My (second) Conversation with Paul Romer

Interesting throughout, here is the audio and transcript.  Here is the summary:

Paul Romer makes his second appearance to discuss the failings of economics, how his mass testing plan for COVID-19 would work, what aspect of epidemiology concern him, how the FDA is slowing a better response, his ideas for reopening schools and Major League Baseball, where he agrees with Weyl’s test plan, why charter cities need a new name, what went wrong with Honduras, the development trajectory for sub-Saharan Africa, how he’d reform the World Bank, the underrated benefits of a culture of science, his heartening takeaway about human nature from his experience at Burning Man, and more.

I liked the parts about charter cities and the World Bank the best, here is one excerpt:

COWEN: How optimistic are you more generally about the developmental trajectory for sub-Saharan Africa?

ROMER: There’s a saying I picked up from Gordon Brown, that in establishing the rule of law, the first five centuries are always the hardest. I think some parts of this development process are just very slow. If you look around the world, all the efforts since World War II that’s gone into trying to build strong, effective states, to establish the rule of law in a functioning state, I think the external investments in building states have yielded very little.

So we need to think about ways to transfer the functioning of existing states rather than just build them from scratch in existing places. That’s a lot of the impetus behind this charter cities idea. It’s both — you select people coming in who have a particular set of norms that then become the dominant norms in this new place, but you also protect those norms by certain kinds of administrative structures, state functions that reinforce them.

And this:

COWEN: If you could reform the World Bank, what would you do?

ROMER: Oh, that’s an interesting question. I think the Bank is trying to serve two missions, and it can’t do both. One is a diplomatic function, which I think is very important. The World Bank is a place where somebody who represents the government of China and somebody who represents the government of the United States sit in a conference room and argue, “Should we do A or B?” Not just argue, but discuss, negotiate. On a regular basis, they make decisions.

And it isn’t just China and the US. It’s a bunch of countries. I think it’s very good for personal relationships, for the careers of people who will go on to have other positions in these governments, to have that kind of experience of, basically, diplomatic negotiation over a bunch of relatively small items because it’s a confidence-building measure that makes it possible for countries to make bigger diplomatic decisions when they have to.

That, I think, is the value of the World Bank right now. The problem is that that diplomatic function is inconsistent with the function of being a provider of scientific insight. The scientific endeavor has to be committed to truth, no matter whose feathers get ruffled. There’s certain convenient fictions that are required for diplomacy to work. You start accepting convenient fictions in science, and science is just dead.

So the Bank’s got to decide: is it engaged in diplomacy or science? I think the diplomacy is its unique comparative advantage. Therefore, I think it’s got to get out of the scientific business. It should just outsource its research. It shouldn’t try and be a research organization, and it should just be transparent about what it can be good at and is good at.

And toward the end:

COWEN: Last question thread, what did you learn at Burning Man?

ROMER: Sometimes physical presence is necessary to appreciate something like scale. The scale of everything at Burning Man was just totally unexpected, a total surprise for me, even having looked at all of these pictures and so forth. That was one.

Another thing that really stood out, which is not exactly a surprise, but maybe it was the surprise in that group — if you ask, what do people do if you put them in a setting where there’s supposed to be no compensation, no quid pro quo, and you just give them a chance to be there for a week. What do they do?

They work.

For purposes of contrast, here is my first Conversation with Paul Romer.

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Actually I thought the testing discussion was the best part. On this and EconTalk. I was skeptical about the whole testing push, but his ideas about just giving the people the tests/information and they will do the right things in aggregate are very compelling. Free The Tests!!

Yes, Romer makes the distinction between testing as a means of diagnosis and testing as a means of collecting data for purposes of setting policy. He doesn't express it quite like that, but it's what he means.

His related point is that testing for purposes of a government enforced quarantine is bound to fail, if for no other reason than it discourages people from testing. Let those tested positive voluntarily choose to self-isolate. Most will. A corollary is that if testing is for purposes of diagnosis, then it's not for data.

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But it actually goes beyond (or orthogonal) to that. It's not diagnostic (for healthcare), and it's not population-based (for policy). It's simply: make daily, reasonably accurate, tests available to everyone, and the increase in formation available will make good things happen.

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He's been talking testing from the get-go. He said at the outset that $100 billion spent on testing (not the CDC test, duh, but maybe some of the ones that were working for our friends in South Korea -- my interpolation here) would have saved trillions of dollars in human and economic loss.

I wish we'd listened to him.

