Few would deny that, in the internet age, Ticketmaster does offer the benefits of expediency and avoiding the hassle of going to the box office. Furthermore, Ticketmaster does disclose its fees up front, so customers know what additional costs they are paying.

Ticketmaster’s business does not seem prone to the competitive pressures that have afflicted other businesses that have specialized in transactions. Many different types of credit cards offering no fees and a variety of special interest rates have put downward pressure on both fees and interest rates. In cities where multiple banks offer “free checking,” ATM fees and check writing ordering fees have gone down as well (conversely, rebates by banks for competitor’s ATM fees have kept them at current levels, as how most subsidies work). Competition between airline ticket sellers, e.g. cheaptickets.com, orbtiz.com, expedia, et al, has kept their transaction fees low as well.
Ticketmaster, with its use of contractual relationships with LiveNation and other concert venue owners, has managed to sidestep competitive pressure. And some bands (Pearl Jam comes to mind) have tried to challenge Ticketmaster’s grip on ticketing but have largely failed. But this will not last. It is only a matter of time before some entrepreneur comes along and says “I can provide a ticketing service for less money, and the fans will like us more.”
The secondary market for tickets and the so-called business of “scalping” or speculation are different issues. Ticket prices are subject to the laws of supply and demand, so whenever the price of the ticket is below what the market should dictate, then a vibrant and vigorous secondary market will emerge. We see this in high profile sporting events all the time. And secondary markets exist in real estate, art, and finance and mostly without the same degree of vituperation from its “customers.” Efforts to ban it outright have been unsuccessful, both legally and practically, as the article points out. So what, if anything, should be done about ticket scalpers?
What offends people the most is that scalpers are essentially “pricing out” the true consumers of music. In other words, there appears to be a huge disconnect between those who really want to the see the musical acts and those who can ultimately afford to go to the concerts. Consumers of music are not exceptionally wealthy, as opposed to say real estate speculators or art collectors. So millions of fans feel left out and alienated.
One solution would be to build bigger venues and create more supply, hence putting downward pressure on the market price of tickets. To be sure, bigger venues would imply seats that are far away from the stage, but at least tickets would become affordable for fans. Concert venues can try to restrict the “transferability” of tickets to reduce the ability of resale. Another would be for the bands and venues to charge a ticket price that is closer to the market price, effectively reducing the “spread” that scalpers can earn. This would ensure that most of the money from ticket sales go to the actual bands and not the heartless, disinterested scalpers. In this case, however, bands risk the negative publicity that comes with charging lots of money for tickets, i.e. being perceived as entirely motivated by money.


Justin read this post and responded below. Fyi, my nickname is "Sandy"


The Ticketmaster / LiveNation and Record Label sagas are interrelated as is the decline of Radio with Clear Channel as the other mega player in this story of dying Dinosaurs.

Obviously I am anti-corporate when it comes to music. That probably doesn't surprise anyone.

Sandy you are very correct that the rise of do-it-yourself technology as well as the internet's ability to explain how to use do-it-yourself technology has left us in a place where more people can record, produce and distribute music without a record label. It has also give independent labels with much smaller budgets tools to sell records and maximize their profits greater than ever before. Indie labels, as you can imagine, have much less overhead.

But we need to stick with the majors for now. Some counter-points and addendums:

Sandy: 1) The rise of the “file to file sharing” movement sometime in the late 90s allowed for the free distribution of music files and, as a result, an increase level of piracy.

* Point - MP3s and file sharing increased piracy. MP3s, however, did not allow for popular music to be copied for the first time. Cassette tapes could be copied VERY easily and the music industry had no way to track how much that occured because it didn't have the internet to study / track / observe said piracy.

If you recall most boomboxes came with a record function. You could record radio or tape to tape. The shear population of developed countries alone prove that tape sharing wasn't as big as MP3 sharing, but it was such an issue that the major labels unsuccesfully tried to sue electronics companies for making devices that allowed tapes to be copied. The courts ruled against the labels. This was the mid to late 80s. It is a very important point in the story because of 3 things:

(1) Major label profits were big but not as excessive as they were from 98-03 (their peak)
(2) The MP3 was invented in the late 80s
(3) Major labels slowly but surely accepted the CD.

