Month: April 2021
3. Mundell stuff: they won’t let you be this way any more.
4. Carlos Reygadas, Our Time, imagine three hours running commentary on Bergman’s Scenes from a Marriage, but set on a Tlaxcala Mexican ranch with lots of bulls and a dash of visual Tarkovsky. The director and his wife play the lead roles, most of you won’t like it but Scott Sumner did and he is almost always right about movies.
By Ivan Gibbons, why can’t all non-fiction books be this good? At 148 pp. brief and to the point, perfectly clear, full of substance, and a model presentation. You can buy it here, headed for this year’s “best of” list.
A McDonald’s in Florida is paying people $50 just to show up for a job interview. But it’s still not attracting many applicants.
Blake Casper, the franchisee who owns the restaurant, told Insider that a general manager and supervisor came up with the idea for the interview reward after he told them to “do whatever you need to do” to hire workers.
“At this point, if we can’t keep our drive-thrus moving, then I’ll pay $50 for an interview,” said Casper, who owns 60 McDonald’s restaurants in the Tampa, Florida area.
Here is the full story, via the excellent Samir Varma, excess unemployment insurance of course is an issue, and here is Scott Sumner on the summer of 2021. So many data points about the rapid recovery and the prescience of Summers and Blanchard, right?
From the St. Louis Fed:
Based on patterns of employment transitions, we identify three different types of workers in the US labor market: α’s β’s and γ’s. Workers of type α make up over half of all workers, are most likely to remain on the same job for more than 2 years and, when they become unemployed, typically find a new job within 1 quarter. Workers of type γ comprise less than one-fifth of workers, have a low probability of staying on the same job for more than 2 years and, when they become unemployed, face a high probability of remaining jobless for more than 1 year. Workers of type β are in between αs and γ’s. The earnings losses caused by displacement are relatively small and transitory for α-workers, while they are large and persistent for γ-workers. During the Great Recession, excess unemployment for α-workers rose by little and was reabsorbed quickly; unemployment for γ-workers rose by 20 percentage points and was not reabsorbed 4 years after its peak. We use a search-theoretic model of the labor market to rationalize the different patterns of employment transitions across types. The model naturally explains both the variation in the consequences of job displacement across types, and the variation in the dynamics of unemployment during the Great Recession. Our view is that several puzzling micro and macro phenomena about the labor market are driven by the behavior of the small group of γ-workers.
Here is the NBER link. The authors are Victoria Gregory, Guido Menzio, and David Wiczer. The ZMP concept remains maligned and misrepresented, sometimes caricatured as a one-blade theory or as demand denialism, so I am happy to see this new evidence capturing the original intuition.
Via David Sinsky.
[Julia] Galef was curious to see exactly how often these predictions pan out. “I went through all of the Star Trek episodes and movies—all of the transcripts that I could find—and searched for any instance in which Spock is using the words ‘odds,’ ‘probability,’ ‘chance,’ ‘definitely,’ ‘probably,’ etc.,” she says. “I catalogued all instances in which Spock made a prediction and that prediction either came true or didn’t.”
The results, which appear in Galef’s new book The Scout Mindset, are devastating. Not only does Spock have a terrible track record—events he describes as “impossible” happen 83 percent of the time—but his confidence level is actually anti-correlated with reality. “The more confident he says he is that something will happen—that the ship will crash, or that they will find survivors—the less likely it is to happen, and the less confident he is in something, the more likely it is to happen,” Galef says.
Spock’s biggest weakness is his failure to understand that other people don’t always behave “logically.” He also makes no attempt to update his approach, even when his mistakes get his crewmates killed.
Here is the full Wired story, and here you can buy Julia’s new book. I wonder if he is more rational in the Star Trek movies than in the TV shows, or how about in the fan fiction? Exactly where is the demand for dramatic irrationality highest, and why?
