The Missing Dockworkers
One of the most amazing facts to come out of the dockworker strike (now resolved, it seems):
WSJ: Start with the astounding fact that there were 50,000 or so ILA strikers but only 25,000 or so port jobs. That’s right, only about half of the union’s members are obliged to show up to work each day. The rest sit at home collecting “container royalties” negotiated in previous ILA contracts intended to protect against job losses that result from innovation.
Hat tip: Scott Lincicome.
The Economic Way of Thinking in a Pandemic
During the pandemic, economists often found themselves at odds with politicians, physicians, epidemiologists and others. Some politicians, for example, were worried that the pharma companies might engage in profiteering while economists worried that the pharma companies were not nearly profitable enough. Physicians focused on maximizing the health of patients while economists focused on maximizing the health of society–during the pandemic these were not the same and this led to disputes over testing, first doses first and human challenge trials. During the pandemic economists were often accused of not staying in their lane. But what is the economist’s lane?
In this talk, I discuss the economic way of thinking and how it conflicted with other ways of thinking. My talk pairs well with my recent paper also titled The Economic Way of Thinking in a Pandemic.
The Marginal Revolution Podcast: The Nobel Prize
We interrupt our regularly scheduled series of podcasts on the 1970s–first one here on inflation and monetary policy–to bring you a new podcast in honor of next week’s Nobel Prize in economics. Who will win? Who should win? Who should have won but didn’t? Who won but shouldn’t have?
Here’s one bit:
COWEN: I would give it to Robert Barro.
TABARROK: Okay. Tell me why you would give it to Robert Barro.
COWEN: “Are government bonds net wealth?” as a fundamental way of thinking about fiscal policy remains central. Also, he did early work on political business cycle theory. The status of cross-country growth regressions has fallen greatly. People once thought he might get it for that. That may now even be hurting his chances, but I think overall, what he’s created and done is enough for a Nobel Prize. He’s had five or six key articles in major macro fields.
TABARROK: Yes, I agree with you. I think you’re right about the cross-country regressions have fallen in favor over time, but still hugely important and really pushed the profession in that direction for a long time. Just because it’s not fashionable today doesn’t mean that it wasn’t a major contribution.
COWEN: It does mean fewer people will nominate him for fear of looking a bit low status, like, “Oh, you still think cross-country growth progressions are the thing.” I think it matters how many people nominate you in the early rounds.
TABARROK: Yes. I think it’s Barro’s birthday this week. He’s 80, I think.
I’d be pleased if Barro won, not for the least reason that he will be here at GMU next week which would be extra exciting if we can also celebrate a Nobel.
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Tariffs Hurt Manufacturing
In Disentangling the Effects of the 2018-2019 Tariffs on a Globally Connected U.S. Manufacturing Sector (forthcoming) Aaron Flaaen and Justin Pierce of the Federal Reserve Board write:
The unprecedented increase in tariffs imposed by the United States against its major trading partners in 2018-2019 has brought renewed attention to the economic effects of tariffs. While vast theoretical and empirical literatures document the effects of changes in trade policy, it is not clear how prior estimates apply when there are virtually no modern episodes of a large, advanced economy raising tariffs in a way comparable to the U.S. during this period. Further complicating estimation of the effects of tariffs is the rapid expansion of globally interconnected supply chains, in which tariffs can have impacts through channels beyond their traditional effect of limiting import competition.
Another important feature of these tariffs is that they were imposed, in part, to boost the U.S. manufacturing sector by protecting against what were deemed to be the unfair trade practices of trading partners, principally China. Thus, understanding the impact of tariffs on manufacturing is vitally important, as some may view the negative consequences of tariff increases documented in existing research—including higher prices, lower consumption, and reduced business investment—as an acceptable cost for boosting manufacturing activity in the United States.
