Category: Economics

Jiaolong, China’s Private City

Shruti Rajagopalan and I wrote about India’s private cities, Guragaon and Jamshedpur in Lessons from Gurgaon, India’s Private City. One thing we discovered was that transaction costs prevented private developers from coordinating on infrastructure such as sewage and electricity even though that was clearly the efficient solution and there was plenty of time to bargain. We suggested larger purchases–such as at Disneyland–were necessary to internalize the externalities.

In The Contractual Nature of the City, Qian Lu looks at Jiaolong, an unusual private city in China. Jiaolong is small, about 4.3 square km and a population of 100,000 but all the infrastructure including electricity, sewage, roads, apartments, shopping malls, aquarium, office buildings, and hotels have been built privately. The firm in charge, Jiaolong Co., has planning rights and crucially it collects 25% of all property tax which means it internalizes part of the increase in value generated by its investments.

Jiaolong is a city built and operated by a business corporation. This is rare in China because in most cases the local city government is in charge of urbanization. In almost all cities, government makes land and city planning, takes farmersland, builds city infrastructure, sells land to housing developers and manufacturers, operates police stations, hospitals, schools and universities. By holding the monopoly power of coercion, the government is able to pool together resources by fiat and hold transaction costs low.

The urbanization of Jiaolong is not based on coercive power, but by a series of contracts with Shuangliu government, firms, farmers, residents and other relevant parties. As the central contractor, Jiaolong Co. is able to simplify the contractual web and reduce coordination cost. The essential contracts are the investment contract with the county government to transfer planning rights, and a series of contracts with the government and firms to share tax. Tax sharing contracts define the income rights for Jiaolong so that Jiaolong could share the surplus of urban development and infrastructure construction. Sharing contracts also motivate Shuangliu government to provide public services including protection of property rights. A series of contracts transfer planning rights, land use rights, and income rights to Jiaolong Co., and thereby endogenize the externality of infrastructure building and urban development. From the perspective of institutional change, Jiaolong offers a case of contract-based rather than coercion-based urbanization, the latter being the typical approach in China.

Noah Substack interviews Patrick Collison

Here goes, here is one good excerpt of many:

Isaac Asimov’s New Guide to Science. I read that when I was 13 or 14 and thought it was just amazing. (I was an exchange student in Germany at the time. I didn’t learn much German but I did have my eyes opened to many aspects of science that I previously knew nothing about!) Some of John Gribbin’s books, like In Search of Schrödinger’s Cat, really inspired me. Douglas Hofstadter — especially Metamagical Themas. (I read GEB when I was a teenager but found it a bit of a slog.) But, honestly, I think I was always interested in creating technology to some extent. I spent hours and hours playing with Lego when I was young and then transitioned pretty quickly to programming. I remember being pretty certain that I’d love programming before I’d ever written a line of code and, sure enough, I did. So, maybe it’s just something about how my mind is wired.


Overall, my single biggest science policy suggestion would be to pursue far greater structural diversity in our mechanisms. More different kinds of grant making institutions, more different kinds of research organizations, more different career paths for participants, etc. That’s not easy to do — bureaucracies by their nature seek to standardize which this fosters homogeneity. So, to the extent that the Endless Frontier Act can bring us closer to a more structurally varied world, I’m probably supportive relative to the status quo. My biggest qualm would probably be that it combines regional development policy with scientific policy. While the political merit is easy to see, I’m not sure that that’s a good idea. Talent clusters are real and I think it probably makes more sense to think about how best to improve those clusters than it does to foster underdog competitors.

Recommended, interesting throughout.

Dose Stretching Policies Probably *Reduce* Mutation Risk

One objection to dose-stretching policies, such as delaying the second dose or using half-doses, is that this might increase the risk of mutation. While possible, some immunologists and evolution experts are now arguing that dose-stretching will probably reduce mutation risk which is what Tyler and I concluded. Here’s Tyler:

One counter argument is that letting “half-vaccinated” people walk around will induce additional virus mutations.  Florian Kramer raises this issue, as do a number of others.

