Here is the text, I won’t attempt a summary but here are some running comments:
2. Industry concentration has not driven wages down by “as much as 17%” — that’s a porky! OK, they say “advertised wages,” but come on…
3. I am happy to see the document take on occupational licensing.
4. Contra to the recommendation, we should not ban non-compete agreements outright. Many non-compete agreements are perfectly normal institutions designed to protect corporate assets against IP theft, client lists for instance. We should restrict non-compete agreements in some more sophisticated manner, still to be determined.
5. Lower prescription drug prices? Maybe. Do they estimate the elasticity of supply? No. Thus this discussion would fail my Econ 101 class. We do know, however, that prescription drugs are one of the very cheapest ways our health care system saves lives, so this is not obviously a good idea.
6. Right to repair laws? Again, maybe. But show me the trade-off and cite a cost-benefit analysis. If software gives more consumer surplus to consumers (again, a maybe), should we be wanting to tax it with contractual restrictions? Should we be wanting to tax Tesla right now?
7. Portability of bank account information is a good idea.
8. “Empower family farmers…” — do you even need to know what comes next? Aarghh!!!
9. The order “encourages” the DOJ and FTC to take various actions. I won’t blame Biden for this, but we’ve way overstepped what executive orders should be doing, some time ago. The net feeling the honest reader of this section receives is that our antitrust policies toward the large tech companies are not based in much of a notion of rule of law.
10. Should HHS “standardize plan options” in the NHIM to make price shopping easier? Makes me nervous — diverse market offerings can be good.
11. Lots of tired and not typically true claims and insinuations about concentration in airline markets; see my book Big Business or read Gary Leff. And shouldn’t airlines charge for bags? Maybe yes, maybe no, but prices per item are not in general a bad thing.
12. We are warned that farmers and ranchers take in an ever-smaller share of the food dollar spent — thank goodness! And there are a bunch of other selective, scattered observations about food prices (“corn seed prices have gone up as much as 30% annually…”), but nothing close to systematic or showing an actual market failure (corn prices by the way have been plummeting since 2012).
13. Broadband policy should indeed be improved, but this section reads as messy, should do more to emphasize the notion of competition and common carrier platforms, and how about a mention of StarLink?
14. There’s not really any point in marching through a discussion of the “Big Tech” section.
15. Is there a problem with bank concentration in this country? Not where I live. Maybe in some rural areas?
16. YIMBY > NIMBY would do more to limit market power than just about anything else, by the way.
17. Is there even a peep about this country’s biggest and worst-performing monopoly in K-12? Of course not. It is Amazon you have to worry about!
So overall this is not great economics. It is good to see the Biden administration pick up on a few pro-competition issues, but much of the document is not clearly pro-competition either. The reasoning and evidence are pretty much politicized from start to finish.
Preston Estep was alone in a borrowed laboratory, somewhere in Boston. No big company, no board meetings, no billion-dollar payout from Operation Warp Speed, the US government’s covid-19 vaccine funding program. No animal data. No ethics approval.
What he did have: ingredients for a vaccine. And one willing volunteer.
Estep swirled together the mixture and spritzed it up his nose.
…Estep and at least 20 other researchers, technologists, or science enthusiasts, many connected to Harvard University and MIT, have volunteered as lab rats for a do-it-yourself inoculation against the coronavirus. They say it’s their only chance to become immune without waiting a year or more for a vaccine to be formally approved.
Among those who’ve taken the DIY vaccine is George Church, the celebrity geneticist at Harvard University, who took two doses a week apart earlier this month. The doses were dropped in his mailbox, and he mixed the ingredients himself.
Church say…he believes the vaccine designed by Estep, his former graduate student at Harvard and one of his protégés, is extremely safe. “I think we are at much bigger risk from covid considering how many ways you can get it, and how highly variable the consequences are,” he says.
I’m a big fan of the RadVac vaccine and was recently asked to give a talk about the vaccine and the pluses and minuses of the open source approach. In my talk I cover patents, when it was rational to take an unapproved vaccine, the FDA, paternal medicine versus the Consumer Reports model and more. I’m especially pleased with this talk.
Addendum: Great set of posts from johnswentworth from LessWrong on making the vaccine and then testing it.
