Month: May 2020
4. “Historically, immigrant men were more likely to be employed than native men. The COVID-related labor market disruptions eliminated the immigrant employment advantage. By April 2020, immigrant men had lower employment rates than native men.” Link here.
8. What the development of penicillin tells us about coronavirus vaccines. The piece makes several interesting points about speed.
In Why Human Challenge Trials Will Be Necessary to Get a Coronavirus Vaccine I asked, “What if we develop a vaccine for COVID-19 but can’t find enough patients–healthy yet who might get sick–to run a randomized clinical trial?” Exactly that problem is now facing the Oxford vaccine in Britain.
An Oxford University vaccine trial has only a 50 per cent chance of success because coronavirus is fading so rapidly in Britain, a project co-leader has warned.
…Hill said that of 10,000 people recruited to test the vaccine in the coming weeks — some of whom will be given a placebo — he expected fewer than 50 people to catch the virus. If fewer than 20 test positive, then the results might be useless, he warned.
As I wrote, “A low infection rate is great, unless you want to properly test a vaccine.” Challenge trials have issues of external validity and they take time to setup properly but they produce results quickly and they can be especially useful in whittling down vaccine candidates to focus on the best candidates.
1DaySooner now has over 25 thousand volunteers from over 100 countries.
Bloomberg: As sections of the global economy tip-toe toward reopening, it’s becoming clearer that a full recovery from the worst slump since the 1930s will be impossible until a vaccine or treatment is found for the deadly coronavirus.
Consumers will stay on edge and companies will be held back as temperature checks and distancing rules are set to remain in workplaces, restaurants, schools, airports, sports stadiums and more.
China — the first major economy consumed by the virus and the first to emerge on the other side — has been able to revive production but not demand. The lesson for other economies: it’ll be a stop-start path back toward normal.
There’s also the risk of new flare-ups. Some 108 million people in China’s northeast region have been put back under varying degrees of lockdown amid a new cluster of infections. Doctors there are also seeing the coronavirus manifest differently, suggesting that it may be changing in unknown ways.
In South Korea – where the virus was controlled without a hard lockdown – consumer spending remains weak as infections continue to pop up.
…Harvard University professor Carmen Reinhart, who is the incoming chief economist of the World Bank, had a similar message. “We’re not going to have something akin to full normalization unless we (a) have a vaccine and (b) — and this is a big if — that vaccine is accessible to the global population at large,” she told the Harvard Gazette.
The virus is being beaten back and there are reasons for optimism but I agree with Reinhart that we won’t get full normalization without a vaccine. The world economy is on the order of $90 trillion and the IMF is projecting a 3% decline instead of an expected 3.3% increase so a loss to the world economy of around $6 trillion in 2020. Growth will probably return in 2021 and there will be some catchup but the IMF projects a cumulative loss of 9 trillion. Ending the pandemic early could generate hundreds of billions, even trillions, in output–that’s why Susan Athey, Nobel laureate Michael Kremer, Chris Snyder and myself advocate for going big on vaccines. It’s billions in costs and trillions in benefits. Warp speed ahead!
Ali Akbar was two years younger than Robu [later named Ravi Shankar], but a couple of years ahead in his musical training. He has been through a brutal regime: Baba had even tied him to a tree and beaten him when his progress was unsatisfactory. Although Baba had arranged for Ali Akbar to marry at the age of fifteen, he still expected him to remain celibate — married to music. Twice Ali Akbar ran away. Ultimately the harsh discipline brought out his talent and made him into a master of the sarod, although one wonders about the emotional cost.
That is from Oliver Craske’s Indian Sun: The Life and Music of Ravi Shankar, which I am quite enjoying.
Upwards of 70 percent of the Covid19 death toll in Sweden has been people in elderly care services (as of mid-May 2020). We summarize the Covid19 tragedy in elderly care in Sweden, particularly in the City of Stockholm. We explain the institutional structure of elderly care administration and service provision. Those who died of Covid19 in Stockholm’s nursing homes had a life-remaining median somewhere in the range of 5 to 9 months. Having contextualized the Covid19 problem in City of Stockholm, we present an interview of Barbro Karlsson, who works at the administrative heart of the Stockholm elderly care system. Her institutional knowledge and sentiment offer great insight into the concrete problems and challenges. There are really two sides the elderly care Covid19 challenge: The vulnerability and frailty of those in nursing homes and the problem of nosocomial infection—that is, infection caused by contact with others involved in the elderly care experience. The problem calls for targeted solutions by those close to the vulnerable individuals.