Maybe, but again I wish to see your expected value calculations.  And in doing these calculations, keep the following points in mind:

a. It is hard to find vaccines where there is a recommendation of “must give the second dose within 21 days” — are there any?

b. The 21-day (or 28-day) interval between doses was chosen to accelerate the completion of the trial, not because it has magical medical properties.

c. Way back when people were thrilled at the idea of Covid vaccines with possible 60% efficacy, few if any painted that scenario as a nightmare of mutations and otherwise giant monster swarms.

d. You get feedback along the way, including from the UK: “If it turns out that immunity wanes quickly with 1 dose, switch policies!”  It is easy enough to apply serological testing to a control group to learn along the way.  Yes I know this means egg on the face for public health types and the regulators.

e. Under the status quo, with basically p = 1 we have seen two mutations — the English and the South African — from currently unvaccinated populations.  Those mutations are here, and they are likely to overwhelm U.S. health care systems within two months.  That not only increases the need for a speedy response, it also indicates the chance of regular mutations from the currently “totally unvaccinated” population is really quite high and the results are really quite dire!  If you are so worried about hypothetical mutations from the “half vaccinated” we do need a numerical, expected value calculation comparing it to something we already know has happened and may happen yet again.  When doing your comparison, the hurdle you will have to clear here is very high.

(See my Washington Post piece for similar arguments and additional references.).

Now here are evolutionary theorists, immunologists and viral experts Sarah Cobey, Daniel B. Larremore, Yonatan H. Grad, and Marc Lipsitch in an excellent paper that first reviews the case for first doses first and then addresses the escape argument. They make several interrelated arguments that a one-dose strategy will reduce transmission, reduce prevalence, and reduce severity and that all of these effects reduce mutation risk.

The arguments above suggest that, thanks to at least some effect on transmission from one dose, widespread use of a single dose of mRNA vaccines will likely reduce infection prevalence…

The reduced transmission and lower prevalence have several effects that individually and together tend to reduce the probability that variants with a fitness advantage such as immune escape will arise and spread (Wen, Malani, and Cobey 2020). The first is that with fewer infected hosts, there are fewer opportunities for new mutations to arise—reducing available genetic variation on which selection can act. Although substitutions that reduce antibody binding were documented before vaccine rollout and are thus relatively common, adaptive evolution is facilitated by the appearance of mutations and other rearrangements that increase the fitness benefit of other mutations (Gong, Suchard, and Bloom 2013; N. C. Wu et al. 2013; Starr and Thornton 2016). The global population size of SARS-CoV-2 is enormous, but the space of possible mutations is larger, and lowering prevalence helps constrain this exploration. Other benefits arise when a small fraction of hosts drives most transmission and the effective reproductive number is low. Selection operates less effectively under these conditions: beneficial mutations will more often be lost by chance, and variants with beneficial mutations are less certain to rise to high frequencies in the population (Desai, Fisher, and Murray 2007; Patwa and Wahl 2008; Otto and Whitlock 1997; Desai and Fisher 2007; Kimura 1957). More research is clearly needed to understand the precise impact of vaccination on SARS-CoV-2 evolution, but multiple lines of evidence suggest that vaccination strategies that reduce prevalence would reduce rather than accelerate the rate of adaptation, including antigenic evolution, and thus incidence over the long term.

In evaluating the potential impact of expanded coverage from dose sparing on the transmission of escape variants, it is necessary to compare the alternative scenario, where fewer individuals are vaccinated (but a larger proportion receive two doses) and more people recover from natural infection. Immunity developing during the course of natural infection, and the immune response that inhibits repeat infection, also impose selection pressure. Although natural infection involves immune responses to a broader set of antibody and T cell targets compared to vaccination, antibodies to the spike protein are likely a major component of protection after either kind of exposure (Addetia et al. 2020; Zost et al. 2020; Steffen et al. 2020), and genetic variants that escape polyclonal sera after natural infection have already been identified (Weisblum et al. 2020; Andreano et al. 2020). Studies comparing the effectiveness of past infection and vaccination on protection and transmission are ongoing. If protective immunity, and specifically protection against transmission, from natural infection is weaker than that from one dose of vaccination, the rate of spread of escape variants in individuals with infection-induced immunity could be higher than in those with vaccine-induced immunity. In this case, an additional advantage of increasing coverage through dose sparing might be a reduction in the selective pressure from infection-induced immunity.

