Anatomy of a scam
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Anatomy of a scam

Joel Spolsky has an interesting explanation of how fraudsters use fake blogs and zombie PCs to scame AdSense adverstisers. This problem isn’t specific to AdSense, it works for any cost-per-click advertising system that allows small Web sites to host advertising.

Update: Niall Kennedy also has a post about how spammers and fraudsters are abusing Google’s services.

More on drug research
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More on drug research

Dean Baker, whose argument on drug patents I linked to last week, has published a specific proposal. In last week’s post, I mistakenly reported that he wanted to do away with drug patents. His actual proposal, which he fleshed out this weekend, is more nuanced and is based on an actual piece of legislation proposed by Dennis Kucinich in the previous Congress. Rather than doing away with patents, he proposes funding drug discovery efforts with federal dollars and putting the results of that research in the public domain. Here’s how he explains it:

My favored alternative is direct public funding of approximately $30 billion a year, as would be provided under the Free Market Drug Act (FMDA) introduced by Dennis Kucinch in the last session of Congress. This would effectively double government funding for biomedical research, since it already is spending approximately $30 billion a year through the National Institutes of Health (NIH)

The basic plan is to create 10 competing government sponsored corporations (each getting roughly $3 billion a year) charged with researching and developing new drugs, through the FDA approval process. All new patents are placed in the public domain so that new drugs can be sold as generics. The work of the corporations is subject to reviews at 10-year intervals by a commission of public health experts. The worst 2 are eliminated with 2 new ones created in their place. The FMDA also creates a separate prize fund (e.g. $1 billion a year) would be used to reward individual researchers, or teams of researchers, for extraordinary breakthroughs, ensuring that there would be substantial incentives.

Drug companies could still patent their own research, but everyone would be able to manufacture the drugs discovered with federal dollars as generics. This seems like a pretty solid proposal to me. There are already plenty of complaints that very little research money goes into efforts to discover drugs that would be helpful but not profitable. Why not let federal government take that on? The initial effort wouldn’t have to be funded at the $30 billion dollar level either, a pilot project could be undertaken for much less.

Good advice for Democrats
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Good advice for Democrats

Since the election last year, I resolved to avoid spewing armchair political strategy here. I don’t know what Democrats need to do to win, and telling them what to do isn’t my problem anyway. I do still like to read political analysis, though, and for any liberal, George Packer’s analysis of what Democrats need to do to win strikes me as a good prescription:

The Party will not return to power by waiting for indictments or by fine-tuning tired slogans. Nor will it be useful to copy the Republican right’s strategy of pandering to its constituency: the conservative base is larger than that of the liberals, as we learned in last year’s Presidential election. The old debate over moving to the extreme or to the center, which resurfaces after every defeat, presents a false choice and is itself a sign of a political vegetative state. The sure way for the Democrats to go on losing is to frame a message designed to win back married Catholic women while mobilizing twenty-something iPod users.

Instead of trying to cobble together a hypothetical majority with a hodgepodge of small-bore policy proposals, the Democrats need to nationalize the elections of 2006 the way the Republicans did in 1994. A Democratic manifesto that unites the Party’s own diverse factions would begin as a referendum on the ruling party: the White House and Congress have handed government over to corrupt interests, and, in so doing, the Republicans have betrayed basic American principles of honesty, competence, and fairness. There is no reason for Democrats to be on the defensive about moral values. On issue after issue, government by cronyism and corruption has sacrificed the interests of the middle class to those of the Administration’s wealthy friends. The deepening inequality in American life threatens families and democracy, and it is neither natural nor inevitable.

I get the feeling that these days only John Edwards is the only politician that really understands this, and he’s not running for anything right now.

The idea trap
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The idea trap

The other day I saw a link to Bryan Caplan’s description of what he calls the idea trap, which seeks to explain why failing countries have a hard time enacting the policies that can lead them to success. I’ll let him explain:

Good ideas lead to good policy, good policy leads to good growth, and good growth reinforces good ideas. The bad news is that you can also get mired in the opposite outcome. A society can get stuck in an “idea trap,” where bad ideas lead to bad policy, bad policy leads to bad growth, and bad growth cements bad ideas.

