You are going to be running to the refrigerator for snacks anyway, so why not make the most of it? Pickles are cool, fresh, delicious, and just the right size for snacking. At the same time, they are not too delicious, and they are pretty good for you, more so than say chips or candy. They store well too. I have been ordering from Number One Sons (kimchee too, and they deliver in my area), while one very smart reader (Alex R.) recommends Oregon Brineworks, especially the spicy ones.
Soon I’ll be turning to books and movies for your lockdown.
3. On the decline of “Bridge Over Troubled Water.” (I myself prefer “Cloudy,” among many other S&G songs.)
5. “We find that firms that had more connections on the eve of the 1929 financial market crash have higher 10-year survival rates during the Great Depression. Consistent with a financing channel, we find that the results are particularly strong for small firms, private firms, cash-poor firms, and firms located in counties with high bank suspension rates during the crisis. Moreover, connections to cash-rich firms are stronger predictors of survival, overall and among financially constrained firms.” Link here.
8. Roger Congleton model of the pandemic, the link downloads it rather than opening it up.
9. Maybe shaky as evidence, but this paper argues that thinking about coronavirus makes people more right-wing.
I wrote earlier that “recovered individuals have a kind of superpower and would be highly desirable workers.” Antibody tests will soon be able to identify these workers and that will help to reopen the economy because not only can these workers go back to work relatively safely they can also work relatively safely with those who are not immune, thus a kind of multiplier-effect for the workplace. Hence, Italy and the UK are talking about “Immunity Passes” that would allow (we hope) immune workers to go back to work.
One factor, however, which hasn’t been taken into account is that the demand to go back to work may be so strong that some people will want to become deliberately infected. If not done carefully, however, these people will be a threat to others, especially in their asymptomatic phase. Thus, if we use Immunity Passes they will need to be combined with variolation, infecting people with small doses of the virus to create immunity under controlled conditions, as suggested by Robin Hanson.
Hat tip for discussion: Rafael Yglesias.
You’ve previously publicized the clever solution to the Corona-crisis of “stopping time.” As others have pointed out, a drawback is that we can’t stop time for everyone. In particular, we need essential services to continue.
Separately, there is a significant case for hazard pay. In principle we could let the market sort this out. But in practice, we don’t want to spend the next month getting to the equilibrium with health care workers.
The current round of government interventions entail mounting distortions.
So perhaps a more efficient solution to all of this would be:
–stop time, but
–government sends everyone checks that can be used for food and gas and directly pays for essential services (public safety, medical, utilities)
The net effect is hazard pay for essential workers—they continue to draw income, but their rent/mortgage/loan/utility obligations are frozen just like everyone else’s.
As a ballpark cost: if 25% of the economy is essential, this is about $400B/month.
Expensive, but much cheaper than alternatives.
That is from an email from Philip Bond, University of Washington.
From internet comments I’ve seen some confusion on the suppress then “test, trace, isolate” strategy. The “flattening the curve” metaphor suggested that lockdown was all about spreading infections over time to keep the medical system operational. But more importantly, the purpose of lockdown is to reduce the infection rate, R, below 1. A virus needs hosts. Take away the hosts and it fades away. We can take away hosts by making people immune, either with a vaccine or through surviving exposure. We can also take away hosts by hiding–that’s what lockdown is for. If enough people hide, then the virus burns out and fades away.
Of course, hiding leaves us vulnerable to multiple rounds of infection. That’s where the second part of the strategy, test, trace and isolate comes into play. When the infection is running wild, as it is now, we don’t have enough tests to keep up with the virus. But after suppression we can put test, trace and isolate into effect very quickly as outbreaks flare up but before the virus runs out of control again. Increasing our test capacity dramatically makes this strategy even more viable. Thus, as V.V. Chari and Christopher Phelan write in a good op-ed:
…A wise use of the breathing room provided by mass quarantines would be to put in place the infrastructure to allow us to mimic the policies of countries such as South Korea, Taiwan, Singapore and Hong Kong. These countries have thus far controlled the pandemic at much lower economic cost…[using] aggressive but targeted quarantine policies. They quarantine people displaying symptoms, aggressively trace the people they have contacted, test their contacts, and then quarantine those who have the virus (and sometimes those who have just had contact with those who test positive), regardless of whether they are symptomatic or not.
