2004 August 18 Wednesday
Business Economists See Terrorism, Aging Populations Biggest Problems

The National Association of Business Economists (NABE) Economic Policy Survey polled 172 members to rank their views on the most important issues for the US President to address in the next presidential term. The business economists see terrorism as the biggest short term threat to the economy.

Terrorism remains the biggest short-term problem facing the U.S. economy this year, according to 40% of respondents, up from 19% in March. The deficit was chosen by 23% of respondents.

We separated long-term from short-term concerns for this survey. In the longer run, the rising elderly population and related health care costs are the primary problems. The rising elderly population and the concomitant rise in the dependency ratio were the prime long-term worries for 23% of panelists (down from 27%), while 22% focused on health care costs (up from 19%). The federal deficit was chosen by 17% (down from 24%) as a significant long-term problem.

The Bush Administration has failed in their handling of the terrorist threat in an important way: weak border control policy. Far better border control policies must be part of a complete response aimed at reducing the threat to terrorism. If policies make it harder for terrorists to enter the country on visas then the terrorists will just come over land borders from Mexico and Canada illegally or jump off of ships in ports. The border with Mexico is the biggest threat on this score. But Bush's pandering for Hispanic votes prevents him from closing the border. A barrier on the US-Mexico border is affordable and would pay for itself every year just for reduced costs for health care provided by US taxpayers.

Another way of looking at the concerns of the economists is a look at how they think the next US President should spend his time.

The new president should concentrate one-quarter of his time on terrorism. We asked what percentage of his time and energy should be spent on different issues. The panel recommended that 25% of his time be spent on the Middle East and terrorism. He should spend 17% on reducing the deficit, 16% on health-care reform, and 14% on social security reform. Energy policy should account for 11% of his attention, trade 8%, and education 6%. No other problem should account for more than 1% of his time.

I would reduce the amount of time allocated to reducing the immediate deficit and on social security reform to shift more attention to old age health care. The unfunded liabilities for Medicare are in the range of tens of trillions of dollars. In particular, I would look at formulating policies to achieve the following goals:

  • Reduce the cost and time needed to get drugs to market. Allow drugs for all fatal illnesses to be made available for use once Phase II trials have been completed. Do not require sufferers of fatal diseases to wait for Phase III approval.
  • Fund comparative studies of more and less expensive treatment methods with an eye toward finding cheaper ways to treat major diseases.
  • Change how the government spends health care dollars in the Medicare program, Veterans Administration, and with government employee health care programs to create incentives for a migration to electronic medical records keeping and more rapid exchange and comparison of medical tests between doctors and pharmacies dealing with the same patient.
  • Use the VA and military to try out expert systems aimed at diagnosis as a way to reduce doctor visits and diagnostic and treatment mistakes. Interface the expert systems to the medical records systems to catch errors and unoptimal treatments automatically.
  • Accelerate research on disorders that are expensive to treat that also look like they could be more rapidly cured than other diseases. Basically, allocate research funding with the goal of finding cheap ways to treat diseases.
  • Accelerate research on therapies to reverse aging. Once we can slow, stop, and reverse aging we will no longer have a huge financial burden from taking care of old folks.

Science policy could play a much more productive role in reducing unfunded future liabilities. Better science policy and higher research funding would also increase our life expectancies and allow us to enjoy better health for longer periods of time. So it is an especially appealing tool to use in tackling the financial problems posed by an aging population.

Share |      By Randall Parker at 2004 August 18 04:45 PM  Economics Political


Comments
Fly said at August 18, 2004 7:52 PM:

Randall: “Fund comparative studies of more and less expensive treatment methods with an eye toward finding cheaper ways to treat major diseases.”

I strongly support this suggestion. The marketplace doesn’t fund research and development to minimize product prices. (When our telecommunications company was looking for venture capital funds, the VCs were only interested in how our company could maintain high price products in the face of competition.)

· “Accelerate research on disorders that are expensive to treat that also look like they could be more rapidly cured than other diseases. Basically, allocate research funding with the goal of finding cheap ways to treat diseases.
· Accelerate research on therapies to reverse aging. Once we can slow, stop, and reverse aging we will no longer have a huge financial burden from taking care of old folks."

Ditto.


I’d also expand this concept to cover social spending. I’d like to lower the cost of education, incarceration, and welfare. What if the US contracted out these services to Walmart? Would that drive prices down? Get a better product for less money.