…In the simplest terms, the concern that dose-sparing strategies will enhance the spread of immune escape mutants postulates that individuals with a single dose of vaccine are those with the intermediate, “just right” level of immunity, more likely to evolve escape variants than those with zero or two doses (Bieniasz 2021; Saad-Roy et al. 2021)….There is no particular reason to believe this is the case. Strong immune responses arising from past infection or vaccination will clearly inhibit viral replication, preventing infection and thus within-host adaptation…. Past work on influenza has found no evidence of selection for escape variants during infection in vaccinated hosts (Debbink et al. 2017). Instead, evidence suggests that it is immunocompromised hosts with prolonged influenza infections and high viral loads whose viral populations show high diversity and potentially adaptation (Xue et al. 2017, 2018), a phenomenon also seen with SARS-CoV-2 (Choi et al. 2020; Kemp et al. 2020; Ko et al. 2021). It seems likely, given its impact on disease, that vaccination could shorten such infections, and there is limited evidence already that vaccination reduces the amount of virus present in those who do become infected post-vaccination (Levine-Tiefenbrun et al. 2021).

I also very much agree with these more general points:

The pandemic forces difficult choices under scientific uncertainty. There is a risk that appeals to improve the scientific basis of decision-making will inadvertently equate the absence of precise information about a particular scenario with complete ignorance, and thereby dismiss decades of accumulated and relevant scientific knowledge. Concerns about vaccine-induced evolution are often associated with worry about departing from the precise dosing intervals used in clinical trials. Although other intervals were investigated in earlier immunogenicity studies, for mRNA vaccines, these intervals were partly chosen for speed and have not been completely optimized. They are not the only information on immune responses. Indeed, arguments that vaccine efficacy below 95% would be unacceptable under dose sparing of mRNA vaccines imply that campaigns with the other vaccines estimated to have a lower efficacy pose similar problems. Yet few would advocate these vaccines should be withheld in the thick of a pandemic, or roll outs slowed to increase the number of doses that can be given to a smaller group of people. We urge careful consideration of scientific evidence to minimize lives lost.

My Economics in Argumentation seminars job

You can trace my earlier jobs here, my next job, which I believe started at age nineteen, involved giving summer talks to high school debaters.  The program was called Economics in Argumentation, and it continues today in a much broader form under the name Economic Thinking, led by the excellent Gregory Rehmke, who was program leader back then as well.

The program was looking for someone who had debate experience (I debated for one year, my high school debate partner was the later economist and Fed governor Randall Kroszner), someone who was available, someone willing to fly around the whole country, someone affordable, someone who could relate to the high school students, and someone who knew enough economics.  That was me.

So I barnstormed for part of the summer, doing I would guess six to eight events a year?  I was paid $500 plus expenses for a weekend, typically to give a few talks on how to apply economics to the year’s debate topic.  One topic example was “the economics of arms sales,” and so in advance I had to spend a few months reading up on the topic of that year.  Other potential speakers were not so interested in doing that.

For my first talk, which was my very first public talk ever, I was nervous and disorganized, but after that I was fine and just consistently got better.  That is when and how I learned to give public presentations.  It was also my first time taking flights on a regular basis, and navigating new locations other than the immediate Atlantic seaboard/95 corridor.

Here are a few things I learned and some related memories:

1. I visited Seattle and Houston most frequently.  But I also went to Louisville, Grand Rapids, Wichita, a bunch of other Midwest places, and Los Angeles and San Francisco for the first time.  I learned what a great country America is, and I began to figure out how to travel.  I became acquainted with locales such as eastern Kansas, and would have not otherwise seen them, or realized how much I enjoy seeing them.  My knowledge base expanded rapidly.

2. Greg was super-nice to me throughout, and he has ended up being one of the people who helped me out most.  The money was useful but most of all the experience.  Greg had to put up with a lot of me, and he enjoyed mocking me (gently) for thinking (at first) that all restaurants around the United States were going to be serving chocolate ice cream.  Greg had formerly been a student of Paul Heyne’s at the University of Washington, so he had broadly Austrian and market-oriented views, and I fit into his programmatic vision very well.  (In fact most of what I was teaching I had learned from Heyne’s own book, which I read when I was fourteen.)  Plus going around with Greg was a lot of fun.  He is also a basketball fan, explained to me articulately exactly why Bill Walton was such a great player albeit briefly, and he taught me things like “if you are going to fly around the country, you need to have a credit card.”