The CD is an important precursor to the technology aspect of the story. Labels were extremely slow to accept it as a viable means to distrube music even though the sound quality was better and longer lasting, and the physical product itself proved more durable, if properly stored, than a cassette tape. At the time there were 6 major record labels --- pre mergers --- and one of them, I believe Sony, went all-in on manufactoring CD players and redistributing it's catalog on CD. Once they started to rake in unbelievable profit the other 5 joined the CD game.

So major labels resist technology until one of it's own starts making tons of money then copy them, join in and phase out the tape --- consumers pay the labels (who get a bigger share than the artists) for the same music twice. Labels profit sky-rocket.

Sandy: "Want to record a few albums and be heard on the radio? You have to go thru them, and not without selling a pound of flesh."

* Point - Major labels involvement in payola scandals goes back to the 1950s. Labels have been sued successfully at least 3 times to my knowledge and most recently in New York by Govenor Spitzer. Labels effectively owned radio. It was 99.99% impossible to get on the radio without a contract with a major label because the labels paid radio stations millions of dollars (both direclty and indirectly). Thus, want to get on the radio? You HAVE to sign a terrible deal that favors the majors.

Further, I would argue this backfired on the majors long term and its part of the broken model. Radio stations all went to similair formats and similair playlists thus disregarding any desire a consumer might have to hear more bands. Radio no longer because a viable format to hear new bands that weren't approved by Majors which was a band or two a year, the rest of the play time slots were alloted for releases by bands that had already sold a ton of records. People who enjoy the act of hearing new / fresh bands that might bring something different or new to the table were essentially forced to look elsewhere for different / new / non mainstream sounds.

This isnt toothpaste were there majors could package and sell the same commodity over and over again and that seems to be what they tried to do. But with art, our culture subscribes to fads, trends and breaking ground. This is true of paintings, music, sculptures, architexture, etc. Newness means something and the majors forgot about that or disregarded it in failing to develop new artists on the radio at a level deemed acceptable by it's consumer base. This ties in direclty to what Live Nation and Ticketmaster are worried about. Sure the small venues (the Metro in chicago) are selling more Arcade Fire tixs but STARS like U2, Dave Matthews, John Mayer --- where these corporations make their most profit --- are not being "developed" by the majors at nearly the same clip as the 80s, 90s and early 00s.

Sandy: "...market participants innovate and find ways to increase reward and lower cost. The rise of the internet and file sharing programs shattered the status quo and threatened record producers’ bulldog grip on profits. Every musicphile by now has heard of Napster or Kazaa, and technologically astute music lovers have found ways to avoid paying altogether for a record or album."

* Point - Record labels knew about the MP3 in the late 80s and refused to acknolowedge it as a means to sell/distribute music until after Napster. While I realize computers didn't run at the speeds they do now, then, it's important to note that file-sharing was not something a slacker in SoCal invented. Big wigs knew about this just like they knew about the CD and they ignored it like they did the CD originally. Only difference is that the speed of technology & culture in the late 90s was infinetly faster than the 80s so before a corporate businessman could get around to figuring out the potential impact of the MP3 (like they did with the CD over the course of say 1-2 years), hundreds of computer experts were figuring out how to create and distribute them (the rise of hacking and code-writing as a hobby plays into this too).

It is also important to point out that major labels cashed in on the CD and increased there reward and lowered their costs but never passed on ANY of this savings to the consumers. In fact the major labels have been successfully sued twice in the last 10 years for (1) All the majors were found guilty of strong-arming distributors to buy their products and ridiculous bulk amounts and refusing to buy back any of unsold products, and (2) the labels were successfully sued for --- I think -- price collusion. Or something similair where the record stores who were forced to sell the products at a value so high they couldnt sell as many records were able to prove that the majors had all secretely agreed to a minimum price to sell the CD at.

Final thing then I have to end with a big TO BE CONTINUED......

