The Germans, for example, have some kind of compromise between single-member and broader districts. In Israel, you have nothing, you have only a national election. You have no local districts at all. And that's because of the idea that in addition to other ideological differences, locality matters. The question is does the congressman represent his district and the interests of his district? And as I said there's quite a variety of systems the democratic world. The implications need to be examined.

I'm struck by the fact that by and large equity capital doesn't play a big role in new financing; it's either bonds or internal financing but not really equity. And therefore, it's not clear that anything which improves the equity markets has really much to do with the productivity of the economy as a whole.

Usefulness depends on tractability.

Unsolved problems, that's one of the great signs of progress in my opinion.

I think the development of the venture capital system has been an example of something which is a successful improvement in risk-bearing. It doesn't exactly remove the risks at the beginning, but at least creates greater rewards at a slightly later stage and therefore encourages, say, small companies to engage in technologically risky enterprises.

The trouble is that the risks that are being hedged very well by new financial securities are financial risks. And it appears to me that the real things you want to hedge are real risks, for example, risks in innovation. The fact is that you'd like companies to be able to take bigger chances. Presumably one obstacle to successful R&D, particularly when the costs are large, are the risks involved.

The general uncertainty about the prospects of medical treatment is socially handled by rigid entry requirements. These are designed to reduce the uncertainty in the mind of the consumer as to the quality insofar as this is possible. I think this explanation, which is perhaps the naive one, is much more tenable than any idea of a monopoly seeking to increase incomes.