Category: Law

By any other name

The Northern Territory’s Covid-19 outbreak is expected to grow beyond locked-down areas after nine new cases were detected in the remote community of Binjari, about 320km south of Darwin.

Binjari and nearby Rockhole have been placed into strict lockdown in response to the outbreak, and the Australian defence force has been called in to help with transferring positive cases and close contacts [sic].

The NT’s chief minister, Michael Gunner, on Sunday said a 78-year-old woman was being treated in Royal Darwin hospital, while the other eight cases had been taken to the Howard Springs quarantine centre.

Here is the full story.  And from another story:

“We’ve shared our supply of vaccine with Aboriginal health organisations so they had enough consistent supply for everyone in their care to have a chance to be vaccinated over the past seven months,” Gunner said in a statement.

I wonder what they think Gibraltar should do.  Didn’t all the Australians tell me on Twitter that things would be back to normal soon, once enough vaccines were distributed?

The Scientific Cost of Immigrant Quotas

In the 1920s immigration to the United States was restricted with quotas which were designed to reduce the number of immigrants from Italy and Eastern Europe, then considered to be low-quality immigrants. One unintended consequence was that the number of immigrant scientists from these areas also declined. The awesome Petra Moser and Schmuel San have an excellent new paper documenting the cost on US innovation and patenting.

Naturalization data indicate a dramatic decline in the arrival of new ESE-born scientists after the quotas. Until 1924, arrivals of new ESE-born immigrant scientists were comparable to arrivals from Northern and Western Europe (WNE), who were subject to comparable pull and push factors of migration.1 After the quotas, arrivals of ESE-born scientists decline significantly while arrivals from Northern and Western Europe continue to increase. Combining data on naturalizations with information on scientists’ university education and career histories, we estimate that 1,165 ESE-born scientists were lost to US science under the quota system. At an annual level, this implies a loss of 38 scientists per year, equivalent to eliminating the entire physics department of a major university each year between 1925 and 1955. For the physical sciences alone, an estimated 553 ESE-born scientists were lost to US science.

To estimate the effects of changes in immigration on US inventions, we compare changes in patenting per year after 1924 in the pre-quota fields of ESE-born US scientists with changes in patenting in other research fields in which US scientists were active inventors before the quotas. This identification strategy allows us to control for changes in invention by US scientists across fields, for example, as a result of changes in research funding. Year fixed effects further control for changes in patenting over time that are shared across fields. Field fixed effects control for variation in the intensity of patenting across fields, e.g., between basic and applied research.

Baseline estimates reveal a large and persistent decline in invention by US scientists in the pre-quota fields of ESE-born scientists. After the quotas, US scientists produced 68 percent fewer additional patents in the pre-quota fields of ESE-born scientists compared with the prequota fields of other US scientists. Time-varying effects show a large decline in invention by US scientists in the 1930s, which persisted into the 1960s. Importantly, these estimates show no preexisting differences in patenting for ESE and other fields before the quotas.

Canada which did not implement quotas did not see a similar decline. One interesting case study which is quite astounding in its way:

A case study of co-authorships for the prolific Hungarian-born mathematician Paul Erdős illustrates how restrictions on immigration reduced collaborations between ESE-born scientists and US scientists. Erdős moved to the United States as a post-doctoral fellow at Princeton, and became a professor at Notre Dame, travelling and collaborating with many US scientists. As a Hungarian citizen, however, Erdős was denied a re-entry visa by the US immigration services in1954, and not granted re-entry until 1963. To examine how these denials affected Erdős’ collaborations with US scientists, we collect the location of Erdős top 100 coauthors at the time  of their first collaboration. These data show that Erdős’ collaborations shifted away from the United States when he was denied re-entry. Between 1954 and 1963, 24 percent of Erdős’ new co-authors were US scientists, compared with 60 percent until 1954. These patterns are confirmed in a broader analysis of patents by co-authors and co-authors of co-authors of ESEborn scientists, which indicates a 26 percent decline in invention by scientists who were directly or indirectly influenced by ESE-born scholars. 

As you might suspect from the Erdos example, scientists in the US became less not more productive without the benefits of cooperation with Eastern European scientists.

Some of the scientists denied entry to the US in the 1920s went to Israel instead and innovated there so their genius was not entirely lost to the world.

