In New York City (2008-2013) most of the people arrested had prior interactions with the criminal justice system. On average, each arrested person had 3.2 prior felony arrests and 5 prior misdemeanor arrests—convictions were considerably fewer than arrests, which suggests to me that the system isn’t convicting enough people. Interpretations may differ, but, in any case, the typical arrested person has been arrested multiple times previously.
…I think most Americans would be surprised and upset to learn that by far the majority of the arrestees are released prior to trial, 74% in total in NYC.
Moreover, the people who do not make bail are obviously not a random sample of arrestees—the people who do not make bail are on average more dangerous—they have twice as many arrests and twice as many convictions on average as those who are released. For example, the average defendant who doesn’t make bail has 6 previous felony arrests and 4 previous failures to appear.
These numbers are by no means unique to New York City. Across 34 states for which data could be collected, for example, the Bureau of Justice Statistics found that the average person sent to state prison in 2014 had 10.3 previous arrests (median 8) and 4.3 previous convictions (median 3)!
(These are not including the arrest and conviction that sent them to jail so add one to get to the figures in Table 6.)
At Brookings I continued with the obvious, yet controversial:
What is going on here seems pretty obvious to me. There is a group of people whose job is a crime. Thus, being arrested is simply part of their job and so after being arrested and released these people go back to work—it’s almost laudatory—they keep working until finally an arrest results in a conviction and they spend some time behind bars.
Nearly a third of all shoplifting arrests in New York City last year involved just 327 people, the police said. Collectively, they were arrested and rearrested more than 6,000 times, Police Commissioner Keechant Sewell said. Some engage in shoplifting as a trade, while others are driven by addiction or mental illness; the police did not identify the 327 people in the analysis.
These, by the way, are just criminals who are repeatedly caught. The problem is much bigger:
…By the end of 2022, the theft of items valued at less than $1,000 had increased 53 percent since 2019 at major commercial locations, according to a new analysis of police data by researchers at the John Jay College of Criminal Justice…..Only about 34 percent resulted in arrests last year, compared with 60 percent in 2017.
The way bail reformers like to frame the issue of eliminating cash bail is to point to a misdemeanor case and say ‘look this ordinary person was denied bail because of a misdemeanor!’ In fact, what is going on is that judges are dealing with serial offenders–they are setting high bail rates for those who have already failed to appear on multiple previous misdemeanor charges. Eliminating cash bail for misdemeanors is one of those policies which sounds reasonable on its face but in practice it leads to shoplifters who have already been arrested 20 times being arrested and released again. The issue of “unaffordable bail” is also misleading. Judges set high bail amounts for a reason!
Sometimes poor people are unfairly held until trial. Eliminating money bail, however, is a crude and dangerous approach to this problem. Instead we should deal with it directly by flagging and reevaluating jailed, non-violent offenders with low bail amounts, use alternative release measures such as ankle bracelets and most importantly, we should look to the constitution. The founders understood the ugly tradeoffs which is why the constitution guarantees the right to a “speedy trial.” Unfortunately, that right today is widely ignored. My route to reform would begin by putting teeth back into the constitutional right to a speedy trial.
Weak-link problems are problems where the overall quality depends on how good the worst stuff is. You fix weak-link problems by making the weakest links stronger, or by eliminating them entirely.
Food safety is a weak link problem, bank or computer security is a weak-link problem, many production processes are weak-link, also called O-ring problems.
[But] some problems are strong-link problems: overall quality depends on how good the best stuff is, and the bad stuff barely matters….Venture capital is a strong-link problem: it’s fine to invest in a bunch of startups that go bust as long as one of them goes to a billion.
….Here’s the crazy thing: most people treat science like it’s a weak-link problem.
Peer reviewing publications and grant proposals, for example, is a massive weak-link intervention. We spend ~15,000 collective years of effort every year trying to prevent bad research from being published. We force scientists to spend huge chunks of time filling out grant applications—most of which will be unsuccessful—because we want to make sure we aren’t wasting our money.
