San Francisco, population 865,000, has roughly the same number of dogs as children: 120,000. In many areas of the city, pet grooming shops seem more common than schools.

There is also this:

San Francisco’s public school system has around 53,000 students, a sharp drop from 90,000 in 1970.

The decline is a reflection both of families leaving the city and wealthier parents sending their children to private schools. Around 30 percent of San Francisco children attend private school, the highest rate among large American cities.

More than 10 private schools have opened in San Francisco since 2009, according to a tally by Elizabeth Weise, a journalist who writes a blog on the subject.

What percentage of those people also support the idea of further experimentation with school vouchers?  And do they require proof that private schools will raise their children’s test scores, before becoming emotionally committed to sending them there?

That is from Thomas Fuller at the NYT.  You will note that some angles in that article may require revision, here is a good comment from Medium.

Monday assorted links

by on January 23, 2017 at 12:55 pm in Uncategorized | Permalink

As someone who has written about FDA reform for many years it’s gratifying that all of the people whose names have been floated for FDA Commissioner would be excellent, including Balaji Srinivasan, Jim O’Neill, Joseph Gulfo, and Scott Gottlieb. Each of these candidates understands two important facts about the FDA. First, that there is fundamental tradeoff–longer and larger clinical trials mean that the drugs that are approved are safer but at the price of increased drug lag and drug loss. Unsafe drugs create concrete deaths and palpable fear but drug lag and drug loss fill invisible graveyards. We need an FDA commissioner who sees the invisible graveyard.

Each of the leading candidates also understands that we are entering a new world of personalized medicine that will require changes in how the FDA approves medical devices and drugs. Today almost everyone carries in their pocket the processing power of a 1990s supercomputer. Smartphones equipped with sensors can monitor blood pressure, perform ECGs and even analyze DNA. Other devices being developed or available include contact lens that can track glucose levels and eye pressure, devices for monitoring and analyzing gait in real time and head bands that monitor and even adjust your brain waves.

The FDA has an inconsistent even schizophrenic attitude towards these new devices—some have been approved and yet at the same time the FDA has banned 23andMe and other direct-to-consumer genetic testing companies from offering some DNA tests because of “the risk that a test result may be used by a patient to self-manage”. To be sure, the FDA and other agencies have a role in ensuring that a device or test does what it says it does (the Theranos debacle shows the utility of that oversight). But the FDA should not be limiting the information that patients may discover about their own bodies or the advice that may be given based on that information. Interference of this kind violates the first amendment and the long-standing doctrine that the FDA does not control the practice of medicine.

Srinivisan is a computer scientist and electrical engineer who has also published in the New England Journal of Medicine, Nature Biotechnology, and Nature Reviews Genetics. He’s a co-founder of Counsyl, a genetic testing firm that now tests ~4% of all US births, so he understands the importance of the new world of personalized medicine.

The world of personalized medicine also impacts how new drugs and devices should be evaluated. The more we look at people and diseases the more we learn that both are radically heterogeneous. In the past, patients have been classified and drugs prescribed according to a handful of phenomenological characteristics such as age and gender and occasionally race or ethnic background. Today, however, genetic testing and on-the-fly examination of RNA transcripts, proteins, antibodies and metabolites can provide a more precise guide to the effect of pharmaceuticals in a particular person at a particular time.

Greater targeting is beneficial but as Peter Huber has emphasized it means that drug development becomes much less a question of does this drug work for the average patient and much more about, can we identify in this large group of people the subset who will benefit from the drug? If we stick to standard methods that means even larger and more expensive clinical trials and more drug lag and drug delay. Instead, personalized medicine suggests that we allow for more liberal approval decisions and improve our techniques for monitoring individual patients so that physicians can adjust prescribing in response to the body’s reaction. Give physicians a larger armory and let them decide which weapon is best for the task.

I also agree with Joseph Gulfo (writing with Briggeman and Roberts) that in an effort to be scientific the FDA has sometimes fallen victim to the fatal conceit. In particular, the ultimate goal of medical knowledge is increased life expectancy (and reducing morbidity) but that doesn’t mean that every drug should be evaluated on this basis. If a drug or device is safe and it shows activity against the disease as measured by symptoms, surrogate endpoints, biomarkers and so forth then it ought to be approved. It often happens, for example, that no single drug is a silver bullet but that combination therapies work well. But you don’t really discover combination therapies in FDA approved clinical trials–this requires the discovery process of medical practice. This is why Vincent DeVita, former director of the National Cancer Institute, writes in his excellent book, The Death of Cancer:

When you combine multidrug resistance and the Norton-Simon effect , the deck is stacked against any new drug. If the crude end point we look for is survival, it is not surprising that many new drugs seem ineffective. We need new ways to test new drugs in cancer patients, ways that allow testing at earlier stages of disease….