Five years ago, Marginal Revolution covered a new project, Stripe Atlas, to help founders incorporate their start-ups and thus make them successful realities. There is a one-time fee of $500. Here are the results:
In 2016, we launched Stripe Atlas to help founders turn their ideas into startups, and in turn, collectively grow the GDP of the internet. Since then, over 20,000 businesses have started with Atlas and have generated over $3 billion in revenue. We surveyed over 1,000 Atlas founders to get a snapshot of this generation of entrepreneurs and their needs…
Ninety-one percent of Atlas founders are not in Silicon Valley. In fact, outside of the US, some of the places where we’re seeing the fastest growth are Nigeria (400% year-over-year), United Arab Emirates (165%), and India (66%). Twenty-eight percent of founders told us that they identify as minorities in their country, and 24% are immigrants. Just 12% of founders identified as female. (This is slightly better when compared to the portfolios of major startup accelerators or venture capital firms.) Over time we hope to help more female founders start and scale. Forty-three percent of Atlas founders are building businesses for the first time—nearly 10,000 of them started in just the past year (an indication of an upward trend in entrepreneurship after nearly three decades of decline).
That is from Edwin Wee. The core lesson, at the meta-level, is that business services for an internet age remain drastically underprovided. But on the bright side, entrepreneurs are starting to remedy this…
That is the topic of my latest Bloomberg column, here is one part:
In economic terms, the private value of internet security is often less than the public value. A ransomware attack that results in only a slight decrease in profits for a business could translate into a major social inconvenience.
One consolation is that hackers will almost certainly “overfish” the pool of victims. At some point there will be so many attacks that most institutions will have no choice but to respond with significant defensive measures. The hackers themselves will accelerate this process, because each will try to maximize their profits before the game is over. Curiously, this means that a successful attempt to “slow down” the hackers could just delay the necessary adjustments that businesses need to make, leaving everyone worse off.
There is much more at the link.
In a series of tweets (try this one), Matt Yglesias has been arguing that academic economists are far more Democratic than the U.S. population as a whole, though less left-wing than most other academics. I agree with his claims, which are backed by plenty of data, but I wish to add some further thoughts.
Very often political views follow our socioeconomic class and the peer groups we are trying to impress or join. Thus those claims from Matt are true for American policies only. If you took a leftish (but not Marxist radical) Democratic U.S. economist, and asked that person what Mexico should do to improve, I think the answers would include the following:
1. Build state capacity to win the drug war, legalize or decriminalize some drugs too.
2. Make it easier for firms in the informal sector to enter the formal, taxed sector, and thus make it easier for them to grow.
3. Invest more in education for underprivileged Mexican youth.
4. End the state monopolies in industrial products.
5. Do something about corruption (but what?).
6. Diversify the economy away from Pemex and fossil fuels.
7. Maintain NAFTA and try to maintain and indeed rebuild the health of the earlier democratization.
Now, that is pretty much the same as my list! To be sure, the rhetoric on some of these proposals, such as #2 and #3, would be different coming from this imaginary leftish Democratic economist. (Lots more talk about “inequality” on #2 and more about the benefits of regulation on #3, for instance, whereas I would stress the benefits of firm growth.) But I don’t think the substance of the proposals would be all that different.
Whether you wish to say the leftish economist has a right-wing perspective on Mexico, or vice versa, is a moot point. Or are we all centrists on Mexico? There is in any case a reasonable coincidence of policy recommendations once you remove people from their immediate socioeconomic environment. And surely that makes the Democratic economists just a little suspicious to the non-economist intellectual Democrats, as you can see from the Twitter fury directed at Matt Y. for what were purely factual claims.
There is a reason why they call it “the Washington Consensus.” I can assure you that the World Bank and IMF economists are not a bunch of Republican wanna-bees. But the Washington Consensus works, at least on average.
If you asked a non-economist Democratic voter what Mexico should do, I am not sure what answers you would get. But it is hardly obvious you would get the above list (I’d love to see this done as a study and compared to the Republican answers). Maybe the non-economist would talk about foreign aid more? Immigration more? I really don’t know. But they probably are not very aware of the dismal productivity performance of Mexican SMEs and what a problem that is, and probably not very aware of the various state monopolies. They probably would mention corruption, however, and also public safety and winning the fight against the drug gangs.
