Month: May 2020
Sunday assorted links
1. Where have all the briskets gone? A good lesson in supply chain economics. And China to slap big tariffs on Australian barley exports.
2. Scarlett Strong on the updated source code.
3. Falling as a feature of Covid-19.
4. Dithering: a new podcast by Ben Thompson and John Gruber.
5. WHO conditionally backs the notion of Human Challenge Trials for vaccines.
6. Hockey analytics guy contributes to Covid-19 modeling.
7. Toward a theory of how and why UFOs would reveal themselves.
8. How much would you pay for this distanced (Dutch) meal?
9. “Citations for traveling faster than 100 mph have been numerous in recent days.”
10. Millie Small, RIP (music video).
11. To be clear, I am not against this kind of article (NYT). “Sweatpants and Caviar,” but in the paper edition it is called “A Chance to Think About Composing that Opera.” Still, we can learn a bit from doing a small amount of modeling of how it came about.
12. A sad take, no matter which side you trust, our regulatory state is failing us.
13. “Ethics of controlled human infection to study COVID-19.” That is what you might call “an establishment piece.” On one hand, it is nice to see them not reject the idea, though they cannot agree on monetary compensation for exposure. I wonder how they feel about fishing boats?
HHS turned down a big opportunity to make a lot of masks early
Another HHS official, also speaking on the condition of anonymity, said: “There is a process for putting out contracts. It wasn’t as fast as anyone wanted it to be.”
The masks still are not being made, and this would be in Texas. I’ll say it yet again: our regulatory state is failing us in this matter. Here is a bit more:
From his end, Bowen [the mask maker] said his proposal seemed to be going nowhere. “No one at HHS ever did get back to me in a substantive way,” Bowen said.
The senior U.S. official said Bowen’s idea was considered, but funding could not easily be obtained without diverting it from other projects.
While we are on the topic of diverting funding, surely we would all agree that the NSF funding for the social sciences all should — for at least two years — be diverted to biomedical research? I wonder how many economists are willing to tweet that policy recommendation.
The Risk of Immunity Passes
I argued earlier that if we have Immunity Passes they Must Be Combined With Variolation because “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 have immunity passes we must also have controlled infection.
In a new paper, Daniel Hemel and Anup Malani run the numbers and verify the intuition:
…Our topline result is that strategic self-infection would be privately rational for younger adults under a wide range of plausible parameters. This result raises two significant concerns. First, in the process of infecting themselves, younger adults may expose others—including older and/or immunocompromised individuals—to SARS-CoV-2, generating significant negative externalities. Second, even if younger adults can self-infect without exposing others to risk, large numbers of self-infections over a short timeframe after introduction of the immunity passport regime may impose significant congestion externalities on health care infrastructure. We then evaluate several interventions that could mitigate moral hazard under an immunity passport regime, including the extension of unemployment benefits, staggered implementation of passports, and controlled exposure of individuals who seek to self-infect. Our results underscore the importance of careful planning around moral hazard as part of any widescale immunity passport regime.
Did we lockdown some parts of America too early?
No, I am not referring to the preventive measures taken in California, Washington state, and parts of the Tri-state area. Those made good sense to me at the time and in retrospect all the more.
I mean when the whole country started to shut down, including the South, Midwest, and other parts of the West. And yes I know the legal lockdowns were not always the biggest factors, arguably it was when governments started scaring people.
Let’s say you have a simple model of political sustainability where Americans will tolerate [???] months of lockdown — shall we say two? — but not much more. (Maybe three months if we had Merkel as president.) Then, if you scare/lock down in parts of the country where the virus is not yet evident, you create economic misery but not many public health gains. Who after all thinks that Seattle should have been locked down last September? Right?
Many parts of America now hate the lockdown, as they see the economic devastation, are not witnessing overloaded hospital systems, and just don’t quite “get it.” And they are now taking off the lockdown, through both legal and informal means, before it is optimal to do so. One loyal MR reader emailed me this:
The smaller town I am in was never hit hard, and therefore most people are somewhere on the spectrum between COVID is a bad flu and you should wash your hands to pick whatever conspiracy theory (plandemic). People do not believe in the severity of the virus. Not one family we know is social distancing. The ICU never got overrun, the only apocalypse to arrive is an economic one. This is the fundamental point. Most people’s only pain and sadness stems from loss of job, security, future NOT from sickness and death. People here don’t work for big companies or the government.