3. High school debate coaches are in general a great and very dedicated group of educators.  The debate world back then was a kind of privatized appendage to the public school system, and it was a good refuge for people who really wanted to learn things.  They were also good audiences to practice upon, because a) they are used to considering all sides of an argument, and b) they judge presentations as such and apply fairly high but not obnoxious standards.  They also expect you to get to the point very quickly.

4. Giving the talks forced me to figure out what I thought economics really was all about.  Incentives and opportunity cost were the two ideas I pushed the hardest.  I tried to show the audience, through the application of concrete examples and arguments to the topic area, that those ideas were useful for formulating and responding to debate arguments.  I also encouraged them to think about secondary consequences in a more rigorous and systematic fashion, rather than just tacking them onto arguments for the sake of debate.

5. Here is a seven-minute excerpt from one of my talks.  I was younger then.

6. I had the chance to meet Paul Heyne when we visited Seattle, and in general met lots of interesting people along the way.

6b. I have a memory of driving around with Greg, finding a delicious Basque restaurant in Nevada.  But how did we end up in Nevada?

7. A number of other speakers for the program were graduate students in economics, and with debate backgrounds, yet I noticed immediately that they did not really think like economists.  They knew more neoclassical economics than I did, but somehow they were lifeless in their approaches and were not able to integrate the economic way of thinking with debate topics.  Some remain in the profession to this day.  It was important for me to learn just how much of the educated world fit into this category, one way or another.

8. Most of all this job required the energy to start, finish, and maintain each talk in a way that would command the attention of bright high school students.  They also respected preparation, so you had to come in knowing more than they did about the topic, but at the same time make the economics the primary focus.  Ultimately “show up and perform” is one of the job styles I am most comfortable with.

9. I felt I was getting a good deal overall, and wasn’t looking to demand a higher wage.  At the margin, I was more likely to ask for more events on the West Coast and in other good places.

10. Maybe I did this for three summers in a row?  (One of my successor speakers was Air Genius Gary Leff.)  Graduate school and then moving to Germany pulled my attention toward other endeavors.  But it was a job I loved, and a job that in modified form I still have to this day.

Bad Advertising Bans

In Australia physicians are currently banned from recommending COVID vaccines as this is considered a form of advertising.  (See also this twitter thread).

Crazy, but then I am reminded that one year ago Britain’s Advertisement Standards Authority banned advertisements for masks ruling that:

Public Health England did not recommend the use of face masks as a means of protection from coronavirus. We understood there was very little evidence of widespread benefit from their use outside of clinical settings, and that prolonged use of masks was likely to reduce compliance with good universal hygiene behaviours that were recommended to help stop the spread of infectious diseases (including coronavirus), such as frequent hand washing and avoiding touching the eyes, nose and mouth with unwashed hands. We considered that the reference to “coronavirus” in the listing was likely to exploit people’s fears regarding the coronavirus outbreak. Particularly in a context where the relevant public health authority had not recommended face masks as a means of the public protecting themselves from coronavirus, we considered that the ad was misleading, irresponsible and likely to cause fear without justifiable reason.

We concluded that the ad breached the Code.

A good reminder that advertising bans have costs and benefits. I prefer the 1st Amendment which also has costs and benefits.

Hat tip: Steven Hamilton.

Are prediction markets going to make it this time around?

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

A skeptic might say that demand is limited because there are already so many good and highly informative markets in other assets. In 2009, for instance, was a market necessary to predict how well the iPhone was going to do? The share price of Apple might have served to perform a broadly similar function.

The question, then, is which prediction markets might prove most useful. Nobel Laureate economist Robert J. Shiller has promoted the idea of prediction markets in GDP, but most people face major risks at a more local, less aggregated level. One of the risks I face, for example, concerns the revenue of the university where I teach. This year enrollments rose slightly even though U.S. GDP fell sharply. So a GDP-based hedge probably is not very useful to me.

How about a prediction market in local real-estate prices, so that home buyers and real-estate magnates may hedge their purchases? Maybe, but then the question is whether enough professional traders would be attracted to such markets to keep them liquid. So-called binary options, particularly when the bet is on the price of a financial asset, often have remained unfairly priced or manipulated, and are viewed poorly by regulators.