…On the one hand, U.S. import tariffs may protect some U.S.-based manufacturers from import competition in the domestic market, allowing them to gain market share at the expense of foreign competitors. On the other hand, U.S. tariffs have also been imposed on intermediate inputs, and the associated increase in costs may hurt U.S. firms’ competitiveness in producing for both the export and domestic markets. Moreover, U.S. trade partners have imposed retaliatory tariffs on U.S. exports of certain goods, which could again put U.S. firms at a disadvantage in those markets, relative to their foreign competitors. Disentangling the effects of these three channels and determining which effect dominates is an empirical question of critical importance.
…Our results suggest that the traditional use of trade policy as a tool for the protection and promotion of domestic manufacturing is complicated by the presence of globally interconnnected supply chains and the retaliatory actions of trade partners. Indeed, we find the impact from the traditional import protection channel is completely offset in the short-run by reduced competitiveness from retaliation and especially by higher costs in downstream industries…[the] net effect is a relative reduction in manufacturing employment.
Most famously, Whirlpool predicted that tariffs on washing machines would be great for Whirlpool profits, but their pleasure turned to dismay when they realized that steel and aluminum tariffs would raise their input prices.
Hat tip: The excellent Kevin Lewis.
New MRU Video! Negative Externalities
Here’s the latest video from Marginal Revolution University. It covers negative externalities–drawing, of course, from the most innovative and interesting principles of economics textbook, Modern Principles of Economics.
MRU videos are free for anyone’s use anytime, anywhere and don’t forget there are also two new econ-practice games on negative externalities and positive externalities and a fun choose your own adventure story on Unintended Consequences (most textbooks just teach when regulation works. We are more balanced.)
Reducing Pollution in India with a Cap and Trade Market
India has some of the worst air pollution in the world. India regulates pollution but it uses a command and control approach with criminal penalties, a system in tension with enforcement given low-state capacity. The result has been widespread corruption, inefficiency, and poor enforcement of pollution controls. In a very important paper, Greenstone, Pande, Ryan and Sudarshan report on an experiment with a market for particulate matter in Surat, India. In fact, this is the first particulate-matter market anywhere in the world.
The experiment created two sets of firms, the treatment set were required to install continuous emission monitoring systems (CEMS) which measured the output of particulate matter. The control set of firms remained under the command and control system which required the installation of various pollution control devices and spot checks. Firms were randomly assigned to treatment or control. Pollution at treatment firms was capped and permits were issued for 80% of the cap so firms could pollute at 80% of the cap for free. Permits for the remaining 20% of the cap were sold at auction and trading was allowed. Treatment plants which polluted more than their permits allowed paid substantial fines, about double the cost they would have paid to buy the necessary permits.
The one and half year experiment revealed a great deal of importance. First, the CEMS systems and the switch to financial penalties reduced the cost of enforcement so that essentially all firms quickly came into compliance. Second, trading was vigorous, which indicated that firms have heterogeneous and changing costs. Moreover, by allowing for a more information rich market the costs of achieving a given level of pollution fell. Pollution costs were 11% lower in treatment firms compared to control firms at the same level of pollution. The value of trade in lowering abatement costs illustrates Hayek’s idea that one of the virtues of markets is that they make use of information of particular circumstances of time and place. In fact, since the costs of achieving a given level of pollution were low, the authorities decreased the cap so that the treatment firms reduced their pollution levels significantly relative to the control firms.
The CEMS systems were a fixed cost but because abatement costs decreased, the overall expense was reasonable. The need for monitoring systems and procedures highlights Coase’s insight that property rights in externalities must be designed and enforced, the visible and invisible hand work best together.
Using estimates on a statistical life-year in India of $9,500 (about 1/10th to 1/30 the level typically used in the US) the authors find that the benefits of substantial pollution reduction exceed the costs by a factor of 25:1 or higher.
I have emphasized (and video here) that there are significant productivity gains to reducing air pollution which would make these benefit to cost ratios even higher. Less pollution can mean more health and more wealth.
The authors are especially to be congratulated because this paper began in 2010 with discussions with the Gujurat Pollution Control Board. It took over a decade to implement the experiment with the authors helping to design not just the market but also the technical standards for CEMS monitoring. Amazing. The success of the system is already leading to expansion across India. Bravo!