When it comes to U.S. disputes, the Democratic economist probably would be more “off the rails” than the typical Democratic voter (sorry, you’ll have to find your own links here, there are plenty), if only because that person is more aware of the socioeconomic conflicts and more aware of what one is supposed to believe. The more symbolic the dispute, the further from the median voter the Democratic economist is likely to be. But that is the education doing the work, not the economics background.
If you want to get a Democratic economist making sense, just get that person talking about some other country, follow most of the policy advice, and remove the word “inequality” and a few other catch phrases.
Interestingly, there is a subset of Republican economists who don’t talk sense no matter what the country under consideration. For instance, they might think that “income tax cuts for Mexico” would do a lot of good. In this sense they are the more consistent “cosmopolitan ideologues,” taking that phrase as a truly joint concept. Since most economists are Democrats, perhaps examining “the remnant Republicans” is selecting for excessively consistent ideology. The remnant Republicans are less likely to insist that “every country is different,” a’ la Dani Rodrik. If they were so flexible, they probably wouldn’t still be Republicans.
As a final note, I fear we are entering a world so “well-informed” about affective polarization, and with Woke concepts so globalized, that at some point the majority of the Democratic economists won’t talk sense on Mexico any more either. But we are not yet there — maybe in five to ten years? Maybe never? And where will the Republican remnant end up?
Wyoming—the first US state to grant a charter to a crypto bank—has approved legal status for a decentralized autonomous organization ( ), the American CryptoFed DAO, according to an announcement on Sunday. The organization, which has a mission to introduce a new monetary system, now becomes the first legally recognized DAO in the U.S.
It comes after Wyoming lawmakers voted in March to pass a bill allowing DAOs to be officially registered in the state. The law affords these entities—which are governed by and dispense with the hierarchical control structure seen in traditional companies—the same rights as a limited liability company. The bill came into effect on July 1, 2021.
Just think — limited liability for “a company managed by nobody”! And:
The DAO law also solidifies Wyoming’s reputation as the most crypto-friendly U.S. state. Last year, it was the first in the US to issue a state charter for crypto banks and has already licensed two: Kraken and Avanti.
Here is the full story, via Shaffin Shariff.
According to Jonathan Martinis, the senior director for law and policy at a center for disability rights at Syracuse University, one of the most dangerous aspects of guardianships is the way that they prevent people from getting their own legal counsel. “The rights at stake in guardianship are analogous to the rights at stake in criminal cases,” Martinis said. “Britney could have been found holding an axe and a severed head, saying ‘I did it,’ and she still would’ve had the right to an attorney. So, under guardianship, you don’t have the same rights as an axe murderer.”
…there is also a wide range of alternatives to conservatorship that are less strict than what Spears has experienced, such as conditional powers of attorney or formal shared control of finances. As conservatorship law is written, the court is required to determine that a conservatorship is—and remains—necessary. “In practice,” Zoë Brennan-Krohn, a disability-rights attorney for the American Civil Liberties Union, said, “this is absolutely not the case. What should be happening is that a judge at a reëvaluation hearing would ask, ‘What else have you tried? Why isn’t anything else working?’ And, if the conservator hasn’t shown that they’ve tried less restrictive options, the conservatorship should be suspended. But I’ve never heard of a judge asking that in any situation.”
Here is the full New Yorker story by Ronan Farrow and Jia Tolentino, focusing on Britney Spears.
A new NBER paper by Allcott, Kim, Taubinsky and Zinman takes a close look at the behavioral economics of payday loans and finds that most common regulations make borrowers worse off.
Critics argue that payday loans are predatory, trapping consumers in cycles of repeated high interest borrowing. A typical payday loan incurs $15 interest per $100 borrowed over two weeks, implying an annual percentage rate (APR) of 391 percent, and more than 80 percent of payday loans nationwide in 2011-2012 were reborrowed within 30 days (CFPB 2016). As a result of these concerns, 18 states now effectively ban payday lending (CFA 2019), and in 2017, the Consumer Financial Protection Bureau (CFPB) finalized a set of nationwide regulations. The CFPB’s then director argued that \the CFPB’s new rule puts a stop to the payday debt traps that have plagued communities across the country. Too often, borrowers who need quick cash end up trapped in loans they can’t afford” (CFPB 2017).
Proponents argue that payday loans serve a critical need: people are willing to pay high interest rates because they very much need credit. For example, Knight (2017) wrote that the CFPB regulation \will significantly reduce consumers’ access to credit at the exact moments they need it most.” Under new leadership, the CFPB rescinded part of its 2017 regulation on the grounds that it would reduce credit access.