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On the other hand, the whole discussion on liability for testing is off base. Romer seems to get it: his preference is for a closer judicial examination of the standard for liability. Should the standard be simple negligence or gross negligence? I suspect doesn't care for our system of tort liability, so any liability strikes him as inefficient. Aside from this, the problem with testing as a basis for liability or as a basis for a defense against liability (e.g., the restaurant that tests its employees) is that testing only addresses a particular point in time: the time of the test. What's needed are standards, or protocols, like observations about fever, sore threat, coughing, etc. Of course, this lacks precision, and we are, if nothing else, a culture that believes in precision (which is ridiculous).

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"If you could reform the World Bank, what would you do?"

Too easy; eliminate it.

Given Paul's actual experience at the world bank, I'd imagine he'd start by limiting the number of times the word "and" appears in reports, followed by "buts", "ors", and "becauses".

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I was shocked that he thinks the World Bank is torn between two conflicting missions diplomacy and science - neither of which is what the bank is supposed to do.

"The World Bank Group is one of the world’s largest sources of funding and knowledge for developing countries. Its five institutions share a commitment to reducing poverty, increasing shared prosperity, and promoting sustainable development."

https://www.worldbank.org/en/who-we-are

His idea of making it a diplomacy training ground is bizarre but perhaps harmless compared to other globalist follies.

+1 stunned that he said that.

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I'm not seeing it as inherently bizarre. Just as economics in a vacuum is useless (it has to be part of policy, and policy is dependent on politics), economic development and trade is dependent on international policy, and international policy is dependent on international relations and politics. I.e. diplomacy.

We could argue that it hasn't worked out and that's mission creep and etc. but I don't see it as inherently bizarre. Even having programs that might be World Bank analogues of Fulbright Fellowships would in the long run aid the World Bank's mission, by exposing future policymakers and economists to other countries and economies.

I'm not saying that's a good idea, it could be another example of counter-productive mission creep. But it's not an inherently bad idea.

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Is it just my iPhone? The link does not work.

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I went via Medium directly and it works.

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Fascinating, thanks for the transcript.

Am I wrong to believe that the same criticism of the World Bank applies to the WHO as well?

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I really liked the part where he says that economists should not think of themselves as philosopher kings. I see that way too often. It is a pretty left wing position but incredibly "free market" economists seem to be doing this more and more.

Well, both always have, though they follow different ethics: The free marketeers are utilitarians; a dollar is a dollar, no matter who owns it. The lefties are Rawlsians, with only the worst off being deserving. The trick of the latter is getting 10% handling for identifying the worst off and distributing to them!

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trying to build strong, effective states, to establish the rule of law in a functioning state

Gee, strong, effective states have the ability to use their oligarchical elites and bureaucracies to eviscerate the liberties of the rest of the population, confiscate wealth and engage in corruption and they do. Who needs that? Small, innocuous states are more citizen friendly, Luxembourg seems to get by.

Charter cities are supposed to be small states, like Luxembourg or Singapore.

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Another thing that really stood out, which is not exactly a surprise, but maybe it was the surprise in that group — if you ask, what do people do if you put them in a setting where there’s supposed to be no compensation, no quid pro quo, and you just give them a chance to be there for a week. What do they do?

I'd be super cautious in extrapolating from Burning Man attendees to the rest of society.

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There’s a saying I picked up from Gordon Brown, that in establishing the rule of law, the first five centuries are always the hardest. I think some parts of this development process are just very slow.

Based and redpilled.

how gentle is the rain that falls softly on the meadow

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I have a cult following.

what people do not understand about Shakespeare and Dickens is that they listened - listened, from the time they were young, to everyone.

then they created art.

there are a few artists who do not listen all that much - Glenn Gould, Maria Callas -

I am tired of names, I am more interested in what people really care about, which is,

what made them happy ----

it was always, always, always involved with making other people happy.

absent that, nothing they did made them happier than they had been before.

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"...in establishing the rule of law, the first five centuries are always the hardest."

Apparently Chancellor Brown has a short memory.

In 1945, Germany was less than a century past unification. While it certainly had the beginnings of a /Rechtstaat/ even in 1871, it was still at that time an autocracy with a toothless parliament and weak to nonexistent ministerial responsibility.

Ditto Italy. Parts of the North weren't too bad, but the /Mezzogiorno/--the erstwhile Kingdom of the Two Sicilies--was positively medieval.

