Category: Law
Deep roots, the persistent legacy of slavery on free labor markets
To engage with the large literature on the economic effects of slavery, we use antebellum census data to test for statistical differences at the 1860 free-slave border. We find evidence of lower population density, less intensive land use, and lower farm values on the slave side. Half of the border region was half underutilized. This does not support the view that abolition was a costly constraint for landowners. Indeed, the lower demand for similar, yet cheaper, land presents a different puzzle: why wouldn’t the yeomen farmers cross the border to fill up empty land in slave states, as was happening in the free states of the Old Northwest? On this point, we find evidence of higher wages on the slave side, indicating an aversion of free labor to working in a slave society. This evidence of systemically lower economic performance in slavery-legal areas suggests that the earlier literature on the profitability of plantations was misplaced, or at least incomplete.
That is from a new NBER working paper by Hoyt Bleakley and Paul Rhode.
How we should update our views on immigration
I am writing this post on a somewhat bumpy plane ride, so I will try doing it without links. Most of the relevant sources you can find through perplexity.Ai, or even on MR itself. Google too.
Overall, I am distressed by the contagion effects when it comes to immigration views. A large number of people are much more anti-immigration than they used to be, in part because yet others are more anti-immigration. All sorts of anecdotes circulate. But let’s look more systematically at what we have learned about immigration in the last ten years or so. Not all of it should count as pro-immigration, but a lot of it should, with one huge caveat.
When it comes to the wage effects of immigration, there is very modest additional evidence in the positive direction. I wouldn’t put much weight on that, but it certainly is not pointing in the other direction.
The United States is showing it can have a higher stock of immigrants and also falling crime rates. I am not suggesting a causal model there, but again that should be more reassuring than not.
There is additional evidence for the positive fiscal benefits of immigrants, including less skilled immigrants. Some of this is from the CBO, some of it I outlined in a Bloomberg column maybe a month or so ago. I don’t view those results as major revisions, but again they are not pointing in the wrong direction.
There is reasonable though not decisive macroeconomic evidence that immigrant labor supply was a significant contributor to America’s strong post-pandemic recovery.
If you are a right-winger who was worried that incoming Latinos would vote Democratic in some huge percentage, you can set your mind at ease on that one. You also can take this as evidence of a particular kind of assimilation.
Fertility rates are falling much more than we had expected, including in the United States. This makes the case for immigration much stronger.
It is increasingly evident that immigrant-rich Florida and Texas are doing just great. The picture is decidedly less positive for many parts of California, but I suppose I see evidence that the white Progressive Left is mainly at fault there, not the immigrants. Still, I do think you can make a reasonable argument that immigrants and the Progressive Left interact in a dysfunctional manner. It is no surprise to me that so many of the leading anti-immigrant voices come from California.
Overall, I am struck by the fact that immigration critics do not send me cost-benefit studies, nor do they seem to commission them. If the case against immigration is so strong, why aren’t these studies created and then sent to me? You could have a good one for a few hundred thousand dollars, right? Instead, in my emails and the like I receive a blizzard of negative emotion, and all sorts of anecdotal claims about how terrible various things are, but never a decent CBA. I take that to be endogenous. I think it is widely accepted that America having taken in the people who are now Italian-Americans would pass a cost-benefit test, even though the Mafia ruled New Jersey and Rhode Island for decades. Somehow people are less keen to apply this same kind of reasoning looking forward, though they are happy to regale you with tales of crimes by current immigrants.
I do see good evidence that trust in American government is falling, but I attribute that mainly to the Martin Gurri effect. I mean look at the current gaslighters in the White House and in the media — they are not primarily immigrants, quite the contrary. Or all the Covid mistakes, were they due to “the immigrants”? I don’t see it.
Now let us look at knowledge updates on the other side of the ledger, namely new knowledge that should make us more skeptical about immigration.
We now see that external hostility to Israel and Taiwan is stronger than we had thought. So the case for a looser immigration policy in Israel is much weaker than it used to be. As for Taiwan, they should be more careful about letting in mainland Chinese. Estonia needs to be more wary about letting in Russians, and indeed they are. And there might be other countries where this kind of logic applies. Do I really know so much about the situation between Burundi and Rwanda? In general, as the level of conflict in the world rises, there will be more of these cases. It is also a major consideration for anywhere near Ukraine. Small countries need to worry about this most of all.
