Friday, 29 August 2014

How to misunderstand the Coase theorem 3

From the comments on one of my previous posts comes this from Economists Do It With Models
Actually, one of the articles on the subject mentioned that the SeatDefender device that was used was not allowed, which would imply that the property rights are at least implicitly assigned to the recliner.
I have not seen that. But if true then the airline just has to make clear what the property right is and let bargaining take place or while the SeatDefender may be illegal it still doesn't necessarily mean that property rights have been defined. Use of the device may just be an attempt at "homesteading" legroom.

Also from the Environmental and Urban Economics blog comes an Update:
Yes, I am well aware that the Coase Theorem assumes that property rights are well defined and agreed upon (so some have said that the Coase theorem does not apply here) but what is interesting about this case is that the airline has not established these rules. It is also interesting that transaction costs precluded the ability of others on the plane to offer their seat to the woman who wanted to recline because this simple solution would have resolved this "crisis". Nobody gained by landing the plane in Chicago. People lost time, they had to land and takeoff one more time. The Coase theorem assumes a smooth redistribution of resources but instead resources were destroyed in this multi-player interaction. This should interest economists.

Thursday, 28 August 2014

How to misunderstand the Coase theorem 2

Following on from my posting yesterday I see that someone does get the Coase Theorem. Writing at the Wall Street Pit Donald Marron says
Somewhere Ronald Coase is smiling. He identified that answer in 1960 in his famous paper, The Problem of Social Cost.

If the little girl has the property right to recline, then you can pay her not to do so. If you have the property right, you can install a Knee Defender.
Yes, but as I noted yesterday the problem here is that property rights are not defined.

Marron goes on the say,
But who should have the property right? Coase would say it depends–some people don’t like negotiating with other passengers. Given those “transaction costs” the right ought to be given to whichever person is most likely to want it most.

I’d bet on the “reclinee” not the recliner. Which might explain why more airlines now offer the ability to pay extra for more legroom. After all, United would rather you pay them than the little girl.
This answer, extra legroom, may not be about the airline collecting the payment which would otherwise go to the recliner since a seat with more legroom is not the same thing as a seat with less legroom. The amount of the externality is not reduce by having more legroom, the recliner may still recline just as much, its just that the reclinee is no longer affected by the reclining. So seats with more or less legroom are two different goods and thus the airline may simply be selling different types of goods to different types of customers.

The Economics of World War I. 3

Another in the series of posts from The Economics of World War I project at
Walking wounded: The British economy in the aftermath of World War I
Nicholas Crafts 27 August 2014
It is well-known that World War I was expensive for Britain. The indirect economic costs were also huge. This column argues that the adverse implications of the Great War for post-war unemployment and trade – together with the legacy of a greatly increased national debt – significantly reduced the level of real GDP throughout the 1920s. A ballpark calculation suggests the loss of GDP during this period roughly doubled the total costs of the war to Britain.

Wednesday, 27 August 2014

How to misunderstand the Coase theorem

This comes from Matthew E. Kahn's Environmental and Urban Economics blog:
My fellow University of Chicago economists, stop reading Krugman's latest and explain this puzzle to me. A United Flight to Denver was diverted to Chicago because of a fight between two 48 year olds over whether the person sitting in front in Economy Plus has the right to recline her chair. For details read this.

As we get ready to start the new academic year, here is an excellent example of the Coase Theorem not working! Who has property rights on an airplane when the person in front of you wants to recline while you care about your knees? Why was this United flight diverted to Chicago? Wasn't that a destruction of resources for everyone involved? My fellow Becker students, what is the answer? You have 10 minutes to answer this 6 point question. The Coase Theorem predicts that the recliner should have paid the person behind her? True, false, uncertain. Explain.
Kahn states "here is an excellent example of the Coase Theorem not working" and then asks "Who has property rights on an airplane when the person in front of you wants to recline while you care about your knees?" And he does not seem to notice the importance of the second point to his first point.

The Coase Theorem assumes that property rights are well defined, it doesn't matter who has those rights, but someone must have them allocated to them. The problem with the seat example, as the second point makes clear, it that property rights are not well defined and thus the theorem does not apply here. Not, at least, until the airline clearly defines seating rights.

Even sweatshop jobs can be good for you,

especially if you are female.

