Who has the power?

The WSJ has several good piece on electric power in the United States, many of which are relevant to my recent podcast with Ezra Klein. Starting with the increased unreliability of America’s electric grid.

The U.S. power system is faltering just as millions of Americans are becoming more dependent on it—not just to light their homes, but increasingly to work remotely, charge their phones and cars, and cook their food—as more modern conveniences become electrified.

… Much of the transmission system, which carries high-voltage electricity over long distances, was constructed just after World War II, with some lines built well before that. The distribution system, the network of smaller wires that takes electricity to homes and businesses, is also decades old, and accounts for the majority of outages.

We need more power but are relying on transmission lines we put into places decades ago when we could still build things. The second WSJ article is on the 17-year travail to get a new power cable from hydropower rich Quebec to Boston.

Blackstone made other discoveries that altered the project. Its environmental consultants spent the summer of 2010 watching patches of blue lupine for endangered Karner blue butterflies and frosted elfins, a threatened species. They spotted two Karners and wrote a plan for avoiding damage to the wildflowers upon which the butterflies rely. Arrangements were also made to protect bald eagle nests that might be present during construction and identify shagbark hickories big enough for the endangered Indiana bat to roost.

When it became clear developers wouldn’t get state approval to dig beneath Haverstraw Bay, where endangered Atlantic sturgeon live, they redrew the route again.

These adjustments weren’t enough to stop opposition from several groups that normally aren’t aligned: the Sierra Club, energy companies, a bipartisan group of lawmakers and a labor union. Sierra Club argued that importing power threatened the development of in-state renewable-energy projects and could cause environmental damage in Canada.

That stand put the environmental advocacy club on the same side as the operator of a soon-to-close nuclear power plant called Indian Point as well as the Business Council of New York State and the Independent Power Producers of New York Inc., which fought the line on behalf of entrenched electricity providers.

Lawmakers objected for local reasons, with one saying he didn’t like that the power line’s energy would bypass dozens of upstate counties. The International Brotherhood of Electrical Workers Local 97 argued it threatened upstate renewable projects, would eliminate the need for additional gas-fired plants and “be deleterious of New York state energy jobs.”

The developers pledged $40 million to train New Yorkers for green-energy jobs and agreed to fund an environmental trust with $117 million. The trust would help pull invasive plants from Lake Champlain, restore oyster reefs around New York City and pay for implanting acoustic transmitters in adult sturgeon so scientists could study the fish.

Blackstone still faces one last step: That supply contract needs the approval of the New York Public Service Commission. One group that still opposes it is Riverkeeper, a nonprofit dedicated to protecting the Hudson. Riverkeeper initially supported the project before turning against it in 2019, saying the transmission line could lead to additional dams in Quebec that would possibly expose indigenous groups to methylmercury—a neurotoxin created by microbes in freshly flooded soils that can pass up the food chain to people who live off the land.

Hydro-Québec, the supplier of power to Champlain Hudson, has no plans for new hydropower facilities, its CEO said. There have also been no reported cases of mercury poisoning resulting from consuming fish caught in Hydro-Québec’s reservoirs during more than 40 years of monitoring, according to a spokeswoman.

…“The last thing we want is more dams because of new markets,” said John Lipscomb, a patrol-boat captain and vice president for advocacy for Riverkeeper. “We are investigating and will continue to look at opportunities to stop the project.”

So there you have it, a power line that could benefit millions is threatened by a brew of “Baptists” defending a few flowers and fish, bootleggers protecting their rents, shakedown artists trying to get a share of the proceeds and hysterics longing for a return to the state of nature.

Addendum: Oh yes, the third relevant piece is about how Americans are turning to their own generators and batteries (expensive and not exactly environmentally friendly) to try to deal with the unreliable grid. I will be getting one of these systems for my own home, which also came up in the podcast with Klein.

Tabarrok on the Ezra Klein Podcast

Late last year I responded to an excellent tweet storm from Ezra Klein by in effect saying he should read Mancur Olson’s The Rise and Decline of Nations. And you know what? He did! Ezra then kindly invited me on to his New York Times podcast to discuss public choice, liberalism, and the rise and decline of nations.

A few good quotes from me:

Japan has caught up to us in slowing down.


Let me put it in a way that progressives can understand, there is an inequality of voice and that inequality of voice also goes to the rich and the powerful and the people who can hire lawyers and the people who can use these so-called equitable institutions to their advantage—even the people in the marginalized communities have not benefited.

Ezra asked challenging questions and had lots of interesting things to say. I was especially struck by his argument that people want to tell heroic stories about themselves and so rent seeking comes to be redefined as something heroic. I think that’s an important insight which public choice scholars are likely to overlook–it becomes harder and harder to break out of a rent-seeking equilibrium not just because of transitional gains traps and the like but because the equilibrium comes to be seen as virtuous.