Photo: Paul Erdos with Terrence Tao. Attribution, either Billy or Grace Tao, CC BY-SA 2.0 <https://creativecommons.org/licenses/by-sa/2.0>, via Wikimedia Commons

The weirdness of government variation in Covid-19 responses

That is the new Substack post from Richard Hanania, here is one excerpt:

But imagine at the start of the pandemic, someone had said to you “Everyone will face the existence of the same disease, and have access to the exact same tools to fight it. But in some EU countries or US states, people won’t be allowed to leave their house and have to cover their faces in public. In other places, government will just leave people alone. Vast differences of this sort will exist across jurisdictions that are similar on objective metrics of how bad the pandemic is at any particular moment.”

I would’ve found this to be a very unlikely outcome! You could’ve convinced me EU states would do very little on COVID-19, or that they would do lockdowns everywhere. I would not have believed that you could have two neighboring countries that have similar numbers, but one of them forces everyone to stay home, while the other doesn’t. This is the kind of extreme variation in policy we don’t see in other areas.

It’s similar when you look at American jurisdictions.

And:

As the political reaction to COVID-19 has surprised me, I’m still trying to figure it out. But for now I can say it’s shifted my priors in a few ways.

  1. People are more conformist than I would have thought, being willing to put up with a lot more than I expected, at least in Europe and the blue parts of the US.
  2. Americans in Red States are more instinctively anti-elite than I would have thought and can be outliers on all kinds of policy issues relative to the rest of the developed world (I guess I knew that already).
  3. Partisanship is much stronger than I thought. When I saw polls on anti-vax sentiment early in the pandemic, I actually said it would disappear when people would have to make decisions about their own lives and everyone could see vaccines work. This largely didn’t happen. Liberals in Blue States masking their kids outdoors is the other side of this coin. Most “Red/Blue Team Go” behavior has little influence on people’s lives. For example, deciding to vote D or R, or watch MSNBC or Fox, really doesn’t matter for your personal well-being. Not getting vaccinated or never letting your children leave the house does, and I don’t recall many cases where partisanship has been such a strong predictor of behavior that has such radical effects on people’s lives.
  4. Government measures that once seemed extreme can become normalized very quickly.
  5. The kinds of issues that actually matter electorally are a lot more “sticky” than I would have expected. Issues like masks and lockdowns, though objectively much more important than the things people vote on, are not as politically salient as I would have thought. A mask mandate for children eight hours a day strikes me as a lot more important than inflation, but it seems not to be for electoral purposes. If an asteroid was about to destroy earth and Democrats and Republicans had different views on how to stop it, people would just unthinkingly believe whatever their own side told them and it would not change our politics at all.
  6. Democratically elected governments have a lot more freedom than I thought before, especially if elites claim that they are outsourcing decisions to “the science.” Moreover, “the science” doesn’t even have to be that convincing, and nobody will ask obvious questions like how “the science” can allow for radically different policy responses in neighboring jurisdictions without much of a difference in results. This appears true everywhere in the developed world but in Red State America, where people really hate experts, regardless of whether they’re right or wrong.

You should all be getting Richard’s Substack.  Of all the “new thinkers” on the Right, he is the one who most combines extreme smarts and first-rate work ethic, with non-conformism thrown in to boot.  Read him!

Oops….

The Biden administration has rebranded its Build Back Better plan as part of a strategy to fight inflation. By subsidizing essential services like child care, the argument goes, American families and the broader economy will experience relief from the rapidly rising cost of living.

Yet something doesn’t add up. Consider that the current proposal would also dramatically shift the cost structure of child care upward with regulations mandating higher salaries, greater credentials and compliance with federal “quality standards.” Having made child care more expensive, it then proposes socializing over 90 percent of the cost for a subset of middle- and lower-income households. This won’t reduce rising prices so much as mask them. And with informal child care providers, including religious organizations, at risk of being crowded-out, the true availability of low-cost child care could even contract.

This is an extreme example of what we call “Cost Disease Socialism” — addressing the increasing costs of supply-constrained goods and services by spreading the price among American taxpayers while leaving the cause of the underlying costs unaddressed.

That is from an excellent piece by Sam Hammond, Daniel Takash, and Steve Teles (NYT).

Why did southern Italy lag behind?

