Month: August 2021
That was then, this is now, climate change edition the median voter theorem remains underrated
“Higher gasoline costs, if left unchecked, risk harming the ongoing global recovery. The price of crude oil has been higher than it was at the end of 2019, before the onset of the pandemic. While Opec+ recently agreed to production increases, these increases will not fully offset previous production cuts that Opec+ imposed during the pandemic until well into 2022. At a critical moment in the global recovery, this is simply not enough. President Biden has made clear that he wants Americans to have access to affordable and reliable energy, including at the pump. Although we are not a party to Opec, the United States will always speak to international partners regarding issues of significance that affect our national economic and security affairs, in public and private.”
That is, um…not from the Trump administration, rather…
Pigou Club getting smaller!
Fluvoxamine seems to work against Covid-19
🚨Interim results of @TogetherTrial of ivermectin and fluvoxamine for early treatment of #COVID_19 🚨#ivermectin : no significant effect#fluvoxamine: ↘️ risk of hospitalization by 31%
These important results deserve a🧵 1/n https://t.co/oSy1p91hs2— Julien Potet (@julienpotet) August 12, 2021
That is from a project funded by Fast Grants.
Thursday assorted links
1. Rent-seeking and the history of institutionalization and mental asylums (co-author Geloso is the new hire for GMU econ this year).
2. Schlegel Twitter is the best Twitter.
3. The satellite data confirmed?
4. Timothy Taylor on rethinking the housing bust.
5. Ivermectin fails in new major study (Fast Grants funded).
The TGA is Worse than the FDA, and the Australian Lockdown
I have been highly critical of the FDA but in Australia the FDA is almost a model to be emulated. Steven Hamilton and Richard Holden do not mince words:
At the end of 2020, as vaccines were rolling out en masse in the Northern Hemisphere, the TGA [Therapeutic Goods Administration, AT] flatly refused to issue the emergency authorisations other regulators did. As a result, the TGA didn’t approve the Pfizer vaccine until January 25, more than six weeks after the US Food and Drug Administration (FDA), itself not exactly the poster child of expeditiousness.
Similarly, the TGA didn’t approve the AstraZeneca vaccine until February 16, almost seven weeks after the UK.
In case you’re wondering “what difference does six weeks make?“, think again. Were our rollout six weeks faster, the current Sydney outbreak would likely never have exploded, saving many lives and livelihoods. In the face of an exponentially spreading virus that has become twice as infectious, six weeks is an eternity. And, indeed, nothing has changed. The TGA approved the Moderna vaccine this week, eight months after the FDA.
It approved looser cold storage requirements for the Pfizer vaccine, which would allow the vaccine to be more widely distributed and reduce wastage, on April 8, six weeks after the FDA. And it approved the Pfizer vaccine for use by 12 to 15-year-olds on July 23, more than 10 weeks after the FDA.
And then there’s the TGA’s staggering decision not to approve in-home rapid tests over reliability concerns despite their widespread approval and use overseas.
Where’s the approval of the mix-and-match vaccine regimen, used to great effect in Canada, where AstraZeneca is combined with Pfizer to expand supply and increase efficacy? Where’s the guidance for those who’ve received two doses of AstraZeneca that they’ll be able to receive a Pfizer booster later?
In the aftermath of the pandemic, when almost all of us should be fully vaccinated,there will be ample opportunity to figure out exactly who is to blame for what.
But the slow, insular, and excessively cautious advice of our medical regulatory complex, which comprehensively failed to grasp the massive consequences of delay and inaction, must be right at the top of that list.
You might be tempted to argued that the TGA can afford to take its time since COVID hasn’t been as bad in Australia as in the United States but that would be to ignore the costs of the Australian lockdown.
Article 13 of the Universal Declaration of Human Rights states that
- Everyone has the right to freedom of movement and residence within the borders of each state.
- Everyone has the right to leave any country, including his own, and to return to his country.
Australia has now violated each and every clause of this universal human right and seemingly without much debate or objection. It is deeply troubling to see people prevented from leaving or entering their own country and soldiers in the street making sure people do not travel beyond a perimeter surrounding their homes. The costs of lockdown are very high and thus so is any delay in ending these unprecedented infringements on liberty.
