Category: Current Affairs

Cash transfers are better than price controls

Really, and yes there is a trade-off at the relevant margin.  That is the theme of my latest Bloomberg column, here is one excerpt:

Or consider Treasury Secretary Janet Yellen. She supports the proposed hike, as she noted in her confirmation hearing last week, yet in 2014 she endorsed the view that a minimum wage hike would lead to significant job loss. Maybe now she knows better, but if the 2014 Janet Yellen could have been so fooled, then perhaps this debate is not so settled.

Why then push so hard for a policy with such murky outcomes? It would raise the wages of many workers, destroy the jobs of some low-skilled workers, and perhaps lower the hours and thus pay of many other workers.

The burden of the minimum wage is unclear as well. Perhaps it leads to higher retail prices, although many proponents suggest it comes largely out of business profits. This too is unclear, and again raises questions about the wisdom of pushing so hard for such a non-transparent set of reallocations and transfers.

In contrast, consider the plan for cash grants to families with children. Under one proposed plan, these grants would be between $3,000 and $3,600 a year, depending on the age of the child.

The benefits here are obvious and transparent, namely that families are better off when they have more money. Perhaps some families would use that money in self-destructive ways, but this basic view — that more money increases the chance for better outcomes — is not really contested.

And please — most policies are not self-financing!  So you should do more of the better policy, rather than pushing for both.

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Vaccine politics in Europe and America

The contentiousness is much worse in Europe, where zero- and negative-sum thinking is the order of the day.  That is the theme of my latest Bloomberg column, here is one bit:

In most of Europe, it’s hard to see much good news. It’s one thing not to have a vaccine. It’s far worse to turn on television or go on the internet and see people in other countries being vaccinated as their pandemics recede. Most of Europe will not be making significant vaccination progress until April, and even then shortages may remain.

At stake is the very legitimacy of the EU. Most of the vaccination contracts were handled at the EU level, although Germany sidestepped the agreed-upon procedures and cut some deals. If the EU fails at the most significant crisis in a generation, it may not maintain much legitimacy.

And:

When people judge how painful an experience was, they often place a high value on first and last impressions. The last impressions of the U.S. and U.K. will be pretty positive. Most of the U.S. pandemic will be over by July, even under a subpar vaccination schedule. And it may turn out that mRNA vaccines are more protective against the new strains of Covid than any alternatives….

Many European countries may end up with fewer deaths per capita than the U.S. But at the end of the pandemic many Europeans may feel like their leaders failed them, that they suffered lockdowns for many months but received little in return. Right now vaccine politics is all about momentum, and so far only a few countries have it.

Here is a related piece by Bruno M.  And a good piece (slow to start) on what went wrong in the EU.

The wisdom of Conor Sen

But this is probably a damned-if-you-do, damned-if-you-don’t situation. It’s easy to imagine a scenario where RobinHood lets things play out on their own, and for all we know stocks like GameStop might have doubled or tripled from here. But inevitably, whenever this trend ended, there would be stories of working parents who bought call options because they saw everyone else doing it and lost everything, or people thrown out of work as the bursting bubble had broader economic consequences. Why,  members of Congress will ask, were inexperienced retail investors allowed to speculate in complex derivative contracts at all? So while these preemptive decisions may result in negative consequences for RobinHood and others, the bursting of a bigger bubble would be worse.

RobinHood did the right thing here, but they shouldn’t expect any thank you’s.

Here is more at Bloomberg.  (And very good Matt Levine commentary.)  The simple “the market put in place this restriction, this is right, platforms and exchanges reserve the right to restrict value-destroying trading, as indeed they always have” approach is very much underrated these days.

Pascal Soriot on First Doses First

Pascal Soriot, CEO of AstraZeneca, in an interview:

I think the UK one-dose strategy is absolutely the right way to go, at least for our vaccine. I cannot comment about the Pfizer vaccine, whose studies are for a three-week interval….First of all, we believe that the efficacy of one dose is sufficient: 100 percent protection against severe disease and hospitalisation, and 71-73 percent of efficacy overall.

