Month: April 2021

Garett Jones sentences to ponder

UCSD’s Valerie Ramey, advisor to CBO and member of the NBER Business Cycle Dating Committee, notes the puzzling result reported by multiple researchers: *More* infrastructure spending predicts *no change or a decline* in jobs:

…Have wonks widely discussed the finding that U.S. infrastructure spending appears to have no positive short-term effect on jobs?

Here is the link, including to research by Valerie Ramey.

Saturday assorted links

1. At #6 and #7 you can read AIER on vaccines.  C’mon people, this particular debate is over.

2. Long Covid is real.  And U.S. excess deaths in 2020 more elevated in relative terms than during the 1918 pandemic (NYT).  And “BREAKING: Israel reports no new coronavirus deaths for second day in a row.”

3. Highly effective software to help you find a vaccine,

4. Wyoming will recognize DAOs as a new form of LLC.

5. The fiscal polity that is Illinois: “Winners of lottery jackpots of $25,000 or more have been denied payment by the lottery commission until the state balances the budget.”

6. “Ontario Parks cracking down on people reselling camping bookings for profit.

India’s Pandemic and the World

Shruti Rajagopalan is right, helping India isn’t just about India.

India’s role in the global pandemic is unique. The developing world is counting on affordable Indian vaccine-makers such as Serum Institute of India Pvt. Ltd. for their supplies. With India now reserving virtually all its doses for domestic use, those countries will have to wait even longer to be vaccinated. And if the pandemic disrupts production at Indian pharmaceutical companies, it could affect crucial non-Covid medications as well. Half the world’s children have been vaccinated by Serum Institute.

The Biden administration can do two things to help. The first is to ease restrictions on critical exports, imposed under the Defense Production Act to prioritize the needs of U.S. companies.

Vaccine production requires very specific, medically approved inputs, which are difficult to substitute quickly in the middle of a pandemic. Currently, U.S. producers must secure permission before exporting such things as special sterile filters, disposable bags for cell cultures, cell culture media and single-use tubing. The embargo has led to major bottlenecks. Serum Institute says that without those inputs, it may not be able to deliver the 160 million vaccine doses it had planned to produce next month.

Second, the U.S. should immediately share doses from its own supply of Oxford-AstraZeneca and Johnson & Johnson vaccines.

I have three things to add. First, I have already noted the foreign policy implications which weigh strongly in favor of taking a more active role in the world pandemic.

Second, India should move immediately to delay the second dose of the AZ vaccine to 12 weeks. The federal government has already recommended a 6-8 week schedule, as this improves efficiency of the AstraZeneca (Covishield) vaccine, but many people so fear shortages that they are getting a less-effective second dose at four weeks. An enforced 12 week schedule would improve efficiency and might also reassure people that there will be supplies in 12 weeks.

Third, and this is more speculative, but the rising pandemic in India provides an opportunity to test fractional dosing of the Pfizer and Moderna vaccines in a real world setting. There is currently a small-scale Belgian trial testing Moderna at 50 mcg and Pfizer at 20 mcg. We already have reasonable information that 50 mcg of Moderna induces a robust immune response in adults. The mRNA vaccines wouldn’t work in all of India but would be fine in the cities and perhaps there is an opportunity for an exchange similar to what Israel promised to get early supplies.

Periodicals to know about

There are new and transformed magazines and movements like American PurposePersuasionCounterweightArc DigitalTablet and Liberties that point out the excesses of the social justice movement and distinguish between those who think speech is a mutual exploration to seek truth and those who think speech is a structure of domination to perpetuate systems of privilege.

That is from David Brooks (NYT).

The petty narcissism of small vaccine differences

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

My survey of the cultural vaccine landscape in the U.S. includes the four major vaccines — from Pfizer, Moderna, AstraZeneca and Johnson & Johnson.

Pfizer, distributed by one of the largest U.S. pharmaceutical firms, is the establishment vaccine. Since it initially had a significant “cold chain” requirement, it was given out at established institutions such as big hospitals and public-health centers with large freezers. It is plentiful, highly effective and largely uncontroversial.

Moderna — the very name suggests something new — is the intellectual vaccine. The company had no product or major revenue source until the vaccine itself, so it is harder to link Moderna to “Big Pharma,” which gives it a kind of anti-establishment vibe. Note also that the last three letters of Moderna are “rna,” referring to the mRNA technology that makes the vaccine work. It is the vaccine for people in the know.