When I say the model was broken here is what I mean. The idea that you had to pay for the entire album, or get nothing at all was stupid. Always was. Singles became obsolete because the label chose the single and pumped millions of dollars into it. No choice. Consumers wanted choice. The biggest thing Napster SHOULD have told the labels was that people no longer wanted to be forced to buy an entire album or nothing at all.

Unfortunately we cant go back in time but I have a feeling that the iTunes model of cost per song and then albums at slightly less than cost-per-song would have been EXTREMELY effective. More so than it is today because iTunes didnt come along until 6 years after file-sharing was very popular and free. Too late. Also it was developed by Apple who is not a record label. Huge mistake.

This ties back into radio and major label promotion the business model of having only a handful of artists / albums actually making money each year but they make SO much damn money that it pays for a hundred albums that didnt make money.

He had more to say on this late last week. Read below:

4 parts of the model were/are broken, all inter-related:

(1) Radio. We've touched on this plenty but the labels shot themselves in the foot by standardizing playlists everywhere a radio station would accept a financial handout. This will tie directly into parts 2 and 3. Short term ramification in the 90s was that people gave up on radio but not a ton of people. The reason I got into more indie bands was that I gave up on radio by the end of high school and started turning to message boards / blogs about bands I liked to turn me onto other bands. it didn’t matter to me if they were major label or not but what ended up happening is that the stuff coming out on labels sounded increasingly homogenized so I wasn’t nearly as interested in the product or radio.

(2) The 'There’s only 1-2 good songs on this album but I had to buy the whole thing' problem. I like to call it 'The Sugar Ray Phenomenon.' In the 90s we ALL bought those albums. One sweet song or video, but the album is 90% crap and sounds nothing like the 1 song that got on the radio. You had no choice. The single was a promotional tool on the radio and MTV to sell the $12-$17 album. In a way, it inflated the notion of how much people wanted to pay for art. I referenced Sugar Ray b/c let's think about this....Sugar Ray had put out a handful of albums before their one with "I just wanna fly" on it and they never sold anything, never got on popular radio, never got on MTV. They make the song "fly" which doesn’t sound ANYTHING like the rest of their album which was primarily hard rock / metal-ish. Record execs hear a hit and pour tons of $$ into getting the song on the radio and the video on MTV. Millions of people have only the option of buying the entire album for approx $15. *IF* the sold a single -- which labels started to do less and less -- the single would have no other songs on it. There would be no opportunity to hear the rest of the product. Which leads to problem #3

(3) you couldn’t hear 95% of the art before you bought it. You could only hear what labels let you hear which was the singled. Why would consumers buy any product without knowing what you were getting if there was technology available to allow them to hear the album and then decide if they want to own it? I still legitimately buy something like 90% of all music I have on my iPod. I’m in the minority there. BUT my favorite thing now is that I can actually hear an entire album before I buy it or at least hear 4-5 songs that are on their MySpace. I am not forced to take shots in the dark because certain blogs or critics like them and it sounds like it might be something I might like.

(4) The '1 band to pay for 100' philosophy. Majors have been operating like this since the 80s when people started to purchase music more than ever -- and there were more people with disposable income than ever before. Majors have hundreds of artists, most of which even I have never heard of. The overwhelming majority of these artists never make money and most of them lose money. Majors have 20 maybe 30 artists that make them money and of those only maybe 10 put out an album a year. BUT they make so much g'damn money it pays for all the losses and then some. The losses for the bands that don’t make a ton of money are minimized by the fact that the majors don’t pump really any money into the release of an album/artist they aren’t 100% sure is going to sell millions of records. This is why sugar ray was on a major label but you never heard of them until "Fly." They never got marketing dollars so their losses on the first few records were small and covered for by the fact that the Smashing Pumpkins put out an album that year.

Now with people legally buying just the songs they want (referencing the inflation of profit I discussed in #2/3) the profits aren’t so humungous. They don’t cover as much of the losses as they use to. Obviously stealing then plays a huge factor here too.

