Freedomnomics: Why the Free Market Works and Other Half-Baked Theories Don't (33 page)

46
Gary Wolfram, “Private College Under Seige”
USA Today
, January 1, 1999. See also Southern Regional Education Board, Total Enrollment in Higher Education. (Summary of NCES Data) (
http://www.sreb.org/main/EdData/DataLibrary/03/highered/enrollment/FB22.xls
); U.S. Department of Education, National Center for Education Statistics, 2003-04 and 2004-05 IPEDS, Table 314 (
http://nces.ed.gov/programs/digest/d05/tables/dt05_314.asp
); and U.S. Department of Education, National Center for Education Statistics, 2003-04 and 2004-05 IPEDS, Table 197 (
http://nces.ed.gov/programs/digest/d05/tables/dt05_197.asp
).

47
Conversation with economics professor Isaac Ehrlich at the University of Buffalo.

48
John R. Lott, “Predation by Public Enterprises,”
Journal of Public Economics
no. 43 (1990): 237-251 and D. Daniel Sokol, “Express Delivery and the Postal Sector in the Context of Public Sector Anti-competitive Practices,”
Northwestern Journal of International Law and Business
, (2003): 353-381.

49
The German government still owned a majority of Deutsche Post AG at the time. For a detailed discussion of the Deutsche Post case in the context of trade liberalization, see Robert B. Cohen, “Trade and Competition Issues Raised by the Liberalization of State-Owned Monopolies: The Example of Deutsche Post’s Cross-subsidization of Its Express Delivery Operations,” (Washington, DC: Economic Strategy Institute) 2004. See also R. Richard Geddes, “Pricing by State-owned Enterprises,” Cornell University working paper (2006).

50
Geddes, “Pricing by State-owned Enterprises.” A competitor brought similar charges against the Japanese Post, though it did not win the case. Editorial, “Japan’s Postal Behemoth Digs In on Deregulation,”
Wall Street Journal
, January 6, 2000, A14.

51
US Postal Rate Commission, Domestic Mail Rate History (
http://www.prc.gov/rates/stamphistory.htm
) and 2006 Rate Source: USPS Express Mail Rate Table (
http://pe.usps.com/text/dmm300/ratesandfees.htm#wp3804532
). See also Lott, “Predation by Public Enterprises,” 237-251.

52
John R. Lott, “Predation by Public Enterprises,”
Journal of Public Economics
no. 43 (1990): 237-251.

53
NASA claims that it costs about $450 million to launch each shuttle, though other estimates are much higher. The cost of taking cargo into orbit is now over $20,000 per pound. NASA, Frequently Asked Questions, Kennedy
Space Center,
http://www.nasa.gov/centers/kennedy/about/information/shuttle_faq.html#10
. See also Milton R. Copulos, “Hearings before the House Committee on Science and Technology, subcommittee on Space Science and Applications,” June 18, 1985,1-2, and Associated Press, “Critics scrutinize cost of shuttle,”
USA Today
, February 4, 2003 (
http://www.usatoday.com/news/nation/2003-02-04-shuttle-critics_x.htm
).

54
John M. Logsdon and Ray A. Williamson, “U.S. Access to Space,”
Scientific American
, vol. 260, no. 3 (March, 1989): 34-40.

55
See John R. Lott, Jr. and Tim Opler, “Testing Whether Predatory Commitments are Credible,”
Journal of Business
, vol. 69, no. 3, (July 1996), 339-82 and Lott,
Are Predatory Commitments Credible?: Who Should the Courts Believe?
(Chicago: University of Chicago Press, 1999), Chapters 1 and 2.

56
For more examples, see Lott,
Are Predatory Commitments Credible?
, University of Chicago Press, 1999.

57
For a discussion of guilds in Paris and Genoa see Steven A. Epstein,
Wage and Labor Guilds in Medieval Europe
, (Chapel Hill: The University of North Carolina Press, 1991).

58
Adam Smith,
An Inquiry into the Nature and Causes of the Wealth of Nations
[1774]. Edited by E. Canna, (Chicago: University of Chicago Press, 1974) 133, 136-7. Milton Friedman wrote his dissertation on how modern professional licenses restrict entry into a profession in order to drive up incomes. See Milton Friedman, “Income from Independent Professional Practice,” Ph.D. Dissertation, Columbia University, 1946. Also published in: Milton Friedman and Simon Kuznets,
Income from Independent Professional Practice
, NBER Publications, (New York: National Bureau of Economic Research, 1954).