DeVita is correct. One of the reasons we see lots of trials for end-stage cancer, for example, is that you don’t have to wait long to count the dead. But no drug has ever been approved to prevent lung cancer (and only six have ever been approved to prevent any cancer) because the costs of running a clinical trial for long enough to count the dead are just too high to justify the expense. Preventing cancer would be better than trying to deal with it when it’s ravaging a body but we won’t get prevention trials without changing our standards of evaluation.

Jim O’Neill, managing director at Mithril Capital Management and a former HHS official, is an interesting candidate precisely because he also has an interest in regenerative medicine. With a greater understanding of how the body works we should be able to improve health and avoid disease rather than just treating disease but this will require new ways of thinking about drugs and evaluating them. A new and non-traditional head of the FDA could be just the thing to bring about the necessary change in mindset.

In addition, to these big ticket items there’s also a lot of simple changes that could be made at the FDA. Scott Alexander at Slate Star Codex has a superb post discussing reciprocity with Europe and Canada so we can get (at the very least) decent sunscreen and medicine for traveler’s diarrhea. Also, allowing any major pharmaceutical firm to produce any generic drug without going through a expensive approval process would be a relatively simply change that would shut down people like Martin Shkreli who exploit the regulatory morass for private gain.

The head of the FDA has tremendous power, literally the power of life and death. It’s exciting that we may get a new head of the FDA who understands both the peril and the promise of the position.

J., a loyal MR reader, asked me for a post on “proliferation and separately nuclear exchange (war).”

Let’s try the latter.  Every now and then I ask myself what is the most likely use of nuclear weapons, putting aside dirty bombs from terrorists and the like.

My first pick is a scenario where North Korea bombs a Japanese city, perhaps Hiroshima or Nagasaki.  Imagine a North Korean regime in the throes of desperation, actually somewhat rational, and playing a mixed strategy with some probability of nuclear weapons use.  Say the bluff is called and they feel a need to make a statement.  I don’t think they would bomb their brethren in South Korea, nor would they opt for China, which could crush them like a bug.  Japan, still perceived as a historic enemy by the way, is the obvious target.  It’s close enough to reach, and they don’t have nuclear weapons of their own.  Tokyo however must be held in reserve as a target, so Hiroshima or Nagasaki it would be.  “Just big enough to send a message” — sound familiar?

My second pick is a scenario where the United States and China are fighting a naval battle in the South China Sea, or perhaps further north, as part of a limited exchange, not a full war.  The United States is about to win the battle, and the Chinese leadership fears a military or other Party-based coup in response.  So they use nuclear weapons, perhaps tactical nukes, to turn the tide in the battle and save their skins.  They figure the U.S. won’t respond with a full-blown nuclear war.  (America, if it lost a comparable naval battle, is more likely to just turn tail and run, at least in the short run.)

Fortunately, the chances of either of these events are quite low.  Unfortunately, the chances are also rising somewhat.

There is more noise as of late coming from the India vs. Pakistan side (Pakistan threatening to use nukes to respond to a ground invasion, plus Pakistan having a nuclear submarine), but I don’t see actual evidence that the chance of nuclear war there has gone up.  It has to make the list, but it’s not one of my top two scenarios.

My core model, by the way, is that political leaders are rational in the loose sense.  So if you are looking for instances of possible nuclear weapons use, consider cases where politicians might be facing relatively dramatic “career-ending” events if they lose a smaller-level struggle.

Sunday assorted links

by on January 22, 2017 at 1:42 pm in Uncategorized | Permalink

1. The culture that is Dutch first all-avocado restaurant to open in Amsterdam.

2. New blog, Political Arithmetick, high quality on economic stats and their meaning, by Brent Moulton.

3. “One of the Obama administration’s signature efforts in education, which pumped billions of federal dollars into overhauling the nation’s worst schools, failed to produce meaningful results, according to a federal analysis.”  Link here.  In 2003 I wrote that vouchers are overrated, but now they are definitely underrated.

4. Econofact.org.

5. Japan’s real Westworld theme park, now defunct, based on the 1973 movie, via Yana.

6. New Dani Rodrik paper on global vs. national inequalities (pdf).

That was my prediction in my forthcoming book The Complacent Class: The Self-Defeating Quest for the American Dream, but I didn’t realize it would come true on such a scale so soon.  Yesterday we saw the largest protests in American history.  Here is one excerpt passage from the book, part of a section describing how different the past was from what we had grown used to:

As much as nonviolence was an essential feature of big parts of the civil rights movement, many blacks in the South, including many of the most prominent movement leaders, protected themselves with firearms, in recognition of what a violent and vindictive time they were operating in. Martin Luther King Jr. kept a gun at home and sometimes relied on neighbors to protect his home with firearms. Medgar Evers traveled with a rifle in his car and kept a pistol beside himself on the front seat; Evers later ended up being murdered.