Hat tip: Paul Novosad.
Avian Flu is Bad for Cows
FarmProgress: With a closed herd and all his heifers artificially inseminated — no outside bulls needed — Nathan Brearley was confident his 500-cow dairy farm in Portland, Mich., would be spared from the avian flu strain that’s affecting dairies.
He was wrong. Nearly six months later after an infection on his farm, milk production still hasn’t recovered.
“I was quite surprised. I never saw any other disease this widespread affect the cattle like it did,” Brearley said during a recent webinar on dairy avian flu, put on by the Pennsylvania Center for Dairy Excellence.
…Brearley said the first signs of problems were in April when the SmaxTec boluses in his cows, which keep track of temperature and other health parameters, started sending high-temperature alarms to his phone and computer. Half the herd looked like it was getting sick.
“Looking at data, the average temperature rise was 5.1 degrees above normal,” he said. “Outlying cows were even higher with temperature.”
The cows were lethargic and didn’t move. Water consumption dropped from 40 gallons to 5 gallons a day. He gave his cows aspirin twice a day, increased the amount of water they were getting and gave injections of vitamins for three days.
Five percent of the herd had to be culled.
“They didn’t want to get up, they didn’t want to drink, and they got very dehydrated,” Brearley said, adding that his crew worked around the clock to treat nearly 300 cows twice a day. “There is no time to think about testing when it hits. You have to treat it. You have sick cows, and that’s our job is to take care of them.”
Testing eventually revealed that his cows did indeed contract H5N1. But how they contracted it, he said, is still a mystery.
Brearley said an egg-laying facility a mile and a half away tested positive for H5N1 and had to depopulate millions of birds. The birds were composted in windrows outside the facility, “and I could smell that process.”
The farm averaged 95-100 pounds of milk per head with 4.0% butterfat and strong solids before the outbreak. During the first three weeks of infection, milk production fell to 75 pounds a head and has been slow to recover.
“Honestly, we haven’t recovered since, though my forages have been stable,” Brearley said. “I cannot get back to our baseline again.”
Reproduction was also challenged. Right off the bat, his cows aborted their calves.
And how about this kicker:
He didn’t test his cows until two weeks after the first high temperatures entered his herd, fearing that his milk processor wouldn’t accept his farm’s milk.
Why do I get the feeling that we are sleepwalking?
Unintended Consequences
Courtesy of MRU here are two new econ-practice games on negative externalities and positive externalities. Great for students.
But don’t forget that if you are not careful regulation can often lead to Unintended Consequences (a fun choose your adventure story!)
All of these resources are free for any teacher of economics but, of course, they go great with the best principles of economics textbook, Modern Principles of Economics!
The US Has Low Prices for Most Prescription Drugs
The US has high prices for branded drugs but it has some of the lowest prices for generic drugs in the world and generic drugs are 90% of prescriptions. I’ve been saying this for years but here is the latest study:
U.S. prices for brand-name originator drugs were 422 percent of prices in comparison countries, while U.S. unbranded generics, which we found account for 90 percent of U.S. prescription volume, were on average cheaper at 67 percent of prices in comparison countries, where on average only 41 percent of prescription volume is for unbranded generics. U.S. prices for brand-name drugs remained 308 percent of prices in other countries even after adjustments to account for rebates paid by drug companies to U.S. payers and their pharmacy benefit managers.
Branded drugs are expensive but that is why we have insurance which works reasonably well, albeit far from perfectly. For example, insurance and the low price of generics is one reason that out-of-pocket costs for medical are low in the United States.
If you don’t want to pay high prices for branded drugs just use generics! As I wrote 20 years ago, in what was called a heartless and cruel post:
People talk about the high price of pharmaceuticals as if high prices lasted forever. In fact, within a year of the expiration of a pharmaceutical’s patents, prices will typically fall by more than 50 percent as generic producers enter the market. Patents nominally last for 20 years but the effective patent life is much lower because patents are typically granted years before a product has cleared FDA review. The effective patent life of the average new pharmaceutical in the 1990s averaged just 12 years [new reference for today, 13.5 years, AT]. Competition from competing but non-infringing pharmaceuticals makes the de facto patent life even shorter.
