Category: Current Affairs

Why I Am Angry

Agnes Callard explains:

… at times it is only the angry who are in a position to apprehend the magnitude of some injustice. For they are the ones willing to sacrifice all their other concerns and interests so as to attend, with an almost divine focus, to some tear in the moral fabric. When I am really angry, it is not even clear to me that I can calm down—the eyes of the heart do not have eyelids—and the person making that request strikes me, to adapt a locution of Socrates’, as trying to banish me from my property, the truth. They are calling me “irrational,” but they seem not to see that there are reasons to be angry.

Why current American politics is less screwed up than you think

There is no better way to show this point than to look at Germany, which has highly reasonable political dialogue and at least in the center German politics is not so ideological.  And there is indeed a center!  Furthermore, politicians address their voters like adults and offer reasonable reasons for the policies they are proposing.

But in terms of discovery and resolution there is a significant downside:

What’s more, coalitions that used to be unthinkable, such as between the Christian Democrats and the Greens, are now the norm in many states — and may well be the only option after September’s elections. Parties, understandably, are reluctant to forcefully campaign against one another. Why make an enemy of a future friend?

Here is the full piece by Anna Sauerbrey.  For all its reasonableness, German politics has been a major failure point over the last twenty (?) years.  The country has a mediocre infrastructure, mediocre primary education system, it is far behind the curve on tech, it is unwilling to pay to defend itself and meet NATO standards, its foreign policy is partly captured by Russia, it is moving away from nuclear power, it responded poorly to the recent floods, it was slow to line up vaccines and relied on awful EU procurement policies, among numerous other failings.  It has enough wealth and accumulated cultural and social capital to withstand these failings, but it has consistently underperformed for some while now.  Matters rarely get settled in an innovative direction and they are masters of complacency and can-kicking.  But at least the major parties do not criticize each other too much.

I would in fact much prefer the policy landscape of the United States, where the two parties are hardly afraid to attack each other, often in the most ridiculous of terms.  Just keep this comparison in mind the next time you despair over the course — and aesthetics — of U.S. politics.

The wisdom of Ilya Shapiro

Civil-Rights Law as Lawyer Full-Employment Act The data that Eric Kaufmann presents and explains about ideological prejudice, social intolerance, and “affective polarization” (“Political Discrimination as Civil-Rights Struggle,” July 12) are as disturbing as they are depressing. Progressive authoritarianism is a growing problem, particularly among young elites and thus at the commanding heights of business, culture, and education. But the solution Kaufmann proposes – expanding anti-discrimination law to cover political belief – is worse than the disease.

There’s a reason why legal protections for ideology are currently found only in places such as Seattle and Washington, D.C.: They’re progressive innovations, one more barnacle on the crusty hull of employment law. Each time a new protected category is added to civil-rights laws that were originally enacted to break Jim Crow – talk about “systemic racism”! – it further burdens employers and enriches lawyers. Indeed, Kaufmann’s proposal is a lawyer full-employment act, with easily foreseeable litigation about whether a particular ideological belief is a “bona fide occupational qualification.”

“Legislators and courts would need to define terms tightly,” Kaufmann allows, but how confident are we that they would, or will long continue to do so? If discrimination “on the basis of sex” can be read 50 years later to include sexual orientation and gender identity – see last year’s Bostock v. Clayton County, which did just that to federal employment law – then even the tightest statutory definitions will loosen over time. In other words, the idea that narrow exemptions for political parties (what about think tanks?) from a ban on political discrimination won’t eventually be read to allow forced adherence to corporate diversity/equity/inclusion statements is laughable. And then we’re back where we started, except with more billable hours.

That is his letter to National Review, the response of Kaufmann can be found at the same link.

Review of Nightmare Scenario by Abutaleb and Paletta

Nightmare Scenario opens with Anthony Fauci stripped to his skivvies and wondering whether the white powder he has just been exposed to in his NIH office is anthrax, ricin, or a hoax. The first and last he can survive, ricin is a death sentence. A security team douses him with chemicals and moves him to another office where a portable shower has been deployed. Fauci showers, calls his wife, and waits for the test results.

Nightmare Scenario is the best of the recent books on the pandemic (I earlier reviewed Lewis’s The Premonition and Slavitt’s Preventable). Based on hundreds of interviews it’s a true inside account. It doesn’t contain much in the way of analysis but that’s a strength in a journalistic history. Rather than a strict review, I will note a couple of things that jumped out to me.

An astounding amount of time was spent at the highest level of government on what do do about the Americans stuck on the Diamond Princess and other cruise ships. I was almost screaming at the book at this point “there’s just 437 Americans on the cruise ship! Pay attention to the 328 million Americans at home!” It’s ridiculous that 437 Americans should occupy the President’s time but that’s what happens when people think the President is their father (or mother) who needs to show them that he cares.