It is a test, trace and isolate policy. These countries have not generally engaged in mass quarantines or shut down factories, shopping malls or restaurants.
After suppression, we can combine “test, trace and isolate” with mask wearing and other safety protocols and move towards reopening the economy.
The strategy chosen by Sweden is of course discussed, but I would still say that there is a broad consensus across the political spectrum viewing the strategy, at least so far, as being wise.
I think this can be explained by at least the following five factors:
1. The high horizontal trust and the high vertical trust in Swedish society. In Swedish culture we usually trust that our peers will behave a responsible way and respect the integrity of others. Moreover, we usually trust our authorities, not only politicians but also the public administration. As a consequence “recommendations” for how to behave in regards to Covid-19 has so far been enough.
2. The long tradition of administrative independence. Since the 17th century we have an administrative system where the central governmental agencies such as the National Health Agency is independent. It is a quiet unique system of division of power, where the implementation of laws and regulations is entrusted to the bureaucracies rather than the politicians. As a result the experts rather the politicians have the say, make recommendations and the like, even in a situation like this. And their recommendation has been to not close down the whole society, but to avoid social contacts and to totally refrain from interact with people older than 70 years.
3. An attempt to reach group or mass immunity. As I interpret these experts the attempt is to reach group or mass immunity, 60 – 70 percent, of the population without reaching the limits of intensive care and by protecting the elderly. Also the ambition is to have the staff at hospitals on the job. Hence, child care and schools for children up to high school s still open as usual, shops, restaurants are still open, even if I many of them have very few customers.
4. As strong belief across the political parties to keep the economy going. There is wide consensus in Sweden about the value of work and to have jobs available, and in particular to keep the important export sector intact. I think especially the experience of the deep crisis we had in the early 1990s is important here. But perhaps also that the current prime minister has a back ground as the chairman of the metal workers union.
5. A long tradition of peace. A last factor I believe is that Sweden has stayed out of wars for over 200 years, Hence, we really do not think that disaster can happen to us. This in contrast to for example Denmark, Norway and Finland, who in fact have chosen very different strategies.
“Anyone repeating lines like “the Trump administration has failed” is spreading an Orwellian lie. There is no “Trump administration.” There is an elected showman and his cronies, fronting for an unaccountable permanent government. The celebrities are neither in charge of the bureaucrats, nor deserve to be. Anyone can be excused for thinking either team is worse than the other. No one can be excused for confusing the two.”
That is from Mencius Moldbug, on the coronavirus, interesting throughout, though some of it quite off base I think.
In autumn 1830, Pushkin was confined by a cholera outbreak to the village of Boldino, his father’s remote country estate in southeastern Russia. Desperate to return to Moscow to marry, he wrote to his fiancée: “There are five quarantine zones between here and Moscow, and I would have to spend fourteen days in each. Do the maths and imagine what a foul mood I am in.”
Pushkin went on complaining bitterly but, with nothing else to do, he produced an astonishing number of masterpieces — short stories, short plays, lyric and narrative poems, and the last two chapters of his verse novel Eugene Onegin — in a mere three months.
Here is the full FT piece by Robert Chandler.
3. “I, basketball hoop” — It took Steph Curry five hours to assemble the hoop he bought (WSJ). By the way, when they reboot the playoffs, can they arbitrarily insert the now healthier, re-formed Warriors and also Zion Williamson? You know it would be good for the ratings. (Putin picked Alekseenko to play in the Candidates tourney, so there is precedent.)
8. Robert Wiblin’s “good news take.” Relatively speaking, that is.
12. Saku is now blogging, on tech and the future of the world (and more).
16. Italy also may be choosing viral status segregation (NYT). And more on “the German exception” (NYT).
In The Defense Production Act I argued that the DPA was neither especially useful or necessary and would probably be misused. In Sicken Thy Neighbor Trade Policy I argued that exports bans were a bad idea. So, of course, Donald Trump has used the DPA to ban 3M from exporting masks to Canada. “We hit 3M hard today” tweeted Trump, as if 3M were a foreign terrorist camp.