I’ve long been suspicious of the “deep deep” roots theory of southern Italian stagnation, given the Neapolitan Enlightenment in the 18th century.  This explanation, however, at least in principle makes more sense to me:

The provincial gap in human capital at the time of Italy’s unification is a plausible explanation for the North–South divide of the following decades. We show that the roots of the literacy gap that existed in 1861 can be traced back to Napoleonic educational reforms enacted between 1801 and 1814. We use exogenous variation in provincial distance to Paris to quantify effects, linking the duration of Napoleonic control to human capital. If the south had experienced the same Napoleonic impact as the north, southern literacy rates would have been up to 70 percent higher than they were in 1861.

That is from M. Postigliola and M. Rota in European Review of Economic History.  Might Napoleon be underrated?

My Conversation with David Rubinstein

Here is the audio, video, and transcript — David has a studio in his home!  Here is part of the CWT summary:

He joined Tyler to discuss what makes someone good at private equity, why 20 percent performance fees have withstood the test of time, why he passed on a young Mark Zuckerberg, why SPACs probably won’t transform the IPO process, gambling on cryptocurrency, whether the Brooklyn Nets are overrated, what Wall Street and Washington get wrong about each other, why he wasn’t a good lawyer, why the rise of China is the greatest threat to American prosperity, how he would invest in Baltimore, his advice to aging philanthropists, the four standards he uses to evaluate requests for money, why we still need art museums, the unusual habit he and Tyler share, why even now he wants more money, why he’s not worried about an imbalance of ideologies on college campuses, how he prepares to interview someone, what appealed to him about owning the Magna Carta, the change he’d make to the US Constitution, why you shouldn’t obsess about finding a mentor, and more.

Here is an excerpt from the dialogue:

And:

And please note that David has a new book out, The American Experiment: Dialogues on a Dream.

The Paxlovid Paradox

Zvi at LessWrong rounds up the COVID news including this excellent bit on Pfizer’s anti-Covid pill Paxlovid which looks to be very effective but is not yet FDA approved.

The trial was stopped due to ‘ethical considerations’ for being too effective. You see, we live in a world in which:

  1. It is illegal to give this drug to any patients, because it hasn’t been proven safe and effective.
  2. It is illegal to continue a trial to study the drug, because it has been proven so safe and effective that it isn’t ethical to not give the drug to half the patients.
  3. Who, if they weren’t in the study, couldn’t get the drug at all, because it is illegal due to not being proven safe and effective yet. 
  4. So now no one gets added to the trial so those who would have been definitely don’t get Paxlovid, and are several times more likely to die.
  5. But our treatment of them is now ‘ethical.’
  6. For the rest of time we will now hear about how it was only seven deaths and we can’t be sure Paxlovid works or how well it works, and I expect to spend hours arguing over exactly how much it works.
  7. For the rest of time people will argue the study wasn’t big enough so we don’t know the Paxlovid is safe.
  8. Those arguments will then be used both by people arguing to not take Paxlovid, and people who want to require other interventions because of these concerns.
  9. FDA Delenda Est.

Politicizing Medicine is Dangerous

Politicizing medicine is dangerous. Tens of thousands of people are dead because vaccines became politicized and people chose political identity over rationality. Yet instead of trying to depoliticize medicine, the AMA has doubled down and is going full woke. The AMA’s Advancing Health Equity: A Guide to Language, Narrative and Concepts is so over the top I thought at first it was satire from the BabylonBee. The guide, for example, recommends that instead of talking about poor health among low-income people that physicians should blame “landowners and large corporations” for “increasingly centralizing political and financial power wielded by a few” and limiting “prospects for good health and well-being for many groups.” Put aside that this is at best tendentious and at worst utterly fallacious and just imagine that you are a landowner or work for a large corporation (that’s most of us!). Would you trust a doctor spouting this rhetoric or might you feel that such a doctor doesn’t have your best interests at heart?

Conor Friedersdorf puts it well:

The medical profession won’t remain more broadly trusted than left-wing activists if the two become indistinguishable. And that’s what will happen if doctors follow the guide’s advice. Instead of saying, “Low-income people have the highest level of coronary artery disease,” it urges health professionals to substitute this doctrinaire sentence: “People underpaid and forced into poverty as a result of banking policies, real estate developers gentrifying neighborhoods, and corporations weakening the power of labor movements, among others, have the highest level of coronary artery disease.”