Thus, my response to the seniors and others clamoring for lower pharmaceutical prices is to be more patient. Does this sound harsh? Consider this, the people who are demanding price controls are not simply asking for lower drug prices they are asking for lower prices on the newest drugs. Lower prices for drugs introduced 15 years ago are already here. Remember, those drugs were recently considered the very best modern medicine has to offer, so it’s not like I am expecting those who can’t afford the newer medicines to go back to using leeches.
Price controls or other such plans such as reimportation may bring cheaper pharmaceuticals for a short period but we will then have a much smaller supply of new drugs forever. Only the shortsighted would buy that prescription.
Don’t fail the marshmallow test people!
People get upset when I say just use generics–shouldn’t everyone have access to the very best pharmaceuticals! Yes! But that illustrates another point–these drugs are worth the price!
Hat tip: Steve.
India and the US
Good op-ed from Arthur Herman and Aparna Pande:
[H]ow America approaches its relations with India — the world’s largest democracy, its most populous nation and very soon its third-largest economy — may determine the balance of global power for the 21st century…As the U.S. looks for a strong strategic partner to contain China’s current hegemonic ambitions, India stands out as the one country whose economic might, military potential and political values can decisively shift the balance of power toward the U.S. and other democracies around the world.
Over 17 percent of the world’s population lives in India. India is poised to become the world’s third-largest economy by 2030 (its GDP stands at $3.94 trillion and is expected to hit $10 trillion by 2035). Its economic growth has stayed around 7 percent per year for the last decade, and it promises to remain robust in the future.
…As for cultural affinities with the U.S. and the West, it’s important to remember that India is the largest English-speaking nation in the world. It’s a vocal supporter of the global norms and multilateral trade institutions such as GATT and the WTO, which sustain a liberal global order.
…For the partnership to really deepen, however, there are important steps both sides must take.
First, India needs to open up its still relatively closed economy, a legacy from its socialist past. It needs to undertake the next generation of market reforms, bolster manufacturing, continue to build up its infrastructure and invest even more in its human capital. India also needs to increase its defense spending from the current 1.6 percent to 2.5 to 3 percent, and diversify its suppliers to include more important ones from Western countries, including the U.S.
Second, the U.S. would benefit from American companies treating the Indian market as their alternative to China in the civilian manufacturing, high-tech and defense-industrial spheres. We also need to respect the fact that as a post-colonial country with a world-class economy, and one with a 5,000-year-old civilization, India will always see itself as a global power, not as a junior American ally, with strategic interests separate from — albeit largely aligned with — those of the U.S.
The emergence of India as a global power will permanently alter the dynamic of competition between the U.S. and China. A president who can correctly guide a closer strategic partnership between India and America will not only counterbalance China’s global ambitions and economic and military might, but could trigger a new era of growth and prosperity for both countries — indeed, for all three.
Civil War
I knew Civil War (now streaming on HBO/Max) was going to be good when just a minute or so in you see an explosion in the distance and only later do you hear the sound wave. [Mild spoilers may follow.] Shortly after, we meet war journalist Lee (Kirsten Dunst in a standout performance). I thought, “She looks like Lee Miller,” and seconds later, the name is dropped. In the next shot, Lee is in a bathtub—a clear sign you’re in the hands of a master. It is not without import that Lee Miller photographed Dachau or a little less obviously that she was a pioneer of the surreal. Both will reappear in Civil War.
In a scene where the journalists need to buy gas, they offer $300. The armed attendant scoffs, “$300 will get you a ham sandwich.” “$300 Canadian,” comes the reply, telling you everything you need to know about the state of the economy.
