Steven Weissman

The electricity grid is one big machine. Transmisssion must be centrally coordinated. Generating units must all be in sync. Voltage levels have to be maintained. There must constantly be an even match between demand and supply. But you would hardly know it from the way we look at energy policy at the states and on the national level.

Each good policy option has its champions, and each debate occupies its own silo. Distributed solar? Check. Energy efficiency? Check. Transmission expansion? Renewable Portfolio Standard? Smart meters? Check, check, check.

All of these important issues offer complicated choices. Proper analysis takes a lot of time, and there are dozens of interested stakeholders. As a result, regulators and lawmakers tend to look at each option as it if stands alone. What can we do to promote energy efficiency? What kind of incentives will adequately encourage the use of photovoltaics? What kinds of power plants should people be building? Continue reading…

Christopher Kutz

We do not yet know what and when the Treasury Department knew about the now-repaid AIG Financial Products bonuses. But the following is plausible: the traders in that unit had convinced their employer that their skills were so important to minimizing the damage to their company, or would be so dangerous in the hands of their competitors, that they were able to extract compensation at least as valuable as the year before, independent of actual performance or retention. Lawyers then drafted apparently bulletproof guarantees that these bonuses would be paid. Treasury, given legislative cover by Congress, saw the bonuses as a distasteful but necessary cost of minimizing the total losses taxpayers would have to bear. Public outrage at this “business necessity,” however, could scupper the entire bailout plan.

Here is another recent story: intelligence professionals asked to use a range of surveillance and interrogation techniques the law clearly prohibited. They were able to persuade their employers that they needed access to these techniques in order to protect national security. Their employers agreed, and asked lawyers to draft documents that purported to protect the operatives from any legal consequences. Their employers may have agreed because they felt hostage to any future attack, if it might be said that they failed to exhaust all options; or because they genuinely believed that these techniques were necessary to security. When the techniques and the enabling legal documents were leaked to the public, the scandal wrought enormous damage to the reputation of the employer, domestically and abroad. Continue reading…

Vincent Fabié

Revamp the business model of credit rating services: We must interpose an independent third-party between issuers and rating agencies to overcome inertia in rating agencies reform — before free-marketers take advantage of the current crisis to promote deregulation approaches.

Everyone knows that we are in the midst of the worst credit crisis since the early 1930s. But what the casual observer may not know is that the system set up to protect investors is flawed to the core. The current crisis was driven, in part, by erroneously positive ratings of bonds backed by subprime residential mortgages. At the heart of the problem is the role of rating agencies and rating-driven regulations. These regulations determine how much capital certain institutions (e.g., insurance companies, banks) need to have available in order to own financial instruments. The safer the investment (i.e., the lower the probability of default), the less capital is required. Consequently, how an investment is rated determines how much capital a regulated institution such as a bank needs on hand. Thus, rating agencies have a profound influence on institutional investments – so profound that the rating agencies are the de facto allocators of capital in our system.

Policy-makers continue to appeal for a critical review of rating services, and some commentators now advocate removing rating-driven regulations entirely. They consider that the problem in the recent crisis was not the wrong ratings in itself but the fact that these ratings were incorporated into law through rating-driven regulations. In this conception, regulators should not have relied on ratings agencies to assess the risk of bond holdings but on markets that would be a better judge of risk and value than any analyst or company. Continue reading…

Stephen Sugarman

(Originally published in the San Francisco Chronicle, March 1, 2009.)

According to the American Medical Association, as many as 150,000 early deaths each year might be saved if Americans were to reduce their salt consumption by 50 percent. Because the sodium in salt raises blood pressure, which in turn increases the risk of heart attacks and strokes, less sodium means better health for many of us.

But merely telling people to eat less salt is unlikely to do the trick. After all, people like salt for its flavor. Moreover, most of the salt we consume is not added in our home kitchens or at the table. Instead, it’s added by food processors to the food we buy in supermarkets and restaurants. We just don’t realize how much salt we’re eating in many products. Although packaged goods today contain standardized information about sodium, it’s easily ignored or misunderstood (cast as it is in terms of portion size and daily recommended amounts).

A more creative way to attack this problem is with performance-based regulation. Continue reading…

Paul M. Schwartz

(Also published in the San Francisco Chronicle, March 1, 2009.)