A new NBER working paper looks at Manufacturing Growth and the Lives of Bangladeshi Women. The paper is by Rachel Heath and A. Mushfiq Mobarak.

Heath and Mobarak note that there is very little rigorous analysis of the welfare effects of access to factory jobs - "sweatshop jobs" - for women, and the "evidence" that there is is dominated by anecdotes from anti-sweatshop activists about the negative effects of hazardous working conditions. The evidence gap is especially pertinent for policymaking in Bangladesh, where well-publicized garment factory collapses and fires and their attendant death tolls recently captured the world’s attention. In response to the disasters individual large buyers, in addition to the U.S. government, have made moves to restrict or boycott garment exports from Bangladesh but such export restrictions and boycotts come with the potential to hurt the very workers that they are designed to protect.

The manufacturing industry in Bangladesh currently employs almost 4 million workers and it was the first industry to provide employment opportunities to women on a large-scale in a country where women traditionally have not worked outside the home. In doing so to it has raised the opportunity cost of being married and having children. These sweatshop jobs require a basic level of literacy and numeracy skills and the arrival of garment factories therefore has potentially affected enrollment, employment, marriage and childbearing decisions for Bangladeshi women.

Heath and Mobarak's
[...] results suggest that the rise of the garment industry can help explain the declining fertility, increasing age at marriage, and rapid increase in girls' educational attainment during this period, both in absolute terms and relative to boys [...]. Approximately 80 percent of garment factory workers in Bangladesh are female [...] and extrapolation from our data and national surveys suggest that around fifteen percent of women nationwide between the ages of 16 and 30 work in the garment industry. The education results are particularly policy- relevant, as Bangladesh has surpassed the third Millennium Development Goal of gender equity in enrollments, a goal with which many other countries in Western Asia and sub-Saharan Africa continue to struggle. Our research design permits a study of investments in girls relative to boys, which is of considerable policy [...] and also academic interest, given the comparative advantage girls possess in skilled tasks [...]. Our results provide one hitherto unexplored explanation for the accelerated gender equity in education in Bangladesh, thus generating important policy implications for other developing countries interested in emulating Bangladesh's success.
There are, in theory, a number of different ways that access to factory jobs can alter women’s school, work, marriage and childbearing decisions.
As documented for maquiladora jobs in Mexico, older children may be induced to drop out of school to access the factory jobs [...]. Conversely, younger children (who are still too young for the factory jobs and do not face the temptation to drop out and begin earning immediately) may respond by investing in education if the availability of relatively well-paid manufacturing jobs increase the returns to education. Educational attainment might also increase through a wealth effect, if parents can now better afford to send their children to school. Both the increased enrollment channel and the direct factory employment effects would result in girls delaying marriage and childbirth.
Heath and Mobarak
[...] document that the hazard of marriage and childbirth at early ages (12-18) drops sharply for girls when they gained exposure to the ready- made garment sector. This is important because other research has documented large negative welfare implications of early marriage and early childbirth [...].
Next Heath and Mobark examine the ways by which these delays in marriage and childbirth occur.
Did girls increase their educational attainment in order to obtain well-paying garment jobs which require numeracy and literacy, which then led to a postponement of marriage due to greater educational attainment? We assess the effect of cumulative years of exposure to garment factory jobs on the total years of educational attainment (for those with completed schooling histories), adding an additional comparison to the girls’ male siblings, given that garment production is has been a much larger innovation in the labor market for girls than for boys [...]. We find that girls gain an extra 1.5 years of education relative to their brothers in the median garment-proximate village. This represents a 50% increase in girls’ educational attainment over control villages that do not have a garment factory nearby. We observe the increase in female education (relative to their male siblings) even in families where the mother or older sister never worked in a factory, which suggests that increased demand for skills in factories that offer job opportunities for women is a likely channel through which the enrollment gains are realized, in addition to any family wealth effect or changes in intra-household time allocation from other household members working in garment factories.