This again ties to #1 because the labels set-up an illegal kickback system with radio and radio expects X amount of $ to play a band. So when the marketing dollars are being divided up the only bands that are going to get a push are the bands that are guaranteed to sell albums. So now the record labels are in a situation where they need to increase the number of bands that can make them money since each band that makes money is making less than before. But they would have to undo the amount of $ they pump into each band to get them on the radio, mtv, etc because they don’t have as big of a budget to work with. Finally there is a matter of the art itself. It remains to be seen if record labels can make decisions about what bands to push based on anything other than popularity and 'does this band sound like another band that makes a lot of money.' The system has been set-up void of the artist side of it and what consumers have been demanding --- and the mp3 & internet allows for -- is more choice. More different types of bands/music/sounds. Majors so far have not been able to supply that for one reason or another.

So to bring it back to Sugar Ray. If Sugar Ray's 'Fly' came out now instead of over 10 years ago, a certain % of people who bought their album for $15 would still do that. Some would buy the hard copy and some would just by the digital version which would only be $10 and a cut of that goes to Apple who came up with the iTunes model first before the labels did. Another % would steal the song and/or album. Another % would listen to the album for free as a stream on MySpace and decide they don’t like it and only buy the songs they liked at $0.99 a song --- most of that would just be 'fly.' Can anyone even name another single off that album? I can’t. All I remember is that their next album sure sounded like 10 songs that wanted to sound as catchy as "fly." (this also leads into the idea of the sophomore slump which is basically a band trying their hardest to catch lightning in a bottle again in order to make money which is hard to do).

So now I think you could say at least 1/3 of the people who bought the sugar ray album in the 90s for $15 would only pay for a handful of songs at .99 cents each. Further, some of them wouldn’t pay for it for $15 b/c all they care about is the mp3 which they get cheaper than the CD and label loses out a little bit more b/c of the agreement they have to succumb from apple. So the label is no longer in complete control of the market.

And I for one am not the least bit sad about that.

Islamist-Leninist Entente

from the Washington Post editorial section

A Friend to Iran
Does the Obama administration know what Venezuela is doing to assist Tehran's weapons programs?

DEBATES IN Washington about Hugo Chávez often end with the dismissive conclusion that the Venezuelan strongman poses no threat to the United States. If that's right, it's not because he isn't trying. For years he has been traveling the world in an effort to build alliances with present or former U.S. enemies, from Cuba to Vietnam. He dreams of standing at the head of a global anti-American military alliance. Most of his efforts have been rebuffed; some have produced mere buffoonery, like his annual, ludicrous love-fest with Belarusan dictator Alexander Lukashenko.

But Mr. Chavez has clearly forged a bond with one leader who is as reckless and ambitious as he is: Iran's Mahmoud Ahmadinejad. The growing fruits of this relationship, and its potential consequences for U.S. security, have not gotten as much attention as they deserve.

Mr. Chávez was in Tehran again this week and offered his full support for Mr. Ahmadinejad's hard-line faction. As usual, the caudillo made clear that he shares Iran's view of Israel, which he called "a genocidal state." He endorsed Iran's nuclear program and declared that Venezuela would seek Iran's assistance to construct a nuclear complex of its own. He also announced that his government would begin supplying Iran with 20,000 barrels of gasoline a day -- a deal that could directly undercut a possible U.S. effort to curtail Iran's gasoline imports.

Such collaboration is far from new for Venezuela and Iran. In the past several years Iran has opened banks in Caracas and factories in the South American countryside. Manhattan district attorney Robert Morgenthau, who has been investigating the arrangements, says he believes Iran is using the Venezuelan banking system to evade U.S. and U.N. sanctions. He also points out that Iranian factories have been located "in remote and undeveloped parts of Venezuela" that lack infrastructure but that could be "ideal . . . for the illicit production of weapons."

"The opening of Venezuela's banks to the Iranians guarantees the continued development of nuclear technology and long-range missiles," Mr. Morgenthau said in a briefing this week in Washington at the Brookings Institution. "The mysterious manufacturing plants, controlled by Iran deep in the interior of Venezuela, give even greater concern."

