Harford on the Poor Going Private

Tim Harford has a great little piece in FT on the poor in undeveloped countries turning to the market to provide services even when there is free government provision:

Imagine that your daily earnings were less than the price of this newspaper. Would you consider buying private education and private healthcare?

Before you make up your mind, here are a few considerations: government healthcare and primary education are free; the private-sector doctors are ignorant quacks and the teachers are poorly qualified; the private schools are cramped and often illegal. It doesn’t sound like a tough decision. Yet millions of very poor people around the world are taking the private-sector option. And, when you look a little closer at the choice, it’s not so hard to see why.

Read the whole thing. It’s a nice antidote to the common assumption that poor people are incapable of dealing with their situation and require government assistance.

Selling Weed on Twitter

It is state-sanctioned medical weed, though (Hat tip: @goodiemonster):

California won’t let the gays marry but it does let people micro-blog (medical) drug deals. Meet former Northwestern J-school student Dann Halem, who is building an online business selling weed on Twitter. How is this possible you ask? (…)

The @artistscollctve Twitter account went up last week and, in the vein of a more #420 friendly Kogi BBQ, the medical marijuana delivery service also boasts “On-Time GPS” and the availability of “green crack.” Artists for Access is a “creative non-profit” operating under something called a 501 3c non-profit license, “as far as the law is concerned, we’re good.”

Technically legal in California, Halem’s dicey business model is legit from a state standpoint, but not federally. You can’t just call up an get a bag, but knowing the multitudes of dodgy loopholes that exist in the CA medical marijuana policy (i.e. insomnia counts) it’s probably not that hard to score a prescription. Line up your doctor’s notes ASAP! Because this opportunity may not (probably won’t) last.

I’ve heard of a few people buying non-medical weed via forums, but not nearly as many as I’d prefer. The internets could drastically reduce the (currently very high) transaction costs of purchasing the poison of your choice. The problem, of course, is the lack of security and trust needed to organize transactions online secretly.

Arto Bendiken has developed a couple of Drupal modules which could help with this. Agora provides the infrastructure for a market, while Lockdown provides security in case the narcs come calling. They both look ridiculously awesome, and I just wish my geek-fu was strong enough to fully understand all the technical details.

Systems like this could go a long way in making black markets more efficient, but I think the problem of trust remains. I suspect it would be useful for anyone trying to develop this sort of thing to look at how meatspace black markets have always worked – considering the ways in which initiation rituals serve as a costly signal and the incentive-aligning effects of vouching, for example.

Libertarian Music Friday: Black Markets Increase Transaction Costs Edition

Lou Reed and John Cale perform Waiting for the Man. If Lou Reed came up with this song while waiting to buy smack, his time was well spent. I suspect, though, that the net effect of wating for drug dealers (they’re never early, they’re always late) is hugely wasteful.