Governance by the 24 hour news cycle is by no means solely a Trump failing. Biden doesn’t need to know anything about the Miami tower collapse, for example. It’s a tragedy but a state and local matter. But the 24-hour news cycle means that politicians don’t think more than a step ahead, often to a bizarre extent. When the Dow dropped, Larry Kudlow rushed to get on the news to say the “virus is contained”. What was he thinking? If true, this would reveal itself in time and the Dow would rise. If false, he gains at best a couple of days of bump and then lose credibility. Similarly, what was Pence thinking when he wrote in a June of 2020 WSJ op-ed “There Isn’t a Coronavirus Second Wave.” You can’t confidence game a virus.

The CDC botched the initial test and when Joe Grogan at the Domestic Policy Council questioned Azar, Redfield and Fauci he was told “Everything is taken care of. The CDC is remedying the situation.” After repeated delays, the FDA sent an expert to investigate what was going on with the CDC test:

When Stenzel gained access to three key labs developing the test, he couldn’t believe what he saw. In two of the three labs, the agency wasn’t following standard operating procedure. And he discovered the CDC had put together the test in the same lab where it was running the test on live virus samples. That was a violation of the most basic manufacturing practices… “If you were a commercial entity, I would shut you down.” p.81

The CDC failing to use standard operating procedures wasn’t Trump’s fault. The rot is deep.

I was hoping to get more information from Abutaleb and Paletta about Pfizer’s peculiar change in study design. Pfizer released their trial design in mid-September. Articles in the Washington Post and the New York Times were clear that Pfizer planned to look at their data once 32 trial participants had been infected. President Trump, following Pfizer CEO Bourla, thus predicted that there would be vaccine news in October, before the election. Instead Pfizer announced their terrific results on Monday November 9, after the election. When the announcement came people were surprised that between mid-September and November the trial design had been changed. STAT News, for example, noted:

In their announcement of the results, Pfizer and BioNTech revealed a surprise. The companies said they had decided not to conduct the 32-case analysis “after a discussion with the FDA.” Instead, they planned to conduct the analysis after 62 cases.

Abutaleb and Paletta report that the Trump team was furious when they discovered that the good news had been delayed and then they say the following:

FDA officials, of course, had no control over when Pfizer reported its results, because the company could report them only after a certain number of people in the trial had contracted coronavirus.

This is blatantly false. FDA officials have only to signal what they want from a company and the company will comply. Moreover, it was precisely by changing the number of people who needed to have contracted coronavirus that control was exerted. What exactly was said in this “discussion with the FDA” that caused Pfizer to wait? Probably not coincidentally it was also in October that Nancy Pelosi began to worry that British immune systems were different than American immune systems.

Abutaleb and Paletta have nothing good to say about Jared Kushner (unlike Birx who was obviously a source) but if you read between the lines Kushner comes off surprisingly well. At the very least, he moves quickly and sometimes gets things done. Abutaleb and Paletta offer this critique:

Kushner was correct that the normal processes for procuring supplies were cumbersome and slow. But circumventing those processes risked wasting taxpayer money, buying faulty supplies, or running afoul of government contracting laws. There were protections in place to try to prevent the government from overpaying for products or supplies and to try to ensure that companies did not receive unfair advantages…” p. 258.

Oooh, overpaying for products. As if that never happens when the processes are followed. All of this makes it clear that there would have been big errors under other administrations but they would have been different errors like moving even slower so as not to run “afoul of government contracting laws.”

One thing which comes through in The Premonition, Preventable and Nightmare Scenario is that quite a few people understood the crisis early. On January 18, Scott Gottlieb texted Joe Grogan to warn him about the virus in Wuhan. Grogan takes it seriously (it may have been Grogan who was responsible for inviting Kremer and I to speak to the DPC on accelerating vaccines.) On January 28, deputy national security advisor Matthew Pottinger warned Trump that he could be facing the deadliest pandemic since the 1918 flu. But Gottlieb had already left the administration, Grogan would resign early, and when Pottinger started wearing a mask to work he was considered an alarmist and was frozen out of decision making. Many others had or would soon leave:

Who was left? A mix of family members, twentysomethings, hangers-on, fourth-stringers, former lobbyists, sycophants…That created tremendous pressure on the government officials who remained in their positions in 2020. Many of them were totally unprepared for what was coming. Many of them were so focused on their own survival that it never occurred to them to focus on anyone else’s. p.31.

Overall, Nightmare Scenario is an excellent read.

