Topic: Cato Publications

Wireless Progress — and the Challenge Not Yet Met

A lot is happening in the world of wireless telecommunications these days. And a lot is not. First, let’s look at a couple things that are happening:

WiMax is poised to move forward as a significant new platform for broadband. ”WiMax” is the popular name for the 802.16 wireless metropolitan-area network standard. It’s like WiFi but can travel a lot farther. It easily traverses the “last mile,” the complicated and expensive rights-of-way that create a high barrier to entry for competitors to DSL and cable.

Recently, Intel announced that a line of its chips will support WiMax. Intel also invested $600 million in leading WiMax provider Clearwire. Clearwire recently pulled back from an IPO, though, fueling speculation that Clearwire and WiMax are not all they’re cracked up to be. Since then, Sprint Nextel has announced that it would spend up to $3 billion to build a WiMax network. Nothing is certain, but WiMax looks pretty good right now for bringing more competition to broadband.

Here’s another thing happening: The Federal Communications Commission is amidst an auction of wireless spectrum. In 1993, Congress gave the FCC the authority to use competitive bidding for allocating rights to use radio spectrum. This beats comparative hearings and lotteries by a mile, because companies that have paid good money for spectrum tend to be well focused on making good use of it. This redounds to the benefit of consumers and the public through new, competitive wireless services.

But much more can be done to improve how this natural resource is deployed. It is widely recognized that creating property-like rights in spectrum will foster secondary markets and help move spectrum to its highest and best use. That work seems not to be happening very quickly, however. 

And a report Cato released yesterday shows that much difficult work remains to be done if we are to have a property regime for spectrum, with all the benefits it entails. In “Toward Property Rights in Spectrum: The Difficult Policy Choices Ahead,” University of Colorado professors Dale Hatfield and Philip Weiser show why creating a property-oriented system for electromagnetic spectrum rights will not be easy.

“Even though the merits of the case for property-like rights in spectrum is beyond dispute, the details about how such a regime would work must still be defined,” Hatfield and Weiser point out. Variation in the way radio waves behave means that simple geographic borders cannot define how rights to use spectrum are divided. Regulation of transmitter technology and power cannot be replaced wholesale with enforcement of radio “trespass.”  Rather, ownership of rights to use spectrum must be defined and enforced with a model suited to the particular characteristics of radio propagation.

The study is a nice tour through radio for the technically uninitiated — you can find out why radio arguably has seven dimensions. And it challenges readers (and hopefully the FCC) to think about the set of rules that will best divide and organize spectrum licenses so that Ronald Coase’s vision can be realized in the area where he did his early work.

Preference for Ignorance

Yesterday, I had a Tech Central Station column that said:

In the fields of health care, education, and assistance to poor countries, we rarely measure value properly. It seems as though we prefer to be ignorant about what succeeds and what fails. We know shockingly little about the cost-effectiveness of very expensive programs.

And today, the New York Times reports:

Some medical experts say Elyria’s high rate of angioplasties — three times the rate of Cleveland, just 30 miles away — raises the question of whether some patients may be getting procedures they do not need or whether some could have been treated just as effectively and at lower cost and less risk through heart drugs that may cost only several hundred dollars a year. Or whether, in some cases, patients might be even better off with bypass surgery — even though a bypass is a riskier, more invasive and more expensive procedure.

When it comes to treating blocked arteries, there are no definitive studies showing which approach most benefits patients in the long term.

The absence of cost-benefit analysis in medical decision-making is one of the main issues raised in my new Cato book Crisis of Abundance. On Tuesday, August 29th, Cato will be having a lunch forum on the book, where you can hear me as well as comments from Washington Post columnist Sebastian Mallaby and Democratic wonk Jason Furman.

The Myth, and Insight, of Owens Valley

Yesterday’s Washington Post included an article on the political battle between Las Vegas and northern Nevada over access to northern Nevada’s groundwater.

Unhelpfully, the article repeated the myth of Owens Valley, the southeastern California valley that, a century ago, became part of the nation’s first major water rights agreement. Under the deal, valley residents sold their property and water rights to Los Angeles, and much of the valley’s water was carried away by aqueduct to fuel the city’s growth into a major metropolitan area.

The Post repeats the myth faithfully:

The specter of California’s Owens Valley looms over the area, as people recall the aqueducts that almost 100 years ago turned a lush agricultural community into an environmental disaster so that water could be delivered to Los Angeles.

[…]

William Mulholland, as head of the Los Angeles water department in 1904, conceived the idea of an aqueduct from the Owens Valley. “He had no interest in draining the valley, he had no interest in creating that wasteland,” [Bob Fulkerson, state director of the Progressive Leadership Alliance of Nevada] said. “He did not want that to happen, but that’s what did happen because once the siphon was started it was impossible to turn it off.”

