Month: January 2021
Tim Harford writes about the whiplash he experienced from the debate over delaying second doses in Britain.
What a difference a couple of weeks makes. In mid-December, I asked a collection of wise guests on my BBC radio programme How to Vaccinate the World about the importance of second doses. At that stage, Scott Gottlieb, former head of the US Food and Drug Administration, had warned against stockpiling doses just to be sure that second doses were certain to be available, Economists such as Alex Tabarrok of George Mason University had gone further: what if we gave people single doses of a vaccine instead of the recommended pair of doses, and thus reached twice as many people in the short term? This radical concept was roundly rejected by my panel
…. “This is an easy one, Tim, because we’ve got to go with the scientific evidence,” said Nick Jackson of the Coalition for Epidemic Preparedness Innovations. “And the scientific evidence is that two doses is going to provide the best protection.”
My other guests agreed, and no wonder: Jackson’s view was firmly in the scientific mainstream three weeks ago. But in the face of a shortage of doses and a rapidly spreading strain of “Super-Covid”, the scientific mainstream appears to have drifted. The UK’s new policy is to prioritise the first dose and to deliver the second one within three months rather than three weeks…..the recommendation comes not from ministers but from the Joint Committee on Vaccination and Immunisation (JCVI).
Strikingly, many scientists have given the move their approval.
See also Tyler’s previous post on this theme.
By the way, if the J&J single-dose vaccine comes in at say 80% effective it is going to be interesting to see how people go from ‘a single-dose at 80% effective is too dangerous to allow for 8-12 weeks’ to ‘isn’t it great we have a single-dose 80% effective vaccine!’.
Anti-money laundering laws are hugely expensive and largely ineffective at their stated purpose.
Necessarily applying a broad brush, the current anti-money laundering policy prescription helps authorities intercept about $3 billion of an estimated $3 trillion in criminal funds generated annually (0.1 percent success rate), and costs banks and other businesses more than $300 billion in compliance costs, more than a hundred times the amounts recovered from criminals.
… If authorities recover around $3 billion per annum from criminals, whilst imposing compliance costs of $300 billion and penalizing businesses another $8 billion a year, it is reasonable to ask if the real target of anti-money laundering laws is legitimate enterprises rather than criminal enterprises.
That’s Ronald Pol from a new paper, Anti-money laundering: The world’s least effective policy experiment? Together, we can fix it.
I would add two elements. The anti-money laundering laws are also injurious to innovation in areas like cryptocurrency where privacy is a goal and there is no bank to fine or from which to demand paperwork. These laws are also a injurious to liberty as they essentially require banks to spy on their customers and report to the government and they are inconsistent with constitutional principles. The key AML laws really only date from the 1990s and should be scrapped rather than “fixed “(which I think is Pol being sly as he never suggests any real solutions.)
For all of its achievements, we still do not know if New Zealand will have ended up doing a good job against Covid-19:
New Zealand’s “go hard, go early” strategy to combat Covid-19 attracted global praise and eliminated local transmission of the virus. But the country’s slow rollout of vaccines is putting people at unnecessary risk and threatens to delay its economic recovery, critics warned.
Wellington plans to start vaccinating frontline workers in April and the general public from July under a cautious strategy that avoids the emergency authorisation of vaccines pursued by crisis-stricken nations such as the US and UK.
And note this:
There are at least 19 cases of the coronavirus variants first identified in the UK or South Africa in managed quarantine facilities in New Zealand for overseas arrivals, according to government data.
Mr Hipkins said there was “absolutely no complacency” in the government’s response.
Here is the full FT story.
A controversial study on the effect of a radical rise in the legal minimum wage level came out Tuesday, pitting employers against employees in the midst of negotiations for the next year’s wage standard.
Researchers at the Korea Economic Research Institute analyzed in the study the impact of the 16.4 percent increase in the 2018 wage level on low-income workers to find that many low-paying jobs were erased, while those who were employed enjoyed higher pay. The institute is affiliated with the country’s top business lobby, the Federation of Korean Industries.
The minimum wage is updated on an annual basis, and the rate currently stands at 8,590 won ($7.10) per hour. In 2018, the rate rose 16.4 percent from 6,470 won a year earlier to 7,530 won, the steepest increase in 17 years.
The KERI report said the employment rate in 2018 for workers directed affected by the hike — those who were getting paid less than the 2018 legal wage in 2017 — was as much as 4.6 percentage points lower than other income groups.
Some 15.1 percent of this group were jobless in 2018.
The study calculated that between 27.4 percent and 30.5 percent of the unemployment cases were due to the higher wage level, which prompted employers to cut jobs.
Here is the article. I cannot find this study, it may well only be in Korean (addendum: here is the link in Korean), and I note it is connected to a business lobby. Still, I will take this opportunity to ask: what else do we know about the recent and radical South Korean wage hike?