How can we, the people, decide if there is too much or too little telecommunications surveillance in the United States? How can we know if law enforcement is using its surveillance capacities in the most effective fashion?

Ideally, we would answer these questions by examining data about government surveillance practices and their results. Sadly, rational inquiry about telecommunications surveillance is prevented by the haphazard and incomplete information that the government collects about its own behavior. Neither the government nor outside experts know the basic facts about our surveillance practices.

A number of regulations permit government to engage in telecommunications surveillance. Yet only one statute, the Wiretap Act, requires relatively thorough data collection about government behavior. Moreover, Congress has done a miserable job of seeing that the Department of Justice supplies it with required information - and the Department of Justice has itself tended to play “hide the ball” with data. Congress has also further muddied the waters in its FISA Amendment Act of 2008, which allows broad immunity to telecommunication companies that participated in the Bush administration’s program of warrantless telecommunications surveillance. This particular issue is now before a U.S. District Court in the Northern District of California in pathbreaking litigation led by the Electronic Frontier Foundation. The Obama administration needs to redesign our system for collecting surveillance information. The twin goals are to minimize the impact of surveillance on civil liberties and to maximize its effectiveness for law enforcement. Congress should develop uniform statistical benchmarks for laws that authorize telecommunications surveillance and enact amendments to these laws.

It should also revisit its granting of telecommunications immunity. Finally, Congress should end the executive branch’s ability to use the state secrets privilege as a categorical bar to litigation. It can do so by enacting the State Secrets Protection Act, a bill before it that would appropriately restrict this privilege.

Paul M. Schwartz is Professor of Law.

Eric Biber

(Also posted on Legal Planet.)

The federal Endangered Species Act (ESA) is a vitally important bulwark in the legal protections for our environment in the United States. The ESA provides essential life support to a wide range of species on the edge of extinction, species such as our native salmon, grizzly bears, and California condors. The Act has helped to bring back species such as our national symbol, the bald eagle.

Of course, there are costs to the ESA. We might lose out on economic development opportunities because of concerns about habitat destruction. The resources we spend on restoring endangered species might be worth spending on other goals. And the ESA regulatory program has its share of paperwork and administrative costs. But when Congress passed the ESA in 1973, it concluded that species protection was generally speaking worth these costs. And Congress hasn’t changed its mind since then.

One of the key provisions of the ESA is what lawyers generally call “Section 7” – it’s the part of the Act that requires federal agencies, when they undertake activities such as development projects, to consult with the agency that implements the Act, the U.S. Fish and Wildlife Service (FWS). The point of that consultation process is to help both the agency proposing to undertake a development activity and FWS to work together to determine what the impacts of that action might be on endangered species. If the proposed action might cause serious harm to the species – what the Act calls “jeopardy” – it is prohibited unless it is changed to reduce or eliminate that harm. Continue reading…

T. N. Narasimhan

In 1976, a group of thoughtful scientists of the International Union of Geological Sciences expressed a vision of earth resources, time, and man thus:

Mankind is on the threshold of a transition from a brief interlude of exponential growth to a much longer period characterized by rates of change so slow as to be regarded essentially as a period of non-growth. Although the impending period of transition to very low growth rates poses no insuperable physical or biological difficulties, those aspects of our current economic and social thinking which are based on the premise that current rates of growth can be sustained indefinitely must be revised. Failing to respond promptly and rationally to these impending changes could lead to a global ecological crisis in which human beings will be the main victims.

In 1976, global-warming and climate-change were yet to engage the attention of scientists as threats to human habitat.

This vision admonishes President Obama’s team of economic advisers to identify the magnitude of economic growth that can be sustained in the long-term, given a finite, delicately interconnected earth subject unpredictable forces of Nature. The need for revising current economic and social thinking entails a balancing of individual rights to private property and economic prosperity against public guardianship of vital resources common to all. For Obama, the legal scholar, this poses the challenge of modernizing the two traditional models of law: the jus civile, the private law of individuals; and the jus gentium,  the public law of peoples and nations. Continue reading…

George Lakoff

As President Obama prepares to address a joint session of Congress, what can we expect to hear?

The pundits will stress the nuts-and-bolts policy issues: the banking system, education, energy, health care. But beyond policy, there will be a vision of America—a moral vision and a view of unity that the pundits often miss.