59
Epstein, 1991, 106-09, 141-43. See also Richard MacKenney, Tradesmen and Traders:
The World of the Guilds in Venice and Europe, c. 1250- c. 1650
, (Totowa, New Jersey: Barnes & Noble Books, 1987).

60
Robert J. Havighurst, study director, National Commission on Accrediting:
Commission on the Study of Optometric Education
, National Commission on Accreditation: Washington, D.C. (1973), and David P. Bianco, ed.,
Professional and Occupational Licensing Directory: A Descriptive Guide to State and Federal Licensing, Registration, and Certification Requirements
, (Detroit: Gale Research Inc., 1993), 697-704.

61
Helen Hofer Gee and E. Shepley Nourse,
Admission Requirements of American Medical Colleges Including Canada
, Association of American Medical Colleges, Washington, D.C., 1960. See also
Comprehensive Guide of Bar
Admission Requirements
, American Bar Association Section of Legal Education, 1989, and
AAMC Curriculum Directory
, Association of American Medical Colleges, Washington, D.C., 1972-1980.

62
Bureau of Labor Statistics, “Training, Other Qualifications, and Advancement,” U.S. Department of Labor,
Occupational Outlook Handbook
(
http://www.bls.gov/oco/ocos169.htm#training
).

63
David P. Bianco, 1993, 155-190.

64
Bianco, 1993.

65
Association of Real Estate License Law Officials, 1991. Also based upon an interview with Joe McClary from the Association of Real Estate License Law Officials (334) 260-2928).

66
Data are for the U.S. during the 2001-2002 academic year. Wendy Stock and John Siegfried, “Time-to-Degree for Economics Ph.D. Class of 2001-2002,”
American Economic Review
(May 2006): 467-474. The ranges of time-to-degree were obtained by the author from Wendy Stock.

67
Charlotte Tubbs, “Teacher Job Fair Attracts 1,500 Prospective Educators,”
Arkansas Democrat-Gazette
(Little Rock), February 6, 2005.

68
John R. Lott, Jr., “Why Does Professional Licensing Rely on Minimum Schooling Requirements,” University of Chicago Working Paper, 1996.

69
There are two types of tests that doctors take to practice: board and licensing exams. Doctors can in theory practice with just a license, but hospitals will rarely let a doctor perform surgery without the doctor being board certified. Board exams are different than the licensing exams and these tests do try to evaluate skills, such as a surgeon’s ability to perform an operation. For information on licensing see G.F. Dillon, J.R. Boulet, R.E. Hawkins, and D.B. Swanson, “Simulations in the United States Medical Licensing Examination,”
Quality & Safety in Health Care
, 2004:i41-i45 (
http://qshc.bmj.com/cgi/content/full/13/suppl_1/i41
); Kate Shatzkn, “Test for better bedside manner fulfills Melnick’s mission,”
Physician Executive
, July-August 2004 (
http://www.findarticles.com/p/articles/mi_m0843/is_4_30/ai_n6133525
) and Anthony M. Alleman and Al F. Al-Assaf, “Have you Wondered About Your Colleague’s Surgical Skills?”
American Journal of Medical Quality
(March/April 2005): 78-82 (
http://ajm.sagepub.com/cgi/reprint/20/2/78.pdf
).

70
This also explains why the length of the time requirements gradually increase over time. As a profession’s overall quality falls, professionals keep expanding school requirements in order to discourage increasing numbers of ambitious aspirants from joining the profession. As the quality of existing professionals declines, hardworking, ambitious students become more
serious threats as potential competitors in the field. Of course, testing also plays an important role by maintaining a floor on the quality of entrants. Professions may run into trouble if the quality of new entrants declines too much.

71
This discussion is based upon Robert G. Hansen and John R. Lott, Jr., “Regulating Indoor Air Quality: The Economist’s View,”
The EPA Journal
, vol. 19, no. 4 (October-December, 1993): 30-31.

72
Http://miltonfriedman.blogspot.com
.

1
Robert E. McCormick and Robert D. Tollison, “Crime on the Court,”
Journal of Political Economy 1984
, 223-235.

2
The original work on this point was done by Brian Goff, William Shughart, and Robert Tollison, “Batter Up!: Moral Hazard and the effects of the designated hitter rule on hit batsmen,”
Economic Inquiry
, July 1997. See also John C. Bradbury and Douglas J. Drinen, “Crime and Punishment in Major League Baseball.”
Economic Inquiry
, 2007.