Why software hasn’t done more to improve productivity
The current status quo means we don’t get productivity growth until these software-driven companies become behemoths. Amazon was founded in 1994, almost thirty years ago. In 2020, it was still less than 10% of total retail sales. Is it any wonder that we haven’t seen robust productivity gains? Amazon is still mapping and digitizing processes at prodigious rates.
And:
Real-world complexity gives us universal software with a low level of capability, like email. It encourages software providers to provide misfit tools for only a portion of our workflow. It is almost impossible for a third-party software provider to reorganize an industry’s core processes. If they did, they would be a first-party company. We want an assembly line, but we get a mallet and file subscription instead. To have an impact on TFP, we need assembly lines.
And:
Management techniques are a technology in a broad sense of the word. Assembly lines are one prominent example. Management techniques are fiendishly difficult to adopt. Improvements in management manifest as differences in company productivity that force most competitors to bankruptcy or merger, if competition allows.[1] Good management and scale are closely linked. Ford reduced costs with assembly lines, increasing sales, which funded more specialized assembly lines and equipment. Thousands of automakers have existed in the United States. Only a few were able to adopt assembly line techniques and compete.
GPTs [general purpose technologies] spread like wildfire on account of their asymmetry. The spread of management technology is a slow, plodding process as the leaders slowly grind down their competitors. Society does not see the benefits of new management techniques until the companies employing them have scaled and absorbed significant market share.
Here is much more from Austin Vernon, quite interesting, and with a cameo from John Collison.
My Conversation with Andrew Sullivan
Here is the audio, video, and transcript. Here is part of the overview:
Andrew joined Tyler to discuss the role of the AIDs epidemic in achieving marriage equality, the difficulty of devoutness in everyday life, why public intellectuals often lack courage, how being a gay man helps him access perspectives he otherwise wouldn’t, how drugs influence his ideas, the reasons why he’s a passionate defender of SATs and IQ tests, what Niall Ferguson and Boris Johnson were like as fellow undergraduates, what Americans get wrong about British politics, why so few people share his admiration for Margaret Thatcher, why Bowie was so special, why Airplane! is his favorite movie, what Oakeshottian conservatism offers us today, whether wokeism has a positive influence globally, why he someday hopes to glower at the sea from in the west of Ireland, and more.
And here is one excerpt:
SULLIVAN: Well, and so you get used to real conversations about people, and you don’t mistake credentials for intelligence. You realize that people outside of the system may be more perceptive about what’s going wrong with it than people buried within it. I honestly find life more interesting the more variety of people you get to know and meet. And that means from all sorts of different ways of life.
The good thing about being gay, I will tell you, is that that happens more often than if you’re straight — because it’s a great equalizer. You are more likely to come across someone who really is from a totally different socioeconomic group than you are through sexual and romantic attraction, and indeed the existence of this subterranean world that is taken from every other particular class and structure, than you would if you just grew up in a straight world where you didn’t have to question these things and where your social life was bound up with your work or with your professional peers.
The idea for me of dating someone in my office would be absolutely bizarre, for example. I can’t believe all these straight people that just look around them and say, “Oh, let’s get married.” Whereas gay people have this immense social system that can throw up anybody from any way of life into your social circle.
Interesting throughout. And again, here is Andrew’s new book Out on a Limb: Selected Writing, 1989-2021.
Wednesday assorted links
1. More on the NYT masking in schools Op-ed: it looks pretty bad. It’s really the public health establishment I blame here, not the NYT.
2. “Since the pandemic recession bottomed out in the spring of 2020, the nation’s gross domestic product has more than fully recovered, with second-quarter output 0.8 percent higher than before coronavirus. The number of jobs decreased 4.4 percent in the same span.” (“Model that!”…NYT link)
3. “In general, pornography use trended downward over the pandemic, for both men and women.”
5. Excellent (but tragic) Ethiopia musings.
6. More returns of stolen crypto than you might think.
7. The commies opine on Cuomo and democracy. Not the worst take I have read.
Our Regulatory State Isn’t Learning
Delta is the fourth wave of covid, and amazingly the US policy response is even more irresolute than the first time around. Our government is like a child, sent next door to get a cup of sugar, who gets as far as the front stoop and then wanders off following a puppy.
The policy response is now focused on the most medically ineffective but most politically symbolic step, mask mandates. An all-night disco in Provincetown turns in to a superspreader event so… we make school kids wear masks in outdoor summer camps? Masks are several decimal places less effective than vaccines, and less effective than “social distance” in the first place.* Go to that all night disco, unvaccinated, but wear a mask? Please.