What they miss is the Obama Code. For the sake of unity, the President tends to express his moral vision indirectly. Like other self-aware and highly articulate speakers, he connects with his audience using what cognitive scientists call the “cognitive unconscious.” Speaking naturally, he lets his deepest ideas simply structure what he is saying. If you follow him, the deep ideas are communicated unconsciously and automatically. The Code is his most effective way to bring the country together around fundamental American values.

For supporters of the President, it is crucial to understand the Code in order to talk overtly about the old values our new president is communicating. It is necessary because tens of millions of Americans—both conservatives and progressives—don’t yet perceive the vital sea change that Obama is bringing about.

Continue reading…

Kenneth A. Bamberger & Andrew T. Guzman

(Also published in the San Francisco Chronicle, Feb. 25, 2009.)

The Obama administration’s response to the problem of unsafe imports—from tainted foreign-made toys to adulterated drugs—must reflect the realities of globalization.

U.S. regulators possess a full toolbox to police domestic production. When laws mandating product safety aren’t enough, the production process itself is regulated – effectively placing a regulator on the each factory floor. For foreign products, however, American regulation of the production process is often impossible.

The dominant regulatory response to date has been more government inspections, ignoring the fact that there are simply too many imports for inspections to work. There are eight inspectors in the FDA’s new Beijing office, while Chinese exports to the U.S. total $321 billion. Even doubling or tripling the number of inspectors would clearly not be enough.

There is another option: giving U.S. importers incentives to monitor compliance with domestic consumer protection laws. Where imports are likely to pose a threat to consumers, higher legal penalties should be imposed against U.S. companies trading in these products, making these firms liable for the true costs of their foreign activity. Drug companies using foreign supply chains, for example, would face increased administrative penalties if harmful products enter the U.S. Companies would respond by taking safety costs into account when deciding where and how to conduct their business—extending the force of American consumer protection far beyond the formal reach of U.S. law. Companies would compete for the cheapest way to produce safe goods, rather than competing to produce the cheapest goods.

(An article detailing this proposal can be found in the California Law Review (December 2oo8).

Kenneth Bamberger is Assistant Professor of Law and Andrew Guzman is Professor of Law and Director of Graudate Programs.

Olivier Roy

(This essay was also posted with the San Francisco Chronicle, February 23, 2009.)

The Obama administration must not try to speak to something called the “Muslim world.” It does not exist!

To offer a dialogue with the Muslim world is precisely to play on the narrative of Osama bin Laden: the world is divided into two parts, the “West” and the “Muslims.” This narrative allows bin Laden to cast himself as the best protector of such a virtual Muslim world.

From Gaza to India, most of the conflicts where Muslims are involved have nothing to do with Islam. Hamas represents Palestinian nationalism under a thin Islamic garb. In Iraq, factions are competing over land and power, not Islamic law. The Bombay attacks stemmed from the conflict between India and Pakistan, fueled by the Pakistani army.

Moreover, Muslims in the West want to be considered first as Western citizens, not as the bridge-head of a foreign influence. Speaking of a Muslim world means pointing to “our” Muslims as foreigners. By addressing the “Muslim world,” do we mean to suggest that the West is defined by Christianity or by secularism?

President Obama cannot speak as the head of the Christian world. But to present the rule of law and human rights as typically Western secular values gives credence to authoritarian Arab leaders and Muslim conservative clerics, who are happy to present these values as “foreign.”

If President Obama tries to open an official dialogue with them, he will effectively define these leaders as representative of the “Muslim world,” thus pre-empting any change. Our policy must recognize the diversity of Islamic people, not assuming a monolithic world.

Olivier Roy is Visiting Professor of Political Science aand author of “The Politics of Chaos in the Middle East,”(Columbia University Press, 2008).

Erin Murphy

Since 1998, the government has overseen the aggregation of a national DNA database that now includes 6.5 million profiles. The database includes a mix of criminals and innocents rounded up in mass DNA “dragnets.” A lot of good has come from these databases: as of last December, roughly 80,900 links between genetic profiles had been made. While better data is needed to quantify how many associations led to meaningful advances in actual cases, anecdotal reports clearly suggest that DNA has dramatically aided law enforcement.

But DNA profiling, like all new scientific methods, is susceptible to misunderstanding and error. For this reason, qualified statisticians (including UC Berkeley scholars) have sought limited access to DNA profiles to ensure that the govermnment’s use of these materials is well-founded.