1. MIE: An NFT bundled with an actual house.
I am a signatory to an open letter from economists, lawyers and others with expertise in market regulation advocating that states stop preventing auto manufacturers most notably manufactures of electronic vehicles such as Tesla from selling direct to the public:
…A brief review of the history of dealer franchise laws may help explain how we got to where we are today. In the mid-twentieth century, car dealers were mostly “mom and pop” sole proprietorships. By contrast, the “Big Three” auto companies were hegemonic firms that faced relatively little domestic or foreign competition. The dealers began to complain to state legislatures that the car companies were taking advantage of them in a variety of ways. This led almost all of the states to pass dealer franchise laws intended to protect the dealers. Among other things, these laws prohibited a manufacturer from opening its own showrooms or service centers and transacting directly with customers. The dealers successfully argued that if the manufacturers were allowed to distribute directly to consumers, they could unfairly undermine their own franchised dealers.
Fast-forward to 2021. The situation is very different. First, the dealership system has grown from its “mom and pop” roots to one where enormous companies operate large dealer networks. The top 10 dealership groups alone earn over $97 billion in annual revenue. Second, the car manufacturer market has become far more competitive. Today, there are at least 15-20 major manufacturer groups selling cars in the U.S. This gives dealers more choices, and hence more leverage in contractual negotiations with manufacturers. Third, and perhaps most importantly, technological and market changes have led new entrants into the market—particularly companies selling EVs—to choose to distribute directly to consumers and not to use franchised dealers at all. As the Massachusetts Supreme Court has recognized, the original concerns that animated the direct distribution prohibitions—protecting a franchisee from its own franchisor—do not apply to a company that is not using franchisees.
Here is a key reason why the dealers don’t want direct sales:
4) Different profit models: Traditional dealerships earn low profit margins on new car sales, and make it up on service. EVs have a much smaller service component since they don’t have service needs like oil changes or engine tune-ups. Traditional dealerships therefore lack much of an incentive to sell EVs.
5) Conflict of interest. EV sales cannibalize internal combustion sales, which are the dealers’ lifeblood. Dealers therefore lack the motivation to sell EVs.
…There is no credible consumer protection argument in favor of prohibiting direct distribution. Consumers should be given the choice of how they buy their cars.
Here is the paper, showing massive overdiagnosis, even following testing. If you don’t wish to click through, here is a nice summary:
Clinicians widely overestimated chance of disease especially after testing
Cardiac ischemia after + ECG—EBM 2-11%, median answer 70%
UTI after + urine cx—EBM 0-8.3%, answer 80%
Breast CA after + mammo—EBM 3-9%, answer 50%
Pneumonia after + CXR EBM 46-65%, answer 95%
— Dan Morgan (@dr_dmorgan) April 12, 2021
President Biden will limit the number of refugees allowed into the United States this year to the historically low level set by the Trump administration, reversing an earlier promise to welcome more than 60,000 people fleeing war and persecution into the country.
Here is more from the NYT. I have been stressing for several years now that the Democrats are not going to die on the hill of an ultimately unpopular immigration policy. Here is an earlier Angus, penned before the Afghanistan withdrawal news:
Kids? Still in cages.
Min wage? Still $7.25.
Student debt? Still unforgiven.
Stimmy? 2 trillion from DJT, 2 trillion from JB.
China? Still tariffed.
Gitmo? Still open
median voter theorem STRONG!!!
— Angus “5 million shots a day" Grier (@ez_angus) March 26, 2021
The marketing and associated cultural capital, however, are indeed very different, and you can expect that to continue and possibly intensify.
Update: Biden will budge.
1. Are the UFOs foreign drones launched from submarines in the Atlantic? As always, please note that a link is not an endorsement.