If we’re going to do NPI (non pharmaceutical interventions), policy other than vaccines, the level of policy and public discussion has tragically regressed since last summer. Last summer, remember, we were all talking about testing. Alex Tabarrok and Paul Romer were superb on how fast tests can reduce the reproduction rate, even with just voluntary isolation following tests. Other countries had competent test and tracing regimes. Have we built that in a year? No. (Are we ready to test and trace the next bug? Double no.)
What happened to the paper-strip tests you could buy for $2.00 at Walgreen’s, get instant results, and maybe decide it’s a bad idea to go to the all night dance party? Interest faded in November. (Last I looked, the sellers and FDA were still insisting on prescriptions and an app sign up, so it cost $50 and insurance “paid for” it.) What happened to detailed local data? Did anyone ever get it through the FDA’s and CDCs thick skulls that even imperfect but cheap and fast tests can be used to slow spread of disease?
…And then we indulge another round of America’s favorite pastime, answers in search of a question. Delta is spreading, so… extend the renter eviction moratorium. People who haven’t paid rent in a year can stay, landlords be damned.
All true. I got dispirited on testing. It’s insane that we don’t have cheap, rapid testing and good ventilation ready for a new school year. As I wrote about earlier, even the American Academy of Pediatrics is shouting from the rooftops that the FDA is deadly slow. The eviction moratorium is a sick joke. Just a backhanded way to redistribute wealth without a shred of justice or reason. Disgusting.
Here’s one more bit (but read the whole thing there is more.)
To learn from the mistakes, and institutionalize better responses would mean to admit there were mistakes. One would think the grand blame-Trump-for-everything narrative would allow us to do that, but the mistakes are deeply embedded in the bureacracies of the administrative state. Unlike bad admirals in WWII, nobody less than Trump himself has lost their job over incompetent covid response. The institutions have an enormous investment in ratifying that they did the best possible job last time. So, as in so many things (financial bailouts!) we institutionalize last time’s mistakes to keep those who made them in power in power — which means we do not learn from mistakes.
Covid dispatch from a relatively non-Straussian country
Most people will end up contracting the coronavirus, the head of the Health Ministry’s advisory committee for infectious diseases predicted on Monday.
“The [real] question is whether the infected person is vaccinated or not. It’s unavoidable that the pandemic will infect the majority of the population. It won’t disappear in another half a year,” Dr. Tal Brosh told the Kan public broadcaster.
Brosh, who also heads the infectious disease department at Assuta Medical Center in Ashdod, said he doesn’t see a reason to shutter Ben Gurion Airport, arguing that would distract “from the main problem — morbidity within in the country.”
WWAFS? How many of our mainstream public health experts would even consider addressing such a question at this point? Do you think they are telling you the truth?
p.s. Which again is the country with the best data?
Addended p.p.s.: “Between 90% and 94% of British adults have some degree of immunity to coronavirus from full or partial vaccination, or prior infection, the U.K. statistics office estimates, based on statistical analysis of blood samples.”
Here is the full story. Via Rich B.
At this point, do you wish to simply not look too closely at the Delta data?
The delta Straussians also don’t want to debate safety claims very much. They fear that studying the data more closely will worry and paralyze us more, without much limiting the overall number of infections. In their view, vaccines have made things about as safe as they are going to get, and the contagiousness of delta will create lots of infections, albeit mostly relatively safe ones.
That’s what the proprietor of one of my favorite local restaurants believes. He is aware of the delta strain, and knows it is worse, though without being up on the numbers or the details. Earlier in the summer, he lifted the mask mandate for his restaurant, and he isn’t interested in restoring it. He is not a “Covid denialist,” but he figures normal business has to continue at some point and that point is now. Someone may well catch Covid in his restaurant, but those people might well have caught Covid anyway.
Our school reopenings face a similar paralysis-inducing dilemma. If we test every child every day, it will seem as if we have far too many cases of Covid, and the schools will shut again quickly. Nonetheless, given that delta is highly contagious, many of those children will catch Covid whether or not they go to school…
I do not rue the growth of delta Straussianism among my fellow citizens. If you can’t do anything about delta, if your institution needs to reopen sooner or later, if the booster shots in large numbers are not right around the corner, and yet another new variant might be coming along anyway, maybe you really do just need to get on with things. Restaurant reservations are robust, and the gym industry is surging back. I do not wish to reverse those trends, and it is hard to believe those customers are only the Covid denialists.