Although government institutions routinely grant researchers access to highly sensitive information (under strict privacy controls) the FBI and Department of Justice have refused to do this for the DNA database—and even threatened to cut off access to any state that does. This secrecy is unwarranted, because researchers are only seeking anonymous data, not any actual or identifiable biological samples.

Given the broad reliance on the accuracy of DNA matches—whether for criminal convictions despite contrary evidence or the recent approval of “familial searches” that comb databases for a perpetrator’s relatives—the government cannot defend its refusal. Neutral, qualified researchers need access to this material to protect the rights of the accused and prevent conviction of the innocent.

Erin Muprhy is Assistant Professor of Law.

Melissa Murray

The transition to an Obama White House makes public something that has been occurring in the private confines of American families for years. As the President himself acknowledged, his historic campaign would have been impossible but for the contribution of one person – his mother-in-law, Marian Robinson. As the Obamas crossed the country campaigning, Mrs. Robinson moved into their Hyde Park home to care for the couple’s young daughters.

The Obama’s “granny-nanny” arrangement may seem novel to media pundits, but it is a way of life for most Americans, who, according to recent census data, routinely rely on non-parental caregivers to care for their children. These childcare arrangements include care by grandparents and other extended family, as well as day care, nursery schools, or third party in-home paid childcare.

Regardless of the specific arrangement, the reality is the same: although we may idealize the notion of the nuclear family providing care to its dependent members in an atomistic fashion, in fact, the nuclear family relies on networks of other caregivers to help it discharge its caregiving responsibilities. Public policies aimed at supporting families should take these realities into account. More particularly, the Family and Medical Leave Act, a federal law that provides employees with the right to take time away from work to accommodate caregiving, should be expanded to include a wider range of family members. Continue reading…

Barry Eichengreen

(Originally published in the San Francisco Chronicle, Feb. 16, 2009.)

Americans may not realize it, but the biggest threat to economic stability is not falling home prices and retail spending but collapsing world trade. The value of global merchandise exports was down fully 45 percent in November 2008 from 12 months before. This is a terrifying number.

Nothing remotely comparable has ever happened before - not even in the Great Depression of the 1930s.

This is a body blow to an already staggering U.S. economy. U.S. exports in the fourth quarter of last year fell by more than 25 percent in constant dollars. California is being hit especially hard: outbound container traffic from the Ports of Long Beach and Los Angeles was down 30 percent in December 2008 from a year earlier.

It’s not surprising that when global growth slows, trade growth slows. But this trade implosion is unprecedented even for a major recession.

The explanation is the disruption to the financial system. Exporters need bank credit to transport their goods and insure them while in transit. And trade credit has dried up completely in the financial crisis. Banks desperate for liquidity are unwilling or unable to extend it to exporters.

The irony is that trade credit is virtually without risk; it is collateralized by the goods whose export it finances. But this also means that there is a solution.

The International Monetary Fund and World Bank could quickly establish a Global Export-Import Bank. They could float, say, $2 trillion of bonds making use of their AAA-credit rating and extend credit directly to exporters.

This is something they should have done yesterday.

Barry Eichengreen is Professor of Economics and Political Science at UC Berkeley.

Christopher Kutz

(Originally published in the Los Angeles Times, Feb. 17, 2009.)

The government should devise a simpler system to deal with household employees.

Stories about “nanny tax” problems accompany every presidential transition, with much schadenfreude about the plight of those wealthy enough to pay people to perform their household work.

No doubt some appointees who didn’t pay Social Security taxes for their household employees acted out of bad faith. Some may be genuinely surprised by the low level at which tax liability strikes. California tax liability starts when you pay someone $750 over a three-month period to work in your home, using your equipment and supplies; federal tax liability kicks in slightly higher, at $1,000 a quarter. For a housecleaner paid $150 a week, an employer owes about $1,600 a year to the federal and state government.

But we should not underestimate the number of people who, in good faith, would like to pay their appropriate share of taxes but are confused and frustrated by the obstacles government puts in their way. Given the difficulties, it is hard to believe the government really wants us to pay these taxes. Money is being left on the table. Continue reading…

Philip P. Frickey and Curtis Berkey

(Originally published in collaboration with Blue Sky in the San Francisco Chronicle, Feb. 16, 2009.)