University of Arizona professor Gary Libecap, in research he summarized in a Summer 2005 Regulation article, has effectively exploded this myth.

Far from being a “lush agricultural community,” historical data show Owens Valley contained small, relatively low-production farms with a total of only about 50,000 acres in cultivation. Much of the valley’s income came from livestock, not planting. The area featured a fairly short growing season, high elevation, alkaline soils, and poor access to markets. In short, Libecap concludes, “Those data suggest that Owens Valley farmers may have been quite anxious to sell their land to an interested buyer.”

The Los Angeles–Owens Valley deal provided that buyer. Libecap’s research shows valley landowners were offered considerably more money for their property and water rights than what their farms were worth. The payments became even more enticing after the California legislature and courts forced the city to sweeten the deals.

That may ultimately prove the solution to the Nevada problem. As Ronald Coase famously argues, original distribution of property rights will not prove an impediment to ultimate efficiency so long as transactions costs are minimal. Put more simply, Las Vegas likely needs to up its offers to northern Nevada counties in order to get the water it needs. And, given Vegas’s growth rate, that bid is likely forthcoming.

New at Cato Unbound: Mexicans in America

Be sure to check out today’s fresh August issue of Cato Unbound, kicking off with celebrated essayist Richard Rodriguez’s provocative meditation on the place of Mexico and Mexicans in the U.S. economy and consciousness. Here’s a taste:

It is as though America, having benefited from illegal labor, pretends that the transaction was one of middle-class benevolence. Mexicans should be thankful for a month of cheerless eight-hour shifts, standing there waiting for the old lady to get off the commode. The odd thing is that they are thankful!

Read the whole thing, and stay tuned: Mexifornia author Victor Davis Hanson will reply on Wednesday, and it’s not going to be a lovefest.

Next Week at Cato Unbound: Mexicans in America

Tune in Monday for the August issue of Cato Unbound, devoted to the topic of “Mexicans in America.”

Richard Rodriguez, author of the celebrated Hunger of Memory and, most recently, Brown: The Last Discovery of America, leads off this month’s issue with a provocative meditation on the role of Mexico and Mexicans in the U.S. economy and consciousness. Hoover Institution senior fellow Victor Davis Hanson, author of Mexifornia, will reply, along with Douglas Massey of Princeton University’s Mexican Migration Project, and labor economist and immigration expert Steve Trejo at the University of Texas.

Here’s the subject:

Today’s heated debate over immigration and border control is largely a debate about Mexicans. It is often argued that Mexican immigrants in particular place a heavy burden on social services, especially in border states, bring crime in their wake, depress wages, and displace American workers. Some argue that although we are a nation of immigrants, and that immigration is generally good, Mexican immigrants are different: they are either unwilling or unable to assimilate and become full-fledged Americans, and, therefore, a heavy concentration of Mexican immigrants in the Southwest threatens a distinctly American way of life. How much truth, if any, is in these arguments? A reasonable debate about Mexican immigration requires that we really know about Mexicans in America. Who are the Mexicans coming to the U.S.? Are they fitting in? Are their children fitting in? Their children’s children? What kind of contribution are they making to the American economy and national character? In what ways are the U.S. and Mexico interdependent? Are the new Mexican immigrants buying homes, starting businesses, setting down roots? Are they upwardly mobile? Civically active? Is their participation in the labor market hurting American workers? Making America richer, economically and culturally? Answers to these questions can make a huge difference–between belief in amnesty and openness, or deportation and a wall. Getting it right matters. So let’s try to get it right.

Don’t miss it! To make sure you don’t, why not subscribe to Cato Unbound’s RSS feed, or sign up for email notification of new posts?

“Chaoulli has brought Canadian Medicare to a fork in the road”

Colleen Flood of the University of Toronto law school has a working paper out on the impact of the Canadian Supreme Court’s ruling in Chaoulli v. Quebec. In that case the court basically said that if the government prohibits private health insurance, but then threatens people’s lives by making them wait for care in the state-run health care system, it is violating the people’s rights to life, liberty, and personal security.

Prof. Flood’s paper is titled, “Chaoulli’s Legacy for the Future of Canadian Health Care Policy.” From the abstract:

The decision was initially considered of limited importance by many given that technically it applied only to Quebec. In the six months since the decision was released, however, it has become clear that the legal impact of Chaoulli will be dwarfed by its normative impact on policy debates across the country. Chaoulli has brought Canadian Medicare to a fork in the road. At the time of writing, critical decisions are about to be taken across the country.

Flood’s paper is available from the Social Science Research Network here (subscription req’d).

Dr. Chaoulli – the chief litigant in the case – authored a paper for Cato on the ruling and its potential impact, available here.