For a prediction market to take off, it probably has to satisfy a few criteria: general enough to attract widespread interest; important enough to matter; and unusual enough not to be replicable by trading in existing assets. The outcomes also need to be sufficiently well-defined that contract settlement is not in dispute.

It remains to be seen how many new assets can meet all these standards.

Recommended, and the “hook” of the piece is the new attempt to jump-start prediction markets through the start-up Kalshi.

My job as managing editor of the Austrian Economics Newsletter

I’ve already posted about my chess teaching, and my grocery store work (here and here), my next job was as managing editor of the Austrian Economics Newsletter, for 1980-1981.  I was only eighteen (and nineteen) then, so for me this was a big step up.

I was responsible for commissioning content, making sure authors got their pieces in on time, editing those pieces (along with the editor proper, Don Lavoie), proofreading, picking up all the copy and delivering it to the typesetter, and coming up with ideas for future features.  I wrote a few short pieces too, conference coverage if I recall.  Part of my job was managing Don as well, though overall he was extremely generous with his time and also easy to work with.  Note that all of this work was de facto pre-computer.

From this job I learned a few things:

1. Most of all, I was grateful to Don for taking a huge chance on me.  A while earlier, I had driven to a party at his house in Brooklyn and spent a few hours with him.  One core lesson here is show up!  If I had not gone to Don’s party, almost certainly none of this would have happened.  At the time, the drive from New Jersey to Brooklyn seemed a little daunting to me, but my Auseinandersetzung with the BQE went fine.

2. I began to suspect all the more that “keeping track of things getting done” requires an innate predisposition, though a bad upbringing can squeeze it out of you.  But a lot of people just can’t or won’t do that, even if they are very smart.

3. The most fragile element of the supply chain was keeping the typesetter in line to deliver material promptly.  We were just never going to be a major customer of his and thus we were not a priority.  I just had to keep on bugging him, and I was afraid he would find out I was only an eighteen-year-old.

4. Parents matter!  My father and mother owned and ran a magazine (Commerce, affiliated with a chamber of commerce in NJ but they owned and ran it), and there I was at age eighteen, helping to run a mini-magazine.  Coincidence?  I don’t think so.  And my mother dealt with typesetters all the time.  My grandmother helped with the editing and the proofreading.

Here I am at an older age, still co-running a magazine of sorts, namely MR.  (Some of you help with the proofreading — thanks!)  You could say it is affiliated with a number of groups, starting with GMU, but it is owned and run by…you get the picture.

5. The issues of the Austrian Economics Newsletter all came out in an orderly fashion, so I considered my work there a success.  Don and I also pushed each other in broader and more empirical directions, away from the earlier Austrian praxeological approaches.  The Newsletter helped make Austrian economics a broader tradition.

6. Managing your boss is a big part of most jobs.  Again, Don I found easy to work with, and I learned a great deal from him, but he did need a co-worker who could appreciate his ideas and listen to his “speeches.”  I feel I served that function well.  I did see that Don was onto ideas that represented real advances in Austrian economics, and to this day Don is underrated.  He was the best and most influential Austrian economist of his generation, but is not universally regarded as such (he passed away prematurely of cancer at the age of 50).

7. As a young person, you can advance much more quickly if you are doing something outside of the mainstream.  That is yet another reason to be on the lookout for “weird” talent.

8. One of the more important things I learned was “what it means to know everyone/everything going on in a particular field.”

9. I don’t recall exactly how the job ended.  But I think that version of the newsletter was discontinued, and Don stopped doing it, more or less at the same time.  (Later it was taken over by the Mises Institute and became a very different product; the Mercatus publication Market Process was the true successor.)  I was very glad to have done it, but after two years or so I was ready to move on to the next thing.

Why Didn’t Congress Fund Operation Warp Speed!?

STAT is reporting a ‘scandal’:

The Trump administration quietly took around $10 billion from a fund meant to help hospitals and health care providers affected by Covid-19 and used the money to bankroll Operation Warp Speed contracts, four former Trump administration officials told STAT.

The NYTimes tried to create a similar scandal back in June when it reported on a diversion of funds to OWS from lung treatment research.

