I am not evil, either

No posting for the past week or so while I've been in the Dragon's Lair. Meanwhile, our exploits have been chronicled here and here (and probably more since then).

A few notes about those posts: Tyler is a really nice guy. Kathleen and I met him just as we were getting married, which became the subject of an MR post. I am afraid we made nuisances of ourselves during this visit, managing to disrupt the entire building so badly that Robin came out to investigate the source of the commotion. Tyler was busy preparing for a trip and very graciously put up with the disruption.

Though Bryan made an attempt at taking the geek crown, I think my photo in the Smithsonian deserves at least honorable mention. Kathleen says he looks too young to vote; I think that probably doesn't matter, given his recent publication.

Robin's job in life appears to be to question everything. No, I mean everything. I think he's up to it, too. It's an honorable pursuit.

And despite his normally polemic posts, Alex may be the quietest of the bunch. Too bad.

All of the stuff we really wanted to see at the Smithsonian was in closed sections (Arts & Industry and American History), so we settled on the few American History artifacts temporarily displayed in the Air & Space Museum. We also went to the Native American museum. It's been a long time since I've been to the first, and the second was built since then. I was surprised to see:

• The actual piece of Woolworth's counter from the 1960 sit-in
  
• A stump from Spotsylvania. Wow.
  
• General Sherman's hat (looks like it went through hell)
  
• General Custer's coat (some odd stains on it)

If stuck in Washington and in need of vegetarian food, be sure to check out the Native American museum. The choices and quality were very good, though it was a little pricey. Peasant food is almost always vegetarian because it is hard to catch, cook, and store meat; this may be therefore a very historically accurate depiction (there were also fish, fowl, and buffalo menu choices).

The Museums of Industry and Arts and of American History are both closed. The SI staff indicated that there is no definitive plan to reopen them. They blamed it on a lack of funds; I'm not sure what to make of that given that recent SI chief Lawrence Small was both a record fund raiser for the Institution and a record, er, spender.

The DC metro bus system is not bad, or were we just lucky that our hotel lay on the same route as the Library of Congress, our primary destination? The freeway system in Northern Virginia and DC is a complete mess. The light rail system in Baltimore is okay, but not great.

At one point, we were on a road headed into a cluster of indistinct concrete buildings. I was thinking, and then my wife said, that it looked like something out of Brazil (the movie, not the place). Washington is freakish: you can walk from the high rent district to a neighborhood populated by people who probably do not have permanent addresses within a few minutes, yet all the while knowing that over $2 trillion is controlled nearby.

The Library of Congress is bizarre. We were both issued library cards. There were bold signs warning us that they were not souvenirs. No library employee ever wanted to look at them thereafter.

You cannot visit the stacks: you must find what you are looking for through the card catalog, then submit a request (in triplicate, with carbon paper), then wait for it to be delivered if it can be found. It may take a day. Several of the books my wife requested were not found even though they were not shown to be "charged" (you can't check them out). The librarians shrugged it off: they're probably either gone or misplaced. Gone? You have to go through security both entering and exiting; the security is tougher coming in then going out. Misplaced? This was blamed on the contract workers down in the bowels. Most people would generally accept the idea that the library staff who hired the contractors would have some oversight responsibility -- metrics, incentive alignment, and such -- but I think those quaint ideas exited in the Viet Nam era or earlier. I pointed out that a particularly old pamphlet was in bad shape and should probably be restored, or at least stored in a larger folder - yeah, the librarian said, but there's nothing that can be done. Don't they have a restoration department? What exactly is the point of the LoC if not to preserve these artifacts?

In Baltimore, I went to one and only one tourist attraction: The B&O Museum's Allegheny, a 2-6-6-6 monster of a steam locomotive. Well, that and a bunch of other stuff at the B&O museum. And there's some other stuff in Baltimore, I suppose.

Salt iodization as market failure - Part I

There is a viewpoint that the unavailability of iodized salt is a market failure since people would pay for it if only salt producers would iodize. This is supported mainly by this New York Times piece.

The benefits of iodine are unquestioned. Iodine is a preventive treatment for goiter, stunted growth, and cretinism or "low IQ". Some of these uses of iodine have been known for almost 200 years in the developed world (the use of iodine-containing foods such as seaweed has been known for much longer). Salt is an inexpensive means of distributing iodine to a population without access to other sources, so iodized salt is readily available in the developed world. In countries where iodine is available through the food supply -- Japan through seaweed, England through various means -- iodized salt is neither necessary nor mandated.

Sponges, seaweed, and other seafood were noted as cures to goiter thousands of years ago. More recently, in 1819 Jean-Baptiste Dumas showed that iodine is a remedy for goiter. Later research found a link between iodine and cretinism or IQ. Thus, iodine became a popular nutritional supplement, with governments becoming active in it only relatively recently.