Almost impossible to imagine in today’s climate of overprotective parenting, the civil rights movement even saw parents willing to put their children in the line of fire. The 1963 Birmingham Children’s March paraded large numbers of African American children in front of potentially hostile armed police, police dogs, and also angry local, racist crowds. The worst-case scenario of violence against the children did not come about, but even the relatively calm course of the demonstration makes for harrowing reading today. This is from one newspaper report of the time: “The teen-agers, most of them 13 to 16, kept moving. Then the water hit them. Cowering first with hands over their heads, then on their knees or clinging together with their arms around each other, they tried to hold their ground.” It’s hard to imagine that being considered an acceptable course of action—from the marchers as well as the police—for the last few decades. Fortunately, at the time the police did hesitate to turn the fire hoses on the six-year-olds who participated in the march. And many African Americans were upset with their leaders for allowing it to proceed in this manner, yet it did, which is a reflection of how far that time was from the current safety-first mentality.

One of the major claims in the book is that history is more cyclical than we had thought during the 1948-2009 period, and that this is a major source of systematic risk in the world today.  Another major claim is that individual attempts to make one’s lot in life safer and more secure actually may exacerbate broader risks at the macro level.

Again, if you pre-order the book in the next two weeks, I will send along to you a copy of my Stubborn Attachments, the book in my life I have worked on longest, on the philosophic foundations of a free society.  Just email me and I’ll be back in touch.

complacentclassphotocover

Here is a Barnes & Nobel pre-order link, here you can pre-order special signed copies.

Written by John Ferejohn and Frances McCall Rosenbluth, with the subtitle War, Peace, and the Democratic Bargain, this is a very important book.  Here is the main thesis:

If the modern democratic republic is a product of wars that required both manpower and money for success, it is time to take stock of what happens to democracy once the forces that brought it into being are no longer present.  Understanding war’s role in the creation of the modern democratic republic can help us recognize democracy’s exposed flanks.  If the role of the masses in protecting the nation-state diminishes, will the cross-class coalition between political inclusiveness and property hold?

…a second question is what is to become of the swaths of the world that were off the warpath in the fourteenth and fifteenth centuries when the European state was formed?  Continued and intense warfare forged democracies with full enfranchisement and protected property rights in the Goldilocks zone: in countries that had already developed administrative capacity as monarchies, and where wars were horrendous but manageable with full mobilization…

The bad news is that in today’s world, war has stopped functioning as a democratizing force.

You can order the book here, here is the Rosa Brooks WSJ review.

TrumpSingles.com is a matchmaking site where supporters of President-elect Donald Trump can connect and possibly find love.

During an appearance on “Fox & Friends,” the site’s founder said TrumpSingles helps supporters navigate a divisive year.

“Sometimes it’s tough to date when you’re a Trump supporter, so we’re making it easier to find each other, who are like-minded and have the same political views,” said David Goss, the 35-year-old Californian who launched the site in June.

TrumpSingles, which costs $19.95 per month, had 24,000 members as of Wednesday afternoon.

Here is the link, via Brent.

Saturday assorted links

by on January 21, 2017 at 1:37 pm in Uncategorized | Permalink

I loved Jason Barr’s Building the Skyline a history of New York from the point of view of the economics of skyscrapers. Where else will you learn so much of interest about elevators?

Elevators create a particular problem. On one hand, adding more floors to the building will produce more space from which the developer can collect more money. But at some point, a new shaft and set of elevators need to be added to handle the additional traffic. This then eats into the rentable space….Do the additional floors on top generate enough rents to cover the loss of new space from the elevators?

…skyscrapers must devote about 30% of the total space to elevators, including their shafts, hallways and machine rooms.

And then you have to get the people where they want to go quickly:

The new One World Trade Center will have the fastest cars in the Western Hemisphere, operating at a top speed of 2,000 feet a minute, though a relative snail compared with the Burj Khalifa, which delivers its tenants to any of its 164 floors at a rate of 3,543 feet per minute.

…Maximum [elevator] speed has increased at an average annual rate of 1.7% since 1913.

Barr loves skyscrapers and he writes about them beautifully. Building the skyline also has excellent photos and illustrations. It’s not for everyone but if the statistics, economics, and history of New York’s skyscrapers appeals, then this is the book to get.