You also get to hear me rant about new hiring procedures at GMU and my HOA.

Ezra asks a good question about why developer interest groups don’t dominate the planning process.

We also talk about crypto and decentralized consensus as well as other topics.

Whether you call it state capacity libertarianism, creating the innovation nation, or supply side progressivism, I think this movement, which Ezra is leading from the left, is one of the most important movements today.

Podcast: Apple, Spotify, Google or wherever you get your podcasts. Transcript here.

Fishy Results on Ocean Acidification

The replication crisis isn’t just about social psychology. A meta-analysis of the effect of ocean acidification on fish behavior shows a big decline in effect size as the studies get larger and better.

Using a systematic review and meta-analysis of 91 studies empirically testing effects of ocean acidification on fish behavior, we provide quantitative evidence that the research to date on this topic is characterized by a decline effect, where large effects in initial studies have all but disappeared in subsequent studies over a decade. The decline effect in this field cannot be explained by 3 likely biological explanations, including increasing proportions of studies examining (1) cold-water species; (2) nonolfactory-associated behaviors; and (3) nonlarval life stages. Furthermore, the vast majority of studies with large effect sizes in this field tend to be characterized by low sample sizes, yet are published in high-impact journals and have a disproportionate influence on the field in terms of citations. We contend that ocean acidification has a negligible direct impact on fish behavior, and we advocate for improved approaches to minimize the potential for a decline effect in future avenues of research. [emphasis added, AT]

Heavy Wears the Crown and the Kohinoor

Shah Jahan is best known as the Mughal ruler who built the Taj Mahal. He spent much more of India’s wealth, however, building the Peacock throne (completed 1635), meant to rival the throne of Solomon. The value of the throne, perhaps the most bejeweled object ever created, can perhaps be understood by knowing that crowning one of the peacocks was the Kohinoor, one of the world’s largest diamonds. At the time, however, the Kohinoor wasn’t even considered the most impressive or valuable jewel in the throne!

Delhi was sacked by the Persian brigand Nader Shah in 1739. With ‘700 elephants, 4,000 camel and 12,000 horses’ Shah carted off hundreds of years of accumulated gold, silver and previous stones including the Peacock throne.

Nader brought the throne back to Persia but he soon went mad becoming ever more paranoid and vicious. He ordered his own son blinded and the eyes brought to him on a platter. Fearing a similar fate, some of his Afghan bodyguards turned on him and beheaded him. But one of his generals, Ahmad Khan Abdali, remained loyal, and amidst the violence and looting stood guard over the royal harem. He was rewarded by the first lady of the harem with the Kohinoor diamond and escaped to Afghanistan.

The rest of the Peacock throne was disbanded and disbursed to the winds although two of the other celebrated stones from the throne can be tracked through history. The Darya-i-Noor stayed in Persia were it eventually became part of the crown jewels of Mohammad Reza Shah, which as a child accompanied by my father I saw in Iran shortly before the revolution. The “Great Mughal” diamond eventually showed up in Amsterdam where it was bought by Count Orlov, the once-lover of Catherine the Great. Hoping to get back into her bed, he gifted her with the diamond but ended up only in debt and confined to a mental asylum. The Great Mughal is now on show in the Kremlin.

On his way back to Afghanistan, Ahmad Khan Abdali, who had escaped from the chaos of Nader Shah’s beheading, ran across a treasure caravan intended for Nader Shah. Commandeering the caravan he used its wealth to become the founder of the Durrani empire and the modern state of Afghanistan. Alas Ahmad Khan lost his nose to leprosy but kept the diamond until it fell to his heir, Timur Shah and then to his eventual heir (after much internecine warfare) Shah Zaman. Zaman was himself blinded with a hot needle “The point quickly spilled the wine of his sight from the cup of his eyes.” as Afghan historian Mirza ‘Ata put it poetically.

As the Durrani empire fell, the Sikh empire rose and the Kohinoor moved to Lahore under Ranjit Singh. The Sikhs, however, lost the Punjab to the East India Company who signed a peace deal with the boy king, Duleep Singh, which included the Kohinoor as tribute. Duleep would later be exiled to England where he would personally hand the Kohinoor over to his patron Queen Victoria.

After Queen Victoria’s death the Kohinoor was incorporated into various of the British crown jewels, excepting one period during World War II when it was hidden in a pond. As of last week, Queen Elizabeth announced that when Charles becomes King the Kohinoor will become part of the crown jewels of Queen Consort Camilla.

The Koh-i-Noor in the front cross of Queen Mary’s Crown. From Wikipedia.

