ECONAMICI A land economist's view

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A land economist's view
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Garlic, Cancer, and the Public Funding of Scientific Research

Fri, 2019-04-26 20:40

Four years ago, in The Mouse That Wouldn’t Die, I described how my husband’s colleague Zheng Cui found some mice in his lab that were naturally immune to cancer. Astonishingly, transferring special white blood cells, granulocytes, from immune mice killed cancer in non-immune mice. It turned out that some humans are also super-immune to cancer. Cui managed to help set up two small privately-funded experiments in Florida and in China, giving transfusions of granulocytes from healthy donors to cancer patients. The treatment seemed to be succeeding, including for Cui’s wife. But then … nothing, due to a lack of funds for follow-up and hostility from the medical establishment. The problem: blood transfusions are old medicine and therefore not patentable. The treatment could never be profitable. If ever there was a case for public funding of scientific research, that was it.

Undeterred, Cui plunged into research on another even more unlikely-seeming cancer treatment, injection of filtered raw garlic juice. Garlic does have antibiotic properties, and was once used for treating wounds. When I was a child living in Paris, our nanny fed me and my little sister raw garlic to kill intestinal worms, which maybe it does. Eating raw, cooked or powdered garlic has been widely touted as a preventative or cure for just about anything. There’s a strong stench of quackery to garlic remedies.

But now Cui’s results are in. A novel therapeutic anticancer property of raw garlic extract via injection but not ingestion just appeared in Cell Death Discovery, an open-access subsidiary of the top scientific journal, Nature. Cui injected groups of mice with two strains of rapidly-lethal untreatable mouse cancer cells. Then, unlike any prior researchers, he injected some of the cancerous mice with garlic juice. He fed the juice to others. The cancerous mice that were fed garlic quickly died, but the garlic-injected mice remained healthy. Cui then tested three human cancer laboratory cell lines with garlic juice, as well as with extracts of a number of other fruits and vegetables. Garlic rapidly killed all three cancer cell lines; cauliflower did pretty well too, followed by red grapes, guava and strawberries.

Cui also tested different parts of raw garlic juice, discovering that the anti-cancer activity came from a bunch of as yet unidentified small molecules. He hypothesizes that these molecules work without being toxic to normal cells because cancer cells are metabolic cripples; the mutations that let them grow wildly also leave them unable to metabolize many ordinary food compounds. The garlic molecules may just clog up the cancer cells until they die. In fact, says Cui, more than by uncontrolled growth, cancer cells kill when their busted metabolism spews toxic little bits of protein into the bloodstream. That causes cachexia, the weakness and wasting away of seriously-ill victims. Conventional chemotherapy attacks cancer cells at their strong point, their ability to multiply rapidly, rather than at their weak point, their compromised metabolism. In the process, chemotherapy damages normal growing cells, such as hair follicles.

What now? However promising, Cui’s discovery may not soon lead to a human treatment, certainly not a conventional one provided through the medical establishment. First of all, to identify the anti-cancer molecules in garlic and fully test them in animal and human subjects to meet FDA requirements would take years and hundreds of millions of dollars. Second, garlic juice is an old medicine. It’s not patentable. Hence the pharmaceutical industry may not be willing to invest.

That doesn’t make treatment totally unavailable. Garlic is a food. It’s still routine and legal to feed people intravenously, usually people who can’t feed themselves due to illness. The FDA requires only that intravenous food be free of particles and sterile. Moreover, on May 30 2018, President Trump signed a “Right to Try” law allowing terminally ill patients to use experimental treatments.

As for practicality, I did a back of the envelope calculation. Cui injected lab mice, which weigh about 15 grams, with a tenth of a gram of filtered garlic juice for 21 days. Scaling up to a 150-pound human, that’s about a pound = a pint of garlic juice, requiring a dozen or so heads of garlic a day. However, Cui made the dose as large as possible to test for toxicity; much lower doses over longer periods might be just as effective. It would make sense to start with lower amount and escalate the dose gradually.

