Month: May 2021

What is holding back employment?

The White House and congressional Democrats have argued for weeks that the lack of child care services poses a major obstacle to the economic recovery, pressing for a massive and immediate investment to get parents back to work.

But a new economic analysis led by a prominent White House ally concludes that school and daycare closures are not driving low employment levels — blunting a key Biden administration argument in favor of its American Families Plan and undercutting the view of some Democrats that investing in child care is crucial for the country to climb out of the coronavirus recession.

“School closures and lack of child care are not holding back the recovery,” said Jason Furman, a Harvard professor who chaired the Council of Economic Advisers in the Obama administration and co-authored the analysis. “And conversely, we shouldn’t expect a short-term economic bump from reopening schools and making child care more available.”

The study — which found that the employment rate for parents of young children actually declined at a lower rate than for those without kids — adds fuel to an intense national debate about what is behind a suspected worker shortage and what policy changes are needed to accelerate Americans’ return to work as the pandemic subsides.

Here is the full Politico article by Megan Cassella and Eleanor Mueller.

Saturday assorted links

1. Have American movies lost their sense of place?

2. Noah on the future of war.

3. Ten positions chess computers have had trouble with.

4. Fear the fungi.  Their computational powers may be stronger than you think.

5. “Icelandic designer Valdís Steinarsdóttir has created a range of translucent, gelatinous garments that are cast into moulds rather than cut from a pattern in a bid to eliminate waste.”  Link here.

6. “Before its liquidation, Kongō Gumi was the oldest continuously operating company in the world. Founded in Japan a mere century after the fall of the Roman Empire…

7. Mattel unveils Helen Keller doll.

Shower Thoughts on IP

Tim Harford has an excellent column on IP:

There is a broad logic to intellectual property, then. But the specifics can be questioned. For example, just how temporary is the monopoly? F Scott Fitzgerald published The Great Gatsby in 1925 and died in 1940. The work only entered the public domain in 2021, after several posthumous copyright extensions, none of which can have been much of an incentive for him to write more.

Then there is the question of what deserves protection. At the height of the dotcom boom, an economics professor, Alex Tabarrok, was taking a shower when he dreamed up the idea of using cell phones to scan barcodes in a store, compare prices and order the product online. Alas, someone else had beaten him to the patent office by mere months. The idea, once unthinkable, was by 1999 rather obvious.

But why should society award 20 years of monopoly rights for the kind of idea that an amateur could dream up in the shower? Tabarrok suggests — rightly — that a 20-year patent should be awarded only if the inventor can prove the idea was expensive to develop. Without that, a five-year patent should be sufficient reward — and, more importantly, sufficient incentive.

I agree entirely with Harford’s concluding comments:

…If we are to produce the extra doses we need, we should focus on lifting every constraint. Perhaps patents fall into that category, but it seems more likely that they are a distraction from the expense of subsidising new factories and more doses for low-income countries. We should spend that money willingly, both for moral and for self-interested reasons.

As for intellectual property, the system needs to change in a hundred ways, some of which require the weakening of intellectual property and the strengthening of other incentives such as prizes and targeted subsidies. When we think through those changes, we should spend less time looking for victims and villains in the creative sphere — and more time thinking about where new ideas come from, and how they can be nurtured.

Read my piece on patent reform. Astute readers will note that there’s no contradiction between thinking that the patent system is in general too strong and that pharmaceutical patents increase innovation and that patents are not a major bottleneck to COVID vaccines. It’s all about evaluating tradeoffs in different scenarios.

What I’ve been reading

1. Allen Lowe, “Turn Me Loose White Man”, two volumes and 30 accompanying compact discs.  “Personally I accept the assumption that a great deal, if not all, of American music is rooted in forms that derive in some way from Minstrelsy.”  Would you like to see that documented over the course of 30 CDs and almost 800 pp.?  Would you like to know how early blues, country, gospel, jazz, bluegrass (and more) all fit together?  Then this is the package for you.  It is in fact of one of the greatest achievements of all time in cataloguing and presenting American culture.  Here is a WSJ review.

2. Luke Burgis, Wanting: The Power of Mimetic Desire in Everyday Life.  This book is the best introduction to this key Girardian concept.

