Month: August 2020

The impact of economic regulation on growth: survey and synthesis

This study provides a survey of research that uses cross-country comparisons to examine how economic regulation affects growth. Studies in the peer-reviewed literature tend to rely on either World Bank or Organisation for Economic Co-operation and Development measures of regulation. Those studies seem to reflect a consensus that entry regulation and anticompetitive product and labor market regulations are generally harmful to growth. The results from this cross-country research, taken in conjunction with economic theory as well as other country-specific studies of economic regulation, support the hypothesis that economic regulation tends to reduce welfare in competitive markets. Given the continued use of certain types of economic regulation, the findings may offer important lessons for policymakers.

That is a new Mercatus working paper by James Broughel and Robert Hahn.

Monday assorted links

Uh-oh Mumbai

And here is the research:

The spatial layout of cities is an important feature of urban form, highlighted by urban planners but overlooked by economists. This paper investigates the causal economic implications of city shape in India. I measure cities’ geometric properties over time using satellite imagery and historical maps. I develop an instrument for urban shape based on geographic obstacles encountered by expanding cities. Compact city shape is associated with faster population growth and households display positive willingness to pay for more compact layouts. Transit accessibility is an important channel. Land use regulations can contribute to deteriorating city shape.

Here is the full paper by Mariaflavia Harari.  “Transit accessibility” — what a funny phrase to apply to Mumbai traffic!  Try some Marathi slang instead.  And in case you are not familiar with Mumbai, some of the lower parts have some of the most valuable land.

What I’ve been reading

1. Daniel Halliday and John Thrasher, The Ethics of Capitalism: An Introduction.  This book is reasonable, empirical, non-dogmatic, readable, and largely but not uncritically pro-capitalist.  It is indeed “an introduction,” and not designed for say yours truly, but we need many more works like this.

2. Ken McNab, And in the End: The Last Days of the Beatlesxxx.  I regularly opine that sports and entertainment books — provided you already have familiarity with the topic area — provide better management lessons than do management books.  This volume, as I read it, presents the Beatles story as a tale of two sequential founders — first John (who had most of the early excellent songs), and then Paul, the turning point in my view being when Paul commandeered the engineering of “Tomorrow Never Knows,” otherwise very much a John song but in fact Paul did most of the actual work on it.  Eventually the first founder rebelled against the ever-more-domineering second founder, and then the Beatles went poof.

3. Martyn Rady, The Habsburgs.  Most books about the Habsburgs confuse me, this one confuses me less than those other ones, consider that a recommendation.  I learned the most from the section about all of the early ties to what is now part of northern Switzerland.

4. Jeff Selingo, Who Gets In and Why: A Year Inside College Admissions. Most books about college admissions do not confuse me (the reality already is so absurd), but this one informs me, consider that a recommendation.  Selingo has done actual extensive research, including a direct pipeline into the processes of several major institutions, and he puts informativeness above moralizing or exaggeration.

5. Richard E. Spear, Caravaggio’s Cardsharps on Trial: Thwaytes v. Sotheby’s.  A surprisingly taut and suspenseful treatment of a dispute and then lawsuit over whether a supposed Caravaggio was in fact “real” or not.  NB: if they have to ask whether or not it is real, most of the time it ain’t.

6. William C. Summers, Félix dHérelle and the Origins of Molecular Biology.  I wanted to read up on bacteriophages, in part as a broader proxy for abandoned lines of scientific inquiry (superseded by antibiotics, and did you recall they play a big role in Sinclair Lewis’s Arrowsmith?), and it seemed this was the right book for that.  Short enough and to the point, clear enough for the non-specialist, and it has plenty on the history of science more broadly.  It also covers d’Hérelle being invited to Georgia, USSR, to pursue his research, a fascinating episode in his life.  For a brief introduction, here is his Wikipedia page.

7. Marieke Lucas Rijneveld, The Discomfort of Evening.  A few months ago I started reading this one, figuring it would win a Booker, and indeed it just did.  I read up through p.102, and quite liked it, but also figured that a Dutch farm tale of mucky perversion, flapping meats, and a mordant, vibrant nature did not in fact fit into my broader life plan.  Indeed it did not. But if you are considering this one, while likely I will not finish it, I still would nudge you slightly in the positive direction.  Cumin cheese makes an appearance (ugh).

I have not had a chance to read Adrian Goldworthy’s Philip and Alexander: Kings and Conqueror, but it appears promising.

Steven Ozment, The Age of Reform, 1250-1550: An Intellectual and Religious History of Late Medieval and Reformation Europe is a reprint of a 1980 classic, with an emphasis on the roots of liberalism in European religious thought.