Over the last several weeks and months, 3M and its employees have gone above and beyond to manufacture as many N95 respirators as possible for the U.S. market. Yesterday, the Administration formally invoked the Defense Production Act (DPA) to require 3M to prioritize orders from the Federal Emergency Management Agency (FEMA) for our N95 respirators.
…There are, however, significant humanitarian implications of ceasing respirator supplies to healthcare workers in Canada and Latin America, where we are a critical supplier of respirators. In addition, ceasing all export of respirators produced in the United States would likely cause other countries to retaliate and do the same, as some have already done. If that were to occur, the net number of respirators being made available to the United States would actually decrease. That is the opposite of what we and the Administration, on behalf of the American people, both seek.
I am against export bans in general but placing an ethically charged export ban on one of our largest trading partners and allies is especially shortsighted. For example, guess where one of the world’s largest producers of a key input for making surgical masks (FYI, these are different than N95s) is located? Canada.
…the Harmac mill [on Vancouver Island] is the world’s only producer of the particular grade of paper pulp used in the manufacture of surgical masks and gowns…
“K10S is the pulp that we’re producing for these medical supplies. We’re the only one that produces it,” he said. “Different pulp mills run different grades of pulp – almost kind of like recipes.”
K10S pulp is made from western red cedar that produces a soft fibre that makes it suitable for the final products made from it.
“It’s been tweaked over the years to come up with the right formula that allows it to go into the medical supplies,” Sampson said.
…the U.S. customer that produces [the surgical masks[ has doubled its order for the K10S pulp.
More generally, in the aftermath of the crisis, supply lines will tighten. I don’t favor this for the reasons given in my TED talk but it will probably happen. It’s not going to happen universally, however. China is going to be hit especially hard as they rely on the world trade system much more than does the United States. Canada and especially Mexico will gain, however, as supply lines move closer to home. In the post-Covid world, manufacturing will rationalize on North American grounds so we may as well start planning for that future by treating Canada and Mexico like a part of the US family.
Bill Gates, who warned us–The Next Outbreak, We’re not ready–is getting ready for a vaccine, in fact for seven of them.
Business Insider: Gates said he was picking the top seven vaccine candidates and building manufacturing capacity for them. “Even though we’ll end up picking at most two of them, we’re going to fund factories for all seven, just so that we don’t waste time in serially saying, ‘OK, which vaccine works?’ and then building the factory,” he said.
Gates said that simultaneously testing and building manufacturing capacity is essential to the quick development of a vaccine, which Gates thinks could take about 18 months.
…”It’ll be a few billion dollars we’ll waste on manufacturing for the constructs that don’t get picked because something else is better,” Gates said in the clip. “But a few billion in this, the situation we’re in, where there’s trillions of dollars … being lost economically, it is worth it.”
This is exactly the type of planning and spending on attacking the virus that governments should be doing.
See also my post, A Solution if We Act.
Let us assume that you, for reasons of choice or necessity, are spending time in close quarters with another person. You are then less inclined to visit corona-dangerous locations. In part you are altruistic toward the other person, and in part for selfish reasons you do not wish to lower the common standard of care. If you go to a dangerous location, the other person might decide to do the same, if only out of retaliation or frustration.
In essence, by accepting such a tethered pair relationship, you end up much closer (physically, most of all) to one person and much more distant from the others. You are boosting your locational extremes.
The physically closer you are to the other person, the more easily you can tell if he or she is breaking the basic agreement of minimal risk. That tends to make the tethered pairs relatively stable. Monitoring is face-to-face!
Tethered pairs also limit your mobility, because each of the two parties must agree that the new proposed location is safe enough.
People who live alone, and do not know each other initially, might benefit from accepting a tethered pair relationship. The other person can help them with chores, problems, advice, etc., and furthermore the other person may induce safer behavior. (Choose a carpenter, not a specialist!) Many people will take risks if they are the only loser, but not if someone else might suffer as well.
A tethered triplet is harder to maintain than a tethered pair. For one thing, the larger the group the harder it is to monitor the behavior of the others. Furthermore, having a third person around helps you less than having a second person around (diminishing marginal utility, plus Sartre). Finally, as the group grows large there are so many veto points on what is a safe location ( a larger tethered pair might work better with a clear leader).