3. Blake Bailey, Philip Roth: The Biography.  I only read slivers and won’t finish it, because I just don’t need 800 pp. on Philip Roth.  But…it’s really good.  I like Picasso too, and Caravaggio (a murderer).  I’ve heard, by the way, that this book will be picked up by Simon and Schuster and put back into print.

4. Martha C. Nussbaum, Citadels of Pride: Sexual Assault, Accountability, and Reconciliation.  There are so many recent books on these topics, you might feel a bit weary of them all, but this is one of the best.  It is rationally and reasonably argued, from first principles, and focuses on the better arguments for its conclusions.  It nicely situates the legal within the philosophical, it is wise on power vs. sex, rooted in the idea of objectification, and it has at least one page on alcohol.

5. Kenneth Whyte, The Sack of Detroit: General Motors and the End of American Enterprise.  How the consumer and auto safety movement helped to bring down GM.

6. Fabrice Midal, Trungpa and Vision, a biography of Chögyam Trungpa, the Tibetan Buddhist leader.  I enjoyed this passage: “He never hesitated to tell the truth, even if this meant provoking the audience.  At a talk in San Francisco in the fall of 1970, he began by saying: “It’s a pity you came here.  You’re so aggressive.””

And this passage: “Chögyam Trungpa might have appeared, at first, sight, to be very modern and up-to-date in his approach to the teachings.  He had abandoned the external signs of the Tibetan monastic tradition.  He drank whiskey, smoked cigarettes, and wore Western clothes.  He had a frank often provocative way with words and ignored the normal conventions of a guru.”  In fact he died from complications resulting from heavy alcohol abuse.

Very good sentences

…if I argue with a higher status person, who for some reason engages with me in this context, and if my position is one seen as reasonable by the usual elite consensus, then my partner is careful to offer quality arguments, and to credit such arguments if I offer them. But if I take a position seen as against the current elite consensus, that same high status partner instead feels quite comfortable offering very weak and incoherent arguments.

That is from Robin Hanson.

Friday assorted links

1. Do employers discriminate against obese women?

2. Is bitcoin a good inflation hedge?

3. Five counties seek to leave Oregon for Idaho.

4. Will the Mormon moderation persist?  Good piece.

5. New issue of Works in Progress, recommended.

6. How well is the lead hypothesis really doing?  And the research is here.

7. “In Canada, it’s possible to find a man lounging on a chesterfield in his rented bachelor wearing only his gotchies while fortifying his Molson muscle with a jambuster washed down with slugs from a stubby.” (Obituary, NYT)

8. Bunch of stuff, including on pseudonymity.

Population predicts regulation — but why?

We found that across states, a doubling of population size is associated with a 22 to 33 percent increase in regulation.

The relationship between regulation and population is surprisingly robust- it also holds for Australian states and Canadian provinces, and based on the limited data we have seems to hold across countries too (for instance, the “free market” United States has 10 times as many regulations as Canada- just as it has 10 times the population).

What is less clear is why this relationship is so strong. Mulligan and Shleifer attribute it to a fixed cost of regulating; larger polities can spread this cost over more people, making the average cost of regulating cheaper, so they do it more. We note two other explanations: larger polities might have more externalities worth regulating, or if regulation produces concentrated benefits and dispersed costs, a larger population could make it harder for those harmed by regulation to organize collectively to oppose it.

That blog post is based on work from James Bailey, James Broughel and Patrick McLaughlin, the latter two my Mercatus colleagues, written by James Bailey.

Windows not Windex

Science News: Though no one solution works for all places, public spaces need to focus on proper ventilation, air filtration, germicidal ultraviolet lights and air quality monitoring rather than rigorously disinfecting surfaces, say many scientists who cite evidence that the virus lingers in the air.

“This is what’s really frustrating,” says Jose-Luis Jimenez, an aerosol scientist at the University of Colorado Boulder. “We’ve wasted billions and billions of dollars on disinfecting, which doesn’t serve any purpose whatsoever, yet things like having a $50 filter in every classroom, we haven’t done.”