Salt, however, has been a subject of intense government interest for much longer. Salt was valued as a germ-killing preservative before wide-scale refrigeration was available, giving us salt-cured ham, bacon, jerky, pickled goods, and so on. The Romans paid their soldiers salarium, salt money, giving us the word "salary". Salt in those days was a source of power and wealth: Salzburg (salt town) was a seat of power in central Europe and Poland's early wealth came as a result of its salt mines, which diminished as Germans developed technology to create salt from brine.

As a source of wealth and power, and a daily necessity, salt of course was the subject of extensive taxation. The Chinese began taxing it 4000 years ago. The British Empire in India paid for its exploits by "the hated salt tax". One of Gandhi's first acts of defiance to the Empire was to march to the sea and make salt, circumventing the tax and declaring that it is every man's right to make salt. Today, Indians still recall that act as they fight against iodine mandates with online petitions. It is currently hotly debated in China again. In Mark Kurlansky's Salt: A World History, he points out that Myanmar (Burma) mandates iodized salt, but people in the highlands can't get it so they trade illegally with China to get it. Sometimes they don't, since unscrupulous black market traders frequently sell untreated salt as iodized.

In the U.S., it is frequently asserted that iodization has been mandated. It is not. Salt companies began voluntarily adding salt in 1924, and Morton began distributing it nationally that year (see this article). Recommended Daily Intake levels are suggested for iodine in 21CFR101.9 (c)(8)(iv) to be 150 micrograms/day.

There has been a recent explosion in noniodized salt availability in the U.S. as an interest in higher quality raw materials for cooking has taken hold. This worries the professional experts, who believe that this will lead to a return of goiter and cretinism. "The National Health and Nutrition Examination Surveys found that from the 1971-1974 to 2001-2002 examinations, iodine excretion in adults dropped from 320 mcg/L to 168 mcg/L -- by nearly half -- and the frequency of iodine deficiencies in pregnant women jumped from 1% to 7%" says this site, emphasis in the original. Note that the fall in adults is from over twice the RDI to slightly above it. Similar trends are reported in this article, which also notes that a similar reduction has occurred in Canada, where iodization is mandated.

Too much iodized salt in a diet is not a good thing, possibly leading to hyperthyroidism or hypertension. The former is typically a problem only in those areas of the world where iodine is a supplement, suggesting that while iodized salt may be a good thing, it is not a perfect solution. "Too much iodine increases the incidence of iodine-induced hyperthyroidism, autoimmune thyroid disease and perhaps thyroid cancer. Too little causes mental retardation, goiter, hypothyroidism, and other features of the so-called iodine deficiency disorders. The global push to eliminate iodine deficiency in the current decades has put both excess and deficiency of iodine in the spotlight. Some countries have already moved rapidly from severe iodine deficiency to iodine excess, while others are only now recognizing iodine deficiency as a problem. Their experience, as well as that in the USA and Canada, emphasizes the need for continued monitoring to assess trends in iodine intake." (from Thyroid Manager Chapter 2 linked above)

Even a cursory reading of the NY Times article would show that this failure in Kazakhstan is not purely the fault of the market:

• It points out that the problem was not solved in the days of the Soviet Union, when there was no market.
• It points out that one of the factors working against iodization was the advertising of the iodine pill industry, proof that there is not market failure but rather an education failure. The desired goal, after all, is the intake of adequate quantities of iodine, not the production of iodized salt. A market need only make it available at affordable prices, which was the case.
  
• The article begins by stating that a public relations program led by a charity organization was the primary contributor to turning the situation around. Yes, the charities received aid (the PR campaign was paid for by the US AID program and UNICEF paid for the original salt sprayer and potassium iodate used by the main manufacturer), but the program would not have worked without the involvement of the organizations because of the massive distrust of the government. The author writes, "Also, Ms. Sivryukova's network of local charity women stepped in. As in all ex-Soviet states, government advice is regarded with suspicion, while civic organizations have credibility." No wonder nobody believed in iodized salt - and it wasn't the market's fault.
• That problem is underlined when the article points out that the problem was completely solved in neighboring Turkmenistan, where maximum leader Saparmurat Niyazof has mandated the giveaway of iodated salt. As I will argue in the next post in this series, I'm not sure I want to live in a country with this level of efficiency, and that isn't even considering that this is the same autocrat who names days of the week after his family and mandates that his own face be present on all clocks.
  
• One company makes 98% of the salt in Kazakhstan. No doubt a former state monopoly, it has access to the salt mountains near the Aral Sea. The article specifically points out that this condition enabled the central mandate to be successful. In other countries with many suppliers, like Pakistan, central mandates are unlikely to work as well.
  

