Wednesday, July 27, 2011

Making leisure pay

The Bixi system in Montreal allows users to rent bicycles at stations all around town. It's popular but expensive: maintaining a Bixi bicycle cost around 3000$ per year, which is heavily subsidized by the city. Some opposition politicians suggest that just buying everyone a regular bicycle would be a cheaper alternative to Bixi, and accomplish the same congestion reduction and environmental goals.

There are often one or two broken bicycles at each Bixi station waiting for repair. Such repairs require paid staff to service the bicycles. The alternate solution would have owners of bicycles repair them on their own time. This is an example of how one method makes use of "work hours" to accomplish a task, whereas the other method makes use of "leisure hours".

While increasing the number of officially worked hours is not popular, making small changes could result in heightened productivity by moving tasks from work hours to leisure hours.

For example, the vast majority of state services provided for individuals could be offered outside of regular work hours. Very often, employees must take time off work to go to a clinic, to renew a passport, etc. Only offering these services on week nights and during weekends would increase productivity of those working in non-government service jobs.

Wednesday, July 20, 2011

Drugs and Drug Policy

I'm currently reading Drugs and Drug Policy. I'm very impressed after two chapters: it's clear, accessible and well balanced. The lesson seems to be that decriminalization of consumption (not production) has little impact on prevalence, whereas retail prices have a huge impact.

I was disappointed to read that the authors do not believe in the legalization of the supply chain while maintaining elevated prices levels. Once the decriminalization of consumption becomes politically feasible, the supply chain of drugs that have a high markup could easily be nationalized.

In Quebec, decent quality alcoholic beverages are distributed exclusively by the government through the SAQ. The SAQ turns a decent profit with markups of two to one, and there is no large scale contraband of wine in Quebec. It should be trivial to run a similar organization for illegal drugs whose markup is significantly greater than two to one.

As an example, cocaine production costs around 1$ per gram; bulk cocaine smuggled across the border costs 20$ per gram, and retail cocaine is sold at 100$ per gram. I'm assuming that given current law enforcement spending, prices are close to as low as they can be to sustain contraband. Nationalized drug prices could be adjusted to prevent the bulk of contraband: in all likelihood that price would in the same order of magnitude as today's retail prices.

Nationalization does not seem to be a compromise at any level.

Tuesday, July 19, 2011

Unconventionnal tools

Economists agree that increasing consumer spending is the most effective way to stimulate an economy out of recession or stagnation. Conventional tools (such as infrastructure spending) are both slow and inefficient. Letting politicians choose how to apply stimulus in recession years is like giving your child a credit card and sending him to Toys R Us. There must be a better way.

Why not give the Fed the responsibility to coordinate direct stimulus in addition to affecting the markets by buying and selling financial instruments? Specifically, the Fed could be given a stimulus fund worth 1% of GDP per year (from general taxation) to be sent to all citizens in the form of monthly cheques when the economy needs to get back on track. Or it could just be trusted to spend the right amount, and possibly need to be recapitalized using general taxation as is the case currently.

Sunday, July 10, 2011

Learning to read

Children watch DVDs over and over again (eg. Cars, The Little Mermaid). These DVDs come with subtitles. A computer program could be used to detect when each word in the subtitle is being spoken to either highlight the subtitle (like a karaoke machine) or place the word in a single frame (like subliminal advertisement).

I did some literature research but could not find anyone who conducted this experiment. It would be interesting to perform such a study with children and perhaps market the program afterward.