I should note this problem does not seem to apply to North America, though you might require tougher security clearances for some jobs currently held by Chinese migrants.
The second issue, and it is a biggie, is that voters dislike immigration much, much more than they used to. The size of this effect has been surprising, and also the extent of its spread. I am writing this post on Election Day in France, and preliminary results suggest a very real risk that France ends up ungovernable. Immigrants are clearly a major factor in this outcome, even under super-benign views that do not “blame” the immigrants themselves at all.
Versions of this are happening in many countries, not just a few, and often these are countries that previously were fairly well governed.
I think it is better for countries in such positions to be much tougher on immigration, rather than to suffer these kinds of political consequences.
But let’s look honestly at the overall revision to our views. Politics is stupider and less ethical than before, including when it comes immigration (but not only! Fellow citizens also have become more negative about other fellow citizens of differing views, and I view negativism as the root of the problem all around). We need to take that into account, and so all sorts of pro-migration dreams need to be set aside for the time being, at least in many countries. Nonetheless the actual practical consequences of immigration, political backlash excluded, are somewhat more positive than we had thought. For some smaller countries, however, that may not hold, Israel being the easiest example to grasp but not the only. In the longer run, we also would like to prepare for the day when higher levels of immigration might resume, even if that currently seems far off. So we shouldn’t talk down immigration per se. Instead we should try to combat excess negativism in many spheres of life.
Somehow that view is too complicated for people to process, and so instead they instinctively jump on the anti-immigration bandwagon. Too much negativism. But in fact my view is better than theirs, and so they ought to hold it.
Claude read the Chevron pdf
“This is a very significant overturning of Chevron deference, which has been a cornerstone of administrative law for the past 40 years. Some key points about the implications:
- It fundamentally shifts power from executive agencies to courts in interpreting ambiguous statutes. Courts will now have primary authority to interpret statutory ambiguities rather than deferring to reasonable agency interpretations.
- It opens up many existing agency regulations and interpretations to potential new legal challenges. Regulations that were previously upheld under Chevron may now be more vulnerable.
- It will likely make it harder for agencies to issue new regulations or take new regulatory actions, as they will have less latitude in interpreting their statutory authority.
- It may lead to less stability and consistency in regulatory policy, as different courts may reach different interpretations of statutes.
- It could slow down the regulatory process, as more issues may end up being litigated in court rather than deferred to agency expertise.
Some areas that may see significant impacts:
- Environmental regulations (EPA, Dept of Interior, etc.)
- Healthcare regulations (HHS, CMS)
- Financial regulations (SEC, CFPB)
- Labor regulations (DOL, NLRB)
- Immigration policies
- Telecommunications regulations (FCC)
Regulations that rely heavily on agencies filling in statutory gaps or interpreting broad statutory language are most likely to be affected. Major Obama and Biden-era regulations on issues like climate change, healthcare, and financial reform may be particularly vulnerable to new challenges.
However, the majority opinion does state that prior judicial decisions upholding agency actions under Chevron should not necessarily be overturned based on this ruling alone. So there is some effort to limit the disruptive impact, though the dissent expresses skepticism about how effective that will be in practice.
Overall, this represents a major shift in the balance of power between the executive and judicial branches when it comes to administrative law and regulation. The full practical implications will likely take years to play out through new litigation and regulatory processes.”
13.9 percent less democracy?
Estonian edition:
After the Citizenship Act was enacted in 1992, 90% of ethnic-Estonians automatically became citizens while only 8-10% of non-Estonians gained citizenship. This is due to a law that granted citizenship to those who were living in Estonia before 1940, which was the year of Soviet annexation. [3] Because of the law, those that moved or were born in Estonia after 1940 during Soviet times had to apply for citizenship. New numbers show that ‘as of April 2012, 93,774 persons (6.9% of the population) remain stateless, while approximately 95,115 (7% of the population) have chosen Russian citizenship as an alternative to statelessness’. [4] Because many Russian-speakers have not been able to gain citizenship, this combined 13.9% of the population does not have the right to participate in Estonian democracy.
Here is more detail. I believe in 1992, during the first election, about forty percent of the resident, age-relevant population was not eligible to vote. I am not sure what the percentages are right now, but I do know the same basic system continues.