Ray C. Fair on price inflation

This paper uses an econometric approach to examine the inflation consequences of the American Rescue Plan Act of 2021. Price equations are estimated and used to forecast future inflation. The main results are: (1) The data suggest that price equations should be specified in level form rather than in first or second difference form. (2) There is some slight evidence of nonlinear demand effects on prices. (3) There is no evidence that demand effects have gotten smaller over time. 4) The stimulus from the act combined with large wealth effects from past household saving, rising stock prices, and rising housing prices is large and is forecast to drive the unemployment rate down to below 3.5 percent by the middle of 2022. 5) Given this stimulus, the inflation rate is forecast to rise to slightly under 5 percent by the middle of 2022 and then comes down slowly. 6) There is considerable uncertainty in the point forecasts, especially two years out. The probability that inflation will be larger than 6 percent next year is estimated to be 31.6 percent. 7) If the Fed were behaving as historically estimated, it would raise the interest rate to about 3 percent by the end of 2021 and 3.5 percent by the end of 2022 according to the forecast. This would lower inflation, although slowly. By the middle of 2022 inflation would be about 1 percentage point lower. The unemployment rate would be 0.5 percentage points higher.

As I do not think the correct answers here are close to certain, I am happy to continue to survey a broad range of opinion.  Stay tuned…

Here is the link, via the excellent Kevin Lewis.  As for the markets, here is yesterday’s report from Neil Irwin:

“So we’re at 1.2% 10-year Treasury yields with 5.4% year-over-year inflation. Very normal very cool.”

As I interpret those numbers, the market expects inflationary pressures, the Fed to respond, but that response will induce a recession.  Stay tuned…

Biden, COVID and Mental Health in America

Using US Census Household Pulse Survey data for the period April 2020 to June 2021 we track the evolution of the mental health of nearly 2.3 million Americans during the COVID pandemic. We find anxiety, depression and worry peaked in November 2020, coinciding with the Presidential election. The taking of prescription drugs for mental health conditions peaked two weeks later in December 2020. Mental health improved subsequently such that by April 2021 it was better than it had been a year previously. The probability of having been diagnosed with COVID did not rise significantly in the first half of 2021 but COVID infection rates were higher among the young than the old. COVID diagnoses were significantly lower in States that had voted for Biden in the Presidential Election. The probability of vaccination rose with age, was considerably higher in Biden states, and rose precipitously over the period among the young and old. Anxiety was higher among people in Biden states, whether they had been diagnosed or not, and whether they were vaccinated or not. The association between anxiety and depression and having had COVID was not significant in Biden or Trump states but being vaccinated was associated with lower anxiety and depression, with the effect being larger in Biden states. Whilst being in paid work was associated with lower anxiety, worry and depression and was associated with higher vaccination rates, it also increased the probability of having had COVID.

That is a new NBER working paper from the highly regarded David G. Blanchflower and Alex Bryson.  Model that!

Covid protection in Oaxaca

On the flight from Houston to Oaxaca, not everyone took off their masks to eat and drink, as they would on most internal U.S. flights, even if only for “faux mask removal-motivated drinking” [FMRMD].

You have to fill out some forms, through an app, on your smart phone in advance.  When you arrive they ask: “Did you fill out the forms?”  Say yes if you did.

They let you in, no test required, no other questions asked.  They do check your baggage tag against the bag you take away.

Nearly everyone in central Oaxaca city wears a mask all the time in public, including outside.  It is like San Francisco at its mask-wearing peak.

They spray the sides of the parks with something that smells like hand sanitizer.

If you wish to enter a store, you have to accept some hand sanitizer.  This is perhaps an efficient tax on browsing.  Toward the end of the day, however, they dispense with the tax.

Some establishments spray your clothes when you enter, maybe it is water?  Some spray you front and back.  Staff compliance does not seem to be grudging, rather the “Mexican petty bureaucracy” seems to be mobilized and out in force and with real enthusiasm.

There is a place along the local highway where they stop all cars, and have everyone get out to accept a dose of hand sanitizer.

I wonder how the equilibrium operates.  Of all the above measures, perhaps only the masks stand a chance of helping?  Does the rest of the security theater make it easier for them to largely stay open?

Here is some NYT coverage of U.S. tourists in Mexico.

Britney fact of the day

A systemic issue that I think is shocking is that Britney has to pay for everyone. In this case, she not only pays for her own court-appointed counsel, she pays for her dad’s lawyers — he has multiple sets of lawyers who are actively fighting against her wishes in court. Recently, one set of her dad’s lawyers billed $890,000 for roughly four months of work, which is about $10,000 a day. And that includes PR specialists that were defending the conservatorship to the media.

Here is further information.  Sounds optimal to me!  After all, I have a friend who knows somebody who is in a coma and needs a guardian.  Nothing to see here, move on people…why would you ever expect the political economy of this issue to yield suboptimal results, given how well the rest of our bureaucracies work…?