Here are some general remarks at Wikipedia. And here is a relevant paper about minimum wage hikes in Hungary: small disemployment effects after four years, and most of the burden carried by consumers, which implies the monopsony model does not apply — in that model prices should fall!
And do read Brian Albrecht on the minimum wage.
To see how much the sanitary and medical revolutions have changed the risks of global interaction, examine what kills Americans abroad these days: cardiovascular events including heart attacks account for 49 percent of all deaths, injuries for a further 25 percent, and infectious diseases other than pneumonia for just 1 percent…even travel to pathogen-rich environments has become far, far safer than it used to be: a study of 185 deaths of US Peace Corps volunteers, placed in some of the world’s least healthy countries, found that unintentional injuries and suicides were far more deadly than infection, accounting for more than 80 percent of deaths between them.
That is from Charles Kenny’s new and excellent The Plague Cycle: The Unending War Between Humanity and Infectious Disease, which was started well before Covid.
It’s a slam-dunk case that doubling the federal minimum wage — it’s been $7.25 since 2009 — would lead to significant declines in employment opportunities for workers with few skills or little experience. According to data from the Bureau of Labor Statistics for 2019 (before the pandemic), in 47 states, at least one-quarter of all workers earn less than $15 per hour. In 20 states, half of all workers earn less than $18 per hour, and in 30 states, the median hourly wage is less than $19.
These statistics show that $15 is a very high wage floor. For employers to keep all their workers would require raising the wages of a huge share of the national workforce. But the number of workers affected would be so large that this wouldn’t happen. Instead, the number of jobs in the low-wage workforce would shrink.
The nonpartisan Congressional Budget Office confirms this basic intuition, estimating that joblessness would increase by 1.3 million if the national hourly wage floor were hiked to $15 [TC: and that is pre-pandemic]. The CBO also concluded that this policy would reduce business income, raise consumer prices and reduce gross domestic product.
That is from Michael Strain at Bloomberg. I would add this. No matter what you think about the recent literature on the minimum wage, all economic theories imply that minimum wages should be decided at the state and local level, given the economic heterogeneity of the United States. That is the message that you as an economist should be carrying forward.
Do you think Puerto Rico should be a state? Should they have a $15 minimum wage too? Come on. Yes, it is easy enough to make an exception for them, and by the way the median manufacturing wage in Mississippi is below $15 as well. Rinse and repeat.
I am sorry to speak in such terms, but the reality is that an allied cabal of activists and left-wing economists have combined on social media to insist on a particular approach to minimum wage economics and to bully those who disagree.
Ask yourself a simple question: were any of them calling for a temporary two-year cut in the minimum wage for restaurants and small businesses during a devastating pandemic? If not, are they really carrying forward the banner of science?
That has been one common response to my recent post asking people to be consistent across assumptions about elasticities. And that is true, those differing elasticities are not all exactly the same. Yet a few points remain relevant:
1. If you see the world as dynamic, full of entrepreneurship, and solving problems fairly rapidly and effectively, you should tend to think that a wide variety of elasticities will be high. Conversely, if you think we are all sluggish, overregulated, creatures of routine boobs, you will tend to see a wide variety of elasticities as being pretty low.
That doesn’t have to follow, but if you instead have your own Rube Goldberg approach, well let’s please hear about it in more detail.
2. The elasticities that “most people on Twitter want” are “long run labor demand inelastic” (minimum wage hike good!) and “short run industry supply curve elastic” (stimulus is good!). In other words, they want the short-run elasticity to be higher than the long-run elasticity. By insisting that not all elasticities are the same, they actually have made the problem more difficult for themselves.
3. Individual firm and aggregate supply curves of course can differ. To get the aggregate curve to be more dynamic and responsive than individual curves, typically you would invoke some notion of increasing returns. But a pandemic is exactly when increasing returns are least likely.
Plausibly there are increasing returns to greater vaccine use. But nominal stimulus? Nope. We are not living in a world of “my pet shop is doing so well I am going to spend money on your movie theater.” Apart from the high multiplier associated with public health improvements, we right now live in a world of bottlenecks and sectorally specific problems. Trying to get increasing returns on your side isn’t going to help, in fact it will work against you.
In sum, I am not saying there is no way you can get all of your elasticities to fit together in the preferred manner. After all, if nanotechnology works, alchemy may work too. I am just asking you to…show your work. And in the meantime be less moralizing and dogmatic. Perhaps you cannot in fact, right now, have all of the things you want.
By July it will all be over. The only question is how many people have to die between now and then?