I do not per se object to these policies (fear the Russian bear), while noting I do not have enough information to assess all the trade-offs involved. Nonetheless it is interesting how much attention the Hungarian and Polish democratic “deviations” receive, relative to this one. An EU country in fully good standing around the world, on the basis of ethnicity, denies a significant portion of its longstanding residents the right to vote.
Two further points. First, you have to worry about this issue, as a Russian ethnic, unless your ancestors arrived before 1940. So the worry here is not just about recent arrivals, but it is quite possible that your grandparents were born in Estonia, maybe even great-grandparents. Second, ethnic Russians do have a path to normal Estonian citizenship, but it is difficult, especially the language requirement, which I am told is very tough.
I heard Russian a great deal walking through the streets of Tallinn, and most of all at the ballet. I have seen estimates that one-quarter of the Estonian population is ethnic Russian, and in the major city it is surely more than that.
Garett Jones, telephone!
Testing for Bird Flu is Too Slow
Remember my warnings about the FDAs takeover of lab developed tests?
…Lab developed tests have never been FDA regulated except briefly during the pandemic emergency when such regulation led to catastrophic consequences. Catastrophic consequences that had been predicted in advanced by Paul Clement and Lawrence Tribe. Despite this, for reasons I do not understand, the FDA plan is marching forward but many other people are starting to warn of dire consequences.
Well the plan marched forward and here we are. Regarding tests for bird flu:
KFFNews: Clinical laboratories have also begun to develop their own tests from scratch. But researchers said they’re moving cautiously because of a recent FDA rule that gives the agency more oversight of lab-developed tests, lengthening the pathway to approval. In an email to KFF Health News, FDA press officer Janell Goodwin said the rule’s enforcement will occur gradually.
However, Susan Van Meter, president of the American Clinical Laboratory Association, a trade group whose members include the nation’s largest commercial diagnostic labs, said companies need more clarity: “It’s slowing things down because it’s adding to the confusion about what is allowable.”
One of the motivations for Operation Warp Speed and my work during the pandemic on things like advance market commitments was that firms wouldn’t invest enough in tests because diseases might fizzle out. The extreme costs of shutting down the economy, however, mean that it’s well worth paying for some tests for diseases that fizzle out if tests are ready when a disease doesn’t fizzle out.
Creating tests for the bird flu is already a risky bet, because demand is uncertain. It’s not clear whether this outbreak in cattle will trigger an epidemic or fizzle out. In addition to issues with the CDC and FDA, clinical laboratories are trying to figure out whether health insurers or the government will pay for bird flu tests.
We need a pandemic trust fund to ramp up advance market commitments when necessary.
On the plus side, I do approve of the new program to pay farmers and farm workers for testing. For example:
Friday’s incentives announcement included a $75 payment to any farm worker who agrees to give blood and nasal swab samples to the CDC.
“Bird flu” has now infected more than 50 types of mammals. To be clear, bird flu may yet fade but every potential pandemic pathogen is a test of readiness and we still are getting a C+ at best.
The polity and culture that is Oregon
Oregon voters will likely decide in November whether to establish a historic universal basic income program that would give every state resident roughly $750 annually from increased corporate taxes.
Proponents of the concept say they likely have enough signatures to place it on the ballot this fall, and opponents are taking them seriously…
“It’s looking really good. It’s really exciting,” said Anna Martinez, a Portland hairstylist who helped form the group behind the campaign, Oregon People’s Rebate, in 2020. If approved by voters, the program would go into effect in January 2025.
Most of the Portland business community opposes the proposal. Here is the full story, via Mark W.
Accelerating India’s Development
What will India look like in 2047? Combining projections of economic growth with estimates of the elasticity of outcomes with respect to growth, Karthik Muralidharan in Accelerating India’s Development reports:
Even with a strong GDP per capita growth rate of 6 per cent, projections for 2047 paint a sobering picture if we maintain our current course. While India’s infant mortality is projected to halve from 27 per 1000 births to 13 in 2047, it will still be well above China’s current rate of 8. Child stunting will only decrease from 35.5 to 25 per cent, which is only a 10.5 percentage point or 30 per cent reduction in nearly 25 years. In rural India, 16 per cent of children in Class 5 will still not be able to read at a Class 2 level, and 55 per cent of them will still not be able to do division at the Class 3 level.