The obvious solution to the final problem is to tighten government control of the salt industry, made easier by eliminating those competitors without the means to add the spraying equipment, and perhaps by restricting the competition by granting a monopoly. Given the history of government intervention in salt markets (still fresh in the minds of societies that don't have a refrigerator in every house), it is easy to understand how people in those areas might get the idea that iodization may be both newspeak for "government monopoly" and a new way to tax the poor. It's easy to dismiss such people if you lack such historical perspective, you believe that the poor are foolish, you easily entrust the government with large amounts of power, or you stand to gain from such grants.

One final point: many people fail to notice that a market failure does not always mean a 100% lack of the desired article. Private roads exist (and were much more common before the government started supporting railroads). Despite Akerlof's paper on the market in lemons and the supposed impossibility of a used car market, used cars are successfully sold every day. In this USAID report, we find that iodized salt was available in Azerbaijan in 2000, 3 years before the intervention started in 2003:

"Consumption of iodised salt by households significantly increased by years: in 2000 was 41.3% adequately iodized salt; 44% in 2002 increased to 70 % in 2003 and selling of iodized salt at the market increased from 30% (2002) to 68% in 2003; In 2004 consumption of iodized salt at households increased to 84%4. However, a WFP survey conducted in rural areas shows consumption of iodized salt to be around 66%."

Likewise in Ghana, Unilever increased iodized salt production in order to increase market share. A market failure is the underproduction or overproduction (and/or underconsumption or overconsumption) of a product, not the complete absence of it. Optimal consumption is that point at which the marginal social cost equals marginal social benefit. I doubt that we know the marginal social costs or benefits with any precision for anything. We could go on arguing about that for any number of products endlessly, and we will finally conclude that it seems likely that all products are under- or overproduced to some degree.

[UPDATE: A concerned reader fears that paragraph eight ("Too much iodized salt...") will leave readers with the impression that I think iodine is dangerous and should be avoided because the quoted material begins, "Too much iodine increases the incidence of iodine-induced hyperthyroidism, autoimmune thyroid disease and perhaps thyroid cancer. " I will point such readers back to paragraph two ("The benefits of iodine are unquestioned...") and also point out that I can't find much evidence linking excessive iodine to cancer. Iodine-induced hyperthroidism (IIH), the Wolff-Chaikoff effect, and Hashimoto disease, however, seem to be real, but probably not for you if you are reading this online.]

End of the Race?

I have a passing interest in analogies which cause people (including me) to question their basic beliefs and mythical stories. This one makes an analogy between fossil fuels and education which is designed to make people question their commitment to "free" public education or to fuel taxes.

What about natural resources in general? There is an analogy which suggests the earth is like a spaceship, equipped with all of the things we need for life*. As we race to consume those resources, we are only depleting them faster and racing towards our own doom. Eventually, so the theory goes, we will run out of new places to explore, prices will shoot up, and we will wish that we hadn't been in such a hurry.

Does the same logic apply to labor? As transnational corporations search for the cheapest labor, they thrash from one previously uncharted territory to the next: first Japan, then Mexico, then Korea, then Vietnam, then China. This is the so-called "race to the bottom".

What happens when that labor race is over? The consequence claimed by "pro-labor activists" is that all labor will be paid at the same low rate as the cheapest labor, but this relies on such assumptions as equal productivity and zero transportation costs (those activists are frequently either self-interested, i.e. union workers, or mistaken in their theory and therefore anti-labor in practice). The actual consequence is that once you have hired the last untapped laborer, the same thing will happen as when you open the last natural resource mine and still have unsatisfied demand: the price of labor goes up.

That is exactly what is happening in China. See, for example, here at Gapminder (check off the China and USA boxes and watch Chinese income start to catch American income, noting that American income does not fall, directly contradicting the "race to the bottom" theory), here, here, here, and the latest, which I have both on good authority and from here is that there is now a shortage of stitchers on the apparel fabrication lines. They are no longer living in abject poverty, and they are becoming consumers who will eventually demand more of China's manufacturing output. Eventually, they may even move up to importing high quality goods - the type that are still manufactured here in the US. Thus, we have little to fear from export-based foreign countries, and they have much to gain. By blocking them out with trade protection, we also grant truth status to the claims of their demagogues that claim America wants to keep them poor.

Go back to the Gapminder graphic and note something: Africa is the home of last remaining unexploited workers. They could use a sweatshop or two to pull them out of their poverty.

* In reality, the earth was randomly equipped. We happen to have discovered uses for many of those resources, adapting them to our needs. We have barely scratched the surface. "Spaceship earth" is an idiotic parable.