Moderna was also, for a while anyway, the American vaccine. It was available primarily in the U.S. at a time when Pfizer was being handed out liberally in the U.K. and Israel. As a recipient of two Moderna doses myself, I feel just a wee bit special for this reason. You had to be an American to get my vaccine. Yes, the European Union had also approved it, but it failed to procure it in a timely manner. So the availability of Moderna reflects the greater wealth and efficiency of the U.S.

Then there are the AstraZeneca and Johnson & Johnson vaccines…


To the extent vaccines turn into markers for a cultural club, vaccine hesitancy may persist.

It might be better, all things considered, if vaccines were viewed more like paper clips — that is, a useful and even necessary product entirely shorn of cultural significance. Few people refuse to deploy paper clips in order to “own the libs” or because they do not trust the establishment. They are just a way to hold two pieces of paper together.

To be clear, the primary blame here lies with those who hesitate to get vaccinated. But behind big mistakes are many small ones — and we vaccinated Americans, with our all-too-human tendency to create hierarchies for everything, are surely contributing to the mess.


Do career disruptions matter for the top five percent?

How resilient are high-skilled, white collar workers? We exploit a uniquely comprehensive dataset of individual-level resumes of bank employees and the setting of the Lehman Brothers bankruptcy to estimate the effect of an unanticipated shock on the career paths of mobile and high skilled labor. We find evidence of short-term effects that largely dissipate over the course of the decade and that touch only the senior-most employees. We match each employee of Lehman Brothers in January 2008 to the most similar employees at Goldman Sachs, Morgan Stanley, Deutsche Bank, and UBS based on job positions, skills, education, and demographics. By 2019, the former Lehman Brothers employees are 2% more likely to have experienced at least a six-months-long break from reported employment and 3% more likely to have left the financial services industry. However, these effects concentrate among the senior individuals such as vice presidents and managing directors and are absent for junior employees such as analysts and associates. Furthermore, in terms of subsequent career growth, junior employees of Lehman Brothers fare no worse than their counterparts at the other banks. Analysts and associates employed at Lehman Brothers in January 2008 have equal or greater likelihoods of achieving senior roles such as managing director in existing enterprises by January 2019 and are more likely to found their own businesses.

That is from a new paper by Anastassia Fedyk and James Hodson.  Via the excellent Kevin Lewis.

Friday assorted links

1. Ayn Rand in Hollywood.

2. A funny kind of Taiwanese marriage arbitrage.

3. Solve for the lovely biscuit equilibrium.

4. Oxford malaria vaccine looking good in (small) Burkina Faso trial.

5. Ranked-choice voting for the New York mayor (NYT).

6. Greece reopens to American tourists.

7. EU proposing to regulate the use of Bayesian estimation.  What’s the chance of that actually happening?

From the comments, Zaua on capital gains tax hikes

This is a big mistake even from a class equality perspective as it will cause rich people to invest more in things that are less liquid and accessible, and therefore harder to tax, from private businesses to real estate to crypto.

I believe that as much wealth as possible should be based on publicly traded corporations, because that is an avenue to build wealth that is accessible to all people with any amount of spare money and an avenue where regular people probably aren’t going to get screwed too badly by insiders because of the efficient markets hypothesis. However, the liquidity and accessibility of public markets also makes them easier to tax. So the higher capital gains tax rates are, the less attractive the public company form will be and the more attractive investment options will be put behind opaque structures that have tax advantages but also become too risky or even inaccessible to the general public.

If you must raise taxes on the rich, do it on their individual income rates, not their capital gains rates.

Here is the link.

Canada (oil sands) fact of the day

Between Mr. Trudeau’s election in 2015 and 2019, Canada’s greenhouse gas emissions increased by 1 percent, despite decreases in other rich nations during the same period, according to government data released last week. In fact, Canada is the only Group of 7 country whose emissions have risen since the Paris climate agreement was signed six years ago.

Here is more from the NYT.

What are the limits of economies of scope?

Amazon is launching its first high-tech hair salon, as the online retailer makes a surprise move into the beauty sector.

The salon, in Spitalfields, east London, will have an augmented-reality mirror showing clients different colours and styles before treatments.