Civil War was written and directed by Alex Garland, who also made Annihilation, Ex Machina, and the underrated Dredd (the 2012 reboot not the Stallone movie). Many viewers expected Civil War to serve some lectures about red state/blue state politics, but it doesn’t. Tyler makes astute comments about the hidden politics (and reviews the movie here).
My interest was more on how the film portrays war—war is hell but it’s also fucking amazing. The photojournalists at the heart of the story justify their actions as serving a higher purpose, but in reality, they have become addicted to the adrenaline. Civil War shares themes with Nightcrawler. The journalists also share more than they think with the sick fucks who also love war because it gives them a chance to torture and kill.
A great scene at the climax incarnates the “when one dies, another is born” trope. The lead character starts to feel and gain a moral code, only to be killed for it, while the apprentice simultaneously sheds hers, emerging as a new, amoral hero. And it’s all caught on film. Karma is a bitch. The transition isn’t surprising given the logic of the setup but it is handled with originality and grace.
Recommended, given the obvious strictures about violence and serious themes.
AI and Biology
I think AI is going to have some if its biggest effects on biology. Biological pathways are among the most complex in all of science. People are good at handling two or maybe three variable problems but just keeping three variables and their interactions in one’s head is difficult. AIs with access to vast databases of genes, proteins, networks and so forth will enable new simulations and learning as has already happened with protein folding.
Equality Act 2010
The UK’s Orwellian sounding Equality Act 2010 is strikingly Marxist. It demands equal pay for work of equal value where these are defined as follows:
A’s work is equal to that of B if it is like B’s work, rated as equivalent to B’s work, or of equal value to B’s work.
A’s work is like B’s work if A’s work and B’s work are the same or broadly similar, and such differences as there are between their work are not of practical importance in relation to the terms of their work.
…A’s work is rated as equivalent to B’s work if a job evaluation study— gives an equal value to A’s job and B’s job in terms of the demands made on a worker
…A’s work is of equal value to B’s work if it is neither like B’s work nor rated as equivalent to B’s work, but nevertheless equal to B’s work in terms of the demands made on A by reference to factors such as effort, skill and decision-making.
In short, supply and demand have been replaced by judges and labor boards with the authority to deem which jobs are “equal” and therefore should be paid equally. And the labor boards do so based on vague and subjective considerations that do not change with changing circumstances. Imagine replacing “jobs” with “condiments” and having judges decide whether ketchup and mustard should be priced equally because they are similar, broadly comparable, or rated equivalent in terms of the effort, skill, and decision-making that went into their production.
You think I am joking. I am not. Here’s an example of a case just decided in the UK.
More than 3,500 current and former workers at Next have won the final stage of a six-year legal battle for equal pay.
An employment tribunal said store staff, who are predominantly women, should not have been paid at lower rates than employees in warehouses, where just over half the staff are male.
The tribunal ruled that retail workers and warehouse workers were “equal” and thus had to be paid equally. Next replied that they paid everyone market wages. Verboten!
Next argued that pay rates for warehouse workers were higher than for retail workers in the wider labour market, justifying the different rates at the company.
But the employment tribunal rejected that argument as a justification for the pay difference.
According to the tribunal’s ruling, between 2012 and 2023, 77.5% of Next’s retail consultants were female, while 52.75% of warehouse operators were male.
The tribunal accepted that the difference in pay rates between the jobs was not down to “direct discrimination”, including the “conscious or subconscious influence of gender” on pay decisions, but was caused by efforts to “reduce cost and enhance profit”.
It ruled that the “business need was not sufficiently great as to overcome the discriminatory effect of lower basic pay”.
No one is alleging that male and female warehouse workers were paid unequally or that male and female retail workers were paid unequally or that there was any direct or indirect discrimination. The only claim is that warehouse workers, who are less likely to be female than retail workers, earn more than retail workers. And since these jobs have been judged “equal,” the company has violated Equality Act 2010.
