Tuesday, October 03, 2006

Economic Freedom Index 2006

Out now

The Cato Institute has just released their 2006 Economic Freedom of the World country measurements. Available free.

Water Use in NYC

You get what you pay for

The NY Times today has an article front page Metro section about how eventhough the population is up water use is down. In 1979 the population was 7 million and the city used 1.5 billion gallons a day, now we are at 8 million and use 1 billion gallons a day (125 gallons per person per day). The subtitle of the article is “Showers spray efficiently, and what comes out of them costs more”. The key here is that in the early 1980s the city started metering the water and charging for use instead of an average across the city per building/user.

The more you use the more you pay for. This creates incentives for saving water as opposed to an averages system which is the more you use the more your neighbor pays for. This explains why in some places public water fountains never get fixed and why the desert still gets irrigated for crops.

The Times article also mentions how the metering was done around the same time as the ‘broken window’ get tough on crime measure where the signal of even one broken window meant a downward spiral towards more crime in a neighborhood. Indeed psychological factors of a sense of community (or “social capital” in social science mumbo-jumbo) no doubt helps. There are approximately 1.2 million rent-controlled apartments with approx. 800 thousand landlords in NYC. Most of the landlords pay the water bill for their units so what is the incentive for their tenants to cut down on water use (besides just human kindness and a sense of Gaia) ?

Indicator of International Development

All that glitters isnt gold

International aid is big business for small countries. The development of sound institutions is necessary for economic growth, for example without trust in the banking sector, or governments, people wont save their money but wear it in fine cloths or horde it in gold and jewelry – you can see this all over Africa and India.

In Tajikistan, which is back on in the aid dole after years of unrest, President Imomali Rakhmonov has laid down the law after seeing that many if not most government employees have gold teeth, so he has done the right thing and had banned gold teeth for government employees (my new tailor in Brooklyn, who is from Kazakhstan, has gold teeth fyi). “How can international organizations believe in your poverty when the mouth of a teacher is full of gold?” The people seem to be doing ok, but the government can do much much better.