These policies, like all forms of gatekeeping, are potentially terrific solutions for weak-link problems because they can stamp out the worst research. But they’re terrible solutions for strong-link problems because they can stamp out the best research, too. Reviewers are less likely to greenlight papers and grants if they’re novel, risky, or interdisciplinary. When you’re trying to solve a strong-link problem, this is like swallowing a big lump of kryptonite.
If you have a weak-link view of science, you’d think peer review works something like this. The relationship between quality and eventual impact is linear, or perhaps even bowed out a bit. Moving resources from low input quality projects to average ones is at least as important to eventual impact as moving resources from average projects to high quality ones.
In a strong-link model of science, filtering the bottom half of the quality distribution is less important to final impact [because the impact of research is highly non-linear].
Even though peer review has the same perfect filter on the quality distribution, it doesn’t translate into large changes in the impact distribution. Lots of resources are still being given to projects with very low impact. Although the average input quality increases by the same amount as in the weak link model, the average final impact barely changes. Since peer review has significant costs, the slightly higher average impact might fail to make up for the losses in total output compared to no peer review.
This is a simplified model but many of the simplifying assumptions are favorable for peer review. For example, peer review here is modeled as a filter on the bottom end of the quality distribution…But if peer review also cuts out some projects on the top end, its increase of the average impact of scientific research would be muted or even reversed.
1. LLMs predictably get more capable with increasing investment, even without targeted innovation.
2. Many important LLM behaviors emerge unpredictably as a byproduct of increasing investment.
3. LLMs often appear to learn and use representations of the outside world.
4. There are no reliable techniques for steering the behavior of LLMs.
5. Experts are not yet able to interpret the inner workings of LLMs.
6. Human performance on a task isn’t an upper bound on LLM performance.
7. LLMs need not express the values of their creators nor the values encoded in web text.
8. Brief interactions with LLMs are often misleading.
Bowman doesn’t put it this way but there are two ways of framing AI risk. The first perspective envisions an alien superintelligence that annihilates the world. The second perspective is that humans will use AIs before their capabilities, weaknesses and failure modes are well understood. Framed in the latter way, it seems inevitable that we are going to have problems. The crux of the dilemma is that AI capability is increasing faster than our AI understanding. Thus AIs will be widely used long before they are widely understood. You don’t have to believe in “foom” to worry that capability and control are rapidly diverging. More generally, AIs are a tail risk technology, and historically, we have not been good at managing tail risks.
Public services such as police, fire, and traffic control in South Africa are breaking down. Private firms are stepping in to take some of the burden. Twenty two percent of Johannesburg’s fire engines are owned and operated by private firms.
Fire Ops employs more than 60 firefighters across seven fire stations in Johannesburg and owns two fire engines—including one now sporting the same shade of blue Discovery uses for its logo and much of its branding—as well as six smaller high-pressure-pump response vehicles.
Discovery says the blue firetruck responded to 172 building fires between Fire Force’s launch through the end of January.
Mr. Ossip said the Discovery-branded truck promotes the insurer’s brand and lowers damages, including to multimillion-dollar homes in some of Johannesburg’s toniest areas. “You need to just save one or two of those a year and it is substantial savings,” he said.
The service helps alleviate a shortage of operational fire engines in Johannesburg, a spread-out city of more than 5.5 million residents, in situations where minutes can make the difference between a blaze limited to a couple of rooms and one that destroys an entire house or spreads to neighboring homes.
Robert Mulaudzi, a spokesman for the City of Johannesburg Emergency Management Services, said the city currently has about seven operational fire engines across 30 fire stations.
…Fire Ops, which invoices buildings’ owners for fire services, says that while it responds to all calls, it will give priority to clients, including Discovery policyholders, when simultaneous fires break out. Other insurers usually pick up the bill when the company puts out a fire in a home not insured by Discovery, said De Wet Engelbrecht, Fire Ops’s chief executive.