Philip Nelson said at August 19, 2004 7:41 AM:

I personally do not believe the federal government has any business whatsoever funding social programs, not even education. Ideally, I would like to see welfare, Medicare, Medicaid, Social Security, and so forth completely eliminated, or in the case of education, returned to the states. (Out of curiousity, has anyone here read the 'Sockdolager' account of Davy Crockett? If not, I heartily recommend it; it is greatly applicable to the above. See here: http://pages.prodigy.net/krtq73aa/sock.htm )

I think one problem is that health care is artificially expensive, since it has been isolated to a certain extent from market forces. Since insurance companies primarily pay for health care in general, not the patients, I think there is a natural tendency on the part of health care providers to not be concerned about competitively pricing services. It's much easier to soak a faceless entity for extra cash rather than the little old lady actually getting the service. Also, it's clear frivolous lawsuits are a factor; and I suspect the justice system would need to be reformed before health care could be properly returned to marketplace- which is another serious issue.

And yes, regulations on drugs are another problem. It's the old tug-of-war between freedom and security, and I would rather err on the side of freedom.....

FLeming said at August 19, 2004 8:28 AM:

Yeah, give us a nanny state. A nanny state like those that have made Europe a veritable paradise. A paradise that will last until enough muslims can get on the dole and multiply themselves into a political plurality. Which won't take long.
Give us a nanny state, boys, and let's have another round!

Akefa said at August 19, 2004 12:00 PM:

A lot of people are falling through the safety net. Society can't turn a blind eye. Don't trash the present for the sake of an uncertain future. People are dying right now. There is genocide occurring right now.

Philip Nelson said at August 19, 2004 12:20 PM:

Government ought not provide a 'safety net' in the first place; that's not its responsibility.

Kurt said at August 19, 2004 1:05 PM:

Reform of the FDA is essential.

1) Allow for automatic approval of all compounds if they pass Phase II trials, not just those for treating fatal illnesses.

2) Split label policy similar to that proposed by Dirk Pearson and Sandy Shaw in the 80's.

3) Cure for aging: Currently the FDA does not consider aging itself to be a disease or medical condition. This needs to change. Aging research should not be directly funded by the government, less you get something like NASA or the fusion program (its always 30 years away). Rather, there should be prize money for private researchers to cure aging.


The legal precident for classifying aging as a medical condition has already occured. There was an age discrimination lawsuit filed in California by someone who was laid off from a job because of age. The judge ruled AGAINST the plaintiff on the grounds that his age (i.e. aging process) had affected him such that it actually adversely affected job performance and, therefor, the employer was within rights to lay the plaintiff off. I consider this to be the legal ruling that aging is, in deed, a medical condition. The logical implementation of this ruling is to force the FDA to consider aging to be a medical condition and to allow treatments to stop or cure it.

A system of prize money for a cure for aging could be implemented in a similar fashion to that proposed by Newt Ginrich in the early 90's for a manned mission to Mars. Since it appears that NASA is beginning to favor a prize based system for space development, a similar system should be proposed to end aging.

Proborders said at August 19, 2004 1:23 PM:

Randall, immigration from Mexico could be increased as the border with Mexico is made more secure. Who might like this? Activists for Mexican immigrants, people who want more Mexicans to migrate here, and people who want more security but aren't too concerned about Mexican immigration. It is, thus, possible to have increased border security with Mexico and more Mexican immigrants.

I favor reducing immigration from Mexico.

In my opinion the greatest risk associated with Mexican immigration is the possible loss of parts or all of the American Southwest to Mexico or a new Hispanic nation-state. The American Southwest used to be part of both Mexico and the Spanish Empire, thus Mexicans living in the American Southwest could say that they are living on lands that used to belong to Mexico.

The Mexican/Mexican American population in the USA is large, numbering over 20 million. In New Mexico and California a majority of babies are born to Hispanic women. In Texas a plurality of birth mothers are Hispanic. In Arizona it will likely not be very long until Hispanic women have more babies than non-Hispanic white women.

Philip, what are your opinions about the current immigration system?


Philip Nelson said at August 19, 2004 1:55 PM:

Excepting Divine intervention, aging is a natural and unavoidable process. Thermodynamics is not only a good idea; it's the law. :)

As such, I'd say adverse medical conditions are commonly considered to be something more than the natural progression of life. And while research can improve longetivity, it cannot achieve immortality. (Thermodynamics is a terrible opponent.) Since longetivity simply postpones aging, I don't see how it can actually lower the overall cost of health care.

By the way, there are key problems not mentioned. Processed foods (especially hydrogenated foods) are a nasty culprit, for instance. Diet in general needs to change, but not through government mandate.