Once you fall into this trap, all it often takes is common sense to get out. But when people are desperate, common sense gets even less common than usual. The recent flu vaccine shortage is a fine example. Common sense says that to alleviate a shortage of the vaccine, you should make it more lucrative to supply. But the reaction of much of the public is, instead, to lash out at greedy suppliers for failing to do their job.

His main point is to dispute the general idea that things have to get worse before things get better. Generally people make worse decisions as conditions worsen, thus encouraging a downward spiral.

My point in linking to this article, though, is to ask whether America is caught in an idea trap right now? Is bad policy leading to bad ideas and vice versa? Caplan argues that economic growth (not simply wealth) is a necessary precondition for better policy and better ideas. Is a psychological sense of economic growth a reality for most Americans right now? And if not, is that what underpins the incredibly poor collective decision making we’ve seen over the past few years?

Economics smackdown
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Economics smackdown

Everybody is talking about the general lack of preparedness for a major outbreak of the avian flu among humans. The only drug that’s known to help people fight off the disease is Tamiflu. It’s developed by Swiss company Roche and we don’t have nearly enough of it on hand to deal with a major flu outbreak should one arise. What should we do to obtain enough of it? One obvious answer is violating Roche’s patent on the drug and licensing other companies to produce it as well. Liberal economist Dean Baker over at MaxSpeak recommends doing just that. In fact, he recommends doing away with patents on drugs entirely:

Just for the record, the U.S. government already spends $30 billion a year on biomedical research, primarily through the National Institutes of Health. Everyone (including the pharmaceutical industry) claims that this is money very well spent and the appropriation always enjoys deep bi-partisan support. Why shouldn’t we believe that if we doubled this appropriation, to replace the $25 billion that the drug industry claims to spend on drug research (two-thirds of which goes to research copycat drugs) that we would end up with at least as good progress in developing drugs as what we have at present?

And, if the research funding all took place upfront, then the patents could be placed in the public domain. This would allow all drugs to be sold as generics. It would reduce drug prices by approximately 70 percent, saving approximately $150 billion a year. Half of these savings would go to the government (mostly through paying less for the Medicare prescription drug benefit), which would more than recoup its additional spending on drug research.

I also happened to read a post by Tyler Cowen over at Marginal Revolution arguing exactly the opposite:

We should not focus on avian flu to the exclusion of other emergencies, including bioterrorism. Avian flu is just one possible pandemic of many. If we confiscate property rights this time around, there won’t be a Tamiflu, or its equivalent, next time. We also need to stop taxing our vaccine-producing infrastructure through liability law.

Respecting Tamiflu property rights would supply an international public good as well. Many other countries will confiscate Tamiflu property rights. If the U.S. holds the line, we are subsidizing global R&D and doing a greater service for the world than our critics are willing to admit.

Interesting debate. Unfortunately, it’s purely academic since ultimately such decisions will be made based on politics rather than on economics. The pharamaceutical industry donates enough money to politicians that we’ll never see drug patents go away (assuming taking them away is a good idea in the first place), and if a flu outbreak got bad enough, public pressure would put an end to Roche’s patent. Can you imagine the public outrage if people in other countries were getting cheap, generic Tamiflu and we couldn’t get it in the United States?

Computers for hackers
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Computers for hackers

Read Mr. Jalopy’s plea for Apple to build computers for hackers:

Woz got it. Thirty seconds after unwrapping an Apple II, you were opening the lid and connecting ribbon cables. It was respect. Apple extended respect. And Apple was respected by my rocket scientist buddies and myself. Apple extended the respect through meaningful manuals, a documented architecture and a generally awesome computer. Nothing was hidden. You could POKE and PEEK your way through the whole machine.

Back in the day I was a Commodore 64 user. Apple computers were too expensive back then, too. I always envied my friends who had Apples, though. What a great computer.

Think locally
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Think locally

As discouraged as I am by nationwide politics, local politics here in Raleigh, NC are actually pretty gratifying these days. We had a municipal election on Tuesday, and we reelected our progressive mayor Charles Meeker by a wide margin, and also elected two progressive candidates to at-large seats on the city council. In one of the suburban districts, which had previously elected a hardcore right winger, the progressive candidate lost to a moderate Republican by less than 1% of the vote. At least around here we seem to have our heads on straight. Maybe it will spread.