Fortunately it was just ruled that Britney can hire her own lawyer to represent her.

Via Shaffin Shariff.

Self Recommending Links

1. I had a fun and wide-ranging conversation with Jonah Goldberg on the Remnant. We covered the economy, immigration, cyborgs and the Baumol effect among other topics.

2. Tim Harford covers fractional dosing at the FT:

The concept of a standard or full dose is fuzzier than one might imagine. These vaccines were developed at great speed, with a focus on effectiveness that meant erring towards high doses. Melissa Moore, a chief scientific officer at Moderna, has acknowledged this. It is plausible that we will come to regard the current doses as needlessly high.

3. The Brunswick Group interviews me:

Act like you’re in a crisis. That has been economist Alex Tabarrok’s advice since the start of the COVID-19 pandemic. Tabarrok was among the earliest and loudest voices arguing for urgency and risk-taking when it came to increasing rapid testing, investing in vaccine capacity, and employing flexible vaccine dosing. In hindsight, he has been proven regularly right when most health experts were wrong.

“The Crypto Revolution Will Not be Public”

That is the title of my latest Bloomberg column, here is one excerpt:

In a remarkably honest yet radical speech last month about stablecoins, Fed Governor Randal Quarles argued that current payments systems already incorporate a great deal of information technology — and they are improving rapidly. The implication is that a central bank digital currency, or CBDC, is a solution in search of a problem.

Quarles also suggested that the Fed tolerate stablecoins, just as central banking has coexisted and indeed thrived with numerous other private-sector innovations. Stablecoins can serve as a private-sector experiment to see if individuals and institutions truly desire a radically different payments system, in this case based on crypto and blockchains. If they do, the system can evolve by having some but not all transactions shift toward stablecoin.

There need not be any “do or die” date of transition requiring a perfectly functioning CBDC. But insofar as those stablecoins can achieve the very simple methods of funds transfer outlined above, market participants will continue to use them more.

Quarles argued that with suitable but non-extraordinary regulation of stablecoin issuers, such a system could prove stable. He even seems to prefer the private-sector alternative: “It seems to me that there has been considerable private-sector innovation in the payments industry without a CBDC, and it is conceivable that a Fed CBDC, or even plans for one, might deter private-sector innovation by effectively ‘occupying the field.’”

In essence, Quarles is willing to tolerate a system in which privately issued dollar equivalents become a major means of consummating payments outside of the Fed’s traditional institutions. Presumably capital requirements would be used to ensure solvency.

For many onlookers, even hearing of innovation in finance raises worries about systemic risk. But perhaps the U.S. would do better by letting information technology advance than trying to shut it down. And if you are afraid of instability, are you really so keen to see foreign central bank digital currencies fill up this space?

If you are still skeptical, ask yourself two final questions. First, which has been more innovative on these issues: the private sector or the public sector? Second, how realistic are the prospects that Congress takes any effective action at all?

This is now a world in which radical monetary ideas are produced and consumed like potato chips. I say, pass the bag.

Recommended.

My Conversation with Alexander the Grate

Here is the audio and transcript, recorded outside in SW Washington, D.C.  And no, that is not a typo, he does call himself “Alexander the Grate,” his real name shall remain a secret.  Here is the event summary:

Alexander the Grate has spent 40 years — more than half of his life — living on the streets (and heating grates) of Washington, DC. He prefers the label NFA (No Fixed Address) rather than “homeless,” since in his view we’re all a little bit homeless: even millionaires are just one catastrophe away from losing their mansions. It’s a life that certainly comes with many challenges, but that hasn’t stopped him from enjoying the immense cultural riches of the capital: he and his friends have probably attended more lectures, foreign films, concerts, talks, and tours at local museums than many of its wealthiest denizens. The result is a perspective as unique as the city itself.

Alexander joined Tyler to discuss the little-recognized issue of “toilet insecurity,” how COVID-19 affected his lifestyle, the hierarchy of local shelters, the origins of the cootie game, the difference between being NFA in DC versus other cities, how networking helped him navigate life as a new NFA, how the Capitol Hill Freebie Finders Fellowship got started, why he loves school field trip season, his most memorable freebie food experience, the reason he isn’t enthusiastic about a Universal Basic Income, the economic sword of Damocles he sees hanging over America, how local development is changing DC, his design for a better community shelter, and more.

And:

And:

Recommended, you won’t find many podcast episodes like this one.  It is noteworthy that Alexander has a better and bigger vocabulary than the median CWT guest.  Also, this is one episode where listening and reading are especially different, due to the ambient sounds, Alexander’s comments on the passing trains, and so on — parts are Beckettesque!