Yet over time the larger groups might prove more stable, even if they are riskier. As more things break down, or the risk of boredom and frustration rises, the larger groups may offer some practical advantages and furthermore the entertainments of the larger group might prevent group members from making dangerous trips to “the outside world.”
There is an external benefit to choosing a tethered pair (or triplet, or more), because you pull that person out of potential circulation, thus easing congestion and in turn contagion risk. Public spaces become safer.
As you choose a tethered pair initially, the risk is relatively high. The other member of the pair might already be contagious, and you do not yet have much information about what that person has been up to. As the tethered pair relationship proceeds, however, it seems safer and safer (“well, I’m not sick yet!”), and after two weeks of enforced confinement it might be pretty safe indeed.
Very often married couples will start out as natural tethered pairs. At the margin, should public policy be trying to encourage additional tethered pairs? Or only in the early stages of pandemics, when “formation risk” tends to be relatively low? Do tethered pairs become safer again (but also less beneficial?), as a society approaches herd immunity?
It may be easier for societies with less sexual segregation to create stable tethered pairs, since couple status is more likely to overlap with “best friend” status.
One advantage of good, frequent, and common testing is that it encourage the formation of more tethered pairs.
You can modify this analysis by introducing children (or parents) more explicitly, or by considering the varying ages of group members. You might, for instance, prefer to be a tethered pair with a younger person, but not everyone can achieve that.
This is from a very able and perceptive correspondent:
|World 1.0||World 2.0|
|110 successive months of job growth||10 million jobless claims in 2 weeks|
|10 year bull market across sectors||Winners and losers with extreme outcome inequality|
|Full employment||30% unemployment|
|Base rate thinking||First principles thinking|
|Office by default||Remote by default|
|Office for work||Office for connection, community, ecosystem, makerspaces|
|Suit, tie, wristwatch, business card||Good lighting, microphone, webcam, home office background|
|Commute + traffic jams||Home + family|
|Last mile||Only mile|
|Restaurants||Groceries + delivery|
|$4 toast||Sourdough starter|
|$100k for college||Not paying $100k for a webinar|
|Internal issues||Exogenous shock|
|Lots of little problems||One big problem|
|Stupid bullshit||Actual issues|
|Too much technology||Too little technology|
|Assume some government competence||Assume zero government competence|
|Trusted institutions||Trusted people|
|Tail risk is kooky||Tail risk is mainstream|
|Boomers most powerful||Boomers most vulnerable|
|Productivity growth collapse||Economic collapse|
|Social services Democrat||UBI Communist|
|Corporate debt||Government debt|
|Techlash||Tech a pillar of civilization and lifeline to billions|
|Break up Amazon||Don’t break up Amazon!!!|
|Avoiding social issues||Avoiding layoffs|
|Phone is a cigarette||Phone is oxygen|
|Resource depletion||$20 oil, $0.75 watt solar, <$100/kwh batteries|
|Low volatility||High volatility|
|20th century||21st century|
We derive a measure of firm-level regulatory costs from the text of corporate earnings calls. We then use this measure to study the effect of regulation on companies’ operating fundamentals and cost of capital. We find that higher regulatory cost results in slower sales growth, an effect which is mitigated for large firms. Furthermore, we find a one-standard deviation increase in our preferred measure of regulatory cost is associated with an increase in firms’ cost of capital of close to 3% per year. These findings suggest that regulatory risk is a major cost to firms, but the largest firms are able to manage that risk better.
That is the abstract of a new NBER paper by Charles W. Calomiris, Harry Mamaysky, Ruoke Yang, a piece written in pre-Covid-19 times. It has never been more relevant, except that the estimates for regulatory costs turn out to be far too low (no criticism of the authors is intended here). To repeat my earlier point, America’s regulatory state is failing us.
7. I could link to Matt Levine every day, but do read this one on liquidity transformation.
8. How is the cloud holding up? A good post.
12. The true story of the toilet paper shortage: it’s not about hoarding, rather a shift of demand away from the commercial sector into the household sector (you are doing more “business” at home these days).
14. Fan, Jamison, and Larry Summers 2016 paper on the economics of a pandemic. I wrote at the end of the blog post: “In other words, in expected value terms an influenza pandemic is a big problem indeed. But since, unlike global warming, it does not fit conveniently into the usual social status battles which define our politics, it receives far less attention.”