3
Michael E. Staten and John Umbeck, “Information Costs and Incentives to Shirk: Disability Compensation of Air Traffic Controllers
,” American Economic Review
, December 1982, 1023-1037.

4
Larry L. Bailey, David J. Schroeder, and Julia Pounds, “The Air Traffic Control Operation Error Severity Index: An Initial Evaluation,” U.S. Department of Transportation, Federal Aviation Administration, April 2005.
Http://www.faa.gov/library/reports/medical/oamtechreports/2000s/media/0505.pdf
.. See also Staten and Umbeck, “Information Costs,” 1034-1035. The “Operation Error Severity Index” is based on a number of factors: vertical and horizontal separation distances, relative flight paths, cumulative closure rates, as well as the air traffic controller’s awareness of the problem. If controllers want to increase their error rate without actually causing more accidents, errors should occur during relatively light traffic volumes, not primarily when the controller is “overloaded.” And indeed, Staten and Umbeck cite evidence for this.

5
Eric Ferkenhoff, Darnell Little and David Mendell, “Murders in Illinois jump by 10%,”
Chicago Tribune
, June 30, 2002, C1.

6
The data were obtained from the FBI UCR data:
http://www.fbi.gov/ucr/ucr.htm
.

7
Lynette Clemetson, “The Gospel According to John,”
Newsweek
, February 12, 2001, 25.

8
Valerie Pottie Bunge, Holly Johnson, and Theirno Balde, “Exploring Crime Patterns in Canada,” Crime and Justice Research Paper Series,
Statistics Canada
, Ministry of Industry, 2005. Canada had a smaller percentage drop in its murder rate than did America in the 1990s, but it already had a lower murder rate when the decade began. Canada registered a lower murder rate despite the fact that its overall violent crime rate, surprisingly, is about 50 percent greater than America’s. The International Crime Victimization Survey,
http://www.unicri.it/wwd/analysis/icvs/pdf_files/key2000i/app4.pdf
.

9
The information for these figures was obtained from:
http://www.ojp.usdoj.gov/bjs/glance/tables/viortrdtab.htm
,
http://www.ojp.usdoj.gov/bjs/glance/tables/proptrdtab.htm
,
http://www.ojp.usdoj.gov/bjs/dtdata.htm#crime
, and
http://www.disastercenter.com/crime/uscrime.htm
. The reported crime rate is obtained by dividing the number of crimes reported to police departments by the National Crime Victimization Survey that indicates the number of crimes people reported to the pollsters. The arrest rate is obtained by dividing the number of arrests by the National Crime Victimization Survey that indicates the number of crimes people reported to the pollsters.

10
FBI Uniform Crime Reports, Crime in the United States, September 2006.
Http://0-www.fbi.gov.mill1.sjlibrary.org/ucr/05cius/data/table_07.html
.

11
To understand the magnitude of this change, consider this: if the rate of reporting of violent crimes had remained constant after 1999, the violent crime rate in 2005 would have been 390 per 100,000 people, not 469. Since nearly all murders are reported, this adjustment also implies that the overall violent crime rate has fallen more than the murder rate since 1991.

12
“Findings,”
Washington Post
, November 22, 2006.

13
“2006 Program Seeks to Fight Poverty by Building Family Ties,”
New York Times
, July 20, 2006.

14
Levitt and Dubner,
Freakonomics
, 137-144 revised edition 2006, 129.

15
Daniel Callahan,
Abortion: Law, Choice, and Morality
(New York: MacMillan Publishers, 1970).

16
Rockefeller Commission, “Report of the Commission on Population Growth and the American Future” presented to the President and Congress in March of 1972.
Http://www.population-security.org/rockefeller/011_human_reproduction.htm
.

17
Hans Forssman and Inga Thuwe, “One hundred and twenty children born after application for therapeutic abortion refused,”
Acta Psychiat. Scand
., 1966, 71-78.

18
Henry Morgentaler, “Message from Henry,” 1998. Online document available at:
http://prochoice.about.com/newissues/prochoice/gi/dynamic/offiste.htm?
sitehttp://www.morgentaler.ca
.

19
Henry Morgantaler made this claim in the late 1960s. By 1979, opinion surveys showed that 61 percent of Americans believed that “many unwanted children end up being subject to child abuse, and it’s a mistake to force unwanted children to be born.” Roper Center at University of Connecticut Public Opinion Online, survey done from Februrary 8, 1979 to February 12, 1979.

20
David M. Alpern, “Abortion and the Law,”
Newsweek
, March 3, 1975.