In a section attacking “the narrative of individualism,” the guide posits that health promotion “typically means educating people as individuals,” and urges “shifting this narrative, from the individual to the structural, in order to more fully understand the root causes of health inequities in our society.” It’s already hard enough to get my conservative grandfather to heed his doctors about how best to care for a bad back worn down from decades in construction. A new narrative meant to problematize real-estate developers or individualism would not improve his medical condition, but it would inflame his temper. One wonders if the AMA and the AAMC grasp how many patients of all races and socioeconomic groups (never mind doctors) strongly disagree with the agenda that the two organizations are pushing. Either way, patients will feel put off by doctors who sound like ideologues from a different political tribe.

If the AMA really wants to do something for health equity they should stop trying to police language and instead support nurse practitioners, midwives, physician assistants, and other healthcare professionals who want to expand their practices, lobby for more physicians and an end to the absurd residency bottleneck, and support greater hospital competition. Physician heal thyself.

Photo Credit: Wikipedia.

Legal Systems and Economic Performance in Colonial Shanghai, 1903-1934

Abstract: How important are legal systems to economic performance? To address this question, I focus on a historical period from colonial Shanghai, where quite different legal systems operated in the International Settlement andFrench Concession. In particular, employing novel historical data, I examine 1903–1934 land value discontinuities at the border between these Settlements. Substantial discontinuities were found in the 1900s, with higher land values associated with the International Settlement. However, by the 1930s, this land value advantage of the International Settlement had disappeared. A closer look at the institutions reveals that the French Concession adapted its operation to be more business friendly, under competition from the neighboring International Settlement. This suggests that the French legal system per se was not a barrier to economic growth, but rather it could function well if interpreted and implemented properly. This paper thus adds to evidence that formal legal system is not a key determinant of economic performance.

That is from Mingxi Li, who is on the job market this year from UC Davis.

The Role of Property Tax in California’s Housing Crisis

From Paul J. Fisher, who is on the job market from University of Arizona:

California faces a shortage of housing according to politicians, activists, and residents. In his paper, I leverage differential exposure to the Proposition 13 tax laws to understand the impact of this policy on the production of housing in Southern California. Proposition 13 restricts property tax growth as long as the owner doesn’t sell or redevelop the property, which allows me to exploit differences in market conditions at the time of prior purchase to identify the effect of these property tax limits on property redevelopment. I find that Proposition 13 discourages redevelopment and sales. In a dynamic discrete choice model of land use, I find that adopting a land value tax that replaces Proposition 13 based property taxes would increase housing production by 35% generating a similar or greater amount of new housing as other policies under consideration in California.

Patrick Wolff, telephone!

Half Doses of Pfizer Work Well

New paper published in Vaccines from Polish group showing that half doses of Pfizer generate strong immune responses.

In the context of the ongoing COVID-19 pandemic, using a half-dose schedule vaccination can help to return to normalcy in a cost-efficient manner, which is especially important for low and middle-income countries. We undertook a study to confirm that in adults up to 55 years old, the humoral response to the half-dose (15 µg, 35 participants between 18 and 55 years old) and to the recommended dose (30 µg, 155 participants) in the two-dose three-week interval schedule would be comparable. Antibody levels were measured by the Elecsys Anti-SARS-CoV-2 S assay (Roche Diagnostics, upper detection limit: 2570 BAU/mL) on the day of dose 2 of the vaccine and then 8–10 days later to assess peak response to dose 2. The difference in proportions between the participants who did and did not exceed the upper detection limit 8–10 days after dose 2 was not statistically significant (p = 0.152). We suggest that a half-dose schedule can help to achieve widespread vaccination coverage more quickly and cheaply.

See my previous piece A Half Dose of Moderna is More Effective Than a Full Dose of AstraZeneca.

The economics of medical procedure innovation

Important NBER work from David Dranove, Craig Garthwaite, Christopher Heard, and Bingxiao Wu on an understudied intervention:

This paper explores the economic incentives for medical procedure innovation. Using a proprietary dataset on billing code applications for emerging medical procedures, we highlight two mechanisms that could hinder innovation. First, the administrative hurdle of securing permanent, reimbursable billing codes substantially delays innovation diffusion. We find that Medicare utilization of innovative procedures increases nearly nine-fold after the billing codes are promoted to permanent (reimbursable) from provisional (non-reimbursable). However, only 29 percent of the provisional codes are promoted within the five-year probation period. Second, medical procedures lack intellectual property rights, especially those without patented devices. When appropriability is limited, specialty medical societies lead the applications for billing codes. We indicate that the ad hoc process for securing billing codes for procedure innovations creates uncertainty about both the development process and the allocation and enforceability of property rights. This stands in stark contrast to the more deliberate regulatory oversight for pharmaceutical innovations.