Similarly, in an excellent piece Derek Thompson writes:

Too many U.S. institutions throughout the pandemic have shown little interest in the act of learning while doing. They etched the conventional wisdoms of March 2020 into stone and clutched their stone-tablet commandments in the face of any evidence that would disprove them. Liberal readers might readily point to Republican governors who rejected masks and indoor restrictions even as their states faced outbreaks. But the criticism also applies to deep-blue areas. Los Angeles, for instance, closed its playgrounds and prohibited friends from going on beach walks, long after researchers knew that the coronavirus didn’t really spread outdoors. In the pandemic and beyond, this might be the fundamental crisis of American institutions: They specialize in the performance of bureaucratic competence rather than the act of actually being competent.

The CDC’s announcement should be curtains for theatrical deep cleanings. But until companies, transit authorities, retailers, and magazines embrace the value of scientific discovery and the joy of learning new things, the show, and the soap, will go on.

Fortunately, there has been some recent learning. The Indian government now advises:

Aerosols could be carried in the air for up to 10 metres and improving the ventilation of indoor spaces would reduce transmission…“Ventilation can decrease the risk of transmission from one infected person to the other. Just as smells can be diluted from the air through opening windows and doors and using exhaust systems, ventilating spaces with improved directional air flow decreases the accumulated viral land in the air, reducing the risk of transmission. Ventilation is a community defense that protects all of us at home or at work,” it stated.

One thing which puzzled me even before the pandemic was the lack of interest in UVC even though there is credible evidence that it reduces hard to kill superbugs.

The large study, published in The Lancet, finds machines that emit the UV light can cut transmission of four major super bugs by a cumulative 30 percent. The finding is specific to patients who stay overnight in a room where someone with a known positive culture or infection of a drug-resistant organism had previously been treated.

“Some of these germs can live in the environment so long that even after a patient with the organism has left the room and it has been cleaned, the next patient in the room could potentially be exposed,” said Dr. Deverick J. Anderson, MD, an infectious disease specialist at Duke and lead investigator of the study. “Infections from one of these bugs are tough to treat and can be truly debilitating for a patient.”

The attentive reader will note that this also implies airborne transmission.

Even the FDA is moderately supportive of UVC:

UVC radiation is a known disinfectant for air, water, and nonporous surfaces. UVC radiation has effectively been used for decades to reduce the spread of bacteria, such as tuberculosis. For this reason, UVC lamps are often called “germicidal” lamps.

UVC radiation has been shown to destroy the outer protein coating of the SARS-Coronavirus, which is a different virus from the current SARS-CoV-2 virus. The destruction ultimately leads to inactivation of the virus. (see Far-UVC light (222 nm) efficiently and safely inactivates airborne human coronavirusesExternal Link Disclaimer). UVC radiation may also be effective in inactivating the SARS-CoV-2 virus, which is the virus that causes the Coronavirus Disease 2019 (COVID-19).

Emergent Ventures winners, 14th cohort

Center for Indonesian Policy Studies, Jakarta, to hire a new director.

Zach Mazlish, recent Brown graduate in philosophy, for travel and career development., headed by Rohan Pavuluri, to support their work on legal reform and deregulation of legal services for the poor.

Madison Breshears, GMU law student, to study the proper regulation of cryptocurrencies.

Quest for Justice, to help Californians better navigate small claims court without a lawyer.

Cameron Wiese, Progress Studies fellow, to create a new World’s Fair.

Jimmy Alfonso Licon, philosopher, visiting position at George Mason University, general career development.

Tony Morley, Progress Studies fellow, from Ngunnawal, Australia, to write the first optimistic children’s book on progress.

Michelle Wang, Sophomore at the University of Toronto, Canada, to study the causes and cures of depression, and general career development, and to help her intern at MIT.

Here are previous cohorts of winners.

Inflation and the Fed

Federal Reserve officials were optimistic about the economy at their April policy meeting as government aid and business reopenings paved the way for a rebound — so much so that and “a number” of them began to tiptoe toward a conversation about dialing back some support for the economy.

Here is more (NYT).  That is yet another sign that our government (treating fiscal and monetary as a consolidated entity) made a mistake in applying too much demand stimulus.  Hardly anyone said this at the time except Summers and Blanchard, and since then few have been willing to come out and admit error.  There is an ex post attempt to redefine the debate by insisting inflation will not spiral out of control.  Quite possibly not, but whatever your view on that question, don’t let it distract you from the actual mistake.  Virtually all macroeconomic commentators in the public sphere were wrong for not realizing and stressing that too much demand stimulus was being applied.  Furthermore, we ended up spending $1 trillion (!) in ways that were pretty far from optimal.