Philip Nelson said at August 19, 2004 2:17 PM:

Some thoughts on immigration:

I think all illegal immigrants should be deported, wherever they are found; and I think the borders need to be guarded tightly. Aside from stringent enforcement, the immigration laws probably do need quite a bit of revision; but I would rather do so without rewarding current illegal immigrants.

However, it seems illegal immigrants have become an integral part of the economy, as they fill a wage slot currently banned by our minimum wage laws. Part of the solution to illegal immigration needs to be removing the minimum wage. In general, when prices are fixed too high for a commodity- be it alcohol, cigarettes, or labor- market forces may well manifest themselves nonetheless through illegal venues. Once the minimum wage is removed, businesses will no longer be rewarded for employing illegal immigrants; the reward for illegal immigration will be lessened; and the economic impact of stopping illegal immigration will be mitigated. (Removing social benefits for illegal immigrants would help tremendously as well.)

In general, I do not have a problem with people immigrating to the US, as long as they do so legally, support themselves, do not expect the US to be an extension of their home country, and make an effort to learn the language and adapt- which all is in the best tradition of our best immigrants.

noone said at August 19, 2004 5:08 PM:

"However, it seems illegal immigrants have become an integral part of the economy, as they fill a wage slot currently banned by our minimum wage laws."

A lot of that labor is a luxury,as will be revealed in the next real economic downturn.

Kurt said at August 19, 2004 9:02 PM:

Philip:

The comparing the aging process to the law of thermodynamics is not a correct analogy. The concept of entropy only applies to closed systems. The body is definitely not a closed system because you receive inputs in the form of air, water, and food and produce outputs in the form of sweat, urine, and shit. If aging was a matter of the laws of htermodynamics, life would never have lasted the 4.5billion years that it has, because the germline is definitely immortal.

There are plenty of multicellular organisms that do not age. Sea urchins are one of them. I honestly do not understand why people persist in believing that aging cannot be cured. The human body is a sophisticated system of molecular technology, capable of a certain amount of self-repair. Elimination of aging is simply a matter of increasing that self-repair capability

I recommend you have a look at the SENS website (www.gen.cam.ac.uk/sens) before stating that aging cannot be eliminated. Many people made similar claims about heavier than air flight in the late 19th century as well as about nuclear energy in 1933.

I stand by my point that aging is curable and that SENS is the appropriate approach to take.

Philip Nelson said at August 20, 2004 6:32 AM:

Free energy is not a solution in itself; it does not automatically increase the order of an already ordered system- in fact, it does much the opposite. Consider the massive free energy of a hurricane entering the ordered system of a city. Or for something less dramatic, consider the free energy of weather affecting the ordered system of an abandoned house.

Regarding an already highly ordered system, there must be a conversion mechanism for free energy to further increase the order of the system. Now you are correct- the human body is exceedingly complex. Is it possible to actively perform maintenance on all cellular structures to counter the effects of thermodynamics? That is an incredible task (and would be extremely costly). But the most serious difficulty is the genetic code itself. Despite built-in correction mechanisms, mutations are steadily building in the DNA, reducing its order. The effects are not seen so much because we inhereit two copies of the code; and as far as I know, it requires mutations in both to manifest the negative effects. (That's why marrying cousins is not a good idea- the children will have genetic defects.) But the mutation burden is increasing, and as that progresses it will be a bad idea to marry people further and further apart in relation. The human race is headed towards genetic death, as is predicted by thermodynamics. Can we reverse that? And do you realize what it would take to research it? Reverse engineering DNA to that degree would require massive experiments on humans.

Of course, thermodynamics predicts that the universe- as a closed system- will eventually succumb to heat death anyhow; immortality is impossible given those parameters. :)

Fly said at August 20, 2004 4:13 PM:

Philip Nelson: “Despite built-in correction mechanisms, mutations are steadily building in the DNA, reducing its order.”

I’m curious as to your source for this information.

Yes, mutations occur at a very steady rate in protein coding, regulatory, and non-coding DNA. Selective pressure weeds out harmful mutations and favors beneficial mutations. Mutations in the non-coding DNA that makes up most of the human genome are neutral in that they neither help nor hurt.

The largest source of genome change isn’t single nucleotide polymorphisms. Copying errors that lead to duplicate and fragment chromosomes change the genome the most. The second factor that changes the genome is transposition elements and viruses.

Bacterial genomes are highly optimized with almost no “junk” DNA. Bacteria are under severe selection pressure and so the metabolic load of “junk” DNA is weeded out. (Bacteria also share many genes among a bacteria community so each individual bacteria doesn’t have to support the entire bacterial genome.)