Oddly, Trump’s big speech when he found “pandemic religion” may have been one of his biggest mistakes. I fully understand that Denmark and Austria did well because they locked down early (and took other measures). There is good evidence that NYC should have locked down earlier yet, but maybe (and I do mean maybe) other parts of the country — most of all rural America — should have locked down later, so they would have their lockdown active “when it really matters.”
In the meantime, we could have restricted or somehow taxed travel out of NYC, which seems to have been a major national spreader.
This is one reason why I am skeptical about models of epidemiology (and economics!) that do not consider political sustainability. I am by no means sure that the claims in this post are correct, but they could be correct. And a model that does not consider political sustainability and time consistency won’t even pick up these factors as concerns. It will simply indicate that a lockdown should happen as quickly as possible. But that was perhaps one of our big mistakes, namely to shut down many of the less dense parts of America before their problems were sufficiently acute, thereby rendering the whole program less sustainable.
And moralizing and blaming our current predicament on “Trump,” or “the yahoos who watch Fox News” is — even if correct — washing one’s hands of the responsibility to incorporate political sustainability into the model.
I fully admit, by the way, that I did not myself appreciate the import of this factor at the time. This is all a sign of how backward our science is in this entire area.
By the way, here is a 55 pp. Powerpoint-like survey of lockdown models. Many references, not much public choice or political economy to be seen.
What should I ask Paul Romer?
I will be doing a second Conversation him, including about testing but by no means only. What should I ask him? For purposes of reference here was my first Conversation with him, likely I won’t repeat any of the same questions, though of course you are free to suggest I should.
The Miracle of the Internet
The internet has performed incredibly well in the crisis. Charles Fishman, at the Atlantic, gets an inside picture from AT&T:
The surge in traffic, on the internet as a whole and on AT&T’s part of the network, is extraordinary in a way that the phrase 20 percent increase doesn’t quite capture. AT&T’s network is carrying an extra 71 petabytes of data every day. How much is 71 petabytes? One comparison: Back at the end of 2014, AT&T’s total network traffic was 56 petabytes a day; in just a few weeks, AT&T has accommodated more new traffic every day than its total daily traffic six years ago. (During the pandemic, the AT&T network has been carrying about 426 petabytes a day—one petabyte is 1 million gigabytes.)
It’s not an accident. Like HEB in Texas
…AT&T rehearses for disaster. Last May, the company ran an internal war game on how a pandemic would affect its ability to keep phone and internet service running. The company does these exercises routinely to try to get ready—to build teams of people and their reflexes, and also to understand what they will need on the ground.
Tom Hazlett at City Journal points out that the strength of the American internet in particular has been due to greater investment and non network-neutrality.
The payoff is that Netflix (or Hulu, Amazon, or YouTube) have forged bargains with ISPs: if you subscribe to Comcast, you might notice that Netflix is so integrated into its network that a button on your cable TV remote clicks you right from CNBC (owned by Comcast) to Netflix—away from the cable operator’s shows and onto a streaming “over-the-top” media platform. These non-neutral arrangements, along with side payments between the companies, fundamentally support Internet growth.
So while Netflix and Amazon have been throttling their video services in Europe, reducing their customers’ data consumption by one-fourth in response to surging demand, high-definition streaming, following a long trend, remains the U.S. norm. In a 2012 paper in the Journal of Law & Economics, Michal Grajek and Lars-Hendrik Röller found that higher levels of regulatory control (with rules designed to force network sharing) undermined investment incentives, reducing information infrastructure across Europe by 23 percent….U.S. network investments are higher than in Europe, accounting for population and relative economic output.
Despite arguments that the U.S. is falling behind, these network investments pay off. American Internet users consume considerably more data than do Europeans on a per-capita basis. According to Cisco, ISP end-users in the U.S. and Canada stream 115.6 gigabytes of data per month, compared with 43.8 gigabytes in Western Europe and 10.6 gigabytes in Asia Pacific.
RIP, Little Richard
Hat tip: Stephen Landry.
Saturday assorted links
1. How to ration access to scarce, reopening resources.
2. Will Australia do best? And America’s coronavirus report card (my Bloomberg column). And the correct Dan Wang link from yesterday (Bloomberg).
