Month: February 2021

Monday assorted links

1. NYT tech coverage still a train wreck.  And reporters using aliases to stalk non-criminal subjects?  Isn’t that against NYT rules?

2. Scott Sumner on the Romney child plan.

3. Update on South African strain, vaccines, and confidence intervals.

4. Monopsony it ain’t.

5. “The average EV increases overall household load by 2.9 kilowatt-hours per day, less than half the amount assumed by state regulators. Our results imply that EVs travel 5,300 miles per year, under half of the US fleet average. This raises questions about transportation electrification for climate policy.”  Link here.

6. Vaccine efficacy update.

Investment, investment, investment — how to think about the Biden stimulus proposal

Here is my Bloomberg column on the stimulus, excerpt for those who are arguing for aid rather than stimulus:

Leave aside the political question of how aggressively to pursue an agenda of a larger, more activist government (and keep in mind that I am more libertarian than many of the participants in this debate). Take a Big Government as a given. History shows that consumption still ought not be the priority.

First, wise public-sector investments are better for the poor than one-time wealth transfers. The U.S. is still reaping the benefits of the great public-health and public-works achievements of the 20th century. Second, the most enduring and beneficial government-transfer programs, such as Social Security, have been built on sustainable majorities.

Progressive societies are fundamentally based on a valorization of investment — in physical structures, in software, in sustainable policies. This argues against a “Let’s grab this policy win while we can” attitude, no matter how popular that stance may currently be on social media. It’s foolish to think that no other policy combination is politically feasible, and if the president’s advisers and supporters really believe that, they are in for a long and unsatisfying four years.

It’s not as if there aren’t obvious candidates for alternative investment: green energy, broadband and public-health infrastructure for the next pandemic, to name a few. Yes, I am familiar with the argument that spending the extra trillion or so now will make it possible to spend more trillions later, including on such policies. But whatever kind of complicated political story you might tell, the basic laws of economics have not been repealed. Increasing current expenditures does, in fact, involve foregone future opportunities.

Another possible direction would be to rework Senator Mitt Romney’s proposed child support plan and turn it into an enduring policy. It is an expensive idea, but at least it would represent a greater investment in America’s future than mere one-off cash transfers.

The defenders of the president’s plan argue that inflation and an overheated economy are not major risks. Maybe so, maybe not — but that is not the crucial issue. Instead, ask yourself this question: Does this program, or this rhetoric, recognize the paramount importance of investment, whether public or private? If not, you needn’t look much further.

I say you can divide the commenters here into two groups.  Those who produce complicated arguments about why opportunity cost reasoning does not apply here, and those who stress the relevance of the opportunity cost of allocating another trillion dollars or two.  I believe that once you recognize that distinction, you know what to do with it next.

Will the future be decentralized?

That question is the topic of my latest Bloomberg column, here is one contrasting excerpt:

When I hear laypersons discuss the future of the internet, the most common question is what kind of company or service is coming next…

When I hear internet entrepreneurs discuss the future, the biggest question is what kind of decentralized service or platform might be next.


Another vertigo-inducing vision of the future can be glimpsed at If you are initially baffled — join the club! Think of Zora as like Spotify, except for more than just music, and the creators keep the rights and sell at prices they decide. It attempts to be an open-source ecosystem for building the future of art.


Having grown up in an analog world, I find these ambitious visions both unsurprising and bewildering. On one hand, I have seen the transition of so much activity to the digital world that another major revolution should not shock me. On the other hand, (a possibly atavistic) part of me likes knowing that someone or something is in control, whether it’s a government, a bunch of people in Mountain View, or even just my dean.


From the comments, on the stimulus

The people were grumpy yesterday!

I’m pretty sure that the “stimulus” package isn’t really about stimulus. I think it’s more to do with trying to compensate or mollify a citizenry that is rightly angry about the incompetent pandemic response. The government can’t come out and openly say “hey we screwed up so here’s $2,000”, so they call it stimulus instead.

I also think the Democrats are keen to refight the global financial crisis of 2008. It’s embarrassing to them that Trump was able to inject such massive stimulus into the economy.

Economists are quite right to object to all this as being way too much, way too late. But, well, here we are. Maybe we’ll see inflation after all.

That is from Brad F., and from B.B.:

Let’s bring James Buchanan into this.

Politicians have figured how to get away with handing out checks to get votes. It has nothing to do with stimulus. Biden would have done it without a pandemic if he could get away with it. But he couldn’t, so he used the pandemic. Never let a crisis go to waste.

He added the largest percent rise in the minimum wage in history to the “stimulus.” Is that going to boost employment? Of course not. Economists express frustration that politicians don’t under economics. They do, they don’t care.

Unions don’t want competition from lower-wage workers. So they want both minimum wage hikes and protectionism along with legislation to promote unionization. The unions understand their self-interest. Biden understands his self-interest; he gets union support.