Coronavirus Attacks the Lungs. A Federal Agency Just Halted Funding for New Lung Treatments.

The shift, quietly disclosed on a government website, highlights how the Trump administration is favoring development of vaccines over treatments for the sickest patients.

My response at the time and today is the same. Good! The real scandal is why Congress never put big funding behind Operation Warp Speed–thus requiring the administration to fund OWS by surreptitiously cutting elsewhere. The Trump administration gets blamed for its inept handling of the pandemic but Congress is supposed to be in charge of the laws and the purse strings and Congress was an abysmal failure. Who in Congress lauded let alone funded Operation Warp Speed, the only big success of the pandemic response?

Here’s what I was shouting from the rooftops in June, Get BARDA More Money! It actually pains me to read this today because even a few extra billion then would have made a big difference.

The real scandal is how little we are spending on advanced research for vaccines–$2.2 billion is a pittance, less than a day’s worth of economic loss caused by COVID. Given their limited budget, BARDA is making good investments. Congress, however, has not allocated enough money to BARDA, one of the few agencies that had the foresight to do the right things, such as investing in emergency vaccine capacity, even before the pandemic hit. Congress’s failure to fund BARDA is why the administration is scraping the bottom of the barrel to get them all the funding they can.

We should go big, really big, on vaccines. But when I talk with people in Congress, I tell them that a big plan is ideal but if we can’t do that then at least GET BARDA MORE MONEY!

Addendum: The fact that BARDA can’t get enough funding from Congress in a pandemic is a good example of why we need a Pandemic Trust Fund.

Ola Malm on the future and industrial organization of chess

It was great to see your “Thursday assorted links” link regarding chess. It has been fascinating to follow the recent online boom to which the game has been subject and to think about what it may mean for the organization, and business, of chess over time.

I speculate, of course, but – as to what the future holds – I believe at least one possible path for the sport runs as follows:

1. The three major chess-focused online platforms (, lichess, and chess24) reduces to one through a self-reinforcing cycle of greater revenue concentration, the attainment by one party of progressive technical superiority, and the increasing convergence of the chess-playing public on a single provider.

2. The market leader signs exclusivity agreements (governing non-FIDE play) with a significant portion of top players and becomes the de-facto organizer of most commercially significant tournaments. In contrast to (1), this could conceivably happen quite quickly, as it involves only a limited set of individuals.

3. The centralization of elite-level play on a single platform enables that platform’s Elo rating to emerge as the chess world’s most important manifestation of achievement, thus furthering the leading provider’s competitive position (and affording it, through subscription fees, the financial means of accelerating (1) and of maintaining (2)).

4. FIDE’s tight grip on the sport is somewhat loosened, and the organization reverts to being something more akin to what it used to be and was originally intended to be – a (gentler) gentlemen’s club (in the English, rather than the American-English, sense of the term) focused on advancing the sport of chess.

Step (2) is, to a certain extent, already underway in the form of Nakamura’s link with and Carlsen’s ownership interest in Play Magnus (which owns chess24 and hosts the Champions Chess Tour). Attempting to negotiate individual agreements with single players would very likely turn out no easier than herding cats (and a rather resourceful and independent sort of cat, at that); rather, I believe whichever party may seek to implement a form of player exclusivity would find it easier to, on a unilateral basis, simply issue rating-based cash compensation (in exchange for promises of exclusivity) to the top-10-ranked (or top-50-ranked – the precise number is of course unimportant) Grandmasters. To rate players, the provider could adopt the current FIDE ranking as its starting position, but thereafter “fork” it (much like an open-source piece of code is forked) and base future rankings (for payment purposes) exclusively on play on its own platform (to enable (3)).

Some would no doubt scoff at such a development as unwelcome commercialization. And, yet, I think it would constitute a step, if not indisputably forward, certainly not backward, for chess. International sports tend to be organized in one of two ways: through one-nation-one-vote Swiss associations (such as soccer’s FIFA); or through commercial corporations (such Formula1’s Liberty Media). Time has undeniably imbued governing bodies in the former category with a certain cachet, but it has also made many of them inefficient and corrupt, as their governance systems – designed for a pre-WWI European world of volunteerism and gentlemanly conduct – have failed to adapt to, and to ward off, an extent of contemporary cynicism. If the Guardian is to be believed, FIDE has not been entirely spared: I think most sports, including chess, would be no worse managed – in the sense of attracting both a broad player base as well as a vibrant elite tier – were they to convalesce around corporate organizations rather than Swiss associations.