The government’s record of collecting, holding and disbursing funds earned by American Indians on their trust lands has long been a national scandal. Litigation seeking redress has gone on for 12 years, involving several lengthy trials, 28 published judicial opinions and myriad government and private reports. The government was found liable for breach of trust in 1999, but a final resolution seems far off.

The litigation has also hamstrung the Interior Department. Several Cabinet-level officials in both the Clinton and Bush administrations were found in contempt of court for the slow pace of reform. For long periods, the court even terminated e-mail service to the Interior Department, due to concerns that the account holders’ financial information was not secure. The specter of other breach-of-trust cases has chilled government initiatives in many areas of importance to Native Americans.

The trust case tests the Obama administration’s commitment to real reform concerning the government’s treatment of Native Americans. The Obama administration can signal its intention to change the way the government handles Indian affairs by changing its basic approach to the case. Rather than fighting every step of the way, the government should be primarily concerned with how to reform the trust fund management and accountability system. It should treat the plaintiffs as collaborators in a joint process to fix the system and provide justice to the account holders.

Attorney General Eric Holder and Interior Secretary Ken Salazar should create an interdepartmental working group, with a representative from the White House, to work with the plaintiffs and others to solve this problem - once and for all.

Philip Frickey is the Alexander F. & May T. Morrison Professor of Law. Curtis Berkey is a partner in the Alexander, Berkey, Williams & Weathers law firm.

Christopher Edley, Jr.

(Originally published in collaboration with Blue Sky in the San Francisco Chronicle, Feb. 16, 2009.)

We may need more economic stimulus options soon. Because most state constitutions have some requirement for balancing their operating budgets, they can’t borrow their way through hard times the way the feds can. That’s both good and bad.

If California, for example, could borrow when revenues fall, it would help meet expenditure demands for programs the public wants and needs, rain or shine. Of course, it’s best to balance borrowing with enough fiscal discipline to retire the debt when times are good. What is needed is a kind of “rainy day fund,” but financed with medium-term borrowing instead of savings.

To overcome the complications of state constitutions and legislative politics, this fund should be federal. In a recession, when a state’s revenues drop more than a certain percentage, the state would be entitled to a federal loan to cover a portion - say half - of the gap. The state would repay the loan before the next recession hits through cuts in federal matching funds for highways and Medicaid, which the state would raise with some combination of improved post-recession revenues, new taxes and state spending cuts. Run the program with a council: the Treasury secretary, the Office of Management and Budget director, and the nonpolitical head of the Federal Reserve as chairman.

Why should the feds help Californians, who choose to tie themselves up in ballot initiatives, super-majority requirements in their Legislature, Proposition 13, and other forms of sadomasochistic civics? A Rainy Day Borrowing entitlement would balance human needs, economic recovery and only moderate enabling of dysfunction in California and elsewhere.

Christopher Edley Jr. is Dean of the School of Law.

Stephen D. Sugarman

To help fund health insurance for children in working-class families, Congress just raised the federal cigarette tax from $.39 a pack to slightly over $1/pack. Both the tax and spending sides of this measure will improve the health of Americans. Future tobacco taxes, however, should be designed to even out the variation that exists from state to state. Ten states impose less than 50 cents-a-pack taxes, while 10 other states tax cigarettes at $2/pack or more.

A good way for the federal government to reduce this difference is to follow the strategy used to fund unemployment insurance. Congress could enact a new $2/pack federal cigarette tax that would be waived to the extent a state’s tax were $2 or more. Surely low-taxing states like Kentucky, Virginia, South Carolina, Missouri, and Mississippi would prefer to increase sharply their own taxes than have their smokers taxed anyway and the money go to Washington.

Not only would the new revenue help those states pay for smoking cessation programs and health care for indigent adult smokers (which might be mandated by the federal government), but reducing the state-to-state tax differential would undermine the moderate but growing problem of interstate tobacco smuggling. Beyond that, an assured nationwide minimum tobacco tax of $3 a pack would bring the U.S. closer to compliance with the Framework Convention on Tobacco Control, the international tobacco treaty already adopted by most nations and which, it is hoped, the Obama Administration will soon convince the U.S. Senate to ratify.

Stephen Sugarman is Roger S. Traynor Professor of Law.