Sunday assorted links

Testing Targets and Intensifies Social Distancing on the Infectious

I’ve been pounding on the need for fast, frequent testing but it’s clear from some of the comments to The Beginning of the End that I have failed to convey some fundamental points. A seemingly sophisticated objection is to note that given background prevalence rates even a fairly specific test will result in a high fraction of false positives among those who test positive. (This is the standard Bayesian doctor puzzle.) It’s nice to see people doing the Bayes calculation but some of them are then drawing the wrong conclusion. Let’s spell it out.

Suppose that the numbers are such that 50% of the people who test positive actually are negative. That sounds bad and it’s not great for a diagnostic test but it’s good enough to be a massive help in a pandemic. To see why, just imagine that you could easily identify people who had a 50% chance of being infectious. That’s a very useful piece of information! If just this group were to intensify social distancing for a week or two the pandemic would end quickly.

In essence, testing allows us to target and intensify social distancing on the people who are most likely to be infectious. Suppose that 10 in 1000 people are infectious (a 1% infectious rate) and that all 1000 are doing some social distancing to protect ourselves from the 1%. If we test and 20 people test positive (10 infectious and 10 not) then 980 people can return to their lives and only 20 need to intensify social distancing. The pandemic ends quickly.

We could cut the number quarantining even further by retesting using PCR and that’s good but not necessary. Also note that the 20 who test positive were already social distancing, albeit perhaps less carefully than ideal, so the additional cost is low and intensifying social distancing on the infectious reduces the transmission rate.  I have ignored false negatives to focus on a key issue. False negatives will mean some transmission still occurs but that will be picked up by more frequent testing.

The takeaway is that when you are blind, you don’t need 20/20 vision to be much better off.

The rise and fall of the corporate R&D lab

Of course, Bell Labs itself later grew to be one of the marquees of commercial labs—in the late 1960s it employed 15,000 people including 1,200 PhDs, who between them made too many important inventions to list, from the transistor and the photovoltaic cell to the first digitally scrambled voice audio (in 1943) and the first complex number calculator (in 1939). Fourteen of its staff went on to win Nobel Prizes and five to win Turing Awards.

That is from Ben Southwood’s new essay on that topic, on the new and important on-line publication Works in progress.

Four stylized facts about Covid-19

We document four facts about the COVID-19 pandemic worldwide relevant for those studying the impact of non-pharmaceutical interventions (NPIs) on COVID-19 transmission. First: across all countries and U.S. states that we study, the growth rates of daily deaths from COVID-19 fell from a wide range of initially high levels to levels close to zero within 20-30 days after each region experienced 25 cumulative deaths. Second: after this initial period, growth rates of daily deaths have hovered around zero or below everywhere in the world. Third: the cross section standard deviation of growth rates of daily deaths across locations fell very rapidly in the first 10 days of the epidemic and has remained at a relatively low level since then. Fourth: when interpreted through a range of epidemiological models, these first three facts about the growth rate of COVID deaths imply that both the effective reproduction numbers and transmission rates of COVID-19 fell from widely dispersed initial levels and the effective reproduction number has hovered around one after the first 30 days of the epidemic virtually everywhere in the world. We argue that failing to account for these four stylized facts may result in overstating the importance of policy mandated NPIs for shaping the progression of this deadly pandemic.

That is the abstract of a new NBER paper by Andrew Atkeson, Karen Kopecky, and Tao Zha.  You will note that when it comes to Covid-19 cases, the superior performance Europe had enjoyed over the United States seems to be evaporating, see here on France and here on Europe more generally.

Forthcoming markets in everything, squirrel nut bar edition

An Ohio man built a backyard squirrel bar with seven varieties of nuts on tap.”  And yes this will be monetized:

Dutko’s favorite part of the bar is its quirky bathroom sign: “Nuts” and “No Nuts.”

The project, which measures about 25 inches wide and 16 inches tall, took him eight hours to design and build.

After posting a video on YouTube showing the build process, Dutko said he was “overwhelmed” with comments and requests to purchase the bar. He immediately applied for a design patent and is now planning to launch a business to sell The Nutty Bar for about $175 – $200.

Here is the YouTube video.  Via the excellent Samir Varma.

Saturday assorted links

Bringing religion back into business

Evan Sharp, the co-founder of Pinterest, hired Sacred Design Lab to categorize all major religious practices and think of ways to apply them to the office. They made him a spreadsheet.

“We pulled together hundreds of practices from all these different religions and cultural practices and put them in a spreadsheet and just tried to categorize them by emotional state: which ones are relevant when you’re happy, which are relevant when you’re angry, and a couple other pieces of metadata,” Mr. Sharp said.

When he had the data, he said, he took a few days and read it all. “This sounds embarrassingly basic,” he said, “but it really reframed parts of religion for me.”