Nonetheless, as with blood transfusions, the unprofitability and quacky aura of a garlic treatment means any testing or implementation will happen slowly at best. National Institute of Health funding for biological and medical research, today at about $39 billion, is down in constant dollars from a $43 billion peak in 2003. The Trump administration wants further cuts. While $39 billion may still seem like a lot, the competition is fierce between thousands of established research programs, whose scientists peer-review each other’s proposals. Only a major increase in funding—and probably a major opening in medical minds—might soon leave room for novel, public investment in that humble herb, garlic.

Originally published in December 9, 2018 on the Dollars and Sense blog.

All I Want Is for You to Listen: A Personal Story with a Political Lesson

Sat, 2018-10-06 11:12

When I complain to my husband of 32 years about something—an argument with my sister or a computer malfunction—he immediately drowns me in a stream of good advice.

“Stop!” I tell him. “All I want is for you to listen!”

We returned from a Fourth of July holiday in a friend’s car, with me driving, the friend directing, and my husband in the back seat.

“Oops,” I say, “I missed the Sawmill River turnoff.”

“Never mind,” the friend responds, “We’ll take the Cross Bronx.”

But a big lighted sign warns us that there’s been an accident and two lanes are closed on the Cross Bronx.

“OK, then it has to be the Third Avenue Bridge.”

When we finally get home on the West Side, my husband is furious.

“That detour made it take twenty minutes longer to get home. I had to pee so badly I almost wet my pants.”

“I’m sorry,” I say, “But there was an accident on the Cross Bronx.”

“Well you should have found another way to get back to the Sawmill. You didn’t even ask my advice on the route.”

“You were in the back. It’s Thomas’s car. I was taking directions from him. He was nervous about my driving. Why didn’t you ask us to pull off and find a gas station?”

“I was in a hurry to get home. I think we need to find a counselor to help you learn to be more sensitive to other people’s feelings.”

“I’m glad to see a counselor. And I promise to learn to be more sensitive to your feelings. But you should learn to be clearer about what you need.”

“That’s not the point. You should have asked me how I was doing in the back seat.”

“OK I’m really, really sorry. I messed up big time. I’ll really try hard to do better.”

“Oh stop it,” he snarls. “When you apologize like that you just cut me off. You don’t hear me.”

Suddenly something clicks in my brain. Time to try active listening, that is, reflecting back what the other person seems to be saying, to indicate you’re paying attention and empathizing with them.

“You must have been really miserable sitting there in the back of the car, mile after mile. And then when we hit all those red lights going down Lexington Avenue, that must have been torture.”

“Yes,” he says, “It was really terrible. I was in such pain.” Then he smiles. “Thanks for understanding. All I want is for you to listen. I’m sorry I put you through all that. I love you.”

“I love you too.”

I can’t resist drawing a political lesson. Against the advice of his staff and of Senate Republicans, President Trump mocked the woman who accused Judge Kavanaugh of sexual misconduct. But in so doing, he reflected the deep beliefs of his base. They roared back in support, sending the nomination through.

The occupant of the White House may be a liar, a crook, and a self-centered bigot. But his base remains loyal because he understands one thing supremely well: When people are unhappy or angry, they don’t want advice, or excuses, or promises, or apologies. All they want is for you to listen.

How the U.S. Military Protects and Enriches Multinational Speculators

Sat, 2018-09-29 09:32

At a 1972 economics conference, at the height of the Vietnam war, Mason Gaffney presented an invited paper blandly entitled “The Benefits of Military Spending.” The paper so shocked the conference organizer that he refused to include it in the conference volume. Gaffney couldn’t find another publisher willing to touch it. Now, only 46 years later, here’s that paper (draft version), updated by Cliff Cobb, and published in the American Journal of Economics and Sociology (March 2018). What so offended the economics establishment?