I am pleased to report that Ola was an earlier Emergent Ventures recipient.

Canada Moves to First Doses First

The Canadian province of British Columbia has moved to First Doses First (as I suggested they would) with a four month (not three as in Great Britain) delay on the second dose. Quebec is already using FDF. I believe that the rest of Canada will follow shortly:

Also on Monday, the province announced it is extending the time between first and second doses of COVID-19 vaccine to four months. The change, as well as Health Canada’s approval of a third vaccine, means every eligible person in B.C. will receive the first dose of their vaccine by mid- to late July.

Provincial Health Officer Dr. Bonnie Henry said data from the B.C. Centre for Disease Control — and countries around the world such as the United Kingdom and New Zealand — shows “miraculous” protection of at least 90 per cent from the first dose of a Moderna or Pfizer-BioNTech vaccine.

She said the National Advisory Committee on Immunization is expected to issue a statement to align with B.C.’s decision, which frees up 70,000 doses for younger age groups.

“This is amazing news,” said Henry. “These vaccines work, they give a very high level of protection and that protection lasts for many months.”

As I wrote earlier:

… first doses first will save lives in the US but delaying the second dose and other dose-stretching policies are even more vital in countries [such as Canada] where vaccines supplies are more limited than in the United States.

Meanwhile in the United States we are vaccinating relatively quickly but in the last week we have given out more second doses than first doses. Overall, we have given out 25 million second doses–under first doses first we would have vaccinated 25 million more people benefiting them and the unvaccinated by lowering transmission rates.

The US FDA is not following the science.

The English Data Support First Doses First

A new study from Public Health England shows that both the Pfizer and AstraZeneca vaccine work well from the first dose. If that sounds familiar it’s because the results are similar to those found in Scotland. The results cover all adults in England aged 70 years and older (over 7.5 million people).

Vaccination with either a single dose of BNT162b2 or ChAdOx1 COVID-19 vaccination was associated with a significant reduction in symptomatic SARS-CoV2 positive cases in older adults with even greater protection against severe disease [approximately 80% effective at preventing hospitalisation, AT] . Both vaccines show similar effects. Protection was maintained for the duration of follow-up (>6 weeks). A second dose of BNT162b2 provides further protection against symptomatic disease but second doses of ChAdOx1 have not yet been rolled out in England. There is a clear effect of the vaccines against the UK variant of concern.

Score three for the land of Reverend Bayes: first doses first, approve AstraZeneca, approve AstraZeneca for the elderly.

We now have significant real world data from millions of vaccine recipients in Israel, Scotland and England and it is very supportive of First Doses First and Approve AstraZeneca.

The US FDA is not following the science.

The Gregory Clark working paper

I wanted to present this paper to you all, here is the abstract:

Economics, Sociology, and Anthropology are dominated by the belief that social outcomes depend mainly on parental investment and community socialization. Using a lineage of 402,000 English people 1750-2020 we test whether such mechanisms better predict outcomes than a simple additive genetics model. The genetics model predicts better in all cases except for the transmission of wealth. The high persistence of status over multiple generations, however, would require in a genetic mechanism strong genetic assortative in mating. This has been until recently believed impossible. There is however, also strong evidence consistent with just such sorting, all the way from 1837 to 2020. Thus the outcomes here are actually the product of an interesting genetics-culture combination.

The title is “For Whom the Bell Curve Tolls: A Lineage of 400,000 English Individuals 1750-2020 shows Genetics Determines most Social Outcomes.”  For those of you who don’t know, Greg’s home page provides some context.

A Biden Plan for World Vaccination

Canada has approved the AstraZeneca vaccine. The US has not. The US has paid for an AstraZeneca factory in Baltimore and stockpiled millions of doses. The US should lease the factory to Canada or simply make the doses available for export. The same factory will also produce the J&J vaccine so it’s possible that there is some small opportunity cost. Exporting vaccine to our close ally, trading partner, and neighbor, however, would create significant political, economic, and health benefits for the United States.