3. Derek Lowe on antibody approaches.
5. Yemeni Jew music video. And quelites: Mexico’s wild greens.
6. A thread threading threads on heterogeneous super-spreaders. Best update on this discussion I have seen lately.
7. A social distancing picnic blanket. And in Newfoundland and Labrador: the double bubble.
World’s Largest Producer of Rubbing Alcohol Can’t Manufacturer Hand Sanitizer
…the U.S. is, by far, the world’s largest producer of alcohol. That distinction is a result of the Energy Policy Act of 2005, which required fuel producers to blend four billion gallons of corn ethanol into their gasoline by 2006 and 7.5 billion by 2012. The immediate result was a spike in the price of corn and an increase in food prices world-wide. U.S. farmers soon solved this problem by diverting millions of acres of land to growing corn. Ironically, this increased overall CO2 emissions, much to the chagrin of the environmentalists who had championed the mandate as a way of fighting global warming.
Long before policy makers had seen their error, however, farm states had so fallen in love with ethanol that they successfully lobbied the federal government to raise the mandate to 32 billion gallons a year by 2022. Keep in mind that the oil industry would gladly pay billions of dollars in extra taxes each year not to use it.
The negative effects of this forced usage of corn-based ethanol in refined petroleum include higher gas prices (alcohol costs more than oil per British thermal unit) and more than 30 million acres lost to subsidized corn production — an area that vastly exceeds all the land lost to urban, suburban and exurban “sprawl” over the past century. And while the U.S. now has inordinate supplies of excess alcohol, fuel producers can’t use it, since adding any more to gasoline will damage car engines.
Surely now, with people clamoring for germ-sanitizing alcohol, this excess supply can be put to good use. Not so fast. The Food and Drug Administration and Bureau of Alcohol, Tobacco, Firearms and Explosives have prohibited the use of ethanol in place of isopropyl alcohol even though both are equally effective as germ-killers.
On April 3 the FDA announced that “ethanol made at plants producing fuel ethanol can be used as rubbing alcohol if it contains no additional additive or chemicals from the plants and they can ensure water purity and proper sanitation of equipment.” But it’s unclear how much supply will increase, since the FDA also stated that it would “consider each plant on an individual basis and grant approval only if a plant meets quality control specifications.”
Worse yet, the FDA reversed course on April 16, announcing additional restrictions that effectively prevent any sales, even though ethanol companies had already produced and shipped millions of gallons of high-grade alcohol for hand sanitizer. With U.S. ethanol inventories at all-time high of about 900 million gallons, you’d think the FDA would let us have a little for our hands.
Coronavirus sports markets in everything, multiple simulations edition
For $20, fans of German soccer club Borussia can have a cut-out of themselves placed in the stands at BORUSSIA-PARK. According to the club, over 12,000 cut-outs have been ordered and 4,500 have already been put in place.
Here is the tweet and photo.
And some sports bettors are betting on simulated sporting events. (Again, I’ve never understood gambling — why not save up your risk-taking for positive-sum activities? Is negative-sum gambling a kind of personality management game to remind yourself loss is real and to keep down your risk-taking in other areas?)
Via Samir Varma and Cory Waters.
Limiting liability for a resumption of business activity
I have a short Mercatus policy brief on that topic, co-authored with Trace Mitchell. Excerpt:
Risk from reopening cannot fall to zero, but investments in safety by employers can bring real gains in many cases. Ideally, a plan should both minimize risk and encourage employers’ safety investments. In essence, policymakers should (1) limit liability in the short term to cases of recklessness, (2) use direct regulation to prohibit some obviously risky options, and (3) create and fund a COVID-19 compensation program while capping liability for covered entities.
To understand how this combination of options might work in practice, consider the simple example of the restaurant. Many states are allowing partial reopenings of restaurants, albeit with social distancing, which might comprise outdoor seating, limited seating within the restaurant, or both. Yet some practices that would be very dangerous in the current situation, such as open buffets, have been made illegal per se. This arrangement takes some of the highest-risk problems off the table, and for the better. It is also appropriate for regulation to mandate soap-and-water washing facilities for workers in all restaurants, to provide another example of a sensible regulation.
It is still necessary, however, for these businesses to have stronger liability protection, so that restaurants may proceed with greater certainty, and also solvency. While the number of future COVID-19 transmissions in restaurants is unlikely to be zero, restaurants can only do so much to limit risk, vulnerable individuals still can opt to stay away and indeed are likely to do so, and tracing particular cases to particular restaurants is very difficult. For all of those reasons, we do not expect the traditional liability system to perform well in the case of restaurants, and we wish to limit its applicability, while of course keeping other safeguards in place. In essence, our proposal takes that commonsense approach to restaurants and applies it to the economy more broadly.