In dry economese laced with even drier humor, Gaffney laid out the fundamental land economics underlying U.S. military spending. The logic resembles that of urban sprawl: For a few bucks, John Bigshot buys Old MacDonald’s farm way out in the boonies. Then he visits his pals on the city council of Anytown. They in turn vote to incorporate MacDonald Luxury Estates into greater Anytown, which means the town improves the road, extends water and sewer, police and fire protection, and other benefits to the property. With little personal investment (maybe a suitcase of cash), Mr. Bigshot has acquired a multimillion dollar parcel at the expense of Anytown taxpayers.

In similar fashion, multinational corporations go to third world countries where they acquire concessions for a song—mineral rights, broadcast rights, bank licenses, timber rights, harbor and airport rights, rights of way, or large tracts of agricultural land. Often they have bribed the local ruler, or “cacique” as Gaffney calls him. When angry locals threaten to overthrow the cacique, the multinationals can call in the U.S. government to protect their sacred property rights. The United States may provide guns and aircraft to the cacique, or establish a military base, or finance infrastructure like dams and ports and highways. Alternatively, the United States can support an opponent who promises to uphold those concessions. A small initial overseas investment can yield decades of lucrative return flows to the multinationals.

Documenting dozens of such arrangements, including the original deals for oil in Saudi Arabia and Iran, Gaffney takes a sly poke at the conventional economic treatment of “defense” spending as a benign “public good” equally benefitting all citizens of the homeland. The real-life benefits go to a small wealthy international minority with no particular loyalty to the United States, while ordinary U.S. citizens pay—as consumers, taxpayers, and especially as soldiers.

When I first read an unpublished version of the paper in 1992, 20 years after Gaffney wrote it, I felt a jolt of recognition. I was a Foreign Service brat. My dad served as Economics Officer; what was he doing? Arranging deals for U.S. investors. Everywhere we were posted or traveled there were U.S. military bases. What were they doing? (We FS types looked down on the military, because they didn’t try to learn the local language or culture, and shopped only at the PX.)

I felt the same jolt years later reading John Perkins’ Confessions of an Economic Hit Man. Perkins’ employers sent him out to convince local third world rulers to undertake wildly overambitious, environmentally destructive infrastructure projects to be built by multinational engineering companies like Bechtel and Haliburton. These projects usually failed to deliver the promised economic benefits, leaving the locals in hock to U.S. and European banks and subject to U.S. control. The original excuse for U.S. intervention on behalf of such caciques was that they provided us with a bulwark against “Communism.” Today they provide us with a bulwark against “Terrorism,” but it’s the same pattern.

The United States has dominated this game since World War II, taking over from Great Britain. The Chinese are now bent on doing us one better with military bases in the China Sea, rail and road systems across Eurasia, seaports around the world, and vast soy plantations in Latin America, Southeast Asia, and Africa. It’s the same pattern.

Looking back to 1972, I think Gaffney’s analysis so shocked conventional economists precisely because his method was so conventional. No hint of Marxism. Just good old-fashioned marginal analysis applied deadpan to an array of undisputed historical facts. Even worse, Gaffney poked subtle fun at received economic wisdom. No way could such subversion see the light of print—until now.

(Originally published on Dollars and Sense, August 10, 2018)

From Germany to America: A Dialog on Inequality

Tue, 2018-06-26 17:45

At a coffee break between sessions at the annual History of Economics Society meeting, I chatted with D___, a tall, blond young woman, a professor of political science at a German university. On hearing that I work on inequality, she immediately challenged me.

D: “I don’t believe in equality. Inequality is just a statistic, a side effect. What’s relevant is how people actually live. What matters are policies to improve citizen’s wellbeing, like health or education, not policies to reduce inequality.

P: But aren’t those statistics useful in identifying those societies that are or are not doing a good job providing those services? After all, there are many statistical studies showing that more equal societies have grown faster and have a higher GDP per capita.”