And let's talk about Japan. Their whole country had emerged from a deeply feudal state capped by a kind of regent--the shogun--less than a century before. Again, while they'd made great strides, the pre-War Japanese government was effectively a proto-Fascist regime. The ministers effectively represented the power blocs and there was zero ministerial responsibility: and any member of the Cabinet--notably the Army and Navy ministers--could bring down the government by resigning.

By the time our occupation of our former enemies ended in 1950 or so, all three were functional rule-of law states, with robust liberal-democratic political institutions and fully-functional ministerial responsibility.

I could give other examples of the, umm, speciousness of the 500-year rule, but I assume the point is made.

The persistent phenomenon of Africa not being post-WW2 Germany or Japan requires a lot of careful, coded commentary and, whistling, I think they call it.

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Right, I was going to make a similar point.

OTOH there's South America, Africa, and most parts of Asia. And the fragility of a regime that tries to follow the rule of law, only to be overtaken by bolsheviks, nazis, some junta of generals (or colonels, or lieutenants, or even a sergeant in the case of Liberia's Samuel K. Doe), or whoever.

So yes it can take a lot less than 500 years. Or it can take more.

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Good stuff all around. The testing conversation is what I was waiting to read.

However, I found the the discussion of the role of science in the west and how it comes from truth seeking (and engineers being frank... does it work types) really interesting.

On that though... science was ancient Greek invention. It was picked up on by Jews and Christians simultaneously (think Augustine for example), then Muslims (think Averroes and Avicenna) and then Christians again (think Peter Lombard, Albertus Magnus, Thomas Aquinas).

What do these all have in common? A framework based on objective truth. If there is no objective truth, there is no point of science. Objective truth also manifests in good behavior as a consequence of an allegiance to the beatitudo... God, the source of all matter and governing rules. In seeking God and Truth, one must apply the rules. And all roads lead to God and truth. Science and faith are thus the paths to Beatitudo. Humans seek to know everything about everything. But alas, we are not eternal and hence we run out of time in our pursuits.

So when thinking about any decline in truthfulness or increases in lying and cheating and decreases in social capital and technological stagnation... it seems to me that the falling away from an understanding of objective truth is critical. Thus, “alternative facts”... born of relativistic, “well that’s like your opinion man”.

If there is a stagnation at all, perhaps secular stagnation is a great term... but for this other reason.

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"what do people do if you put them in a setting where there’s supposed to be no compensation, no quid pro quo, and you just give them a chance to be there for a week. What do they do?"

2019 Burning Man selection bias might be very different from early Burning Man.

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I think the World Bank ought to concentrate on saving the rule of law in the West rather than trying to impose it on the Third World. There is a chance that they might achieve something in the West.

And I guess it is more or less compulsory to say - the scientific endeavor has to be committed to truth, no matter whose feathers get ruffled? James Watson could not be reached for comment.

+1

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But the growth, the proliferation of connection means that our system is more fragile than we realize. A shock comes, and things happen that we didn’t anticipate. But again, that’s part of learning about a very new type of economy which is changing in real time.
----
Beach ball won't color. Everyone in the value chain has deja vu all at once.

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just heard the timely leak of bidens quid pro funny phone call with ukrainina president poroshenko about firing the ukrainian prosecutor
in return for a billion american dollars of loan guarantees!

/yawn.

remember when the elite media promised us watergate was a 3rd rate burgulary. the legal fiasco with General Flynn is bigly under-rated on a lotta different levels

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You might say Russiagate was the highest level of interference in an election by Executive branch bureaucrats over who would be their next boss since Watergate.

Our democracy really could use some tweaking. Government employees effectively have three votes to every taxpayer's one.

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Odd that he doesn’t mention that the World Bank’s main line of business is providing loans and grants to poor countries.

It’s likely that many here forget that without the World Bank countries would not be able to finance big infrastructure projects. The alternative is China.

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Question for Romer next time: Most would agree you need some fiction for the diplomacy, and that this may negatively effect the science. But perhaps you don't want too much fiction, and perhaps the scientific function helps reign that in?

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"We live in a world with no litter." That's a pretty bold claim right there.

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This was an interesting conversation. Thanks!

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Re Burning Man. My experience is that many people given the opportunity to participate in contributing to an authentic gathering or expression or creation of community - social organisms that exist simply for its own sake - will do so. In fact, people seek these out. In droves. They flock to them in fact. These organisms are just so hard to find, and usually fleeting (see above, re 'people flock to them').