Mr. Morgenthau's report was brushed off by the State Department, which is deeply invested in the Chávez-is-no-threat theory. State "will look into" Mr. Morgenthau's allegations, spokesman Ian Kelly said Wednesday. Meanwhile, Mr. Chávez is off to Moscow, where, according to the Russian press, he plans to increase the $4 billion he has already spent on weapons by another $500 million or so. Mr. Chávez recently promised to buy "several battalions" of Russian tanks. Not a threat? Give him time.

Majority Support for Public Option???

The President claimed, in his speech to Congress on Wednesday, that a majority of Americans support the idea of a "public option" for health insurance. Former DNC chairman Howard Dean repeats the claim almost every day on CNBC and liberal commentators such as Juan Williams of Fox News and National Public Radio repeat the claim often. But is it true?

Majority Support for a Public Option?

By Karlyn Bowman

Last night, in his combative healthcare speech, President Obama said, “it’s worth noting that a strong majority of Americans still favor a public insurance option of the sort I’ve proposed tonight.” Is that so? Yes, when questions mention that a public option would work like the popular Medicare program or when people are told it would give them more choices or options, ideas Americans always like. But the public option is less popular when people are told that it would be run by Washington. In the August NBC News/Wall Street Journal poll, 43 percent were in favor and 47 percent were opposed to a public plan “administered by the federal government.” In follow-up questions, more people agreed with the statement that such a plan would limit access to doctors and treatments than agreed with the statement that it would lower costs and provide healthcare for all. When people have little knowledge of a subject, the information that pollsters give them can powerfully influence poll results.

How Many Americans are REALLY UNINSURED???

The Democrats often trot out a number that is in between 46 and 50 million. But Keith Hennessey takes a look inside the number.

How many uninsured people need additional help from taxpayers?

When discussing health insurance we frequently hear that there are “46 million uninsured” in America. This figure is from a monthly survey of about 50,000 households done by the Bureau of Labor Statistics and the Census Bureau. This Current Population Survey ^[1] (CPS) then uses statistical techniques to paint a picture of the entire U.S. population.

Advocates for expanding taxpayer-subsidized health insurance, and their allies in the press, repeat this 46 million number constantly. It paints the following technically accurate but misleading picture:

^[2]

This looks really bad. At least there are more than 250 million people with health insurance – that is clearly a good thing that we never hear it in the press. Still, there’s a lot of red there. It means that in 2007 (15%) of Americans lacked health insurance, according to the CPS. Advocates, some elected officials, and the press round that number up to “1 in 6 Americans”. We hear that there are “46 million uninsured,” and then we jump to the conclusion that government needs to help 46 million people buy health insurance, subsidized by taxpayers.

Let’s look inside that 45.7 million number and see what we can learn. Here is our key graph:

^[3]

First, I need to make a technical disclaimer. I had this same detailed breakdown for 2005 data, done by health experts when I was part of the Bush Administration. I now have a 2007 total (45.7 million), and so I have proportionately adjusted the components to match that new total. It is a back-of-the-envelope calculation, but I am confident that it is solid, and it does not move any component by more than two hundred thousand. In addition, the expert analysis I am using ensures that the subdivisions shown above do not overlap. I will slightly oversimplify that point in the following description of the breakdown to make the explanation readable.

Let us walk through the graph from top to bottom.