D: No. Inequality statistics are just an artifact. They don’t mean anything. We could all be perfectly equal in extreme poverty, like we were in East Germany. [Obviously before she was born.] Is that what you want?”

P: In the United States, our Congress just passed a new tax law reducing income taxes for the rich and for large corporations.  That will surely lead to reduced services and other benefits to poorer people.

D: Well, what do you want? A flat tax? The same tax on each person? That would be a perfectly equal tax.

P: A flat tax would be regressive because it would take a higher percent of the income of poor people—if they could pay it at all. How about a flat percentage tax on wealth? Since wealth is much more unequal than income, that would be more progressive even than an ideal progressive income tax.

D: That’s not the point. We need to focus on ordinary citizens’ wellbeing. If we do that, the rest will take care of itself.

P: OK, how about a basic income grant, that is, the same sum paid monthly to every citizen of a country, man woman and child, rich and poor. A large enough sum to provide a modest living. That idea has become very popular lately. It is being promoted by some Silicon Valley tech entrepreneurs.

D: No, I don’t think that’s a good idea. People should contribute to society. Basic income would give people bad incentives. They would take it easy.

P: Wait a moment, there’s a difference between basic income with no strings attached, and public assistance money. Here and I assume in Germany, public assistance is phased out as people earn more income. What’s amazing is that some people who receive assistance keep on working even though they lose income. The dignity of holding a job is very important.

D: Well you may be right about that, especially in Germany.

P: In the 1970s there was a guaranteed minimum income experiment run for five years in Manitoba, Canada. Recipients received additional income which—as with public assistance—was phased out as they earned more. A few years back Evelyn Forget, who’s here at the conference, analyzed the data. She found that only new mothers and teenagers worked substantially less. The teenagers became more likely to finish school, presumably due to less pressure to support their families. New mothers and school age teenagers are just the people you’d want to stay home. Remember, this was not a fixed basic income, but a guaranteed minimum with a sharp phase-out at 50% or more effective tax.

D: Still, you have to make a choice. Do you want equality of opportunity or equality of outcome? You can’t have both.

P: Actually, I think you can, sort of. A basic income grant, plus the public services we expect in a modern society—health, education, pensions, security, justice –including protection from unfair practices like monopolies—those should guarantee a rough equality of opportunity. Above that, it should be OK for people to earn high incomes by hard work, talent, or even luck. But you need progressive taxes to finance the system.

Whoops, just as I was getting to the punch line, the elevator arrived to take us downstairs to the next sessions. I would have said that as Adam Smith wrote in the Wealth of Nations (1776), taxes should be proportional to benefits received—a notion more radical than any proposed by today’s leftists. Chief among benefits received, Smith included government protection of title to land, in an era when some 2% owned most of the land in England. The tax he favored was a tax on the value of that land, a tax that would capture the “rent” or unearned income England’s “great proprietors” gained from the mere title to land granted and protected by the king. England had a land tax, but at low rates and poorly administered. The French “Philosophe” reformers whom Smith visited in Paris is 1766 advocated land taxes, as did the next generation of economists such as David Ricardo.

A hundred years later, in 1879, the American economist and radical reformer Henry George took Smith’s idea and ran with it. In his world-wide bestseller Progress and Poverty, George argued that all taxes should be replaced with taxes on land values only, and the revenues used for public purposes like schools and infrastructure (including public bath houses!). This was a perfectly practical proposal: property taxes then and now are assessed on land and buildings valued separately. In the heyday of George’s influence in the late 19th and early 20th century, assessors just left out the buildings and raised the rate on land to make up the difference.

Now almost 140 years later, as support for basic income has grown, some advocates have made the obvious connection: why not finance basic income with a land tax? That squares the circle, doesn’t it? Equality of opportunity at the bottom via a basic income grant, financed by a tax that limits inequality of outcome at the top.

That might be too theoretical for my pragmatic German acquaintance. She’s right, though, that we need to be more specific in talking about inequality.