We next use retrospective data on the entire history of annual school enrollment decisions for each girl to test whether the effects of the garment industry on schooling are strongest for younger girls. We find that young girls (aged 5-9) are more likely to stay enrolled in school hen factories open close to their village compared to girls in comparison villages in the same sub-district that are not located within commuting distance of factories, relative to earlier years (before the factory opens), and relative to male siblings of the same age.
While there is a positive effect on education for young girls, what about those a bit older?
Our data also indicate that the delays in marriage and childbirth we estimate likely also stem from girls in garments-proximate villages choosing to work in factories when they are about 17-23 years old, instead of getting married (or staying in school). Factory job access has a small negative effect on school enrollment of 17-18 year olds (unlike the positive effect for younger girls). More importantly, girls who are exposed to factory jobs when they are between 10 and 23 years old (which is the critical age group at risk for early marriage in Bangladesh) are 17 percentage points more likely to have done wage work outside the home, and this is a 79% increase over the control group.
In summary,
[...] access to factory jobs significantly lowers the risk of early marriage and childbirth for girls in Bangladesh, and this is due to both the girls postponing marriage to work in factories, and the girls staying in school at earlier ages. We benchmark the magnitude of the effects of the garment industry against the effects of a large-scale (US$15 million per year) conditional cash transfer for schooling intervention run by the Bangladesh government with multilateral donor support. The program has paid for 2 million girls to remain in school, conditional on remaining unmarried. The dramatic improvement in girls' outcomes in Bangladesh in the past 30 years has 5 frequently but casually been attributed to the FSP, but our estimates suggest that the rapid expansion of the garment sector has been a much more important reason for the decreases in earlier marriages and fertility and the closing of the gender enrollment gap in Bangladesh.
While sweatshop jobs are not great jobs, by our standards, they do come with positives for those people in poor countries who can get them. The anti-sweatshop groups should keep this in mind when attacking such forms of employment. Sweatshops are the first step down the road out of poverty.

Video of Alvin Roth talking on "Repugnant markets and prohibited transactions"

This is a 30 minute video of Alvin Roth's recent lecture at Lindau, on Repugnant Markets and Forbidden Transactions.

Tuesday, 26 August 2014

The effects of patent trolls

There is a new organisational form, called the non-practicing entity (NPE), in the world of intellectual property. NPEs have recently emerged as a major driver of IP litigation. The idea is that NPEs amass patents not for the sake of producing any actual product, but rather they aim to prosecute infringements of their patent portfolios. (rent-seeking?) The rise of NPEs has sparked a debate regarding their value and their impact on innovation. Proponents argue that imperfections in the legal system implicitly reward large, well-funded organisations, enabling them to infringe at will on small innovators’ IP and that NPEs are there to protect small innovators from such abuse. Opponents cast NPEs as organisations that simply raise the costs of innovation by exploiting the fact that an imperfect legal system will rule in their favour sufficiently often—even if no infringement has actually occurred—that the credible threat of the legal process can yield rents from producing, innovative firms.

So what are the effects of these "patent trolls"? A new NBER working paper, Patent Trolls: Evidence from Targeted Firms by Lauren Cohen, Umit Gurun and Scott Duke Kominers, tries to find out. Cohen, Gurun and Kominers add to the debate on NPEs by providing the first large-sample evidence on precisely which corporations NPEs target in litigation, when NPE litigation occurs, and the impact of NPE litigation on the targeted firms’ innovative activity.

Cohen, Gurun and Kominers argue that there are two reasons that patent trolls can prevent welfare-increasing innovation from being brought to market.
  1. innovators with profitably commercialisable inventions but with a high enough probability of being sued to be deterred from production
  2. innovators that decide not to commercialise because the ex ante expected profitability of becoming a patent troll is higher than that of commercialisation
In their empirical work Cohen, Gurun and Kominers
[...] link patent-level data on NPEs and their activities to data on all publicly traded firms. Using this linked data, we show that NPEs behave opportunistically; that is, typically acting as patent trolls. Specifically: NPEs target firms that are flush with cash (controlling for all other characteristics) and firms that have had recent, positive cash shocks.

Indeed, a one standard-deviation increase in cash level increases the probability of being sued by an NPE by 11% (t = 6.84). Given that the mean probability is 2%, this is more than a fivefold increase.

In fact, NPEs even target conglomerate firms that earn all of their cash from segments having nothing to do with the allegedly infringing patents. For example, an NPE is likely sue a firm regarding a technology patent even if the firm is earning all its revenue from a lumber division entirely unrelated to the allegedly infringing technology patent—even if the division holding that patent is unprofitable. Indeed, we find that profitability in unrelated businesses is almost as predictive of NPE infringement lawsuits as is profitability in the segment related to the allegedly infringing patent.