Who could have predicted that jobs as disparate as warehouse and retail jobs might one day be deemed “equal.” Yet because Next failed to foresee such lunacy they are now required to pay millions in back wages to their retail employees. Software engineers, particularly in AI, are currently in high demand. A British firm looking to hire them may hesitate to raise wages, fearing that a future ruling could classify software engineers as “equal” to a larger, lower-paid group like HR administrators. Such a decision could easily push the firm into bankruptcy.
The warehouse workers were almost 50% female (47.25%). So females were not barred from the higher paying jobs. The fact that 77.5% of the retail workers were female suggests that retail work has special appeal to females relative to males and thus that there are compensating differentials. Any of the three female plaintiffs could have taken jobs in the warehouse. If the jobs are equal and the warehouse jobs pay more this is, on the plaintiffs’ theory, “puzzling”. [Or, as Ayn Rand would say, blank out.]
In fact, the court case reveals that Next was struggling to fill the warehouse positions and offered any retail employee—including the plaintiffs—the opportunity to switch to warehouse work. On cross-examination, one of the plaintiffs admitted that, given the unpleasant conditions in the warehouse—described by the court as “the drone of machinery,…vibration, alarm sirens and the screeching of machinery, wheels and rollers, continuously present in all areas”—the warehouse job “did not seem particularly attractive” compared to the greater autonomy and more appealing environment of the retail job. The plaintiff added that she would only have considered the warehouse job if it paid “a lot more money.”
Thank goodness for the men and women who were willing to take such jobs for only a little more money! It should not shock that different people have different preferences over jobs, just as they have different preferences over ice cream. In particular, it will perhaps surprise only the judges to learn that men tend to be more wage-focused and “women are relatively more attracted to employers with low pay but high values of nonpay characteristics (NBER 32408).” The court, however, recoiled from this idea, noting that if they were to take demonstrated preferences seriously this would be tantamount to applying “an unfettered free market model of supply and demand.” The horror.
Now consider how the jobs were deemed “equal”. On the left is the job evaluation report for claimant Amanda Cox. The specific categories and numbers are not important; what is important is that the jobs are rated across 11 categories, and the point-scores are then added to get a total score at the bottom.
Amusingly, the evaluators emphasize that they use equal weighting across the categories. Of course, they did—because “equal” is synonymous with fair, right? An unequal weighting would surely be discriminatory!
I am not making this up:
Any scheme which has as its starting point – “This qualification is paramount” or that “This skill is vital” is nearly always going to be biased or at least open to charges of bias or discrimination.
Thus, if you think that a skill is vital for a job, that’s discrimination!
(Notice also that equal weighting is just another form of weighting. Given the subjective nature of both the categories and the points assigned, equal weighting holds no inherent superiority or objectivity.)
But no matter—we have yet to get to the best part. The evaluators selected three warehouse workers and assessed them using the same metric. For example, Amanda Cox was compared to warehouse worker Calvin Hazelhurst, resulting in the table on the right.
Can you spot something surprising in this table? I’ll give you a moment.
The obvious conclusion any reasonable person would draw from this table is that the jobs are clearly not equal. Amanda’s total score is 440, while Calvin’s is 340. 440 ≠ 340. Not even close! In nearly every category—except (no surprise!) physical demands and working conditions—the retail job requires more points, aka “skill and responsibility”.
At this point, most people would stop and ask some critical questions. If the jobs differ so much across multiple dimensions, isn’t it clear that they are not equal? And why do jobs that seemingly require less “skill” pay more? Could it be that our point-score rating system is oversimplified? Maybe the market is telling us something that this crude scoring system isn’t capturing? Is it time to check our premises?
But not the evaluators! Oh, no. The evaluators are thrilled–because the fact that the jobs are unequal proves that they are equal!
War is peace, freedom is slavery, ignorance is strength. UNEQUAL IS EQUAL.
Adam Smith had a much better understanding of wages in 1776 than UK judges have today.