2. How Swiss is your watch? (NYT)
5. Republicans and big business (my Bloomberg column).
Ho hum, nothing to see here:
Mexico’s drug cartels are notoriously well armed and equipped, with some possessing very heavy weaponry, including armored gun trucks sporting heavy machine guns. Now at least one of these groups appears to be increasingly making use of small quadcopter-type drones carrying small explosive devices to attack its enemies. This is just the latest example of a trend that has been growing worldwide in recent years, including among non-state actors, such as terrorists and criminals, which underscores the potential threats commercially-available unmanned systems pose on and off the battlefield.
Various police raids seem to have uncovered quadcopters armed with shrapnel. Just how speculative is this report? I do not know, but I have been expecting such developments for quite a few years now, and it would be sad if finally they were upon us. Here is the full story by Joseph Trevethick.
California has been waiting for AB 1401 for a long time. In 2005, the American Planning Association published The High Cost of Free Parking, an 800-page book in which I argued that minimum parking requirements increase housing costs, subsidize cars, worsen traffic congestion, pollute the air and water, damage the economy, degrade urban design, encourage sprawl, reduce walkability, exclude poor people, and accelerate global warming. To my knowledge, no city planner has argued that minimum parking requirements do not cause these harmful effects. Instead, a flood of recent research has shown that minimum parking requirements do produce all these harmful results. We are poisoning our cities with too much parking.
Minimum parking requirements are almost an established religion in city planning. One shouldn’t criticize anyone else’s religion, of course, but I’m a protestant when it comes to parking requirements. City planning needs a reformation, and AB 1401 can help.
City planners are placed in a difficult position when asked to set parking requirements in zoning ordinances. They don’t know the demand for parking at every apartment building, art gallery, bowling alley, dance hall, fitness club, movie theater, pet store, tavern, zoo, or hundreds of other land uses. Planners also do not know how much the required parking spaces cost or how the parking requirements affect the cost of housing and everything else. Nevertheless, planners must set the parking requirements for every land use.
Planning for parking is an ad-hoc talent learned on the job and is more a political activity than a professional skill. Despite a lack of theory and data, planners have managed to set parking requirements for hundreds of land uses in thousands of cities—the Ten Thousand Commandments for off-street parking.
…Cities usually require or restrict parking without considering the middle ground of neither a minimum nor a maximum. This behavior recalls a Soviet maxim: “What is not required must be prohibited.” AB 1401, however, is something new. It does not require or restrict parking, and developers can provide all the parking they think demand justifies.
…Minimum parking requirements work against…transit investments. For example, Los Angeles is building the Purple Line under Wilshire Boulevard, which already boasts the city’s most frequent bus service. Nevertheless, along parts of Wilshire Boulevard the city requires at least 2.5 parking spaces for every dwelling unit, even for the smallest apartments. Twenty public transit lines serve the UCLA campus near Wilshire Boulevard in Westwood, with 119 buses per hour arriving during the morning peak. Nevertheless, across the street from campus, Los Angeles requires 3.5 parking spaces for every apartment that contains more than four rooms.
California has expensive housing for people and free parking for cars.
Read the whole thing.
That is the theme of my latest Bloomberg column, here is the opening bit:
One of the most disturbing trends in recent economic thought is the view that green energy should be viewed as a source of good jobs. Such attitudes are bad for our polity and for our economy.
To be clear, the need for greener energy policies is imperative. Honest observers may disagree about the best paths forward, but a simple example illustrates the point about jobs.
Let’s say America’s energy supply was composed primarily of solar, wind, hydroelectric and nuclear power, mostly automated with a few workers for oversight and a dog to guard the factory gate.
The biggest obstacle to green energy is not that American voters love pollution and carbon emissions, but rather people do not wish to pay more for their gasoline and their home heating bills. If we insist that green energy create a lot of good jobs, in essence we are insisting that it have high labor costs, and thus we are producing a version of it that will meet consumer and also voter resistance.
That would be close to ideal, even if it involved fewer jobs on net than the current energy infrastructure. Ideally, we should be striving for an energy network that hardly provides any jobs at all. That would be a sign that we truly have produced affordable and indeed very cheap alternatives to energy produced by fossil fuels.
