Marginal Revolution

Aphorisms by Juan Ramón Jiménez

I liked these ones:

The true poet reanimates in his work, in abbreviated form, the complete history of poetry.

The rose: how can it be naked and clothed, all at the same time?

In order to read many books, buy just a few.

I am humble among the serious, proud among the vain.

Here is a brief biography.  Here are more of his aphorisms.

Why did the Houston Rockets draft Yao Ming?

Yao Ming is (was?) a very good player and of course he looked great on paper.  He's now injured for the third season in a row and out for the year.  He has never been past the first round of the playoffs and it is not clear he will ever be healthy.  It is clear that players over 7'4" almost always have persistent injury problems; human beings with that frame were not meant to play professional sports, least of all contact basketball.  There are plenty of people that tall, but who has had the most successful basketball career?  I believe the answer has to be the not totally impressive Rik Smits. 

So why did the Houston Rockets draft Yao Ming?  They couldn't not draft him.  The lessons for financial markets are obvious.  Drafting Yao Ming is like writing the disguised naked put.  You see the money in front of you, you see the return in front of you, you see the potential in front of you, none of the alternatives are so glamorous, and so you can't not do it. Besides, other players get injured too.

Yao Ming, the naked put.  Think about it.

Odd Numbers blog, from Portfolio

It is very good, find it here.  You'll find posts on whether we should abolish the penny, why housing derivatives aren't more popular, and which is now the largest "emerging market" (Brazil, not China).  Thanks to Chris F. Masse for the pointer.

Should we waive legal liability for FDA-approved drugs?

So asks Megan McArdle.  The argument runs as follows:

I don't understand quite why FDA approval of drugs and medical devices hasn't long provided legal safe harbor for their manufacturers. The defects that show up, such as the Vioxx and Fen-Phen problems, are discovered long after approval precisely because they're so rare that they don't show up in ordinary clinical trials. If the government experts, who are presumably highly motivated to avoid catastrophes, can't spot the danger, why do we expect the drug companies to?

I can think of three possible rebuttals:

1. We simply can't trust the bureaucrats to find the flaws with drugs.  But note this is inconsistent with both the rhetoric of FDA defenders ("the FDA can work") and FDA critics, who argue we are overinvesting in drug safety as it is.

2. Lawsuits encourage the companies to look for problems once a drug is already approved.  Regulation does not.

3. People need lawsuits as a way of emotionally striking back.  If they are denied that privilege, they will demand ridiculously oversafe levels of regulation in the first place.  In this view regulation is as much about building consumer confidence in a health care system as it is about protecting people.

I do not currently have a view on this matter.  Do you?  Kevin Drum is opposed.