That is the abstract of a new paper by Charlotta Stern and Daniel B. Klein.
5. Too many pop-ups, but still a useful piece on the India-China border flare-up.
In Brazil, 15 percent of deaths have been people under 50 — a rate more than 10 times greater than in Italy or Spain. In Mexico, the trend is even more stark: Nearly one-fourth of the dead have been between 25 and 49. In India, officials reported this month that nearly half of the dead were younger than 60. In Rio de Janeiro state, more than two-thirds of hospitalizations are for people younger than 49.
And here are the speculations:
Because population density is so much higher in much of the developing world — and because so many people must keep working to survive — a far greater share of the population ends up being exposed to the virus.
The virus then spreads through a population that’s less resilient. People in the developing world grapple not only with the diseases that have long been associated with it — malaria, dengue, tuberculosis, HIV/AIDS — but increasingly with those more closely associated with wealthier countries. Rates of diabetes, obesity and hypertension are surging. But treatment for many such illnesses is lacking.
Fairfax County Health Department responded to my request for nursing home/longterm care facility deaths from COVID-19. As of May 22, there have been 249 coronavirus deaths in these facilities. That’s ***75 percent*** of all Fairfax County deaths from coronavirus as of today (330)
Here is the link, via Alex T. For epidemiology, shouldn’t those numbers be in a separate model altogether?
Also, it would be very interesting to test the performance of the private sector vs. public sector institutions here.
1. “Of all the Sonoma County youth under 18 who have tested positive for coronavirus, a staggering 95% are Latino, a statistic that is again raising concerns over how the virus is disproportionately impacting local Latinos.”
4. Ten arguments against immunity passports. I mean…those are the arguments you should make. But there is no conception that you have to “solve for the equilibrium” if there are no formal immunity passports, and compare the two situations in terms of cost, unfairness, and the like. In that sense the authors cannot conceive that there needs to be a comparison at all.
6. Do proponents of moral outrage wish to “sneak up on women”? That would explain a lot.
8. American Interest interview with Larry Summers. “LHS: There’s a lot of empirical evidence since Keynes wrote, and for every non-employed middle-aged man who’s learning to play the harp or to appreciate the Impressionists, there are a hundred who are drinking beer, playing video games, and watching 10 hours of TV a day.” It’s a good thing that has nothing to do with subsequent delayed re-employment (also known as “unemployment”), isn’t it?
The author is Zachary D. Carter, and the subtitle is Money, Democracy, and the Life of John Maynard Keynes. Maybe you’ve read plenty about Keynes, but still this book is good enough to qualify (without reservation) for the year’s “best of non-fiction” list published every December.
One surprise is that the author seems to “get” the Bloomsbury Circle, Woolf, and the like, even though he is not an old, crusty British pain in the ass.
A second surprise is that much of the biography goes well past the life of Keynes, though with no diminution of quality. I very much enjoyed for instance the discussion of Samuelson vs. Galbraith, the career of Milton Friedman, the role of the Volker Foundation, and so on.
Very readable, substantive, and the main topic never ceases to be interesting. I am not sure if there is anything truly new in here, but it is nonetheless a very good book to read about Keynes and his later influences on economic thought.
In Adam Smith there is the pin factory and the market and from that beginning we trace the long literature in economics focused on the twin questions, What price to set? How much to produce? Following Coase, Williamson asks different questions, Why a pin factory? Why are the 18 steps to make a pin performed by a single firm rather than two or more? Why are there many firms instead of one large firm? Why does the pin factory not vertically integrate upwards to buy the steel factory and downwards to buy the retail hardware shop?
Williamson’s answers rest on the notions of bounded rationality, contract incompleteness, asset specificity and opportunism. Start at the end, asset specificity and opportunism. When a deal has been sealed the parties typically move from having many potential partners to being locked in. That’s bad because it raises the possibility of opportunism–one party can exploit the other. But it’s also good because when the lock-in is credible each party may be more willing to invest in assets which are extra-productive but specific to the relationship.