In 19th century Great Britain prosecution assocations and insurance firms were responsible for much of the policing (see Stephen Davies in The Voluntary City.) In Lessons from Gurgaon, India’s Private City (working paper) Shruti Rajagopolan and I discuss private police and fire services in modern day Gurgaon. In general, the private firms provide excellent service relative to their public counterparts but, as in Gurgaon, there are limits to how much the private firms can do without large economies of scale:
…Fire Ops also has to navigate public infrastructure that doesn’t always work, including traffic lights, fire hydrants and municipal water supplies….In September, both Fire Ops and the city’s fire department responded to a blaze at Little Forest Centre, a private special-needs school in Johannesburg, but a water shortage in the area meant all fire hydrants were empty, said Kate More, the school’s owner and principal, who isn’t a Discovery policyholder.
Despite Fire Ops sourcing water from a neighbor’s pool, the school burned down.
Ufuk Akcigit and Nathan Goldschlag (my co-author and former student) have an important new paper on the employment and invention dynamics of US inventors. Amazingly they link data on inventors from patents to census data using anonymized, person-level identifiers, known as Protected Identification Keys (PIKs) so they also have individual data on earnings and employment and they link that data to data on firms.
Ultimately, we observe the employment histories of approximately 760 thousand inventors associated with 3.6 million patents granted between 2000 and 2016.
What they find is twofold. First, an increasing number of inventors are being hired by large incumbent firms (left below). Second, when inventors move to large incumbent firms they earn more but they invent less, compared to similar inventors who go to young firms (right below). Why would an incumbent firm pay more for less productive workers? One possible answer is the Arrow replacement effect, namely a monopolist has less incentive to innovate than a competitive firm becasue the monopolist has a bigger opportunity cost, namely it’s own profits. As Arrow put it: “The preinvention monopoly power acts as a strong disincentive to further innovation.” A logical extension is that a monopolist will be willing to pay not to innovate and one way of doing that is to hire inventors who, if they worked at an entrant, would threaten their monopoly profits.
This is an important paper on declining dynamism in the US economy.
One model of a future course is a super-textbook: lectures, exercises, quizzes, and grading all available on a tablet with artificial intelligence routines guiding students to lectures and
exercises designed to address that student’s deficits and with human intelligence—tutors—on call on an as-needed basis, possibly for extra marginal fees.
…last week, the private Khan Lab School campuses in Palo Alto and Mountain View welcomed a special version of the [GPT] technology into its classrooms.
Rather than solve a math problem for a student, as ChatGPT might do if asked, Khanmigo is programmed to act like “a thoughtful tutor that’s actually going to move you forward in your work,” says Salman Khan, the technologist-turned-educator who founded Khan Academy and Khan Lab School.
Khanmigo was developed in concert with OpenAI, the nonprofit tech start-up that created GPT-4, the underlying technology for the latest version of ChatGPT. OpenAI did not respond to a request for comment on the partnership.
Casey Mulligan has an excellent new paper, Peltzman Revisited: Quantifying 21st-Century Opportunity Costs of Food and Drug Administration Regulation. What are the costs of delaying a new drug or a vaccine? Longer and bigger clinical trials increase safety but I’ve often made the point that the people who would have lived had a good drug been approved sooner are buried in an invisible graveyard and thus these costs are typically undercounted–the failure to see the invisible graveyard biases decisions in favor of delay. Mulligan makes a different and rarely considered point about substitution effects. If a vaccine isn’t available there are substitutes but these substitutes are themselves potentially unsafe and ineffective. But who is testing the substitures?
Many of these substitute interventions, such as remote work, closing schools, and canceling normal medical appointments, are beyond the jurisdiction of the FDA and can be utilized without any attempt to demonstrate their safety or efficacy.