Consistent with our model, we also find that NPEs target firms against which they have a higher ex ante likelihood of winning. We demonstrate this fact using multiple measures of ex ante likelihood of lawsuit success. First, we show that NPEs are significantly more likely to target firms that are busy dealing with a number of other litigation events unrelated to intellectual property. Being tied up with outside litigation roughly doubles the probability (t = 2.87) of being sued by an NPE. Moreover, we show that, controlling for all other characteristics, firms with larger legal teams have a significantly lower probability of being targeted by NPEs, consistent with large legal teams serving as a deterrent.

Of course, the true prediction of our model is on the ex ante expected profitability of NPE litigation. To capture this, we interact our measures of expected cash payouts with our measures of expected lawsuit success. We find that, as the model predicts, NPEs systematically target those firms for which the ex ante expected profitability of litigation is large. In particular, the payout probability interaction terms are significant and economically large. Our finding suggests that nearly all the firms targeted by NPEs have large pools of cash for potential payouts and are ex ante more likely to pay off in some form (either an out-of-court settlement or an in-court loss). To further explore this connection, we construct a measure of the ex ante expected outcome if a targeted firm were to go to court. This measure relies on the assumption that defendants often make predictions about the likely outcome based on observations of other firms in the same industry and location. We find that the interaction term of this expected outcome and expected payout is again large and significant, providing further evidence that NPEs choose targets based on expected profitability: suits with high probability of payoff against firms with deep pockets.

Non-practicing entities don’t have a monopoly on IP litigation. Practicing entities (PEs), such as IBM and Intel, also sue each other for patent infringement. If our results are simply picking up general characteristics of IP litigation, then we might expect to see PEs behaving in much the same way as NPEs. In order to compare PE and NPE behavior, we hand-collected the universe of patent infringement cases brought by PEs against other PEs in the same period (2001–2011). However, we find the opposite. If anything, PEs are slightly less likely to sue firms with high cash balances and less likely to sue firms with many ongoing cases. All of the other determinants of NPE targeting have (statistically and economically) no impact on PE litigation behavior. This comparison suggests that our results on NPE litigation behavior are not just reflections of general characteristics of IP litigation. Rather, our findings are consistent with agent-specific motivations for NPEs in targeting firms flush with cash just when favorable legal outcomes are more likely.

Lastly, we examine the real impacts of NPEs’ litigation activity. Comparing firms that are sued by NPEs and go to court (and in this way controlling for selection of firms targeted by NPEs), we find that firms that lose in court have significantly lower post-litigation patenting activity and fewer citations to their marginal post-litigation patents, relative to firms whose cases are dismissed. Furthermore, after losing to NPEs, firms significantly reduce R&D spending—both projects inside the firm and acquiring innovative R&D projects outside the firm. Our evidence suggests that it really is the NPE litigation event that causes this decrease in innovation. Prior to litigation, firms that subsequently lose to NPEs are identical to those that subsequently have suits dismissed. They have the same R&D, patenting, and patent quality. Moreover, patents of firms developed pre-litigation continue to accrue citations at exactly the same rate after litigation, whether or not the suit was dismissed. This is in stark contrast to the divergent amount of citations of firms’ post-litigation patents.
In short, NPEs behave as patent trolls.

But what is the point?

From the TVNZ website we learn that
The New Zealand dollar dropped sharply in mid morning trade today, shedding half a US cent in about five minutes and prompting speculation of Reserve Bank intervention.

The kiwi fell, from 9:15am when it was trading at 83.96 US cents, to 83.40 US cents at 9:21am. The local currency subsequently touched a six-month low of 83.36 US cents and was recently trading at 83.44 cents.
Let us assume that it is intervention by the RB that caused this, What is the point? As soon as the intervention stops the dollar will go back to where it began, assuming other factors haven't changed. And if other factors have changed to bring the dollar down, there seems no point to any intervention. To keep the dollar "low" the RB would have to keep on intervening and it can't do that, so what does the RB get for its effort?

The TVNZ article goes on to say,
New Zealand's Reserve Bank has previously said the local currency is too high and raised the possibility it could intervene in the market by selling kiwi in an attempt to push it down.
Which brings us back to the old question of what does "high" or "low" even mean? After all the exchange rate is just the price of foreign exchange and like all freely determined prices, they are what they are. "High" or "low" has little meaning.