Economists are supposed to understand self-interest. Why won’t we apply it to politicians?

And from Moral Panic:

I think he’s partly complaining that one can argue Biden’s proposal is way, way off, and yet we can barely discuss it. And the autopilot is not because there are minor differences, so come on, let’s get on with it. No, the alleged bill of goods has major issues.

I appreciate what Summers and a few others are saying. This seems similar to Obamacare’s passage. No debate allowed, and we’ll figure out what it means eventually. I find the straight-up endorsement by elite media especially disappointing, with the only notable dissent in true progressive form being about not giving stimulus $ to affluent people.

To be clear, no one is arguing for doing nothing, or questioning the value of automatic stabilizers.  Most of all, it is to the credit of Summers that we are debating this at all.

Sunday assorted links

1. The regulatory, status quo bias in public health commentary: “Do any of the experts arguing that it’s wrong for Americans to demand access to the AstraZeneca vaccine also advise residents of the UK, EU, and 15 other countries to delay taking it until our FDA grants authorization?

2. Claudia Sahm Substack.

3. People are fed up with broken vaccine appointment tools — so they’re building their own (Technology Review).

4. NASA prize to make food on the Moon, Mars.

5. The UK put a venture capitalist in charge of its vaccine procurement.

6. Cuba will allow more small business.

7. Ross Douthat on the Romney family plan (NYT).

8. It seems fear of kidnapping is severely limiting mobility in Haiti, even for the non-wealthy (NYT).

Stimulus sentences to ponder

Estimates by Harvard economics professor Raj Chetty and his colleagues suggest that consumer spending by low-income consumers is up more than 13 percent from January 2020 to January 2021, before any new stimulus. Researchers working with data from the JPMorgan Chase Institute find household cash balances have risen across the income distribution during the pandemic. At the proposed level of unemployment benefits, more than half of laid-off workers will see their incomes rise. Proposed expenditure levels for school support exceed $2,000 per student.

That is from Lawrence H. Summers, answering further questions about his stimulus stance.  Do read the whole thing.  Again people, you are being sold a bill of goods on this one…

Larry Summers, Right Again

No surprise but in can case you were wondering, retail investors trade mostly on noise. A little bit more surprising is that the effect is to make markets less liquid since some models suggest that noise traders make markets more liquid and accurate by bringing in the sharks.

Contrasting with recent evidence that retail traders are informed, we find that Robinhood ownership changes are unrelated with future returns, suggesting that zero-commission investors behave as noise traders. We exploit Robinhood platform outages to identify the causal effects of commission-free traders on financial markets. Exogenous negative shocks to Robinhood participation are associated with increased market liquidity and lower return volatility among stocks favored by Robinhood investors, as proxied by WallStreetBets mentions. Platform outages are also associated with reduced high frequency trader (HFT) activity, indicative of payments for order flow. However, outages have the strongest effect on stocks neglected by HFTs, suggesting that zerocommission traders have direct negative effects on market quality.

Here is the paper by Eaton, Green, Roseman and Wu.

Live and Work in Croatia With a Digital Nomad Visa

EuroNews: On January 1st, Croatia became one of a small handful of European countries welcoming digital nomads through the introduction of a long-stay visa. New legislation covering the residence of this category of foreign remote workers was introduced in December 2020 as part of reforms to the foreigners’ law….Under the terms, they are not allowed to provide services to Croatian businesses and are not subject to income tax.

I could work in Dubrovnik for 6 months. Details on how to apply here.

What I’ve been reading

1. Honor Moore, Our Revolution: A Mother and Daughter at Midcentury.  An excellent book on “what it was like back then.”  Plus the daughter-mother memoir often is neglected by male readers, and this is one place to start.  The mother ends up diagnosed with cancer at age fifty, and furthermore her war hero and Bishop husband turns out to be actively bisexual.

2. Zachary Karabell, Inside Money: Brown Brothers Harriman and the American Way of Power.  A very useful treatment of an undercovered institution, and one spanning many different eras of American history.  Lots about early 20th century Nicaragua, plus this is the private investment firm that stayed private.

3. Marie Favereau, The Horde: How the Mongols Changed the World.  The subtitle is maybe misleading, because this is the book that corrects all the other books with subtitles like “How the Mongols Changed the World.”  Yes they were somewhat globalized and also religiously tolerant, but Favereau fills in the rest of the details, and furthermore outlines the concept of “the horde” as a mode of governance.  I am hardly an expert in this area, but this seems to be the recommendable book on the Mongols that is both conceptual but at the same time not overly simplified.

4. Margarette Lincoln, London and the 17th Century: The Making of the World’s Greatest City.  Is it so terrible to read another book about the world’s greatest city?  The emphasis is on London as a city of war, turmoil, and crime, rather than triumphalism.  It will be a shame when the English language of that era is no longer intelligible to us without a translation, because currently it is our very closest connection with a fundamentally different worldview.