Here is the full Bloomberg column, which also offers a take on the British test and trace system.
The labor market ran hot, real wages fell
You may remember that I’ve been predicting that repeatedly, while much of “Twitter economics” was suggesting that “running the labor market hot” would boost real wages, I was claiming it was far more likely that rising employment would be correlated with falling real wages. (Try here.) This did not represent any great insight on my part, rather I was simply refusing to make the mood affiliation move of denying the tradeoff, and I had read Keynes’s General Theory. Here is the latest:
Companies big and small are raising wages to attract workers and hold onto employees as the economy revs back into gear.
But those fatter paychecks aren’t going as far, thanks to rising inflation.
In fact, compensation is now lower than it was in December 2019, when adjusted for inflation, according to an analysis by Jason Furman, an economics professor at Harvard University.
The Employment Cost Index — which measures wages and salaries, along with health, retirement and other benefits — fell in the last quarter and is 2% below its pre-pandemic trend, when taking inflation into account. (Wages and salaries are growing at a faster pace than benefits.)
Score one for Keynesian economics > Twitter economics.
Or maybe they didn’t run the labor market hot enough.
Tuesday assorted links
1. Your periodic reminder to read Matt Levine (Bloomberg). And Bloomberg Media is doing just great. Congratulations to all those I work with! If you don’t already, you should subscribe too.
2. Space Force reluctant to take over UFO mission.
3. My remarks on the new All Things Must Pass reissue.
4. Interview with Ken Rogoff, focusing on China.
5. I’ve never been anti-mask, in either theory or personal practice, but I find it striking how this NYT Op-Ed, advocating mandatory masking for children in school, upon a close read presents no actual evidence whatsoever. If I understand them correctly, here is “the control”: “By contrast, one school in Israel without a mask mandate or proper social distancing protocols reported an outbreak of Covid-19 involving 153 students and 25 staff members.” Maybe they are just poor writers and bad organizers of thought, and the actual controls are in fact air tight.
Solve All Murders
Defund the police is a bad idea and a terrible slogan. Conor Friedersdorf argues for a better policy and a better slogan, Solve All Murders. He quotes, Jill Leovy, author of Ghettoside:
Forty years after the civil rights movement, impunity for the murder of black men remained America’s great, though mostly invisible, race problem. The institutions of criminal justice, so remorseless in other ways in an era of get-tough sentencing and “preventive” policing, remained feeble when it came to answering for the lives of black murder victims.’
Few experts examined what was evident every day of John Skaggs’s working life: that the state’s inability to catch and punish even a bare majority of murderers in black enclaves such as Watts was itself a root cause of the violence, and that this was a terrible problem—perhaps the most terrible thing in contemporary American life. The system’s failure to catch killers effectively made black lives cheap.
Homicide is the leading cause of death for black males under the age of 44. As Friedersdorf continues:
The absence of policing yields not a safe space where marginalized people thrive, but a nasty, brutish place where violent actors either push people around with impunity or are met with violence by someone who forces them to stop. “When people are stripped of legal protection and placed in desperate straits, they are more, not less, likely to turn on each other,” Leovy wrote. “Lawless settings are terrifying; if people can do whatever they want to each other, there are always enough bullies to make it ugly.”
Moreover, although crime has declined until recently, that beneficial trend may have masked that police may be becoming less productive over time. Nationally a majority of homicides are cleared but the long term tend is down. Moreover, an increasing number of police agencies fail to clear a majority of homicides. In Chicago, for example, less than half of homicides are cleared–that screams too few police not too many. Solve all murders!
We are underpoliced in the United States especially in high-crime areas. We need better policing so that we can all be comfortable with more policing.
Don’t judge Covid conditions by the current rate of Covid growth
These days when I go to Twitter I see so many claims that current caseload or hospitalization numbers (in some not all regions) are approaching their peaks from the third wave last winter.
But don’t be misled by that rhetoric — speed of growth is not at this stage of the pandemic a good metric for evaluation. Obviously, speedy Covid growth is bad news compared to having no Covid at all, but relative to actual constraints inference here is difficult. Even the growth of hospitalizations, much less the growth in cases, is a misleading signal for how well we are doing.