Econtalk this week

Daphne Koller of Coursera talks with EconTalk host Russ Roberts about online educational website Coursera and the future of education both online and via bricks-and-mortar. Koller, co-founder of Coursera with Andrew Ng, explains how Coursera partners with universities, how they try to create community and interaction, and the likely impact of widespread digital education on universities and those who want to learn. The conversation includes a discussion of why Koller left a chaired position in computer science at Stanford University to run a for-profit start-up in a crowded field.

A direct link to the audio is available here.

Monday, 25 August 2014

Competition and productivity

An obvious and important question in industrial economics is does competition raise productivity and if so, through what mechanism? In a 2010 working paper, Does Competition Raise Productivity Through Improving Management Quality?, John Van Reenen sets out to answer that question. He writes,
I discuss recent empirical evidence from both large-scale databases and specific industries which suggests that tougher competition does indeed raise productivity and one of the main mechanisms is through improving management practices. To establish this, I report on new research seeking to quantify management. I relate this to theoretical perspectives on the economics of competition and management, arguing that management should be seen at least in part as a transferable technology. A range of recent econometric studies suggest that (i) competition increases management quality and (ii) improved management quality boosts productivity.
Thus Van Reenen's argument is that competition does indeed increase productivity and a major mechanism for this is via improved management practices. He says that management is a transferable technology and that competition fosters the adoption of better management practices through both selecting out the badly managed firms (reallocation) and giving incumbent firms stronger incentives to improve their management practices. He argues that this perspective is supported by a range of new evidence both from new ways of measuring management and from more robust forms of identifying the causal impact of competition changes on productivity outcomes.

This has important implications for a small trading country like New Zealand. Given our small internal market how do we increase competition? One way is to open our markets to foreign trade and investors. Yes, allow foreigners to trade here and to buy assets here. Yes I know, certain political parties will not be too pleased with this idea.

Allowing foreign companies to trade here increases competition in our market in general and thus forces improvement in terms of management on local firms. But as my previous posting on the example of France showed foreign ownership can also improve a firm's productivity. Foreign investors are more likely to takeover firms that are currently under-performing and thus are open to productivity improvements. Such investors are more likely to buy firms that aren't working, right now, as well as they have in the past. The targets of foreign buyouts normally had experienced substantial productivity decline in the years prior to the foreign takeover. The foreign buyers then use their expertise, including improved management practices, to correct things and thus increase productivity. Of course this performance improvement puts additional pressure on other firms to up their game as well.

Thus foreign trade and ownership can both improve productivity by increasing competition in the local market and thus putting pressure on local firms to improve the quality of their management.

Sunday, 24 August 2014

You know your economy is in trouble when .........

In City A.M. Guy Bentley writes
The President of Venezuela, Nicolas Maduro, has announced plans for a major mandatory fingerprinting system to combat the increasingly dire food shortages and rampant smuggling afflicting the Latin American state.

He said the fingerprinting system would be similar to the one the country uses for voting and was intended to stop Venezuelans buying too much of a single item. Venezuelan authorities report up to 40 per cent of the goods the country subsidises for its domestic market are smuggled to Colombia and sold at higher prices.
The opposition argued mandatory fingerprinting is yet another demonstration of the government's "failed socialist policies", which has seen essential goods driven from shop shelves, oil production plummet and growth slow to a snail's pace.

Venezuela has been running short of basic goods like toilet paper, soap and cooking oil for over a year. Strict currency controls and a shortage of US dollars have hammered consumers' ability to get imported goods.

Furthermore, price controls have crippled the ability of producers to make profits and correctly identify market signals.
Earlier this month, in a desperate move to combat a wave of smuggling, the government deployed 17,000 troops on the Colombian border and began closing crossings at night.
I can't help but think that any system that requires 17,000 troops to stop smuggling of staple food items and fingerprinting of shoppers to stop them buying "too much" is a system that clearly is not working. Instead of such measures, which won't work anyway, President Maduro should remove subsidies, price controls and currency controls and reintroduce markets so that the price mechanism can work to give producers the right incentives to produce and consumers the right information to make decisions about what to buy. Only then will shortages be removed and smuggling stopped.

Do economists play well with others?