The venue will also have magazines loaded on to tablets, for browsing.

Traditional services including cuts, blow-dries and colour treatments will also be available.

Here is the full story, via Michelle Dawson.

Is this really better than borrowing?

Or how about a VAT?

President Joe Biden will propose almost doubling the capital gains tax rate for wealthy individuals to 39.6%, which, coupled with an existing surtax on investment income, means that federal tax rates for investors could be as high as 43.4%, according to people familiar with the proposal.

The plan would boost the capital gains rate to 39.6% for those earning $1 million or more, an increase from the current base rate of 20%, the people said on the condition of anonymity because the plan is not yet public. A 3.8% tax on investment income that funds Obamacare would be kept in place, pushing the tax rate on returns on financial assets higher than the top rate on wage and salary income, they said.

Here is the full story from Bloomberg.  Given state rates, that means over 50% in New York and California — is that what the science recommends?

A Foreign Policy Disaster in the Making

NYTimes: A lethal, fast-paced second wave of the coronavirus pandemic has brought India’s health care systems to the verge of collapse and is putting millions of lives and livelihoods at risk.

On Sunday and Monday, the country recorded more than 270,000 and 259,000 cases, respectively, of Covid-19, a staggering increase from about 11,000 cases per day in the second week of February. Reported coronavirus infections shot up from about 20,000 per day in mid-March to more than 200,000 by mid-April.

The newspapers and social media are scrolls of horror and failure of the health system. There are reports of lines of ambulances with patients waiting outside the largest Covid facility in Ahmedabad in the western state of Gujarat because ventilator beds and oxygen had run out.

On Friday in the northern city of Lucknow, Vinay Srivastava, a 65-year-old journalist, shared his falling oxygen levels on Twitter, tagging government authorities for help. Overburdened hospitals and laboratories wouldn’t take calls from his family. The last tweet from Mr. Srivastava’s handle described his oxygen saturation level at 52, way below the 95 percent, which is considered normal. Nobody helped. He died on Saturday.

When I left India in February of 2020 I feared that COVID would rip through its dense, urban populations which were already under stress from some of the world’s worst air and water pollution. I feared that COVID would overwhelm India’s weak public health care system and leave its low-capacity state flailing. As it happened, I should have worried more about America’s poorly cared for nursing home populations, its high obesity rate, and its low state-capacity. It was the US state that ended up flailing, as it and the public became absorbed by media spectacles, impeachments and scandals du jour even as thousands died daily. The virus mocks us all.

All of this will require some rethinking. Today, however, I want to point to a foreign policy disaster in the making. America’s role as the guarantor of a globalized, mostly peaceful, and orderly world–already deeply hurt by four years of “America First,”–is now under further threat by an increasing perception that we are vaccine hoarders. Conspiracy theories are running wild in India on WhatsApp and elsewhere that we have hundreds of millions of spare doses. It isn’t true, of course. We ordered more doses than we needed because we didn’t know which vaccine would work and so we smartly placed multiple bets. Our advance-purchases from Pfizer and big investments in Moderna and related parts of the vaccine supply chain have paid off big time. As the US is vaccinated, our investments will benefit the entire world. Our investments in Novavax, AstraZeneca and Johnson and Johnson were also smart investments but those bets have yet to pay off in a big way. We don’t have hundreds of millions of doses stockpiled but maybe tens of millions of some AstraZeneca and Johnson and Johnson vaccines.

We have, however, used the Defense Production Act to prioritize American vaccine manufacturing at potentially great cost to India. As The Economist reports:

Production lines in India, making at least 160m doses of covid vaccine a month, will come to a halt in the coming weeks unless America supplies 37 critical items.

A shutdown of vaccine production in India would be a disaster for India and also for the United States. Our image in Asia will be tarnished at a time when we want to be making allies to counter Chinese influence. Moreover, the US benefits tremendously from a globalized world. Indeed, the US cannot supply its own vaccine needs without inputs from the rest of the world so flouting the rules will boomerang, leaving us and everyone else worse off. Autarchy is very bad for vaccine production.