• There were 45.7 million uninsured people in the U.S. in 2007.
• Of that amount, 6.4 million are the Medicaid undercount. These are people who are on one of two government health insurance programs, Medicaid or S-CHIP, but mistakenly (intentionally or not) tell the Census taker that they are uninsured. There is disagreement about the size of the Medicaid undercount. This figure is based on a 2005 analysis from the Department of Health and Human Services.
• Another 4.3 million are eligible for free or heavily subsidized government health insurance (again, either Medcaid or SCHIP), but have not yet signed up. While these people are not pre-enrolled in a health insurance program and are therefore counted as uninsured, if they were to go to an emergency room (or a free clinic), they would be automatically enrolled in that program by the provider after receiving medical care. There’s an interesting philosophical question that I will skip about whether they are, in fact, uninsured, if technically they are protected from risk.
• Another 9.3 million are non-citizens. I cannot break that down into documented vs. undocumented citizens.
• Another 10.1 million do not fit into any of the above categories, and they have incomes more than 3X the poverty level. For a single person that means their income exceeded $30,600 in 2007, when the median income for a single male was $33,200 and for a female, $21,000. For a family of four, if your income was more than 3X the poverty level in 2007, you had $62,000 of income or more, and you were above the national median.
• Of the remaining 15.6 million uninsured, 5 million are adults between ages 18 and 34 and without kids.
• The remaining 10.6 million do not fit into any of the above categories, so they are:
  • U.S. citizens;
  • with income below 300% of poverty;
  • not on or eligible for a taxpayer-subsidized health insurance program;
  • and not a childless adult between age 18 and 34.

As a policy matter, we care not about the total number of uninsured, but about the subset of that group that we think “deserves” taxpayer-subsidized health insurance. That is a judgment call that involves some value choices.

I will make one value choice for you and boldly assert that, if you are already enrolled in or eligible for one free or heavily subsidized health insurance program, we can rule you out as needing a second. That simple statement reduces the 45.7 million number down to 35 million, by excluding the Medicaid undercount and Medicaid/SCHIP eligible from our potential target population.

I think most people would also say that the 10.6 million I have labeled as “remaining uninsured” and shaded in yellow above are the most sympathetic target population.

It then gets tricky.

• Should people with incomes near or above the national median get health insurance subsidized by taxpayers?
• How about non-citizens? Should we distinguish between documented and undocumented non-citizens? Between those who pay taxes and those who do not? Remember that we are not talking about who should get emergency medical care, but instead who should get taxpayer subsidies to finance the purchase of pre-paid health insurance. Does that change your answer?
• Many young adults and childless couples are in good to excellent health. Do they deserve subsidies, when they may be making what they believe to be a rational economic decision and using their financial resources for things other than buying health insurance? Should a 25-year old Yale graduate triathlete making $30K per year get his health insurance subsidized by taxpayers if he chooses not to buy it because his budget is tight?

There is no clear right or wrong answer to the above questions. You need to make your own value choices for them.

Now let us look at the effects on the totals for several hypothetical answers to these questions. Remember that the advocates, some elected officials, and press tell us that the numbers are: 46 million uninsured, 15% of the population, and 1 in 6 Americans “are uninsured.” I suggest you try to figure out which of the following is closest to your view.

1. Ann wants to subsidize everybody, but agrees that we don’t need to double-subsidize. She excludes the Medicaid undercount and Medicaid/SHIP eligible from her target population and ends up with 35 million people. That is still an enormous amount, but it is 10.7 million less than the headline number she heard in the news. Her target population is now 11.7% of the total U.S. population, down from 15%. Put another way, she would like taxpayers to help between 1 in 8 and 1 in 9 Americans who she feels are deserving of subsidies to buy health insurance, rather than the 1 in 6 she heard in the press.
2. Bob agrees with Ann, but thinks that subsidies should go to the poor, or at least not to those who have above the median (or near median) incomes. His target population is therefore about 25 million people, way down from 46 million. That is 8.4% of the total U.S. population, or 1 in 12 Americans. That is still a huge problem, but it is very different from 1 in 6.
3. Carla agrees with Bob that subsidies should not go to those with incomes near or above the national median. She also thinks that undocumented citizens should get emergency medical care, but not taxpayer-subsidized pre-paid health insurance. I will guess a 50/50 split between documented and undocumented of the 9.3 million uninsured non-citizen, and I would appreciate it if someone could help me refine this. With this assumption, Carla’s target population is about 21 million, or 7% of the total U.S. population. That is roughly 1 in 14 Americans.
4. Doug thinks only American citizens with incomes below the national median (and who are not already eligible for another program) should be eligible for additional aid. His target population is therefore the bottom two bars on the graph, or 15.6 million people. That is 5.2% of the U.S. population, or 1 in 19 Americans. If Doug were to further limit subsidies to those below 200% of poverty or 150%, his target population would be a few million people smaller.
5. Edie agrees with Doug, but thinks that if you are a young adult without kids, you should fend for yourself. Her target population is 10.6 million people, or 3.5% of the total U.S. population. That is 1 in 28 Americans.