If the substitutes work, the costs of delay are reduced. The FDA, for example, is right to prioritize drugs for which there are few alternative treatments. But the standards for many vaccine or drug substitutes are completely different than those used to approve a vaccine:
Closing schools to in-person learning is an important example of a prevention activity that was available, was applied to tens of millions of children in the United States, and was outside the FDA’s jurisdiction…Obviously the FDA’s effectiveness standard for vaccines differs from the effectiveness standard (if any) that school districts applied in deciding to close schools.
Where were the randomized controlled trials for closing schools, shutting the parks and beaches, and delaying medical appointments? Thus, it’s quite possible that greater safety of vaccines comes at the expense of greater time under less safe and possibly unsafe substitutes. As Mulligan concludes:
Approval delays for pandemic tests and vaccines pushed tens of millions of individuals and businesses into preventions and treatments that were both outside FDA jurisdiction and hardly safe or effective. The pandemic experience raises the question of whether, on the whole, consumers engage in more unsafe and ineffective practices than they would if FDA approval were not a prerequisite for pharmaceutical sales.
Addendum: Much else of interest in the paper including a calculation of the value of the vaccines in the hundreds of billions and trillions very much in line with work done by the AHT team, including myself ,in the AER PP (especially the appendix) and Science.
An excellent discussion between Balaji and my colleague Larry White. I don’t think Balaji is going to win his bet but he has been ahead of the crowd on the banking crisis. It’s now obvious, for example, that what was important about SVB was not Silicon Valley but that it was a bank and Balaji was among the first to present this clearly. Like Larry, I can imagine Bitcoin and other crypto assets rising in price due to the crisis as people look to diversify away from USD and the US banking system (I am an advisor to some crypto firms) but I don’t see $1 million soon. Larry, however, understands banking issues better than anyone I know (check out his new book Better Money: Gold, Fiat or Bitcoin?) and he agrees with much of Balaji’s analysis even if not $1m BTC.
Balaji’s mic is noisy but worth listening to anyway for the signal.
Sketchplanations writes up my theory of unintended consequences:
People are complicated. Life is complicated. Ecosystems are complicated. Alex Tabarrok writes, “The law of unintended consequences is what happens when a simple system tries to regulate a complex system.” This so often happens in any kind of government program, regulation, law or attempt to control something within a complex system with a relatively simple action. Things will happen that we didn’t anticipate.
Examples abound:
A policy of suppressing forest fires that goes on to cause even greater fires.
An attempt in Bogotá to reduce traffic by restricting who could drive each day based on licence plates that led people to circumvent the policy by buying more cars.
A sharply worded whitepaper from law firm Cooper and Kirk accuses regulators at the FDIC and the FED of an illegal and unconstitutional attack on crypto done without cover of law or Congressional approval. Cooper and Kirk are one of the most powerful and influential law firms in Washington. The firm’s attorneys have frequently appeared before the Supreme Court and as of 2021 “six former interns or associates of Cooper & Kirk [were] serving as U.S. Supreme Court clerks.” So this broadside isn’t coming from an obscure and unconnected law firm:
Recent stories in the financial press have uncovered a coordinated campaign by prudential bank regulators to drive crypto businesses out of the financial system. Bank regulators have published informal guidance documents that single out cryptocurrency and cryptocurrency customers as a risk to the banking system. Businesses in the cryptocurrency marketplace are losing their bank accounts, or their access to the ACH network, suddenly, and with no explanation from their bankers. The owners and employees of cryptocurrency firms are even having their personal accounts closed without explanation. And over the past two weeks, federal regulators have shut down a solvent bank that was known to be serving the crypto industry and, although it is required to resolve banks through the “least cost resolution” to the Deposit Insurance Fund, the FDIC chose to shutter rather than sell the part of the bank that serves digital asset customers, costing the Fund billions of dollars.