Claire Lehmann of Quillette fame and others have edited the new Panics and Persecutions: 20 Tales of Excommunication in the Digital Age.

Arnold Kling’s Fantasy Intellectual Teams Draft

Here is his explanation, earlier post here, the point is to pick the undervalued people, not to pick your favorites or “the best” per se.  In essence you are assembling a “team” of public intellectuals to…I am not sure what.  But it might be fun!  Here is my advice for picks:

1. Pick people who have had more than one significant job.

1b. Pick people who have had to manage something, broadly defined.

2. Pick religious thinkers.

3. Pick people who keep on getting better.  Because indeed they will continue to keep on getting better.  That one might sound trivial, but I suspect not so many people follow it.

4. Pick people who do not use the words “Democrat” and “Republican” too often.

5. Pick people who are curious about China.

6. Pick people who experiment with different media and outlets.

7. Pick people who have an interest in seeing through very long-term projects.

8. Don’t pick too many complainers and whiners.

Good luck!

The wisdom of Matt Levine, payment for order flow

I feel like most of what I read about payment for order flow is insane? Otherwise normal people will start out mainstream explainer articles by saying, like, “Robinhood sells your order to Citadel so Citadel can front-run it.” No! First of all, it is illegal to front-run your order, and the Securities and Exchange Commission does, you know, keep an eye on this stuff. Second, the wholesaler is ordinarily filling your order at a price that is better than what’s available in the public market, so “front-running”—going out and buying on the stock exchange and then turning around and selling to you at a profit—doesn’t work. Third, because retail orders are generally uninformative, the wholesaler is not rubbing its hands together being like “bwahahaha now I know that Matt Levine is buying GameStop, it will definitely go up, I must buy a ton of it before he gets any!” The whole story is widely accepted but also completely transparent nonsense.

Here is the full article, with some extra footnotes in the original.

Will tech companies be allowed to secede from Nevada?

I don’t pretend to know what this really means, but here is the report:

Planned legislation to establish new business areas in Nevada would allow technology companies to effectively form separate local governments.

Democratic Gov. Steve Sisolak announced a plan to launch so-called Innovation Zones in Nevada to jumpstart the state’s economy by attracting technology firms, Las Vegas Review-Journal reported Wednesday.

The zones would permit companies with large areas of land to form governments carrying the same authority as counties, including the ability to impose taxes, form school districts and courts and provide government services.

The measure to further economic development with the “alternative form of local government” has not yet been introduced in the Legislature.

Sisolak pitched the concept in his State of the State address delivered Jan. 19. The plan would bring in new businesses at the forefront of “groundbreaking technologies” without the use of tax abatements or other publicly funded incentive packages that previously helped Nevada attract companies like Tesla Inc.

Sisolak named Blockchains, LLC as a company that had committed to developing a “smart city” in an area east of Reno after the legislation has passed…

The Governor’s Office of Economic Development would oversee applications for the zones, which would be limited to companies working in specific business areas including blockchain, autonomous technology, the Internet of Things, robotics, artificial intelligence, wireless, biometrics and renewable resource technology.

Zone requirements would include applicants owning at least 78 square miles (202 square kilometers) of undeveloped, uninhabited land within a single county but separate from any city, town or tax increment area. Companies would have at least $250 million and plans to invest an additional $1 billion in their zones over 10 years.

The zones would initially operate with the oversight of their location counties, but would eventually take over county duties and become independent governmental bodies.

The zones would have three-member supervisor boards with the same powers as county commissioners. The businesses would maintain significant control over board membership.

Here is the full article.  I will keep you posted if anything comes of this.  Addendum: Here is a legislative analysis of the bill, at some point these zones simply become counties?  The underlying reality still is not clear to me.

And here is a different article: Joe Lonsdale Wants to Build a new Tech City Near Austin and a Tunnel Transportation System to Develop an Even Bigger Tech Hub.

Friday assorted links

1. Daron Acemoglu on Melissa Dell.

2. Jonathan Parker: “Economists who think the end of this recession will look like the last one aren’t looking at the data. Household balance sheets, state finances, income, all in better shape than pre-COVID & we haven’t even fixed the cause of recession.

3. Samuel Hammond and Robert Orr make the case for a child allowance.

4. New and excellent visualizations about just how good each vaccine is, including with consideration of variants.  And in defense of the Russian and Chinese vaccines (NYT).

5. Dan Wang podcast on China’s tech ascendancy.

6. The absence of hysteresis in U.S. economic data.

7. “If the Warriors sign a COVID-recovered player immediately, he could play this weekend.”  Shorter quarantine.

8. New seroprevalence data from India and its implications.