These are, of course, not the only possible answers, but I think they are a representative bunch. Even for the most “liberal” set of answers (Ann’s), the headline numbers we hear in the press overstate the extent of the problem by more than 10 million people.

Now even Edie’s narrowest 10.6 million target population is still a lot of people who lack health insurance. So why does it matter that the press gets the numbers wrong?

1. If we misdiagnose the problem, we could easily design the wrong policy solution. A solid quantitative understanding of who we would like to help and why is important.
2. Health insurance subsidies cost taxpayers tens of billions of dollars each year. If we target these funds well and prioritize, we can help more of the people whom we think are deserving of additional assistance, and fewer of those who need less help. If we target those funds poorly, we will waste a lot of money. This point is independent of the total amount we spend on subsidizing health insurance.
3. Health insurance competes with other policy goals for an enormous but still ultimately limited pool of taxpayer funds. We should neither overstate nor understate the problem to be solved, so that the tradeoffs with other policy goals can be considered fairly.

When you hear “46 million uninsured,” or “1 in 6 Americans don’t have health insurance,” remember that this is technically correct but misleading. The more important question is, “How many uninsured people need additional help from taxpayers?”

What’s your answer?

A Market for Organ Donation

by one of my favorite economists, Gary Becker from Harvard

http://home.uchicago.edu/~gbecker/MarketforLiveandCadavericOrganDonations_Becker_Elias.pdf

We evaluate the introduction of monetary incentives in the market for live and cadaveric
organ donations. We show that monetary incentives would increase the supply of organs
for transplant sufficiently to eliminate the very large queues in organ markets, and the
suffering and deaths of many of those waiting, without increasing the total cost of
transplant surgery by more than 12%. We build on the value of life literature and other
parts of economic analysis to estimate the equilibrium cost of live transplants for kidneys
and livers. We also show that price will be determined by the cost of live donations, even
though most organs will come from cadavers.

Is Your Wealth Correlated to Congressional Sessions?

Congress Reconvenes Today - Hide Your Money

Congress comes back to Washington today after its month-long recess. That's bad news for investors, because as Mark Twain once quipped: "No man's life, liberty, or property are safe while the legislature is in session."

With Nancy Pelosi as Speaker, nor is any voter's 401k plan. Dan Clifton, an expert with the investment advisory firm Strategas, says that "almost the entire congressional agenda right now is bearish." He points to health care, cap-and-trade, deficits, coming tax hikes and the huge appropriations increases slated for federal agencies next year. "One bill that not many people are paying attention to," Mr. Clifton warns, "is the financial consumer protection act, which will be a regulatory nightmare for financial firms and credit card companies." The word on Capitol Hill is that the White House wants to fast-forward this legislation for 2009 rather than 2010, because health care and cap-and-trade are stalled.

Eric Singer, who runs the Congressional Effect Fund, a mutual fund that allows investors to hedge their portfolios against congressional actions, has examined historical stock market returns depending on whether Congress is in session or not. Over the past 44 years, stock market returns have been more than twice as high during periods when Congress is shut down. That's true even during the recent subprime crisis. Since May of 2008, stocks fell 3.5% during periods when Congress was adjourned versus a fall of 24.3% when Congress was in session.

Mr. Clifton agrees with high-profile bulls like CNBC's Larry Kudlow that the market's recent rally is due to investor perceptions that President Obama's agenda is cratering. Right now, Mr. Clifton counts ten Senate Democrats as likely votes against the Obama health care bill. The outlook could quickly become more bearish, however, if the administration succeeds in striking a deal with GOP Senators Chuck Grassley of Iowa or Olympia Snowe of Maine, which might bring just enough votes around to let the White House ram its plan through the Senate.