The wages of labour vary with the ease or hardship, the cleanliness or dirtiness, the honourableness or dishonourableness, of the employment. Thus in most places, take the year round, a journeyman tailor earns less than a journeyman weaver. His work is much easier. A journeyman weaver earns less than a journeyman smith. His work is not always easier, but it is much cleanlier. A journeyman blacksmith, though an artificer, seldom earns so much in twelve hours, as a collier, who is only a labourer, does in eight. His work is not quite so dirty, is less dangerous, and is carried on in day-light, and above ground. Honour makes a great part of the reward of all honourable professions. In point of pecuniary gain, all things considered, they are generally under-recompensed, as I shall endeavour to shew by and by. Disgrace has the contrary effect. The trade of a butcher is a brutal and an odious business; but it is in most places more profitable than the greater part of common trades. The most detestable of all employments, that of public executioner, is, in proportion to the quantity of work done, better paid than any common trade whatever.
Today, the UK would convene a labor board to rule that the tailor and the weaver must be paid equally because they DO WORK OF EQUAL VALUE. Case closed.
Labor boards will inevitably lead to the misallocation of labor, diminishing both wealth and fairness. Severe misallocation may lead to further intervention, in the worst scenario, even to the allocation of labor by fiat. Politicization breeds division, rent-seeking, and a stagnant, unpleasant society.
More generally, it pains me that there is no recognition that the market is a discovery procedure, including the discovery of the value of different skills and people’s preferences over different jobs. No recognition that the market harnesses tacit knowledge and knowledge of particular circumstances of time and place–knowledge that is difficult to quantify, communicate, or communicate in a timely manner–and that “society’s economic problems are primarily related to adapting quickly to changes in these circumstances.” No recognition that a price is a signal wrapped up in an incentive.
I despair when I consider that these fundamental ideas are the foundation of our liberal, global, and prosperous civilization. On economics, as on free speech, the UK has entered the great forgetting.
Addendum: A special hat tip to Bruce Greig who brought this to my attention and had the receipts.
LLMs are Creative Reasoners
It’s bizarre to me that there are still people claiming that LLMs are not reasoning or are not creative when by any objective measure they are obviously creative reasoners! By objective measure I mean a test that evaluates creativity and reasoning by evaluating outputs not by idle philosophical speculation that rules AIs out by definition. Here’s a good paper, Can LLMs Generate Novel Research Ideas? A Large-Scale Human Study with 100+ NLP Researchers, which illustrates one such test. The authors asked top researchers in the field of natural language processing to propose research ideas which were then presented in a standardized format to a ratings panel of other NLP experts. The AI created ideas were judged more creative than the human ideas.
Now one might argue that the humans weren’t giving their best ideas–some data in the paper suggests they were giving ideas at the median of those for top researchers–and humans might also be looking for ideas that were perhaps easier to get funding precisely because they were less creative but more doable. Either way, however, the AIs are coming up with good ideas that could usefully supplement human generated ideas.
Peer Approval to Address Drug Shortages
Reuters: Mark Cuban’s Cost Plus Drug Company said…that it is working with the U.S. Food and Drug Administration to import and distribute penicillin in the country temporarily….Cuban’s Cost Plus will import Lentocilin brand penicillin powder marketed by Portugal-based Laboratórios Atral S.A.
There are two remarkable items in the above passage. First, there is a shortage of penicillin in the United States! Crazy. The second remarkable item is that the FDA has authorized the temporary importation of penicillin from Portugal. In other words, the FDA will accept the EMA’s authorization of penicillin as equivalent to its own, at least for the purposes of alleviating the shortage. That’s good. What is needed, however, is a more permanent form of peer-approval.
I have long advocated for peer approval or reciprocity for any drug or device approved in a peer country but notice that this form of peer approval is only for drugs already approved in the United States. Thus, the approval is really only for labeling and manufacturing, a pretty small ask.
Peer approval for imports would also help to discipline domestic firms who sometimes take advantage of monopoly power to jack up prices. Indeed, you may recall Martin Shkreli and the massive price increases for Daraprim (Pyrimethamine) to $750 a pill when the same pill was available in Europe for $1 or less and in India for 10 cents. Importation would have solved that problem entirely.