The issue of cost is all the more urgent because climate change is a global problem, not just a national one. We could make North America entirely green, but climate change would proceed apace, due to carbon emissions from other countries, most of all China and eventually India.
So what we need to produce are very cheap renewable technologies, ones so cheap that the poorer countries of the world will adopt them as well. If we insist on packing a lot of labor costs (“good jobs”) into our energy technologies, we will not come close to achieving that end.
And I suspect my colleague Don Boudreaux would remind us all of Bastiat’s excellent Candlemakers’ Petition to the Sun, relevant here in its very specifics.
I really have not seen Democratic economists pushing back against the Biden administration on this point. #thegreatforgetting
3. Scott Alexander on the new Honduran charter city, recommended.
4. Garett Jones on laissez-faire lockdowns plus liability law and tort — what exactly is the benchmark here for comparing to intervention?
6. Claims about Afghan troop withdrawal, from the excellent Tom Tugendhat.
I thought the meeting went well. I made four points.
- It is not too late to do more.
- We should invest in nasal and oral vaccines.
- We should vaccinate the world.
- We should stretch doses through fractional dosing and delaying the second dose, this will be important to vaccinate the world quickly.
One observation. Lots of people are talking about vaccine hesitancy but I am one of the few people who have been talking about nasal and oral vaccines which are the only really solid approach to the issue that I have seen.
My best line:
The unvaccinated are the biggest risk for generating mutations and new variants. You have heard of the South Africa and Brazilian variants, well the best way to protect your constituents from these and other variants is to vaccinate South Africans and Brazilians.
I also got in the last word in Q&A when discussing the pause of J&J:
For the rest of the world it is important to underline that it is most important to get vaccinated now. Use the AstraZeneca vaccine, use the Johnnson & Johnson vaccine…don’t wait for Moderna or Pfizer, it is going to take too long…start your vaccination program early…vaccinate as quickly as possible, that is the route to health and wealth.
See Western Warnings Tarnish Vaccines the World Badly Needs for the beginnings of a disaster. Note that if J&J and AZ are tarnished or knocked out of the vaccine arsenal then dose stretching and investing in more capacity are going to be even more important.
I also submitted five excellent and important pieces to Congress:
Canadian statement on delaying the second dose.
National Advisory Committee on Immunization (NACI) Canada. 2021. “COVID-19 Vaccine Extended Dose Interval for Canadians: NACI Recommendation.” Government of Canada. March 3, 2021. https://www.canada.ca/en/public-health/services/immunization/national-advisory-committee-on-immunization-naci/rapid-response-extended-dose-intervals-covid-19-vaccines-early-rollout-population-protection.html.
Value of vaccine capacity and additional investments.
Castillo, Juan Camilo, Amrita Ahuja, Susan Athey, Arthur Baker, Eric Budish, Tasneem Chipty, Rachel Glennerster, et al. 2021. “Market Design to Accelerate COVID-19 Vaccine Supply.” Science, February. https://doi.org/10.1126/science.abg0889.
Efficacy of the first dose from NEJM.
Skowronski, Danuta, and Gaston Serres De. 2021. “Letter to the Editor on Safety and Efficacy of the BNT162b2 MRNA Covid-19 Vaccine.” New England Journal of Medicine, February 17, 2021. https://doi.org/10.1056/NEJMc2036242.
Overview of dose stretching policies (with links in the online version).
Tabarrok, Alex. 2021. “What Are We Waiting For?” Washington Post, February 12, 2021, sec. Outlook. https://www.washingtonpost.com/outlook/2021/02/12/first-doses-vaccine-rules-fda/
A plan to vaccinate the world.
Agarwal, Ruchir, and Tristan Reed. 2021. “How to End the COVID-19 Pandemic by March 2022” SSRN. 2021. https://documents.worldbank.org/en/publication/documents-reports/documentdetail/181611618494084337/how-to-end-the-covid-19-pandemic-by-march-2022