At the core of this debate is the question of whether borrowers act in their own best interest. If borrowers successfully maximize their utility, then restricting choice reduces welfare. However, if borrowers have self-control problems (“present focus,” in the language of Ericson and Laibson 2019), then they may borrow more to finance present consumption than they would like to in the long run. Furthermore, if borrowers are “naive” about their present focus, overoptimistic about their future financial situation, or for some other reason do not anticipate their high likelihood of repeat borrowing, they could underestimate the costs of repaying a loan. In this case, restricting credit access might make borrowers better off.
First, the authors find that borrowers clearly understand their own behavior. When asked, borrowers predict that they have a 70% probability of borrowing again in the next eight weeks which is almost exactly (74%) the actual borrowing probability. Experienced borrowers are better at predicting their own probabilities of borrowing again so learning also takes place.
Just because they can predict their own behavior doesn’t meant that borrowers like their own behavior (a drunk might predict they will get drunk again without “desiring” to get drunk again) and indeed the authors show with a clever experiment that many borrowers are willing to pay to modestly constrain their own choices. Overall, however, borrowers gain from payday lending so when the authors model payday loan regulations with borrower preferences (their “best”, long-run preferences) regulation reduces welfare:
Payday loan bans and tighter loan size caps both reduce welfare in our model. By contrast, 18 states have banned payday lending, and some states have particularly stringent loan size caps, such as the $300 limit in California.
The best regulation in the model is a rollover restriction which prevents borrowers from borrowing again and again and again. Rather than a blanket regulation, however, I’d prefer a self-exclusion option which would allow people to ban themselves from borrowing in much the same way that people with gambling problems can ban themselves from gambling establishments.
The bottom line is that payday lenders are serving a need and benefiting their customers. Preventing people from accessing payday lenders typically makes them worse but that doesn’t mean that the customers are entirely sensible or without problems both internal and external. The most revealing statistic in the paper is one the authors mention only in passing:
although our participants are liquidity constrained and we sent two reminder emails, our gift card vendor reports that only 44 percent of the $100 gift cards were claimed
It’s no surprise that people who leave free money on the table have planning problems and need to borrow, it’s just that preventing them from borrowing doesn’t make them better off.
Governor Ron DeSantis would not let cruise ships sailing from Florida mandate vaccination? Well, this is what you end up with:
Now we know the true cost of not getting vaccinated for COVID-19: You won’t be able to order sushi when cruising on Royal Caribbean‘s Freedom of the Seas.
Here is a list of all the other restrictions for the unvaccinated cruise passengers. Via Stephen Jones.
Over the past fifty years, to earn the median wage, a Mexican has had to sell an average of 700 grams of marijuana, 18 grams of heroin, or 66 grams of cocaine on the U.S. streets. It amounts to weed weighing two cans of soup, coke weighing a tennis ball, or smack weighing just three U.S. quarters. And this is only the average. During the economic collapse of the mid-1980s, it took only 280 grams of marijuana and 4.8 grams of heroin to make the annual wage. You could earn as much growing a single marijuana plant or a window box of poppies as driving a cab for a year.
Up to the 1970s, violence was rarely employed to sort out disputes between drug traffickers. The trade was relatively peaceful. Cooperation was the rule. Deep ties of blood, marriage, friendship, and neighborhood, which linked many of the traffickers, prevented the frequent use of force. In general, so did the local protection rackets. Both state governors and state cops were keen to avoid conflicts that risked exposing their own ties to the traffickers.
This changed because sometimes the later state authorities sought to institute their own protection rackets, using force toward that end. Many of the gangs sought to extend their turf beyond drugs to other commercial areas, also leading to conflict. Finally, the U.S.-led war on drugs induced a form of Mexican aggressive counternarcotics policing that bred conflict as well.
Overall this is a good book about a hard to research topic.
Austin Cyclists Split On Sharing Bike Lanes With Pizza Delivery Robots
Some Austin cyclists are not happy about the robots using bike lanes, while others are optimistic that sharing their path will lead to good things down the road…
“My personal view is that I don’t believe these belong in the bike lane,” said Jake Boone, who serves as vice-chair of the city’s Bicycle Advisory Council.