More generally, the US is focused on vaccinating its residents first. That’s understandable. But step two is vaccinating the world. The Kremer team advocated going big on vaccine capacity for two reasons. First, we needed a lot of capacity to vaccinate the US fast and fast was valuable. Second, going big meant that the US could vaccinate its population quickly but then have that capacity available to vaccinate the rest of the world.

Contrary to what many people feared, Operation Warp Speed hasn’t taken doses from the rest of the world, Operation Warp Speed has built the infrastructure to deliver doses to the rest of the world. Our motto in advising governments and NGOs was ‘Capacity is the antidote to conflicts over distribution.

The United States will soon be the first big country with a fully vaccinated population. The US will then have a chance to lead the world into the post-pandemic era with a “Biden plan” for world vaccination akin to the Mashall Plan.

Invest more. Vaccinate the world. End the pandemic.

Start with Canada.

Lynne Kiesling and Vernon Smith on Texas electricity

How can the resilience of ERCOT’s grid be improved without resorting to costly regulatory mandates that may or may not yield benefits? ERCOT could implement clear market rules requiring natural gas generators to have firm supply contracts in order to be certified as an eligible resource for emergency conditions. Plant owners have incentives to do so because they would have market access under high-price conditions where their performance would more than compensate them for the insurance cost of fuel security.

ERCOT can also take advantage of Texas’ deregulated retail market structure to incentivize more customers to reduce consumption in return for bill savings, creating demand flexibility. Using digital devices and automation to send prices to residential devices would allow consumers to reduce their demand during extreme stress and high prices. Similarly, the Texas market design is well-suited to increasing battery storage, which has been made increasingly economical due to innovation. Batteries enable households to choose to self-insure against outage risk, and when interconnected in their local distribution grid, they can serve as resources to provide energy or grid services to others.

Here is the full opinion piece, via Kurt B.

Following the science? — the show so far

As the pace of recovery quickens, and most balance sheets continue to look decent, it seems increasingly obvious that $1.9 trillion is too much to spend.  We are spending at least $1 trillion too much, with very little investment to show for it, and $1 trillion is a lot of money.  Heaven forbid they should make part of the stimulus dependent on future macroeconomic variables, which is what science would suggest.

New CDC school opening guidelines fail to “follow the science.” School reopening is a big, big issue. Overall the blue states are not doing well on it, and the Biden administration is hurting rather than helping.

Vaccine distribution is doing better, with 2.4 million doses distributed per day by the end of this last week.  I am less sure how much that is above the previous trajectory.  At least originally, Biden was boasting of aspiring to doing one million doses a day, so the presidential grasp of detail is not what pushed us over the edge here.

Those are arguably the three most important issues at the moment, and the overall performance level is not great.

The AstraZeneca vaccine still is not approved, with no sign of an FDA budge in sight.  Canada approved it last week, so now there are more than fifteen nations on board.  The new data on its performance are quite strong, even for a single dose.

Biden will be appointing an FDA head, but I haven’t heard talk of reform in spite of major and ongoing failures, and some in process reforms in the UK.  Is it even permissible to raise the topic of “the deregulations we need”?

The $15 minimum wage idea seems doomed to fail, in any case it was obviously worse than an “indexed by state” approach, even if you hold the Dube-ous view of minimum wage economics.

There is also this:

The emergency facility — a vestige of the Trump administration that was open for only a month in summer 2019 — is being reactivated to hold up to 700 children ages 13 to 17.

By the way, arrests of unaccompanied children at the border are up 50% this month (WSJ).  So this problem isn’t going away.  Is science being used to structure the incentives properly for these migrants?

That issue aside, immigration is the one policy area where there has been major sustained improvement, and where those improvements are likely to continue.

As far as I know, there is no immediate plan to eliminate or lower the Trump tariffs on Chinese goods.

The (non-scientific) belief in a new era of cooperation with Europe, including in opposition to China, already lies in tatters.

I don’t know if the American military should have bombed Syria, but I do know that it did and I suspect our government also does not know if it should have, not really know in the scientific sense.

I do get that the Biden administration “feels more scientific” to you, and it has the demeanor of a proper establishment, and it offers experts much higher status, and it does not encourage yahoos to storm the Capitol, for which I am very grateful.

But the rather obvious evidence here is that the scientific record is already quite poor.