Brian Harvey

When I ask my students what they think has been the most profound effect of computers on education so far, they always guess things like the World Wide Web or arithmetic drill software, but when I tell them the true answer they always immediately understand: The biggest effect of computers on education has been the computer-scorable multiple choice test. The developers of these tests intended only to eliminate an onerous task for teachers, but the unintended consequence was to magnify the importance of factual knowledge, reducing the importance of thoughtful analysis, verbal expression, and creativity. This has been a profound change in the epistemology of schools.

But “No Child Left Behind” has vastly worsened this problem. Before, the multiple-choice standardized tests were just one part of a child’s school experience, and good schools could minimize their importance. Now the continued funding of a school depends on the tests, and so test preparation has squeezed out any other learning consideration. Continue reading…

Jacob Hacker

(orginally printed in the Christian Science Monitor, Feb. 3, 2009)

If we heed lessons of the past, we can achieve universal coverage.

The economic stimulus package just passed by the House contains much to jump-start our economy in the next few years. And congressional moves to expand Medicare eligibility and healthcare for children (through SCHIP) are commendable. But these steps still leave largely unaddressed the most fundamental long-term threat to economic security that President Barack Obama vowed to tackle during the campaign: our crumbling framework of medical financing.

Now is the time to fix it. The window of opportunity for comprehensive action is open wider than at any time for decades. But without quick action, it will close, and America’s businesses, workers, and families will continue to suffer at the hands of a healthcare nonsystem that costs far too much, leaves far too many at economic risk, and does far too little to improve our nation’s health. Continue reading…

Robert Reich

(originally published in the Los Angeles Times, Jan. 26, 2009)

America, and its faltering economy, need unions to restore prosperity to the middle class.

Why is this recession so deep, and what can be done to reverse it?

Hint: Go back about 50 years, when America’s middle class was expanding and the economy was soaring. Paychecks were big enough to allow us to buy all the goods and services we produced. It was a virtuous circle. Good pay meant more purchases, and more purchases meant more jobs.

At the center of this virtuous circle were unions. In 1955, more than a third of working Americans belonged to one. Unions gave them the bargaining leverage they needed to get the paychecks that kept the economy going. So many Americans were unionized that wage agreements spilled over to nonunionized workplaces as well. Employers knew they had to match union wages to compete for workers and to recruit the best ones.

Fast forward to a new century. Now, fewer than 8% of private-sector workers are unionized. Corporate opponents argue that Americans no longer want unions. But public opinion surveys, such as a comprehensive poll that Peter D. Hart Research Associates conducted in 2006, suggest that a majority of workers would like to have a union to bargain for better wages, benefits and working conditions. So there must be some other reason for this dramatic decline. Continue reading…

Michael Pollan

(originally printed in the New York Times Magazine, October 12, 2008)

Dear Mr. President-Elect,

It may surprise you to learn that among the issues that will occupy much of your time in the coming years is one you barely mentioned during the campaign: food. Food policy is not something American presidents have had to give much thought to, at least since the Nixon administration — the last time high food prices presented a serious political peril. Since then, federal policies to promote maximum production of the commodity crops (corn, soybeans, wheat and rice) from which most of our supermarket foods are derived have succeeded impressively in keeping prices low and food more or less off the national political agenda. But with a suddenness that has taken us all by surprise, the era of cheap and abundant food appears to be drawing to a close. What this means is that you, like so many other leaders through history, will find yourself confronting the fact — so easy to overlook these past few years — that the health of a nation’s food system is a critical issue of national security. Food is about to demand your attention.

Complicating matters is the fact that the price and abundance of food are not the only problems we face; if they were, you could simply follow Nixon’s example, appoint a latter-day Earl Butz as your secretary of agriculture and instruct him or her to do whatever it takes to boost production. But there are reasons to think that the old approach won’t work this time around; for one thing, it depends on cheap energy that we can no longer count on. For another, expanding production of industrial agriculture today would require you to sacrifice important values on which you did campaign. Which brings me to the deeper reason you will need not simply to address food prices but to make the reform of the entire food system one of the highest priorities of your administration: unless you do, you will not be able to make significant progress on the health care crisis, energy independence or climate change. Unlike food, these are issues you did campaign on — but as you try to address them you will quickly discover that the way we currently grow, process and eat food in America goes to the heart of all three problems and will have to change if we hope to solve them. Let me explain. Continue reading…

Kate Jastram

It’s time to rethink our detention policies for asylum seekers. Not many people are aware that the United States routinely imprisons terrified (note: not terrorist) people who have fled to our shores seeking asylum from persecution and torture. The new Secretary of Homeland Security needs to focus on less expensive and more humane alternatives to detention, to improve conditions for those who must be detained, and above all, to give her Special Adviser for Refugees enough clout to ensure that the agency’s national security mission does not completely overwhelm the humanitarian aspect of its responsibilities.