First, there is a diehard core of individuals who just won’t get vaccinated. That is highly unfortunate, but possibly it is better if those individuals get Covid sooner rather than later, at least provided they are not so numerous as to overwhelm the hospital system all at once. The Covid case is in essence their preferred form of vaccination. Stupid, yes, but later is not necessarily better.
A second possibility is that we will see waves of Delta Covid, rising rapidly and then declining rapidly. That seemed to happen in the most badly afflicted parts of India, and maybe has been happening in England and the Netherlands, noting that the English numbers have begun a recent (minor?) uptick again, so we cannot be sure of the dynamics. The general point stands that it is better to get a given amount of Covid over with more quickly rather than less quickly, again subject to the constraint that you do not overwhelm your hospital system. Circa August 2021, we are no longer in the older position of “waiting for the vaccines to arrive.”
A third possibility is that Delta really is extremely contagious and that non-pharmaceutical interventions just aren’t going to succeed in checking it. (Oddly, few elites are willing to mention this possibility. Though they are willing to tell us how terrible it is, which it is!) Yes, boosters may help out, but most of the “cavalry” — vaccines in this case — already has arrived, at least for those willing to take them. OK, so if most people are going to be hit by this thing, and vaccinations do make that event much safer than before, again you want to get that process over with more quickly rather than less quickly. And to the extent vaccine protection decays (an unknown variable but a real worry), speed really is of the essence here. Again, all subject to the “don’t overwhelm your hospital system” caveat.
Clearly there are scenarios where the rapid case growth is a bad thing, even taking relevant constraints into account. For instance, vaccinating younger individuals might be a relevant “cavalry” still to arrive, and maybe it can arrive before most of our young people are exposed to Covid. Or maybe most of the unvaccinated are pretty “elastic” in their status, and a high but not too high case and hospitalization growth will scare them enough to bring them over to the vaccinated side of the ledger. Those really are possibilities.
But rapid growth per se — even on the hospitalization side of the ledger — has to be used with care as an indicator of where we stand. Generating a lot of Covid cases and hospitalizations in a short period of time is a very tricky signal, again relative to the constraints we face. You need to define your counterfactual very carefully, and recognize that the mood affiliations you were promoting earlier in the pandemic may or may not make sense now.
In other words, it wasn’t much of a real estate bubble
We reevaluate the 2000s housing cycle from the perspective of 2020. National real house prices grew steadily between 2012 and 2019, with the largest price growth in the same areas that had the largest booms between 1997 and 2006 and busts between 2006 and 2012. As a result, the areas that had the largest booms also had higher long-run price growth over the entire 1997-2019 period. With “2020 hindsight,” the 2000s housing cycle is not a boom-bust but rather a boom-bust-rebound.
We argue that this pattern reflects a larger role for fundamentals than previously thought.
As I see it, there was a “negative bubble” circa 2008-2009, based on panic about the shadow banking system that was at the time reasonable but also turned out to be wrong. You can argue however that there was a small bubble at the time (see Figure 1 in the paper, and compare that say to the Japanese stock market), or a bubble in a few particular regions. And do you know who got this right at the time? Our own Alex T., perhaps he will tell you the story in more detail.
The authors continue:
A few papers ascribe a role to fundamental factors in the 2000s cycle as we do. Writing near the peak of the boom, Himmelberg et al. (2005) found “little evidence of a housing bubble” because of fundamental growth, undervaluation in the 1990s, and low interest rates. Ferreira and Gyourko (2018) estimate the timing of the boom across cities and show that the beginning of the boom was “fundamentally based to a significant extent” but that fundamentals revert in roughly three years. We similarly conclude that fundamentals played a significant role in the boom, but based on different methods that focus on long-term fundamentals rather than short-term income growth. More recently, Howard and Liebersohn (2021) propose an explanation for housing cycles based on divergence in regional income growth, in which fluctuations in fundamentals fully explain the cycle, and Schubert (2021) identifies spillovers of fundamentals across cities via migration networks.
You are not going to hear many mea culpas on this one, but a quick look at today’s housing market makes it pretty clear who was right and who was wrong.
Here is the NBER working paper from Gabriel Chodorow-Reich, Adam M. Guren, and Timothy J. McQuade.