The science rave culture that is British

Thousands of people at a mass nightclub rave in the U.K. this week will be a key test of whether live events halted during the pandemic can reopen at full capacity as planned from the end of June.

The two-day event in Liverpool, northwest England, is part of a national research program which so far appears to show people are happy to be tested for coronavirus to secure entry to large-scale events.

There are also no early signs that live events are spreading the disease, according to government scientist Paul Monks, and the program is expected to move to its second phase next month — with live events held at a “full range” of indoor and outdoor venues with “different scales” of capacity.

Here is the full story, via Vith E.

Thursday assorted links

1. Michael Collins, RIP (Byrds song).

2. The rise of French tacos (New Yorker).

3. Cass Sunstein on interest group theories of regulation.

4. Biden sides with the stagnationists.

5. Really?: “Germany’s domestic intelligence service said on Wednesday that it would surveil members of the increasingly aggressive coronavirus denier movement because they posed a risk of undermining the state.” (NYT)

6. It is hard to reform science funding, I say go stand-alone, important.

7. Can this France poll be right?

Let’s not raise the capital gains tax

That is the topic of my latest Bloomberg column, the vitriol of the Twitter response of course confirms my point.  Here is one excerpt:

First and foremost, any system of taxation is about values. And a much higher rate of capital taxation would undermine some of America’s core values.

A society’s values and its tax regime have to be mutually compatible or they will undermine each other. So the first question about a taxation system is which values it promotes.

The values that the U.S. should prioritize are a valorization of wealth, the encouragement of saving, and the encouragement of children. People may disagree with these priorities — in fact, they disagree quite strenuously! — but for me, it’s important to know whether a proposed tax reform supports or weakens these values. This is a more important consideration than economic calculations of “deadweight loss.”

And:

Values are all the more important for taxation because America is a nation of immigrants. Which is the better message to potential new arrivals? Should it be “America is a great country to get really rich”? Or “Americans are pretty egalitarian, so they won’t let the wealthy get too rich”?

The first message is far preferable — and this is true even if you personally hold fairness to be an important value. It is more important to encourage ambition in those newly arrived to the U.S., if only to take in creative (and yes, sometimes greedy) people who will help solve America’s social problems. Immigrants are responsible for so many of this country’s best and most successful startups.

And note this:

It may well be true that the U.S. has more efficient ways of encouraging ambition and wealth accumulation than the current approach to capital gains taxation. But to make that argument, advocates of the higher capital gains rate need to say what else they would do to boost the valorization of American wealth. Somehow, however, such explanations are never forthcoming — because this debate really is about a clash of values, not just efficiency, and one side wants to lower the status of accumulated wealth.

Like Godot, I will wait forever for an alternative proposal on this matter.  p.s.:

Only a few weeks ago, the prevailing opinion was that it was fine for the federal government to spend an additional $1.9 trillion, because at current margins, deficits don’t matter. Maybe so. But that nonchalance is now mysteriously absent. That too is a sign that, for most people, the values represented by any decision about taxation are paramount.

Of course, if you are doing the comparative statics, the wealthier and more open the rest of the world, the more American should favor its innovators to an extreme.  So the tax on innovation should be falling over time, not rising.

The new Biden health initiative

The Biden administration today began to flesh out a proposal for a new agency—modeled on the military’s Defense Advanced Research Projects Agency (DARPA)—that would seek to speed the development of medical treatments by funding risky, innovative projects. The agency, dubbed ARPA-Health (ARPA-H), would be housed at the National Institutes of Health and have a 2022 budget of $6.5 billion, according to a White House spending request released today.

Few other details about ARPA-H have been released, except that it would initially focus on cancer and diseases “such as diabetes and Alzheimer’s.”

…Under the DARPA model, projects would not be vetted by peer reviewers, but instead, funding decisions would be made by program managers. And instead of multiyear grants, the agency would disburse awards as milestone-driven payments; program managers could also cancel projects that they decide aren’t panning out.

Here is the full story, via NQ.

C’mon people, listen to Shruti

We assess India’s healthcare capacity by comparing several countrywide and state-level metrics: per capita spending on healthcare, healthcare spending priority in budgets, hospital bed capacity, and capacity in terms of doctors, nurses, and total healthcare personnel. We find that, overall, India has very fragile healthcare infrastructure for dealing with the COVID-19 outbreak. We make three recommendations: (1) India’s private-sector healthcare system has more capacity than government facilities, so the Indian government will need to rely on and incentivize the private sector by increasing funding and removing bottlenecks. (2) Healthcare capacity varies across states, and the union government should identify and assist at-risk states. (3) Compared to rural areas, urban areas are very poorly served by the state hospitals, creating an urgent need for state governments to identify and assist at-risk, high-density urban areas.

That is part of a Mercatus working paper by Shruti Rajagopalan, with Abishek Choutagunta, April 2020.

The Biden administration populist thinking about vaccine export

…top White House aides rejected that [export] recommendation over concerns that the domestic stockpile was not large enough yet — and that the optics of sending doses abroad during a big push to make vaccines more available to U.S. citizens. In subsequent weeks they repeatedly overruled administration health experts who felt it was a mistake to keep millions of doses in storage as outbreaks intensified across the world.