How Colonies Can Liberate Themselves by Taxing Real Estate

Tue, 2018-06-26 17:34

Greece, Haiti, and Puerto Rico have something important in common: they are colonies. Puerto Rico started out as a Spanish colony and was then acquired by the United States as a “gift with purchase” of the Philippines in 1898. Greece and Haiti (itself a former colony of France) have become debt colonies of the multinational banks and their supporting governments. In all three, wealth is highly unequal. Most of the land, and all the best land, is owned or controlled by absentee natives or by outside organizations—foreign corporations, banks or governments. Local government is corrupt, incompetent, and obligated to outsiders if not actually controlled by them. There’s a two-fold net effect. On the one hand, there’s a continuing drain of working capital and labor to the outside, as rents, interest, profits flow out and young adults emigrate. On the other hand, the extraction process cripples the economy, by cutting off working capital and killing labor incentives. The local government, cannot or will not provide adequate services, due to corruption and lack of tax money. Metaphorically, these colonies are being bled dry.

Suppose a reform government were to come to power in these places and suppose it could stave off foreign threats. How could it stop the bleeding?

New settlers in the 19th-century United States faced a similar problem. Large chunks of good land were held vacant by absentees, often railroad companies. The resulting scatter made it hard to build public works like dams and canals for irrigation. Meanwhile, the railroads charged exorbitant monopoly rates to ship the settlers’ grain to market. The solution: tax the value of property in the district. Because the absentees were not using their land, the tax helped force them to sell to incoming settlers. Until the middle of the 20th century, property taxes were the dominant means of state and local finance, so using them to bring in revenues for local development while nudging out absentees made perfect sense.

The same strategy can work for modern colonies. A reform government can heavily tax the value of real estate, possibly with exemptions for small resident property owners. Better yet, and much easier to implement, tax only the land component of real estate. Such a tax would force absentee owners to send euros or dollars back to the colonies. The government could then begin to provide services and repair infrastructure. But why tax real estate? Why not tax income or imports? Because absentees and foreign based corporations can easily avoid income taxes by funny accounting. Taxes on most imports are regressive and a drain on the economy. The real money is in real estate.

All but the most primitive governments keep some sort of registry of property, crude and out of date in Greece, Haiti, and Puerto Rico. A reform government can easily create new cadastral maps—that’s what George Washington did as he surveyed Native American land. In the age of GPS it’s even easier. The government can then place the existing claims on the map. The recorded “owner” may be a shell corporation based in the Bahamas, but no matter. Just tax it. Where claims overlap, they can be taxed twice—forcing owners to resolve the boundaries. The government can claim any blank spots—forcing hidden informal owners to declare themselves or lose the property.

How should a reform government estimate the value of property in order to tax it? This may appear a daunting problem when the property market is not very active—large absentees mostly do nothing—and many transactions are informal. But an experienced appraiser can in fact put a reasonable assessed valuation on property by walking around and observing activity. A great advantage to taxing land only is that value depends entirely on location and tends to vary smoothly from one spot to another. Property owners then can, and will, challenge their valuations—but they will have to show that the valuation is out of line with that of neighboring properties.

Another strategy for getting initial property values is to ask owners to declare the values themselves, with the government having the right to purchase the properties at the declared value. The government right to purchase, if enforced, takes away owners’ incentive to understate the value.

Once the government imposes taxes, some owners—absentees especially—will decide to sell in order to pay the tax. These sales will provide government assessors with more information, enabling them to make more accurate assessments. Meanwhile the purchasers of the property will put it to use, generating production and jobs.

When Fidel Castro’s revolutionary government took power in the American colony of Cuba, they nationalized most foreign-owned property. In accordance with international law, they offered compensation, which all but the Americans accepted. I have to wonder, if they had tried taxation instead of nationalization, could they have pulled off a smoother transition, while giving the U.S. less excuse for military intervention?

 (Originally published 5-2-18 at Dollars and Sense)