Addendum: Largely cribbed from the excellent Kohinoor by William Dalrymple and Anita Anand.

Fractional Dosing Trials

My paper Testing fractional doses of COVID-19 Vaccines, co-authored with Kremer et al., has now been published at PNAS. I covered the paper in A Half Dose of Moderna is More Effective than A Full Dose of Astra Zeneca and other posts so I won’t belabor the basic ideas. One new point is that thanks to the indefatigable Michael Kremer and the brilliant Witold Wiecek, clinical trials on fractional dosing on a large scale have begun in Nigeria. Here are a few key points:

WHO SAGE Outreach: The authors have met and presented their work to the World Health Organization (WHO) Strategic Advisory Group of Experts on Immunization (SAGE), with follow-up meetings to present evidence coming from new studies.

DIL Workshop and Updates: In the fall of 2021, the Development Innovation Lab (DIL) at UChicago, led by Professor Kremer, hosted a workshop on fractional dosing, collecting updates from clinical researchers from multiple countries conducting fractional dosing trials for COVID-19 vaccines. The workshop also covered issues relating to trial design and included participants from Belgium, Brazil, Ghana, the Netherlands, Nigeria, Thailand, South Africa, UK and the US. 

CEPI Outreach: Professor Kremer has also presented this research to The Coalition for Epidemic Preparedness Innovations (CEPI), which is now pursuing a platform trial of fractional dosing.

Country Trials – Nigeria: With the support of DIL and the research team and generous support and advice from WAM Foundation, the charitable arm of Weiss Asset Management and Open Philanthropy, a trial is being conducted in Nigeria by the Nigerian Institute of Medical Research, National Institute of Pharmaceutical Research and Development, National Agency for Food and Drug Administration and Control, and the National Primary Health Care Development Agency, in coordination with the Federal Ministry of Health.

A comprehensive list of all the trials on fractional dosing conducted to date is at the link. Fractional dosing may come too late for COVID-19 vaccines but perhaps next time a shortage of a vaccine looms we will be more quick to consider policies to stretch supplies.

The emergency is over. It’s time to pivot to preparedness

Jonathan Rauch has an excellent column in Persuasion, The emergency is over. It’s time to pivot to preparedness. One bit from yours truly:

A useful suggestion comes from Alex Tabarrok, an economist at George Mason University who has been saying smart things about the pandemic since it began. “When vaccines were coming, it made a lot of sense to put off a lot of other good things in life—to do what economists call intertemporal substitution,” he said in a recent interview. “Once vaccines are available and widespread, you can’t intertemporally substitute anymore because there’s no more cavalry coming. This is it. Before vaccines, costly actions can delay your getting COVID until after you’re vaccinated, which is highly valuable. But the corollary is that once you move to the permanent scenario and are vaccinated, costly actions that mostly delay when you get COVID have much less value.”

…That being the case, Tabarrok proposes a rule of thumb: “Whatever we do, we should be thinking about, ‘Do we make this permanent or not?’” If measures are not candidates for permanence, “We might as well stop them now or soon.”

Read the whole thing.

Good News on Crypto Taxation

I argued:

Suppose you buy an apple tree and it grows apples. You don’t sell any apples. (Maybe you use the apples to plant more trees). The IRS demands that you pay income on market value of the apples even though you haven’t sold any. Crazy! Yet that is how the US taxes staking.

Well it turns out that the IRS agrees with me (!) or at least believes that the courts were likely to side with the argument I sketched. The Proof of Stake Alliance writes:

[I]n 2020, Abe Sutherland’s 2020 Tax Notes brief argued that these tokens should be taxed when they are sold, not when they are created – like all property– and that treating this property created by staking as the taxpayer’s immediate income would be contrary to over 100 years of tax law.

The IRS has signaled that it agrees in a new case: After Joshua Jarrett paid income tax on staking rewards he created in 2019, he sued the IRS for a refund. On Thursday, he will announce that the IRS granted this refund. Nevertheless, Josh and the legal team at Fenwick will reject the refund and  continue to sue the IRS in order to force the agency to offer explicit guidance that states that staking rewards will be taxed as property, not income. Only through this definitive statement will taxpayers in the growing proof of stake industry be able to plan for their futures.

This case has significant implications for the tax industry, as it will determine how staking rewards are taxed in the future. POSA is supporting and elevating Josh and this case to demand the IRS offer explicit guidance that staking rewards, as property, should be taxed when they are SOLD, not when they are created. 

Assuming this falls into place, as looks likely, this offers significant clarity to current tax law on crypto. Note that this does not mean that crypto is taxed less–it is still taxed when sold–it’s more about creating simplicity and consistency in the code. See also Tyler’s post, We need a better tax system for crypto.

Special congratulations to Abe Sutherland.