Yeast genomes are moderately optimized with much more “junk” DNA than bacteria but much less than humans. (Humans and yeast share many genes.)

Animal genomes have lots of “junk” DNA. In addition, they often have several functional copies of the same gene. Many genes incorporate regulatory sections that turn off other genes. If you knock out the primary gene then a secondary copy turns on and provides the same or similar function. (Early research on “knock-out” mice was confusing because “knocking-out” genes seemed to have no effect. Only when several genes were “knocked-out” together was the gene function stopped.)


My guess is that animal genomes have been selected to be fast evolving. Mutations, copying errors, large amounts of non-coding DNA, multiple copies of very similar genes all point to a genome that is robust and highly adaptable.

“The human race is headed towards genetic death, as is predicted by thermodynamics.”

Rather than being a fatal flaw, the animal genome is a highly evolved, highly successful system that provides amazing adaptability and robustness. (No software code begins to match this adaptability and robustness.)

“Reverse engineering DNA to that degree would require massive experiments on humans.”

Evolution did well to get humans to this point. Now humans will direct their own evolution. Most experimentation is being done on bacteria, yeast, C. Elegans, fruit flies, fish, frogs, and mice. Some experimentation will occur in humans. I hope to live long enough to be an early adapter. (With luck I’ll be seeded with gene-engineered stem cells that will rejuvenate and enhance my body.)

gcochran said at August 20, 2004 7:41 PM:

You can reduce entropy with enthalpy. Given the right method and enough free eenrgy and you can stop aging. no problem. Aging is an evolutionary consequence of separting somatic and germ cells, not thermodynamics.

noone said at August 21, 2004 2:33 AM:

"Of course, thermodynamics predicts that the universe- as a closed system- will eventually succumb to heat death anyhow; immortality is impossible given those parameters. :)"

By which time humans will have colonised space.

We will exsist somewhere,if the crazies don't get us.And I'm far more concerned about biological weapons than nukes.One good,geneticaly engineered plague could set the human race back by centuries.

Philip Nelson said at August 23, 2004 9:22 AM:
Selective pressure weeds out harmful mutations and favors beneficial mutations. Mutations in the non-coding DNA that makes up most of the human genome are neutral in that they neither help nor hurt.

At the very least, modern health care and environmental technology mean that natural selection has relatively little effect on the human population of first world nations. And by 'mutations' I was using the term loosely to indicate random changes (of whatever kind) in the genetic code that are passed along to descendants (I guess the proper term is germline mutations?).

Now the vast majority of those mutations are either negative or neutral. And the few positive I have read about do not represent an increase in the order of the genetic system; they are beneficial for other reasons. And I indicated why already: regarding an already highly ordered system, there must be a conversion mechanism in place for free energy to further increase the system's order, else it will tend to be degraded overall. When does free energy ever randomly increase the order of an already ordered system? A seed grows into a tree using free energy, but it has a guiding mechanism to do so. A crystal forms from heat and pressure and material, but there is a law mandating that it occur given certain basic conditions. A flood ravages ordered cities, but a dam harnesses that power to provide more order to cities. A nuclear weapon is designed to inflict a great deal of uncontrollable free energy- and a lot of disorder- while a nuclear power plant is designed to do the opposite. A hurricane is an immense source of free energy; but we have not been able to harness it- and the disorder a hurricane can inflict is equally immense. Less dramatic natural forces will wear down an abandoned building. Free energy must be harnessed in order to be converted into more order in an already highly-ordered system; the possibility of it happening randomly is extremely low.

The genetic code itself is a highly-ordered system, and random germline mutations represent free energy entering the system and changing it. If there is no mechanism to convert the free energy into more order, then the free energy will overall cause a decrease of order in the genetic code. Natural selection cannot be the mechanism; for it does not determine which mutations occur in the first place, it only affects which mutations survive. It cannot force a good mutation to occur by harnessing free energy to change the genetic code (as a genetic technician might do). And I have never heard of such a natural mechanism or law in relation to the genetic code and germline mutations. If neither exists, a random mutation that increases the order of the genetic code would be an extreme rarity- a nigh-on impossibility. Evolution would therefore be a practical impossibility even given eons and perfect selection efficiency, since it would require an incredibly massive number of such nearly impossible order-increasing changes to reach the point of high order we see today in the genetic code.

Free energy isn't enough in itself to resolve the challenge of thermodynamics; there must be a conversion mechanism as well. That is a foundational problem for evolution; and I have never seen it answered, but would welcome information on it.


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