Here are ungated copies.

ProPublica on FDA Delay

If you have been following MR for the last 18 months (or 18 years!) you won’t find much new in this ProPublica piece on FDA delay in approving rapid tests but, other than being late to the game, it’s a good piece. Two points are worth emphasizing. First, some of the problem has been simple bureaucratic delay and inefficiency.

In late May, WHPM head of international sales Chris Patterson said, the company got a confusing email from its FDA reviewer asking for information that had in fact already been provided. WHPM responded within two days. Months passed. In September, after a bit more back and forth, the FDA wrote to say it had identified other deficiencies, and wouldn’t review the rest of the application. Even if WHPM fixed the issues, the application would be “deprioritized,” or moved to the back of the line.

“We spent our own million dollars developing this thing, at their encouragement, and then they just treat you like a criminal,” said Patterson. Meanwhile, the WHPM rapid test has been approved in Mexico and the European Union, where the company has received large orders.

An FDA scientist who vetted COVID-19 test applications told ProPublica he became so frustrated by delays that he quit the agency earlier this year. “They’re neither denying the bad ones or approving the good ones,” he said, asking to remain anonymous because his current work requires dealing with the agency.

Recall my review of Joseph Gulfo’s Innovation Breakdown.

Second, the FDA has engaged in regulatory nationalism–refusing to look at trial data from patients in other countries. This is madness when India does it and madness when the US does it.

For example, the biopharmaceutical giant Roche told ProPublica that it submitted a home test in early 2021, but it was rejected by the FDA because the trials had been done partly in Europe. The test had compared favorably with Abbott’s rapid test, and received European Union approval in June. The company plans to resubmit an application by the end of the year.

A smaller company, which didn’t want to be named because it has other contracts with the U.S. government, withdrew its pre-application for a rapid antigen test with integrated smartphone-based reporting because it heard its trial data from India — collected as the delta variant was surging there — wouldn’t be accepted. Doing the trials in the U.S. would have cost millions.

Photo credit: MaxPixel.

Our regulatory state is failing us, edition #1637

The U.S. Food and Drug Administration (FDA) has authorized the SalivaDirect PCR COVID-19 test created by the Yale School of Public Health for use with pooled saliva samples.

Pooled testing allows labs to combine saliva samples from multiple individuals into a single tube and process the batch as a single test. This approach maintains the clinical sensitivity associated with the real-time reverse transcription polymerase chain reaction tests — the gold standard for detecting SARS-CoV-2, the virus that causes COVID-19 — and gives labs the ability to process the tests far more quickly. The FDA authorizes Yale-designated laboratories to use the SalivaDirect test to pool as many as five samples at a time for SARS-CoV-2 testing.

That is November 2021In July 2020, Alex wrote: “Tyler and I have been pushing pooled testing for months.”

Better to have nothing in the meantime I guess!  In the meantime, only a handful of pooled spit tests have been approved.

Here is the full piece, via DR.

The Treasury report on stablecoin regulation

I’ve now read it, and I don’t get it.  OK, so stablecoins should be Fed regulated, brought into the FDIC network, and prohibited from mixing with commerce.  In essence, the stablecoin issuers become like banks in the regulatory sense.  Let’s put aside whether or not you think that is a good idea and ask a simpler question: what about “all of crypto”?  Does that have to be put through the same legal ringer?  What does it mean to ban general crypto from affiliating with commerce at the institutional level?  To guarantee crypto issues with the FDIC?

You might say this is only for “stablecoins,” but does the document give a rigorous legal definition of that term?  No.  How stable does it have to be, to be a stablecoin?  What if there is no stability guarantee, but the issuer acts to create an expectation of relative stability.  Is that a stablecoin?  Or just crypto?  What if the price fluctuates “a bit”?

You may feel “I know a stablecoin when I see one,” and maybe you do, but I very much suspect that under these proposed regulations you either kill all of crypto, or hardly anything ends up being legally classified as a stablecoin, though it still might be pretty stable!

What about a “not quite stable coin,” but you buy a separate contract with a “separately capitalized” intermediary, so that you are each time made whole, and can de facto treat the value as really quite stable?

Maybe they have clever answers to these questions, and just didn’t see fit to include them in a 26-page document.  But I am sooner inclined to think that Treasury is not currently handling this issue at a sufficiently high conceptual level.