It made him realize how many useful tools existed inside something as old-fashioned as his childhood church. “Some of the rituals I grew up with in Protestantism really have emotional utility,” he said. And Mr. Sharp saw that it was good.

And:

Rev. Phillips, the minister, had a few other ideas. She suggested using a repetitive meeting structure, which can be calming for participants. This might take the form of starting each team meeting with the same words, a sort of corporate incantation.

Others suggested workers each light a candle at the start of a meeting, or pick up a common object that everyone is likely to have in their homes.

“How about trying actual religion?” I hear Ross Douthat saying… Here is the full Nellie Bowles NYT article, after a slow start interesting throughout, though no real discussion of Wokeness, which of course is what the tech companies actually are doing.

From Christianity to liberalism

Daniel Klein sets the record straight:

Olsson: But was it Christianity in particular, or monotheism more generally, that opened up the road to liberalism? Don’t other religious traditions and civilizations also have ideas on individuals, moral agency, and the conscience?

Klein: Monotheism is necessary but not sufficient. Other monotheistic religions didn’t have moral agency, moral equality, and the conscience in quite the same way. Siedentop says that Christianity was quite exceptional in the dignity it accorded the individual. That individual was a votary of the Christ with responsibility to figure out how to advance the well-being of the widest whole of humankind.

Siedentop speaks a lot about moral equality, and I think that one aspect of what he means is that everyone, no matter how depraved or religiously misguided, even an enemy, has the potential for upward vitality, and everyone, no matter how saintly and accomplished up to the present moment, has the potential for downward moral movement. Each of us faces a same sort of moral challenge all the time. Siedentop would associate this image of the individual with Augustine. The implication is that everyone is with or potentially with God, and as an individual. It isn’t about abiding by a set of ritualistic practices. It is a very individual affair.

Siedentop argues that liberalism emerged from, and best prevails today, in what was once thought of as Christendom. If you look at a map of economic freedom today, you will see that the “most free” countries generally correlate to Christendom circa 1300, plus areas (North America, Australia and New Zealand, arguably Japan) that have since been developed by or influenced by the Christian West. In a sense his book is a theory of that correlation, an explanation. Christianity made liberalism possible—which is not say that, within a country, Christianity is sufficient for, or will necessarily produce, liberalism.

Here is the full interview, recommended.  And here is a related tweet.

Friday assorted links

The Beginning of the End?

It’s taken far too long and it’s still not FDA approved for at-home use or for asymptomatic individuals but the new $5,15-minute, easy to use, Abbott test and the Trump administration’s promise to purchase 150 million of them is a big deal. Abbott has been building capacity for months according to their lead scientist interviewed in the Atlantic by Alex Madrigal and in a few weeks will be producing 50 million tests a month:

Madrigal: Fifty million tests a month is a huge number. That’s more than twice the number of tests the U.S. completes in a month. How did you ramp up production so massively?

Hackett: This was the challenge of this program. We needed some sort of reliable testing that could be affordable and that doesn’t require instrumentation. You need scale. The more frequently you could test people, frankly, even tests with lower sensitivity would be very effective at identifying people quickly and slowing the spread. As we were developing the test, there were people working in parallel looking at supply chain and logistics. Abbott took a lot of risk—hundreds of millions of dollars were spent building two new manufacturing facilities focused solely on those tests. We hoped we could come to a solution that would be where we needed it from an overall accuracy perspective, but if you weren’t building capability simultaneously, there was no way it could be the answer.

The US has performed about 80 million tests since the pandemic began, so an additional 50 million tests a month is a big increase in capacity. As noted, the test is not approved for at-home use but it’s a CLIA-waived test which means that a doctor’s office, a CVS or Walmart clinic, even a school nurse could qualify for a waiver and perform the tests. The test is not approved for asymptomatic individuals but I suspect that won’t mean much in practice, it can be prescribed off-label although the fact that a prescription is required is limiting. I hope the necessity for a prescription will be lifted as we get more experience with these tests. False positives (~1.5%) are low and by taking the strain off the PCR system we can improve triage and afford to do more double checks. False positives will be more of an issue as we wipe out the virus but that will take time.

I hope these tests will open up air travel within a month or two. I also hope to see more of these types of tests approved. Derek Lowe has more technical details.

It won’t be all smooth sailing, Abbott may not be able to produce as much or as quickly as they say they can and quality in the field may fall. The government may distribute the tests poorly. The virus could pickup in the fall, as in 1918. I expect more problems and challenges but we now have a chance to get ahead of the virus which is very welcome news.

Addendum: This type of public-private partnership with private firms building capacity in advance of approval for tests and vaccines on the foundation of government push and pull funding is exactly the structure that the Accelerating Health Technologies team has been recommending both to the US government and to governments around the world.