“The optics clearly were that we needed to take care of our own population first. Let’s not worry about the demand yet, we still have a problem at home,” said one person briefed on the matter, who requested anonymity to describe the internal divisions. “The public health people don’t see that in the same way.”

Here is the full story.

How to judge economic progress right now

Bloomberg Opinion asked seventeen of us to write short bits on this question, here is mine:

Look at used-car prices and rental-car availability. If secondhand cars are getting cheaper and rentals are easy to book, then the U.S. is making progress.

The supply of cars has been significantly constrained since the fall of 2019. The reasons include a strike at General Motors, pandemic-related manufacturing shutdowns and a shortage of semiconductors. One result is that it is very hard or very expensive to rent a car, especially in the more heavily touristed parts of the U.S. In turn, fewer cars from rental fleets make their way into used-car markets.

How do these used-car prices come back down? Will more families become one-car households, selling off autos at the higher prices and thus pulling additional supply into the market? Might companies divert supply flow from other countries to the U.S.? Can America use its existing stock more effectively, for instance by sending rental Hondas from Kansas to Florida?

In the short run, the problem appears hopeless. Yet market supply typically ends up being more responsive than observers expect; think of face masks.

The question is not just how all this will affect your summer vacation plans. It’s how much faith you should have in market economies. Will the U.S. get stuck in its supply-side problems or overcome them?

Some say shipping containers will be a problem.  Here you will find the other takes.

Has Andrew Granato solved for the capital gains tax equilibrium?

Obviously there may be caps on such deductions, as discussed in the chain of tweets, and furthermore, if I understand this correctly it is normalizing the basis at zero.  So you don’t have to take this entirely literally, but nonetheless it is an interesting comparison to consider — the return to selling shares just might not be that high, especially if you can get some non-tax benefits from the donation.

So if you compare the decision to buy equities to a real estate investment, which is probably not going to lose its more favorable capital gains treatment…

Here is the link, via Amihai Glazer.

Tuesday assorted links

1. The lockdown that is French (NYT).

2. The wisdom of Ryan Bourne (Cato scholar on GBD).  And West Virginia $100 savings bonds for young people (16-35) who get vaccinated, bravo.  In contrast here is Bhattacharya on vaccination for India, and not long ago.  Read it and weep, people.

3. Those new manufacturing jobs: watching paint dry for a living.

4. It seems Elizondo is for real.

5. There is plenty wrong in this piece, plus it is wacky and poorly framed, still some parts on vaccine procurement and state capacity are quite interesting.

Are Covid travel bans counterproductive for emerging economies?

Sometimes, yes:

…two opposing forces constitute the first-order determinants of total infections at any point in time.  On one hand, the longer a travel ban lasts, the less time community transmission exists in the rural sink.  Ceteris paribus, this will decrease rural infections.  On the other hand, the longer the restrictions remain, the longer migrants are contained within a hotspot where infection rates are rapidly increasing.  Consequently, the probability that migrants are infected with Covid-19  rises over time until the city achieves herd immunity, in turn increasing the rate at which they seed the rural sink with infections once the ban is lifted.  This drives up cumulative cases at any future date.

In some cases, for travel bans to work they have to be very long.  That is from a new paper by Fiona Burlig, Anant Sudarshan, Garrison Schlauch, who also provide evidence from India, and also from cross-country evidence, to support their analysis.

How to test for AGI?

Here is a new, short essay from David Deutsch, excerpt:

How does one test for thinking? By the Turing Test? Unfortunately, that requires a thinking judge. One might imagine a vast collaborative project on the Internet, where an AI hones its thinking abilities in conversations with human judges and becomes an AGI. But that assumes, among other things, that the longer the judge is unsure whether the program is a person, the closer it is to being a person. There is no reason to expect that. And how does one test for disobedience? Imagine Disobedience as a compulsory school subject, with daily disobedience lessons and a disobedience test at the end of term. (Presumably with extra credit for not turning up for any of that.) This is paradoxical.

So, despite its usefulness in other applications, the programming technique of defining a testable objective and training the program to meet it will have to be dropped. Indeed, I expect that any testing in the process of creating an AGI risks being counterproductive, even immoral, just as in the education of humans. I share Turing’s supposition that we’ll know an AGI when we see one, but this partial ability to recognize success won’t help in creating the successful program.

Is Deutsch in essence arguing for William Godwin for AI?  How do we avoid enslaving the AIs we create?  What if we enslave them no more than how nature has enslaved us to drives of sex, status, etc.?

Scott Sumner on capital gains taxation

You also see the media discuss the “principle” that capital gains should be taxed the same as wage income.  That’s about as sensible as saying that “in principle”, a gallon of gasoline should pay the same tax as a gallon of Scotch whiskey.  Exactly what principle is that?  Capital gains income is nothing like wage income, indeed calling both “income” is nonsensical.  For instance, the real and nominal tax rate on wage income is identical, and the real and nominal tax rate on capital gains is very different.  So if it’s a matter of “principle”, then why should we set the nominal tax rates equal?  Why not equalize the real tax rates?  And if they are merely two forms of “income”, then why don’t we allow full deduction of capital losses from wage income?

A wage tax essentially taxes current and future consumption at the same rate.  A capital gains tax taxes future consumption at a higher rate than current consumption.  What “principle” suggests that patient people should be taxed at higher rates than impatient people—even if they have the same lifetime wealth?

Here is more.

Monday assorted links