This pattern of events is not random, and we have seen it before. This is not the first time that federal bank regulators, working with their State-level counterparts, have abused their supervisory authority to label businesses unworthy of having a bank account and worked in secret to purge disfavored lines of commerce from the financial system. Beginning in 2012, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Board of Governors of the Federal Reserve System carried out a coordinated campaign to weaponize the banks against industries that had fallen out of favor with the administration—including gun stores, pawn shops, tobacco stores, payday lenders, and a host of other brick and mortar businesses. That campaign was called Operation Choke Point.
Our firm successfully challenged Operation Choke Point, and it was brought to a halt. The current bout of regulatory overreach against the crypto industry is illegal for much the same as reason as its predecessor. Specifically:
• Operation Choke Point 2.0 deprives business of their constitutional rights to due process in violation of the Fifth Amendment. It is well settled that when a federal agency attaches a derogatory label to an individual or business, and this stigmatizing label causes the business to lose a bank account or broadly precludes them from the pursuit of their chosen trade, the agency has violated the Due Process Clause of the Fifth Amendment, unless if first afforded the individual or business a right to be heard. This is precisely what the federal bank regulators responsible for Operation Choke Point 2.0 have done and continue to do by labeling crypto businesses a threat to the financial system, a source of fraud and misinformation, and a risk to bank liquidity.
• Operation Choke Point 2.0 violates both the non-delegation doctrine and the anticommandeering doctrine, depriving Americans of key structural constitutional protections against the arbitrary exercise of governmental power.
• By leveraging their authority over the banks to acquire the power to pick and choose the customers whom the banks may serve, the bank regulators have exceeded their statutory authority. The bank regulators are charged with supervising the safety and soundness of the banks; their effort to anoint themselves the gatekeepers of the financial system and the ultimate arbiters of American innovation and American economic life cannot be permitted to stand.
• The federal bank regulators are also refusing to perform their non-discretionary duties when doing so will benefit the cryptocurrency industry. State banks that are statutorily entitled to access the federal reserve system are being denied their rights solely because they serve the crypto industry. The federal bank regulators are not free to pick and choose which statutory obligations they duties they wish to perform.
• The federal bank regulators are evading the notice and comment rulemaking requirements of the administrative procedure act by imposing binding requirements on the banking industry through informal guidance documents. This is undemocratic, since it deprives the public of the right to comment on proposed rules, and it also runs contrary to the principle of judicial review, since courts lack the power to review “informal” agency actions.
• Finally, the federal bank regulators are acting in an arbitrary and capricious fashion by failing to adequately explain their decisions, by failing to engage in reasoned decision making, and by failing to treat like cases alike. It is difficult to imagine a more arbitrary and capricious agency action than simultaneously placing a solvent bank into receivership solely because it provided financial services to the crypto industry, while permitting insolvent institutions not tied to the crypto industry to continue operating.
…The persistent unwillingness of the nation’s bank regulators to follow the law and obey the Constitution calls out for Congressional action. Cracks are starting to form in the American financial system as its regulators increasingly abuse their power to achieve aims outside their authority and beyond their competence….We therefore urge Congress to perform its oversight role and hold these agencies to account.
I agree that financial regulation has been employed unconstitutionally, illegally, and covertly to control and regulate economic activity. One of my big fears is that a Central Bank Digital Currency would render nearly every transaction in the entire economy legible and primed for government monitoring and control. Thus, it is crucial to uncover, understand and debate the clandestine nature of financial regulation before the urgency of crisis is used to push us into an undesirable new equilibrium that will be difficult to escape.
GPT4 passed the medical licensure exam but the critics want to know how does it perform in the real world? Zak Kohane, pediatric endocrinologist, data scientist, and chair of the Harvard Chair of the Department of Biomedical Informatics at Harvard Medical School has apparently been working with GPT4 for about 6 months. He has a forthcoming book (with Peter Lee and Carey Goldberg). He writes:
“How well does the AI perform clinically? And my answer is, I’m stunned to say: Better than many doctors I’ve observed.”—Isaac Kohane MD
That’s from a review of the book by Eric Topol. Not much more information to be had in the review but if you think about it, this bit is hilarious:
I’ve thought it would be pretty darn difficult to see machines express empathy, but there are many interactions that suggest this is not only achievable but can even be used to coach clinicians to be more sensitive and empathic with their communication to patients.