"Left to its own devices, the economy has shown some signs of healing," warns Mr. Singer. "But the phrase 'leave well enough alone' is not the mantra of this Congressional leadership."

-- Stephen Moore

Charles Kessler on the Future of Conservatism

From the summer issue of the Claremont Review of Books. I have excerpted a few important parargraphs.

"Faced with this liberal blitzkrieg, how have Republicans responded? Paralyzed at first by the rapidity and sheer audacity of the Democrats' advance (and by a plummeting stock market), they hunkered down behind a Maginot Line of safe districts, remembered triumphs, and misaimed slogans, hoping that the Democrats soon would outrun their supply lines or, besotted by success, fall to feuding among themselves....

Liberalism was the first political movement in America without a clearly defined goal of reform, without a terminus ad quem: the first to offer an endless future of continual reform. Its intent was to make American government "progressive," which meant to keep it always progressing, to keep it up to date or in tune with the times. No specific reform or set of reforms could satisfy that demand, and no ultimate goal could comprehend all the changes in political forms and policies that might become necessary in the future.....

The "new order of things," to use FDR's term, would feature abundant rights, very different however from the unalienable rights invoked in the Declaration of Independence. These new rights originated not in God or nature, as the Declaration taught, but in the State. The character of the rights differed, too. According to the new social contract, government would grant to the people certain socio-economic rights or benefits, bestowed primarily on groups and on individuals only insofar as they belonged to an officially recognized group (e.g., the poor, the mortgaged-deprived). In return for these rights, the people would cede to government ever greater powers. The individual didn't completely disappear from this vision of democracy but appeared in a very different role, as a kind of long-term government project.

Today's liberals assure us, to the contrary, that political tyranny is a virtually extinct threat, save for the occasional throwback like George W. Bush. Why fear Big Government, after all, when the bigger and more powerful it gets, the more rights it can bestow on us?

The assumption that Reagan had achieved a revolution in policy and public opinion led easily to the presumption that his "new, lasting majority" could be counted on. Even when it went AWOL, for instance in Bill Clinton's victories in 1992 and 1996, or in 2006 and 2008, commentators tended to adjust the facts to fit the hypothesis. Clinton was a rogue, they said, and ordinary Americans like rogues; 2006 showed that the voters, like good conservatives, were fed up with spendthrift Republicans; last year Obama kept talking about tax cuts for the middle class, thus sounding more conservative than McCain. Though there's an element of truth to each ad hoc explanation, they overlook the obvious: that latent conservatism doesn't translate into reliable political conservatism, much less into voting Republican, without persuasive appeals, "a program of action based on political principle."

"But the worst of it for conservatives was that compassionate conservatism eviscerated the GOP's reform ambitions. By abandoning even the rhetorical case for limited government, Bush's philosophy left the administration, and especially Congress, free to plunge lustily into the Washington spending whirl. When House majority leader Tom Delay—the heartless right-winger Tom Delay!—protested that Congress could not cut another cent from the federal budget because it was already cut to the bone...you knew things were bad."

"Here, in outline, is the liberal M.O.: Take a very good thing, like quality health care. Turn it into a right, which only centralized government can claim to provide equally and affordably and—the biggest whopper—excellently to all. Refer as little as possible to the plain logic that such a right implies a corresponding duty; that the duty to pay for this new right's provision must fall on someone; and that the rich, always defined as someone with greater income than you, cannot possibly pay for it all by themselves. Ignore even more fervently that this right, held as a social entitlement, implies a duty to accept only as much and as good health care as society (i.e., government) allows or, ideally, as can be given equally to everyone. Having advertised such care as effectively free to every user, because the duty to pay is separated as much as possible from the right to enjoy the benefit, profess amazement that usage soars, thereby multiplying costs and degrading the quality of care. Blame Republicans for insufficient funding and thus for the painful necessity to increase taxes and cut benefits in order to protect the right to universal health care, which is now a program. Run against those hard-hearted Republicans, and win."