Got that?  People, the rooftops are waiting.

Thursday assorted links

1.”Thomas Bagger, German diplomat and advisor to the federal president, once noted, “The end of history was an American idea, but it was a German reality.”  Link here.

2. For all the mockery, we are almost at Dow 36,000.

3. William Shatner at 90.

4. “Using event study analysis of recent minimum wage increases, we find that these changes do not affect the likelihood of searching, but do lead to large yet very transitory spikes in search effort by individuals already looking for work.”  Link here.

5. All the more reason to call it “The Norwegian Century.”

Deregulate the Market for Land

Martin Wolf in the FT has excellent op-ed on British land use policy:

Here are two facts about land use in England: houses and gardens occupy just 5.9 per cent of available land; and land with permission to develop can be worth 100 times as much as land without it. The notion that there is a shortage of land for additional housing is ludicrous. Moreover, the planning system is much the biggest market distortion in the economy: it is throttling supply, to the benefit of homeowners, who have made huge unearned gains.

…Almost all the debate is cast in Soviet terms: “need”, not demand, and numbers of units, not prices. But market signals are telling us that the public wants more land in residential use, which is vastly more valuable to them than in its main current use, agriculture; 63 per cent of land is currently farmed, while all developed land, plus gardens, plus outdoor recreation, is a mere 15.3 per cent. Moreover, 84 per cent of the UK’s population lives in urban areas, which must generate a still bigger share of gross domestic product. The share of farming in GDP is 0.61 per cent: economically, it is a hobby.

…Opponents will insist that the amenity value of open land is overwhelming. Really?…The idea that we have no land left for houses or that every bit of farmland has imperishable amenity value is absurd.

In the industrial revolution millions of people moved from the countryside to urban areas and cities grew to house them. It wasn’t always pretty but it worked. Especially since the 1970s, however, we have regulated cities so they can’t build up and made it more difficult for land to move from rural to urban uses thereby freezing old systems in place and reducing dynamism. The story varies a little depending on whether we are talking about Portland, San Francisco, Toronto, New York, Mumbai, or London but in broad measures it is remarkably similar around the world.

Addendum: Canada, The Second-Largest Country In The World Is Running Out Of Land illustrates the point.

Do higher minimum wages induce more job search?

In some models job search is just about the posted wage, but I suspect that is the easiest kind of search to do.  In reality, search covers multiple dimensions, for instance wage but also working conditions, such as the comfort of your job post, how much of a jerk the boss is, and so on.

If the minimum wage is hiked, the higher nominal wage will indeed induce more search, because the pecuniary gain from a good match is higher.

That said, a higher minimum wage will to some extent induce employers to lower the non-pecuniary quality of the job.  At the very least, there will be more uncertainty about the non-pecuniary aspects of the job.  Imagine a new job seeker: “I’ve read Gordon Tullock — now I’m wondering if they are going to turn down the air conditioner in the back room where I will be working.”

That uncertainty in fact raises the costs of job search and makes the results of that search less certain.  In this regard, you can think of a higher minimum wage as a tax on job search.

If you think job search is mainly about the posted wage, you won’t be very worried about this affect.  Alternatively, if you think job search is mainly about finding a good match along the non-pecuniary dimensions, you might be very worried about it indeed.  And it will make it harder for minimum wage hikes to boost employment by inducing more labor search.

For this post, I am indebted to a conversation with the excellent Matthew Lilley.

The relationship between religious, civil, and economic freedoms

From Christos Makridis:

This paper studies the relationship between religious liberty and economic freedom. First, three new facts emerge: (a) religious liberty has increased since 1960, but has slipped substantially over the past decade; (b) the countries that experienced the largest declines in religious liberty tend to have greater economic freedom, especially property rights; (c) changes in religious liberty are associated with changes in the allocation of time to religious activities. Second, using a combination of vector autoregressions and dynamic panel methods, improvements in religious liberty tend to precede economic freedom. Finally, increases in religious liberty have a wide array of spillovers that are important determinants of economic freedom and explain the direction of causality. Countries cannot have long-run economic prosperity and freedom without actively allowing for and promoting religious liberty.

Via the excellent Kevin Lewis.