The unlikely sounding answer to this question is yes. This answer comes from a paper in a recent issue of The American Economist (Vol. 59, No. 1 (Spring 2014)) on "Do Economists Play Well with Others? Experimental Evidence on the Relationship Between Economics Education and Pro Social Behavior" by Bryan C. McCannon. The abstract reads:
Does an economics education affect an individual's behavior? It is unclear whether differences in behavior are due to the education or whether those who choose to study economics are different. This issue is addressed using experimental evidence from the Trust Game where trusting and reciprocating behaviors can be measured. First, it is shown that economics students provide greater trusting investments and reciprocate more. Accounting for the selection effect, these effects are explained by those who choose to study economics and not directly from the education being provided. Thus, economists play well with others and these social preferences are not taught in the classroom.
The upshot of the experimental research discussed in the paper is that as the number of economics courses taken increases, more trusting investment and more reciprocation occurs. Thus, students of economics create more wealth and engage in more "pro-social" behaviour. Using the surveys as an instrument to disentangle the selection effects and learning effects, the results indicate that this outcome is due to the selection effect rather than learning. The estimated impact of an additional economics course taken reduces and becomes statistically indistinguishable from zero. Thus, those who choose to study economics are, indeed, different from other students and the classrooms do not have a substantial, independent impact on behaviour. Thus, the answer posed in the title, do economists play well with others, can emphatically be answered, yes.

That is, economists are just nice!

But you all already knew that ...... didn't you.

Saturday, 23 August 2014

Interesting blog bits

  1. Carlos Vargas-Silva asks Are Migrants Good for the Economy?
    Two studies about the impact of migration on the UK economy have been published which – if media reports are to believed – appear to contradict one another. A closer reading of these reports, however, shows that in fact they come to very similar economic conclusions.
  2. Chris Dillow on Optimum Deaths
    What is the optimum number of migrant deaths? The answer is not zero.
  3. Tim Worstall points out What glories this capitalist free market thing hath wrought
    There’s nothing worse than being exploited by some running lackey pig dog of a capitalist, as Deirdre McCloskey reminds us.
  4. Joel Waldfogel on Piracy Undermining Content Creation: Loch Ness Monster or Black Swan?
    Theory and common sense dictate that piracy should threaten new product creation. If it costs money to bring new works to market, then a reduction in revenue – all else constant – should render some projects uneconomic. So compelling is this theory that the content industries share it with lawmakers at every opportunity. Robert Solow once quipped, “You see the computer age everywhere but in the productivity statistics.” So it has been with piracy and content creation: one can see a negative impact of piracy everywhere except in the evidence about content creation. Maybe until now.
  5. Ed Dolan on Universal Basic Income and Work Incentives: What Can Economic Theory Tell Us?
    Everywhere you look, it seems, people are talking about a Universal Basic Income (UBI)—a monthly cash benefit paid to every citizen that would replace the existing means-tested welfare system.
  6. Tim Harford on Monopoly is a bureaucrat’s friend but a democrat’s foe
    “It takes a heap of Harberger triangles to fill an Okun gap,” wrote James Tobin in 1977, four years before winning the Nobel Prize in economics. He meant that the big issue in economics was not battling against monopolists but preventing recessions and promoting recovery.
  7. Andrea Prat asks How can we measure media power?
    The potential for political influence is what most people think of when they talk about the power of the media. A new media power index, proposed in this column, aggregates power across all platforms and focuses not on markets but on voters. It measures not actual media influence but rather its potential. Using the index, the author finds that the four most powerful media companies in the US are television-based and the absolute value of the index is high. This indicates that most American voters receive their news from a small number of news sources, which creates the potential for large political influence.
  8. Gabriel M. Ahlfeldt, Stephen Redding, Daniel M. Sturm and Nikolaus Wolf on The economics of density: Evidence from the Berlin Wall
    Economic activity is highly unevenly distributed across space. Understanding what drives the agglomeration and dispersion is important for many economic and policy questions. This column describes a theoretical model of internal city structure incorporating agglomeration and dispersion and heterogeneity in local fundamentals. The authors use the division and reunification of Berlin as a natural experiment. Their findings show that both heterogeneity in locational fundamentals and agglomeration forces are important in shaping a city’s internal structure.
  9. Tim Worstall on Companies are the cells of the economy
    It’s often pointed out that companies are little sections of a command economy and thus, some leap to say, obviously it’s possible to have a command economy because we actually do.