The challenge is that they are attractive precisely because of their innate non-commercial characteristics. It is the authenticity that cannot be replicated. And is a terribly rare thing in our commercial material culture. So of course these type of events are also irresistible attractions for profiteers, commoditizers, and corporate co-opting.

You can't talk about Burning Man without talking about the idea of simulacra. The event has reached that stage where rich people and celebrity-attention whores no longer want to go experience it anonymously just like any other participant, but they want to enjoy a mediated premium experience, set up and ready for them with professional self-expression kits prepared for their use in advance, segregated from the masses, and/or they want to BE SEEN doing so, fabulously of course.

Ref: Trustafarians at Coachella.

Alas, Burning Man has run its course. I mean of course there’s still much to savor among the pop-up city of tens of thousands. But the ticket prices alone are an indicator of the problem. Big money ruins everything.

Yup, and for people who don't go to Burning Man, there are other such pursuits: join a church (or even a cult). Do cosplay and attend cons. Pick up a hobby and find your tribe: quilting, rock climbing, Ultimate frisbee, blogging.

But for the vast majority of people, these can be only sidelights or avocations, not their entire lifestyle or entire community.

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Burning Man is so interesting. Very strict rules to get in. The perimeter constantly policed, etc. So not very open at all in one sense. Kind of the opposite of Woodstock in many ways although it's considered a 'free thinking paradise' type environment. Do the people attend agree with this? Not care? Just so many rules for everything today. If you were a band and just wanted to play for people out in public, it couldn't happen realistically. And with Covid-19 we see the entire world is this way more or less. It used to be you could go to remote Guatemala if you wanted to escape society, but now they don't even want you and from what I have read it's enforced pretty severely for foreigners.

A lot of mythology surrounds Woodstock. It started as a business venture like any other and the team got kicked out of one town and almost got shut down by the town of Bethel, NY. There are still some places that won't hassle small-time street musicians but once big crowds are involved, even leaving aside covid-19, permits are usually required.

It started as a business venture, but the people made it something else. That's the beauty of it to me. Completely organic. No rich person tent, or VIP rooms, or other BS either. You actually had no idea what was going to happen. That kind of spontaneity is impossible to imagine now.

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Rather than sitting around waiting for the infected in nursing homes to be identified through testing when it is already too late and the facility die-off is already in motion, Romer would do better to advocate chemoprophylaxis in Consistent with the Texas nursing home experience, in South Korea, hydroxychloroquine has been successfully used as chemoprophylaxis for covid-19 prevention in a nursing home:

Sun Hee Lee, et al. “Can post-exposure prophylaxis for COVID-19 be considered as an outbreak response strategy in long-term care hospitals?” International Journal of Antimicrobial Agents, Available online 17 April 2020, 105988.

From abstract: “After a large COVID-19 exposure event in an LTCH in Korea, PEP using hydroxychloroquine (HCQ) was administered to 211 individuals, including 189 patients and 22 careworkers, whose baseline polymerase chain reaction (PCR) tests for COVID-19 were negative. PEP was completed in 184 (97.4%) patients and 21 (95.5%) careworkers without serious adverse events… Based on our experience, further clinical studies are recommended for COVID-19 PEP.”

Given the long history of use with minimal side-effects, there is no good reason not to implement mass-prophylaxis. As also published in an editorial in the same journal:

“The promising results of chloroquine in treatment of COVID-19 and the low prevalence of side-effects in long-term use indicate a possible use of chloroquine at 100 mg daily or hydroxychloroquine at 300 mg weekly in mass prophylaxis in individuals exposed to COVID-19, and could be part of urgent interventions currently required to help protect frontline healthcare workers combating COVID-19.”

See:
"Chloroquine as a prophylactic agent against COVID-19?": https://www.sciencedirect.com/science/article/pii/S0924857920301370

Given the massive death counts in nursing homes due to the incompetence of many governors, mass prophylaxis in nursing homes is past due.

And if Trump had advisors worth a cup of warm spit, the administration would already be working to make hydroxychloroquine available over the counter as it already is in so much of the world.

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Synthetic hormones for children just hitting puberty, handfuls of psychoactive medications to swallow with your red wine, and toxic antiretrovirals to give you a facsimile of the immune system your behavioral choices destroyed. All described as "groundbreaking," "leading-edge," "lifesaving."

But since Blormpf takes hydroxichloroquine, the Establishment has finally found a pharmaceutical it doesn't like.

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