Hat tip: Michael Hendrix.

An MR reader sends me this request:

You land in a new city – an urban area – without other commitments.
What’s the first thing you do?
What’s your first day look like?

The first thing I do is make sure blog is ready for the day to come (though that is usually pre-arranged if I am traveling).

The second thing I do is decide whether the country is worth wasting a meal on breakfast.  I might just skip it.  If not, the next thing I will do is get breakfast.  I evaluate breakfast options by walking and by sight, not by using the internet, as I find that old-fashioned method better training for all that life brings us.

Then I try to walk through at least two neighborhoods, to get a general sense of the city.  More importantly, I can then later take some time over lunch without feeling I haven’t seen anything yet.  These neighborhoods should be connected to the main drag in some way but not the main drag itself.  The main drag is often boring, though essential, and it is more likely to get a fuller treatment on day two, with only a quick peek on day one.

The best art museum will come after lunch, and then be followed by more neighborhood walking, perhaps in a more distant part of the city.  A major food market will come on day two, a vista or city lookout will come on day three.  It means less if I go to either right away, because I have less information about what I should be noticing and looking for.

The real question is what to postpone, not what to do.  Don’t attempt the most fully integrative experiences right off the bat, because you are squandering some of their potency.

Shenzhen, a city in southern China known for electronics manufacturing, stood out last year, completing 11 such skyscrapers. That’s more than the US and Australia combined. The city was also China’s hottest real estate market last year.

Next was Chongqing, noted for its fast GDP growth (link in Chinese), and Guangzhou, which completed a new finance center with 111 stories and especially fast elevators.

There is much more information at the link.

Friday assorted links

by on January 20, 2017 at 11:54 am in Uncategorized | Permalink

That is the topic of my latest Bloomberg column, here is one excerpt:

One of the biggest objections to recent globalization is that it extended international trade at a destabilizing pace. Whether or not you agree with this negative assessment, from 1950 to 2008, international trade grew about three times faster than global gross domestic product. Since then, cross-country trade has grown much more slowly, at about the pace of global GDP growth or perhaps slower. For better or worse, that is a significant deceleration.

Elites didn’t just decide trade growth had to be slowed down. Rather, the initial rapid growth had some self-reversing properties built in. For instance, China’s growth and exports slowed down as the economy matured and wages rose, trade-intensive Europe became a smaller percentage of the global economy, and protectionist nontariff pressures have recently been rising.

The wisdom behind globalization isn’t a belief that it will be steered by very wise elites. Rather, most economic processes show elements of convergence, stability and mean-reversion, without anyone planning them.

The conclusion:

I’m not saying that all is well, as I see significant possibilities for instability in the current political configuration. But the elites have in fact been working at their job, and now it is up to voters to catch up in their understanding.

Do read the whole thing.

The excellent Douglas Irwin has a new NBER paper on that question, here is one excerpt:

Hayek (1937, 64) leveled three main criticisms against flexible exchange rates, all of which were frequently repeated during this period. First, flexible exchange rates would give rise to speculative capital flows that would be destabilizing; specifically, capital movements would reinforce exchange rate shifts arising from payments imbalances, thereby magnifying volatility and “turn what originally might have been a minor inconvenience into a major disturbance.” Second, flexible exchange rates would lead to competitive depreciations, the flexible rate counterpart to competitive devaluations, which would encourage a return to mercantilism and an increase in trade barriers. “Without stability of exchange rates it is vain to hope for any reduction of trade barriers,” he concluded (1937, 74n). Third, exchange rate instability would create risks that would discourage international trade and deter long-term foreign investment.

Frank Graham and Charles Whittlesey, both at Princeton, were among the few American economists who favored complete floating rates and monetary independence.  Now what might account for such a difference in opinion?:

1. They hadn’t yet learned that fixed rate systems just weren’t politically stable, but we now know this with the benefit of hindsight, including the failures of Bretton Woods and a new understanding that competitive devaluations don’t have to be so disastrous.

2. They were good economists, and we are plain, simple idiots.

3. Heavy-duty manufacturing exports, with only a few major exporting countries, and a lot of FDI potential in the periphery, plus plenty of highly illiquid currencies, actually militated in favor of fixed rather than floating rates at that time.

4. During that period people thought high level of international cooperation were necessary to solve problems, and this stemmed in part from the failures of World War I and later World War II.  If you favor “international cooperation” as a general value, you might then also tend to mood affiliate with the notion of fixed exchange rates.

I believe that factors #1-4 all might play a role in the complete explanation here.  Am I overlooking something?