The second dose is needed for long term protection. But you get a better efficiency if you get the 2nd dose later than earlier. We are going to do a study in the US and globally to use two-month dose interval to confirm that this is indeed the case, there are many reasons to believe it is the case with our vaccine. We have a different technology. First of all, when you look at level of antibody production, this is higher if you give the second dose three months or two months later than one month later. Also, if you look at Ebola, its vaccine, which is also using the Adenoviral vector like the Covid one, the second dose needs to be given eight weeks later. Finally, the J&J vaccine with Adenoviral vector also are performing studies on a two-month interval. And J&J has the same technology as ours. Therefore, for our vaccine, there is no doubt in my mind that the way the UK is going is the best way, because right now you have a limited amount of vaccine, but also you have a limited number of doctors and nurses able to inject people. So you maximize the number of people who get one dose. You give them enough protection for two or three months, then you give them the second dose after 3 months.

By the way, the US failure to authorize the AstraZeneca vaccine in the midst of a pandemic when thousands are dying daily and a factory in Baltimore is warmed up and ready to run is a tragedy and dereliction of duty of epic proportions. The AZ vaccine should be given an EUA immediately and made available in pharmacies for anyone who wants it while continuing to prioritize Moderna and Pfizer for the elderly and essential workers.

To Every One Who Has, More Will Be Given

From an email to Fairfax County teachers:

Due to a decrease in vaccine allocation, we are temporarily reducing appointment availability over the coming weeks. Vaccine supply is fluid across the country, and we are matching currently scheduled appointments to anticipated inventory.

We are pleased to share that more than 22,000 Fairfax County Public Schools teachers and employees have already been able to schedule their first shot.  At this time we are honoring those who have current appointments. Should our vaccine supply not be sufficiently replenished, we will suspend initial appointments (first doses) for eligible individuals in 1b and prioritize those who require their second vaccine dose in the weeks to come.

It’s really quite stunning when you think about it.

Hat tip: Max.

Preparing for a Pandemic: Accelerating Vaccine Availability

In Preparing for a Pandemic, (forthcoming AER PP), by myself and a host of worthies including Susan Athey, Eric Budish, Canice Prendergast, Scott Duke Kominers, Michael Kremer and others equally worthy, we explain the model that we have been using to estimate the value of vaccines and to advise governments. The heart of the paper is the appendix but the paper gives a good overview. Based on our model, we advised governments to go big and we had some success but everywhere we went we were faced with sticker shock. We recommended that even poor countries buy vaccines in advance and that high-income countries make large investments in vaccine capacity of $100b or more in total.

It’s now obvious that we should have spent more but the magnitudes are still astounding. The world spent on the order of $20b or so on vaccines and got a return in the trillions! It was hard to get governments to spend billions on vaccines despite massive benefit-to-cost ratios yet global spending on fiscal support was $14 trillion! Even now, there is more to be done to vaccinate the world quickly, but still we hesitate.

I went over the model for Jess Hoel’s class and we also had a spirited discussion of First Doses First and other policies to stretch the vaccine supply.

Our Virginia regulatory state is failing us

As of tomorrow, hospitals in Virginia will no longer be able to administer COVID-19 vaccines. Thousands of elderly people are having their vaccine appointments canceled. From now on, all COVID-19 vaccines will go to the local health departments and none directly to hospitals.

Virginia Hospital Center had been running clinics all day every day to give people the vaccine. Appointments there for all 1st dose vaccines have been canceled because the hospital will no longer be able to get the vaccines.

Northam’s health department has also forbidden people from crossing county lines to get the vaccine. If the county next to you has an abundance of the vaccine, you can’t get it. Only residents of that county may get their vaccine.