“I almost feel like we’re the test subject for this new technology, and that does bother me,” he said. “What if in two years we have several hundred of these on the road?”
Here is the full story, via Mike Doherty.
This paper studies how the presence of adult entertainment establishments affects the incidence of sex crimes, including sexual abuse and rape. We build a high frequency daily and weekly panel that combines the exact location of not-self-reported sex crimes with the day of opening and exact location of adult entertainment establishments in New York City. We find that these businesses decrease sex crime by 13% per police precinct one week after the opening, and have no effect on other types of crimes. The results imply that the reduction is mostly driven by potential sex offenders frequenting these establishments rather than committing crimes. We also rule out the possibility that other mechanisms are driving our results, such as an increase in the number of police officers, a reduction in the number of street prostitutes and a possible reduction in the number of potential victims in areas where these businesses opened. The effects are robust to using alternative measures of sex crimes.
That is from a new paper by Ciacci and Sviatschi, via Jennifer Doleac. We find this clash of values repeatedly in public policy. Do you wish to side with the interests of the actual victims — the people who might end up abused and raped? — or do you wish to side with landlords and homeowners who might find their property values reduced by sex establishments? “Export the bad stuff!”, this is a NIMBy dilemma yet again.
That from the FT is the kind of headline we should be seeing. From Henry Mance:
…for 13 years, courts in California have rewarded Spears’s father Jamie, a failed businessman who struggled with alcoholism, once filed for bankruptcy and who, according to the documentary Framing Britney Spears, was often absent from his daughter’s childhood. They have enabled arguably the most egregious villain of them all. In 2008, when his daughter suffered an apparent mental health crisis, Jamie asked a court to make him her conservator — that is, legal guardian. He has mostly kept the power since. He has decided which friends she sees, what medical treatment she receives and what happens to her fortune, estimated at $60m.
…They had made her work seven days a week, taken her credit cards and given her no privacy when undressing. “In California the only similar thing to this is called sex-trafficking,” she said. They would not let her have an intrauterine device removed, because they didn’t want her to have more kids. But they did allow a doctor to prescribe her lithium “out of nowhere”.
I get that you might have doubts about this case, or be able to cite many other cases where some form of guardianship might be useful. But if something like this is possible at all, it is time to realize the whole system is broken and we need to work much harder to root out its abuses.
Time to wake up! Be woke! Really woke.
A survey of almost 200 police departments indicated that retirements were up 45 percent and resignations rose by 18 percent in the year from April 2020 to April 2021 when compared with the previous 12 months, according to the Police Executive Research Forum, a Washington policy institute.
New York City saw 2,600 officers retire in 2020 compared with 1,509 the year before. Resignations in Seattle increased to 123 from 34 and retirements to 96 from 43. Minneapolis, which had 912 uniformed officers in May 2019, is now down to 699. At the same time, many cities are contending with a rise in shootings and homicides.
Asheville was among the hardest hit proportionally, losing upward of 80 officers, more than one third of its 238-strong force.
NYTimes: New York City built only 163,000 units of housing in the 2010s, fewer than the 205,000 created in the 1930s, during and after the Great Depression, according to a city report. From 2009 to 2018, the New York metro region added 0.5 units of housing for every new job, down from 2.2 units per job in the previous decade.
The article continues:
In December, a New York Supreme Court judge annulled the city’s rezoning plan for Inwood…The Inwood plan would have increased the allowable height and density in parts of the neighborhood, which could have brought 3,900 new units to the area, including 1,600 below-market apartments, according to the Department of City Planning. The city is appealing the decision.
The judge agreed that the city’s environmental review process, which aims to measure the impact of development, did not adequately study a number of concerns, including the risk of racial displacement and the effect of speculative development on local businesses, many of which can be more valuable to landlords as land sales.
This is another illustration of how collective decision making impedes innovation. Neither judges nor regulators should be making these “balancing” decisions which politicizes and creates veto players who can dam innovation at low-cost to themselves. Decisions about when and where to build should by left to the spontaneous order operating under the principles of private property and the rule of law.
Look at this nonsense and imagine if every decision had to be so studied for every group and interest that one could possibly imagine:
“They don’t have to study the racial impact? That’s ridiculous,” said Michael Sussman, the petitioners’ attorney, who argued that speculation would have an outsize impact on minority residents in the area, many of whom live in rent-regulated apartments.