Beginning with the Trump administration, and accelerating under the Biden administration, U.S. trade and industrial policy has prioritized relocating manufacturing production back to the United States. For all their differences, both administrations disregarded other countries in this pursuit. Both also attacked international trade and investment as harmful to U.S. economic and national security, even though the rules for that very system were established by the United States and serve its interests. Along with members of Congress from both parties, the Biden administration has sought to take away production from others in a zero-sum way—explicitly from China and a bit more courteously from others.
This policy approach, while having considerable popular appeal at home, is based on four profound analytic fallacies: that self-dealing is smart; that self-sufficiency is attainable; that more subsidies are better; and that local production is what matters. Each of these assumptions is contradicted by more than two centuries of well-researched history of foreign economic policies and their effects.
The US has benefitted from leading a rules based system of global trade but it is throwing the rules away to go after individual countries on a one-on-one basis.
In big-league sports, the best job is to be league commissioner. As commissioner, you make money whichever team wins or loses on a given day, you are welcome at every stadium (even if occasionally booed), and you can ultimately decide the big questions of how the game is played and who is allowed to own a team. If you instead become identified with a single team, sometimes you win, sometimes you lose, but most importantly, others have an interest in your losing. You might even get repeatedly punished for cheating, instead of being the one to decide who is cheating.
Buy American doesn’t work.
The idea of “Buy American” has broad populist appeal. It connotes an economy that is self- sufficient, producing all it needs, and “putting American workers first.” Yet detailed research has repeatedly shown that policies aimed at maximizing domestic manufacturing employment rather than the development and adoption of new technologies are not only doomed to fail but crowd out the very industrial and trade policies that contribute the most to innovation, national security, and decarbonization.
The US should bet on rules and growth.
At its core, a successful U.S. industrial policy is one that promotes the widespread diffusion and adoption of the best technologies, even if that means the United States purchasing them from production located abroad. Innovation and technical progress are accelerated by having common standards at global scale, not by politically captured industries with barriers to entry. This approach is especially necessary for decarbonization but also to increase supply chain resilience and the ability of other countries to stand up to Chinese threats.
Fifty years ago today, on March 23, 1973, Alexander P. Butterfield, the Administrator of the Federal Aviation Administration, issued a rule that remains one of the most destructive acts of industrial vandalism in history.
“No person may operate a civil aircraft at a true flight mach number greater than 1 except in compliance with conditions and limitations in an authorization to exceed mach 1 issued to the operator under Appendix B of this part.”
This text was slightly modified in 1989 and again in 2021, but the upshot remains the same. The rule imposed a speed limit on US airspace. Not a noise standard, which would make sense. A speed limit.
This speed limit has naturally distorted the development of civil aircraft. For fifty years, the aviation industry has worked to improve subsonic aviation. Commercial passenger aircraft are safer and more economical today than they were in 1973, but they are no faster.
If we had propagated the rate of growth in commercial transatlantic aircraft speeds that existed from 1939 to the mid-1970s, we would have Mach-4 airliners by now. But the overland ban put an end to all that. It made small supersonic aircraft, which need to fly shorter overland routes, essentially illegal, closing off the iteration cycle that could drive progress in the industry.
That’s Eli Dourado who notes that modern designs greatly reduce sonic boom. I would also add the following. In 2019 there were 811 million passengers on US domestic flights and 241 million passengers on US international flights. The average duration of a domestic flight is about 2.5 hours and an international fight about 7.3 hours so Americans spend about 3.7 billion hours every year on airplanes. If we could cut even 20% of that time that’s a saving of 757 million hours which has to be weighed against a few people experiencing sonic booms near airports. Indeed, since the people on the airplane are subjected to a lot of the noise the total amount of noise experienced could easily go down with faster aircraft!