These new rules will result in many people either having their vaccination appointment canceled or delayed for months. Currently, 7.5 million people in Virginia, Maryland, and DC qualify to get the vaccine, if only they had access to it. The new rules limit the options citizens have for getting the shot. Everyone MUST go through their local health department to be vaccinated. That means in a county such as Loudoun, with a population of over 420,000, and two health department locations to receive the vaccine, will continue to inoculate 400 to 900 people a day. There are no other options. The Loudoun health department has said they are trying to open a third location for vaccinations (possibly at Dulles Town Center) but that could take months. If Loudoun continues at its current pace it will take well over a year for the local health department to inoculate all those who want vaccines. If Loudoun hospitals were allowed to open clinics for vaccines, many more people could be inoculated every day but the Northam administration will not permit it.

Here is the link, via Hans.  In general, Virginia is a fairly well-run state, but as of late it has not been cracking the top 40 for vaccine distribution.

Is Germany still our ally?

Armin Laschet, the newly elected leader of Germany’s Christian Democrats, is coming under mounting scrutiny over statements he has made in the past defending Russian president Vladimir Putin and the Assad regime in Syria. Mr Laschet, prime minister of North Rhine-Westphalia, beat rival Friedrich Merz in a digital leadership election on Saturday. He is seen as representing continuity with Angela Merkel’s moderate policies. But in the past Mr Laschet, who has strong chances of succeeding Ms Merkel as chancellor after September’s Bundestag elections, has expressed views on Russia and Syria that put him outside the CDU mainstream and which have now come back to haunt him…

Mr Laschet in a Twitter message [had] said there was a lack of evidence to prove that Russia was behind the novichok attack on Sergei Skripal and his daughter Yulia in Salisbury in 2018.

Here is more from the FTAnd:

CDU Baden-Württemberg lists Huawei as top sponsor of this weekend’s party congress

This will be a tough one for Biden.

What was it that Stanley Fischer said?

Voters in the North would like to see a referendum on a United Ireland sometime in the next five years, while voters in the UK believe Scotland is likely to become independent within the next decade, according to a series of polls.

The Sunday Times commissioned a series of surveys across the UK gauge attitudes towards the Union.

The findings highlight some of the difficulties facing Boris Johnson and the UK government as he struggles to keep the country together following its departure from the European Union.

In Northern Ireland, 47% still want to remain in the UK, with 42% in favour of a United Ireland and a significant proportion – 11% – undecided.

However, asked if they supported a referendum on a United Ireland within the next five years, 51% said yes compared to 44% who were against.

In Scotland, the poll found 49% backed independence compared to 44% against – a margin of 52% to 48% if the undecideds are excluded.

The Irish result seems to be a more rapid shift than the Scottish one.  Here is the full article.

How Slowly ‘First Doses First’ Came to America

Yesterday I pointed out How Rapidly ‘First Doses First’ Came to Britain. The United States is also moving in that direction but more slowly. First we ended holding second doses in reserves. Now the CDC has new policies:

CNBC: The Centers for Disease Control and Prevention quietly changed its guidance on Covid-19 vaccine shots, saying it’s now OK to mix Pfizer’s and Moderna’s shots in “exceptional situations” and that it’s also fine to wait up to six weeks to get the second shot of either company’s two-dose immunization.

We will see what happens if new variants start to takeoff in the US, as seems likely, and as the number of people immunized starts to slow as we move from first does to having to vaccinate people for the second dose. More second doses means fewer resources for first timers. Biden’s 100 million in 100 days, for example, was already under-ambitious but it’s not even 100 million people it’s 100 million doses or only about 67 million people given that some will be in line twice.

It is a marathon, not a sprint

For all of its achievements, we still do not know if New Zealand will have ended up doing a good job against Covid-19:

New Zealand’s “go hard, go early” strategy to combat Covid-19 attracted global praise and eliminated local transmission of the virus. But the country’s slow rollout of vaccines is putting people at unnecessary risk and threatens to delay its economic recovery, critics warned.