Marriage, for example, takes away some possibilities but it adds others. With marriage, for example, comes a greater willingness to invest in children (n.b. asset specificity, the child is of extra value but only to the specific parties involved in the marriage) but that very benefit also means that one of the parties has the leverage to be opportunistic. Knowing all of this when they enter the contract the parties bargain ex-ante, they exchange promises and make investments (the ring), they establish rules for ex-post bargaining or decide on the background rules to apply in that eventually (pre-nup, no fault divorce, covenant marriage). The rules are never perfect and the contacts are always incomplete.
Transaction cost economics is all about applying these ideas in different settings to figure out the best governance structures (marriage, vertical integration etc.) in different circumstances. How does one deal with expensive investments (such as highly individual dies or plant construction) that are specific to a given
trade and put the investor at risk yet which increase productivity? Williamson analyzes how firms come to rely on long term contracts or vertical integration or other seemingly non-competitive solutions to enhance market productivity. Early generations of antitrust enforcers often saw these as monopolistic dealings, but scholars such as Williamson helped us understand how these are essential to the workings of the invisible hand.
Williamson’s paper, The Economics of Governance is an excellent recent summary of his views in the area.
Williamson’s work is notable for inspiring a large body of empirical and theoretical work in modern industrial organization and having influence in law, political science, and management. His work has been widely cited, and by some counts he was the most widely cited economist in the world.
I especially thank John Nye who contributed to this post.
The Los Angeles Lakers, far and away.
The most valuable stars, such as LBJ, have their own private gyms and work-out rooms, often in their homes. They have stayed in the best shape, and of course LBJ has the discipline too. Those star players also are the most used to unusual circumstances (All-star games, Olympics, etc.) and being accustomed to higher than average levels of pressure. They rely less on crowd support than do the role players, noting it is the latter who benefit much more from home court advantage. If the games are played in Las Vegas and Orlando, and without crowds, no one will have home court advantage (except the Orlando Magic, sort of).
So teams built around star veterans will have higher chances of doing better in the playoffs.
The interrupted and probably shortened season also will be easier on the older players, which again covers LeBron. Anthony Davis is not so old but the Lakers would love to play him as many minutes as possible.
The teams with “many necessary complementary parts” will fare worst in relative terms. With such a long break, surely at least 10-20% of those players have “gone off the reservation,” so to speak, and will not return to quality form for some time. Those teams will not gel so easily and find their groove.
Who might that be? I know the Clippers have two big stars, but they seem to rely a lot on the team as a whole. Who else? The Celtics maybe? Indiana?
What are the implications of this analysis for management and business firms? Will teams built around a superstar have an advantage there too?
Of course you should worry, not withstanding all of the dogmatism on Twitter and the pre-Lucasian framing of various charts and graphs.
Here is a simple way to look at it. Let’s say the Fed does the very best job possible with its monetary policy (and in my view the Fed has done a very good job so far). That would mean in terms of the loss function a Fed error in one direction would mean a too low rate of price inflation, and a Fed error in the other direction would mean a too high rate of price inflation.
Now, supply conditions have never been so volatile in my lifetime, and perhaps never in American history. We don’t know how the virus will spread, how reopenings will go, when a vaccine will arrive, how good the vaccine will be, how much a climate of fear will persist, and so on. Demand conditions in turn depend on how these supply conditions will evolve.
The Fed thus could make an error on either side of its target, through no procedural fault of its own. As a result, as a simple matter of logic, the rate of price inflation could be too high, or it also could be too low.
if you think you know the direction of the error in advance, you aren’t paying enough attention to the underlying unpredictable uncertainties.
And if your response is to cite old open letters to the WSJ and the like, that is the same dogmatic error that the inflation hawks from the 1970s have been making.
There are other, more substantive arguments why the rate of price inflation might end up too high (the fiscal side really matters!), but that is the simplest one and you won’t see it on Twitter. And it is fine to argue, by the way, as does Matt Yglesias, that you would rather see it too high than too low.
I was glad to see Martin Wolf tackle this whole question (FT) and not be too scared off by the yappers.