Youyang Gu, whose projections have been among the most accurate, projects that the United States will have reached herd immunity by July, with about half of the immunity coming from vaccinations and half from infections. Long before we reach herd immunity, however, the infection and death rates will fall. Gu is projecting that by March infections will be half what they are now and by May about one-tenth the current rate. The drop will catch people by surprise just like the increase. We are not good at exponentials. The economy will boom in Q2 as infections decline.
If that sounds good bear in mind that 400,000 people are dead already and the CDC expects another 100,000 dead by February. We have a very limited window in the United States to make a big push on vaccines and we are failing. We are failing phenomenally badly.
To understand how bad we are failing compare with flu vaccinations. Every year the US gives out about 150 million flu vaccinations within the space of about 3 months or 1.6 million shots a day. Thus, we vaccinate for flu at more than twice the speed we are vaccinating for COVID! Yes, COVID vaccination has its own difficulties but this is an emergency with tens of thousands of lives at stake.
I would love it if we mobilized serious resources and vaccinated at Israel’s rate–30% of the population in a month. But if we simply vaccinated for COVID at the same rate as we do for flu we would save thousands of lives and hundreds of billions of dollars in GDP. The comparison with flu vaccinations also reminds us that we don’t necessarily need the National Guard or mass clinics in stadiums. Use the HMOs and the pharmacies!
And let’s make it easier for the pharmacies. It’s beyond ridiculous that we are allowing counties to set their own guidelines for who should be vaccinated first. We need one, or at most 50, set of guidelines and lets not worry so much at people jumping the queue. (The ones jumping the queue are probably the ones who want to get back to the bars and social life the most so vaccinating them first has some side benefits.)
Of course, the faster we vaccinate the more vaccine quantities will become the binding constraint which is why we also need to approve more vaccines, move to First Doses First (delay second doses like the British), and use Moderna half-doses. Fire on all cylinders!
Time is of the essence.
Hat tip: Kevin Bryan and Witold Wiecek.
This was presumably my last Bloomberg column about a policy from President Trump, here is the setting:
On his way out the door, President Donald Trump issued an executive order expanding on his earlier call for the creation of a “Garden of American Heroes.” The context is that recent events have supposedly shown that the U.S. no longer believes in its own greatness and has mocked its own history and heritage, and so this new tonic is needed to restore a spirit of homage and pride. Thus the government should carve out a new public space, full of statues of great Americans.
Here is one excerpt:
My first worry is that, however important heroism may be, it is not well represented en masse. The U.S. celebrates the heroic best when presenting an ethos of individualism, yet the executive order lists 244 Americans to be honored. In contrast, the Lincoln and Jefferson Memorials are solo presentations. The Iwo Jima statue in Arlington, Virginia represents a collective effort of flag raising, by only six soldiers. Mount Rushmore has just four presidents.
My worry is that a Heroes Garden of 244 would appear more collectivistic, even mildly fascistic, than heroic. It is hard to avoid a numbing effect when the number of figures is so large. Large numbers of figures also sometimes indicate victimization, such as in the “Tragedy of the Peoples” Holocaust memorial in Moscow, or with the more than 58,000 names on the Vietnam Veterans Memorial.
A final worry is that we do not live in a time of great portrait sculptors. Contemporary artists may be ironic or acerbic or witty or deeply conceptual to wonderful effect, as you can learn from a tour of the sculptures at the Hirshhorn Museum in Washington or the Storm King Art Center in upstate New York. But I don’t see many first-rate works with the aesthetic of, say, Michelangelo’s David or the portrayals of American heroes created by Augutus Saint-Gaudens. The reluctance of contemporary sculptors to communicate the quality of heroism is likely to produce a bland garden featuring an ugly official culture.
There are further points at the link.
The U.S. also experienced its most violent year in decades with an unprecedented rise in homicides. The Gun Violence Archive reported that more than 19,000 people died in shootings or firearm-related incidents in 2020, the highest figure in over two decades.
New Orleans-based crime analyst Jeff Asher took a closer look at the number of murders in 57 major American cities and he found that the number of offenses grew in 51 of them. He only focused on agencies where data was available and most of them had figures through November or December of 2020. Growth in violent crime varied by city with Seattle seeing a 74 percent spike in homicides between 2019 and 2020 while Chicago and Boston saw their offenses grow 55.5 percent and 54 percent, respectively. Elsewhere, Washington D.C. and Las Vegas saw growth in their murder offences, albeit at a slower pace of less than 20 percent.
New York’s homicide count went up by nearly 40 percent with Mayor Bill de Blasio stating that the figures should worry all New Yorkers and it has to stop.
Here is the full link. Via Noah.
1. Those new service sector jobs: “no bison experience necessary.”
2. Where does the climate change struggle stand now? (New York magazine)
3. The Pfizer shots likely give sterilizing immunity (i.e., you don’t then infect others).