Most asylum seekers have no criminal record and pose no threat to the public. An asylum application is a civil, not a criminal, matter, heard by an administrative judge, with no right to counsel at public expense. Yet DHS keeps asylum seekers in federal immigration detention facilities, in for-profit prisons, and in actual county jails. Conditions are uniformly grim, complete with guards, guns, and prison garb. The common denominator in our asylum detention policy is a penal model that is wildly expensive, and completely unsuited either to our needs for security or the asylum seekers’ needs for a prompt and fair hearing of their claim. Continue reading…

Steven Maurer

Practically all commercial drug development is driven by patents. Unfortunately, this business model assumes a multi-billion dollar market which often doesn’t exist. This is almost always true for developing-world diseases like malaria and dengue fever. Here, patients are so poor that even millions of sufferers don’t add up to a useful market. But inadequate market size is also surprisingly common in rich nations. Probably the most famous example involves orphan diseases that “only” affect a few thousand patients — a category that happens to include most cancers. More generally, rich nation markets repeatedly undervalue goods which (a) have externalities, so that consumers only receive a small part of the product’s overall benefit to society, and (b) are too important to fail, so that consumers calculate that government will eventually supply them gratis. Together, these market imperfections go a long way toward explaining why US companies invest so little in vaccine R&D.

For many diseases, then, patents are not an option. But if patents won’t work, then what? Recent years have seen several high-profile initiatives to fill the gap. The first – and easily the largest – was Congress’s $5.6 billion “Bioshield” program (Public Law 108-276) to promote the private development of drugs and vaccines to fight off a bioweapons attack. Five years on, the program hasn’t delivered a single new product. Bioshield’s defenders like to argue that drug discovery is expensive – about $800 million per drug. By that standard, though, the program’s $5.6 billion budget should funded seven new drugs. The real problem, as critics have repeatedly pointed out, is that Bioshield got the incentives wrong. “Wait for industry to invent a new drug,” Congress told DHS, “and then pay them a reasonable price to make it.” Companies, though, were skeptical. To them the Bioshield law sounded more like an invitation to spend $800 million and then trust the government to set a “fair price.” Not surprisingly, they stayed away in droves. Evidently, just offering money isn’t enough. You also have to get the incentives right too. Continue reading…

Michelle Wilde Anderson & Steve Weissman

(Originally published in the San Jose Mercury News, Jan. 6, 2009)

“The time for delay is over,” President-elect Barack Obama said recently following a meeting about energy and climate policy with former Vice President Al Gore and Vice President-elect Joe Biden. “We have the opportunity now to create jobs all across this country in all 50 states to repower America, to redesign how we use energy and think about how we are increasing efficiency to make our economy stronger.”

To that end, the incoming administration has announced plans to fund capital projects like mass transit, electrical grids, sewer systems and public utilities. It will invest in jobs to design alternative fuels, build windmills and solar panels, and install fuel-efficient heating and cooling systems.

We need such efforts urgently. Yet if past is prologue, there is a great deal of work to be done to ensure that the federal government carefully weighs the distribution of its investments. Who will benefit, who will not? Who may be harmed inadvertently? Continue reading…

Hal R. Varian

In an editorial published in the Wall Street Journal (January 7, 2009), I argue that the economic stimulus policies should emphasize firm investment incentives.  We want to come out of this recession with a higher consumer savings rate than we have seen in the past and this necessitates a higher level of investment.  Direct stimulus of consumption is problematic because consumers are likely to be cautious in spending. Public infrastructure investment can be subject to political compromise and is frequently too late to be effective.  Private investment, on the other hand, generates future productivity.  While investment tax credits and accelerated depreciation may not be as popular politically as tax cuts or stimulus spending, they may be a more effective strategy for economic recovery.
The editorial can be found at:

http://online.wsj.com/article/SB123129443022559731.html#printMode.

Hal Varian is a professor in the Schools of Information and Business, and the Department of Economics; he is also chief economist for Google.