Wellington plans to start vaccinating frontline workers in April and the general public from July under a cautious strategy that avoids the emergency authorisation of vaccines pursued by crisis-stricken nations such as the US and UK.

And note this:

There are at least 19 cases of the coronavirus variants first identified in the UK or South Africa in managed quarantine facilities in New Zealand for overseas arrivals, according to government data.

And this:

Mr Hipkins said there was “absolutely no complacency” in the government’s response.

Here is the full FT story.

We Will Get to Herd Immunity in 2021…One Way or Another

By July it will all be over. The only question is how many people have to die between now and then?

Youyang Gu, whose projections have been among the most accurate, projects that the United States will have reached herd immunity by July, with about half of the immunity coming from vaccinations and half from infections. Long before we reach herd immunity, however, the infection and death rates will fall. Gu is projecting that by March infections will be half what they are now and by May about one-tenth the current rate. The drop will catch people by surprise just like the increase. We are not good at exponentials. The economy will boom in Q2 as infections decline.

If that sounds good bear in mind that 400,000 people are dead already and the CDC expects another 100,000 dead by February. We have a very limited window in the United States to make a big push on vaccines and we are failing. We are failing phenomenally badly.

To understand how bad we are failing compare with flu vaccinations. Every year the US gives out about 150 million flu vaccinations within the space of about 3 months or 1.6 million shots a day. Thus, we vaccinate for flu at more than twice the speed we are vaccinating for COVID! Yes, COVID vaccination has its own difficulties but this is an emergency with tens of thousands of lives at stake.

I would love it if we mobilized serious resources and vaccinated at Israel’s rate–30% of the population in a month. But if we simply vaccinated for COVID at the same rate as we do for flu we would save thousands of lives and hundreds of billions of dollars in GDP. The comparison with flu vaccinations also reminds us that we don’t necessarily need the National Guard or mass clinics in stadiums. Use the HMOs and the pharmacies!

And let’s make it easier for the pharmacies. It’s beyond ridiculous that we are allowing counties to set their own guidelines for who should be vaccinated first. We need one, or at most 50, set of guidelines and lets not worry so much at people jumping the queue. (The ones jumping the queue are probably the ones who want to get back to the bars and social life the most so vaccinating them first has some side benefits.)

Of course, the faster we vaccinate the more vaccine quantities will become the binding constraint which is why we also need to approve more vaccines, move to First Doses First (delay second doses like the British), and use Moderna half-doses. Fire on all cylinders!

Time is of the essence.

Hat tip: Kevin Bryan and Witold Wiecek.

U.S.A. fact of the day

The U.S. also experienced its most violent year in decades with an unprecedented rise in homicides. The Gun Violence Archive reported that more than 19,000 people died in shootings or firearm-related incidents in 2020, the highest figure in over two decades.

New Orleans-based crime analyst Jeff Asher took a closer look at the number of murders in 57 major American cities and he found that the number of offenses grew in 51 of them. He only focused on agencies where data was available and most of them had figures through November or December of 2020. Growth in violent crime varied by city with Seattle seeing a 74 percent spike in homicides between 2019 and 2020 while Chicago and Boston saw their offenses grow 55.5 percent and 54 percent, respectively. Elsewhere, Washington D.C. and Las Vegas saw growth in their murder offences, albeit at a slower pace of less than 20 percent.

New York’s homicide count went up by nearly 40 percent with Mayor Bill de Blasio stating that the figures should worry all New Yorkers and it has to stop.

Here is the full link.  Via Noah.

Let us not again forget knowledge of exponentials

New variants may change everything. They’ll be 1% of all cases by end of next week, with hot spots in Florida and Southern California. But doubling every week, they’ll be about 30% of all cases in 5 or 6 weeks. It’ll be harder to hide from them, schools will be more vulnerable.

That is from Scott Gottlieb.  And much of what you thought you knew about this pandemic may soon be obsolete.