I would stress that nursing homes require a fully separate treatment. Here is a related Marc Thiessen piece. Here is Ross Marchand on state-level experimentation with liability.
Alexander Wendt on why we should take UFOs seriously
He has more than just the usual hand-wringing, here is one excerpt:
Sean Illing
…What’s the Occam’s razor explanation for these UFO sightings?
Alexander Wendt
To me, the Occam’s razor explanation is ETs.
Here is another:
Sean Illing
If some of these UFOs are the products of alien life, why haven’t they made their presence more explicit? If they wanted to remain undetected, they could, and yet they continually expose themselves in these semi-clandestine ways. Why?
Alexander Wendt
That’s a very good question. Because you’re right, I think if they wanted to be completely secretive, they could. If they wanted to come out in the open, they could do that, too. My guess is that they have had a lot of experience with this in the past with civilizations at our stage. And they probably know that if they land on the White House lawn, there’ll be chaos and social breakdown. People will start shooting at them.
So I think what they’re doing is trying to get us used to the idea that they’re here with the hopes that we’ll figure it out ourselves, that we’ll go beyond the taboo and do the science. And then maybe we can absorb the knowledge that we’re not alone and our society won’t implode when we finally do have contact. That’s my theory, but who knows, right?
Here is the full piece, interesting and intelligent throughout.
Friday assorted links
1, “New York acted as Grand Central Station for this virus…” (NYT)
2. An “economics of epidemiology” paper incorporating Lucas-like mechanisms.
3. Who is at most risk from Covid? A new study based on very good NHS data.
4. Further new data on transmission. And useful overview of how Covid-19 “works.” Maybe it seems a little late in the game to be reading this kind of short survey piece, but it is actually the best one I’ve seen and it is quite up to date, recommended.
6. Sidewalk Labs abandons Google smart city plans. And new coronavirus calypso (video and music).
7. Why are coronavirus survivors banned from the military? How can that possibly make sense?
8. After reopening, people from neighboring states have been flocking to Georgia.
9. John Carmack defends the Imperial College code. Correction: that was Carmack on IHME, here is Carmack on Imperial College code.
10. Epidemiological model from some data scientists at Stripe (but not a Stripe product). Do you have any comments or suggestions for improvements for them?
11. Alex discussing vaccines on the Dan Proft show. And Dan Wang on America can’t build any more (Bloomberg).
Facts about labor markets ouch, when are rising wages bad edition
Workers in the bottom quintile of the wage distribution experienced a 35 percent employment decline while those in the top quintile experienced only a 9 percent decline. Large differences across the wage distribution persist even after conditioning on worker age, business industry, business size, and worker location. As a result, average base wages increased by over 5 percent, though this increase arose entirely through a composition effect. Overall, we document that the speed and magnitude of labor market deterioration during the early parts of the pandemic were unprecedented in the postwar period, particularly for the bottom of the earnings distribution.
That is from a new paper by many authors, including Cajner, Decker, and Hurst. Via Adam Ozimek.
Testing participation vs. testing capacity
This paper argues that testing participation –and not testing capacity–is the biggest obstacle to a successful “test and isolate”-strategy, as recently proposed by Paul Romer. If 𝑅0=2.5,at least 60percentof a population needs to participate in a testing program to make it theoretically possible to achieve an effective reproduction rate for the whole population,𝑅′′, below 1. I also argue that Paul Romer’s assumption about quarantine length is problematic,because it implicitly assumes that an infected and tested person is quarantined during the entire duration of the illness. With more realistic assumptions, where the fraction of the illness duration that is spent in quarantine depends on the test frequency, at least 80percentof the population must participate to keep 𝑅0′′<1, even if participants in the test program are tested every five days.Comprehensive testing,as proposed by Romer,is probably still a very cost-effective means of reducing the reproduction rate of the infection compared to mandatory lockdown policies, but it seems less promising than he suggests.How-ever, comprehensive testing might also reduce voluntary social distancing in a non-cost-effective way because testing and isolating infected individuals decreases the risk of infection for an individual if social distancing is not practiced.
Here is the full paper by Jonas Herby.