The Biden Administration has some leeway. We have over 60 million doses of Pfizer and Moderna vaccines on hand and more arriving every day. We do not need to pause our own vaccination efforts to help others. We can donate what AstraZeneca stockpiles remain at no cost to us. A I said in my testimony to Congress, forget being humanitarians, there are health, economic and political reasons to vaccinate the world.

So let’s make it clear that we have an American plan to vaccinate the world before perceptions solidify that we are the villain and not the hero of the story.

Lucan’s *Civil War* is grossly underrated, and I found reading it to be a revelation

COWEN: Why does reading Lucan’s The Civil War make more sense in 2021 than it might have 30 years ago? To me, it seems remarkably contemporary — more than Virgil. People are crazy. They’re at each other’s throats, but not really for any good reason.

BARTSCH: Lucan seems contemporary. Lucan is very much after and in response to Virgil. He reads Virgil as saying the possibility of the good state, the good empire is a real thing. What Lucan says is, “No, that is never possible. There will always be men grubbing for power and killing each other, and civil war is, frankly, a condition of life, a condition of history. Right now, I’m writing under Nero, who is not a good emperor. I’m writing about the events that led to Nero coming to power, and I hate them. They’re terrible. People lie to each other. Brothers killed brothers. Friends slashed each other in the face, all for political reasons. People use language, again, incorrectly to distort what they meant, and then — here’s the rub — because I’m writing under Nero and because Nero is one of the bad emperors, I can’t complain about writing under Nero. I have to praise him. Otherwise, I’ll get in trouble.”

So you get this beautiful juxtaposition of a poet starting out his poem with almost over-the-top praise. “Oh, Nero, you’re going to heaven, and you’re going to be a star in the constellations. There’s never been anybody so wise as you. Civil war was worth it if you were the outcome.”

Then the rest of the poem is this blistering indictment of the present, which is the present under Nero. By indicting the present but praising Nero, he effectively shows us that his praise is false, but that false praise is what everybody has to engage in in a world where there’s no freedom. Maybe that is what seems topical to you. Or maybe it’s just about fake news, and you see Lucan is writing fake news in the beginning of his epic.

COWEN: I think the lack of obvious self-interested motivation for the polarization is what strikes me as so contemporary about Lucan. It’s not primarily about rent-seeking. There’s simply some logic of escalation that never stops. Now, maybe at the end of the poem, there’s a return to sanity in some ways, but there’s still this total immersion in violence, and the dynamics of that, the nonrationality or arationality — it struck me if I had read Lucan in 1991, I would have been quite puzzled, like this is something of antique interest. But I read it today — I’m not so pessimistic about the Western world, but it seems to hit much closer to home.

BARTSCH: Why is that? Sorry, you’re supposed to be asking me questions, but why does it seem to strike closer to home to you now?

COWEN: There seems to be a logic in contemporary politics where people take opposite sides of an issue because other people have taken a side. They don’t necessarily care anymore what it’s about. This may have moderated in the last few months, but there was a sense, if Trump tweeted some view about Turkey, some people would agree, and other people would take the other side, whether or not they had agreement about Turkey.

BARTSCH: Absolutely. The polarization of political views — that is completely in Lucan. Everything is binary. Both sides are at each other’s throats. The problem is, neither side is good. They’re just both opinionated. Yes, he constantly shows us horrible, meaningless scenes of butchery, which will never lead to anything meaningful. I think in that sense, yes, it’s an interesting comparison to what happens today.

Another interesting thing that he does is that, even though everything has been boiled down into them versus us — or actually them versus them because there’s nobody good in the epic except for Cato, who ends up dying — even as he takes on so serious a subject, he refuses to partake of its seriousness in a way. What I mean by that is that his battle scenes are ridiculous. They’re not realistic.

Here’s an example. You’re fighting for Julius Caesar, and you’re on a boat, and you’re trying to get onto a boat that belongs to Pompey, so you grab it with one arm as it comes by, but the people in Pompey’s boat chop off your arm. Then you grab it with your other arm, and then they chop that arm off. Then you’ve got no arms. So, what do you do? Well, Lucan says, you just lob yourself onto the boat armlessly and hope that you can make a difference that way. There’s arms and legs flying everywhere.

In Virgil or Homer, somebody stabs you, you groan, blood comes out, you die. In Lucan, you just bop around like a puppet losing limbs and legs. That’s very strange.

That is from my Conversation with Shadi Bartsch.