Bear in mind that this is assuming an optimistic 6% growth rate in GDP per capita. Even more telling is that if growth increased to 8%, infant mortality would only fall to 10 per 1000 (instead of 13). Growth is great. It’s the single most important factor but it’s not everything. If India can double the elasticity of infant mortality with respect to growth, for example, then at the same 6% growth rate infant mortality would fall to just 6 per 1000 by 2047–that’s millions of lives saved. The big argument of Muralidharan’s Accelerating India’s Development is that India can get more development from the same level of growth by increasing the total factor productivity of the state.
There are many “big think” books on growth–Landes’ Wealth and Poverty of Nations, Acemoglu and Robinson’s The Narrow Corridor, Koyama and Rubin’s How the World Became Rich–but these books are primarily historical and descriptive. The big think books don’t tell you how to develop. Create institutions to strike “a delicate and precarious balance between state and society” isn’t much of a guide to development. Accelerating India’s Development is different.
“Accelerating” opens with two excellent chapters on the political economy of politicians and bureaucrats, outlining the constraints any reforms must navigate. It concludes with two chapters on the future, including ideas like ranked choice voting, representing its aspirations. It’s in-between the constraints and the aspirations, however, that Accelerating India’s Development is unique. I know of no other book that offers such a detailed, analytical, and comprehensive examination and evaluation of a country’s institutions and processes.
Muralidharan’s recommendations are often based on his own twenty years of research, especially in education, health and welfare, and when not based on his own research Muralidharan has read everyone and everything. Yet, he offers not a laundry list but a well-thought out, analytic, set of recommendations that are grounded on political and economic realities.
To give just one example, India’s bureaucracy is far over-paid relative to India’s GDP per capita or wages in the private sector. With wages too high, the bureaucracy is too small–a reflection of the concentrated benefits (wages to government workers), diffuse costs (delivering services to citizens) problem. Lowering wages for government workers is a non-starter but Muralidharan argues persuasively that it is possible to hire new workers from local communities at prevailing wages on renewable contracts. The Integrated Child Development Services (ICDS), for example, is India’s main program for delivering early childhood education. There are 1.35 million anganwadi centers (AWCs) across India and typically a single anganwadi worker is responsible for both nutrition and pre-school education but they spend most of their time on paperwork!
A simple, scalable way to improve early childhood education is to add a second worker to AWCs to focus on preschool education….In a recent study, my co-authors and I found that adding an extra, locally hired, early-childhood care and education facilitators to anganwadis in Tamil Nadu doubled daily preschool instructional time…we found large gains in students’ maths, language and executive function skills. We also found a significant reduction in child stunting and malnutrition…We estimate the social return on this investment was around thirteen times the cost….the ECCE facilitators typically had only a Class 10 or Class 12 qualification and received only one week of training, and were still highly effective.
The example illustrates Muralidharan’s methods. First, the recommendation is based on a large, credible, multi-year study run in India with the cooperation of the government of Tamil Nadu. Second, the study is chosen for the book because it fits Muralidharan’s larger analysis of India’s problems, India has too few government workers which leads to high potential returns, yet the workers are paid too much so these returns are fiscally unachievable. But hiring more workers on the margin, at India’s-prevailing wages, is feasible. India has lots of modestly-educated workers so the program can scale–this is not a study about adding AI-driven computers to Delhi schools under the management of IIT trained educators, a program which would be subject to the heroes aren’t replicable problem. The program is also politically feasible because it leaves rents in place and by hiring lots of workers, even at low wages, it generates its own political support. Finally, note that India’s ICDS is the largest early childhood development program in the world so improving it has the potential to make millions of lives better. Which is why I have called Muralidharan the most important economist in the world.
One of the reasons state capacity in India is so low is premature load bearing. Imagine if the 19th-century U.S. government had attempted to handle everything today’s U.S. government does—this is the situation in India. When State Capacity/Tasks < 1, what should be done? In premature imitation, Rajagopalan and I advocate for reducing Tasks–an idea best represented by Ed Glaeser’s quip that “A country that cannot provide clean water for its citizens should not be in the business of regulating film dialogue.” Accelerating India’s Development focuses on increasing State Capacity but without being anti-market. In fact, Muralidharan proposes making the state more effective by leveraging markets more extensively.
Indian policy should place a very high priority on expanding the supply of high-quality service providers, regardless of whether they are in the public or private sector.
Hence, Muraldiharan wants to build on India’s remarkably vibrant private schools and private health care with ideas like vouchers and independent ratings. Free to choose but free to choose in an information-rich environment. My own inclinations would be to push markets and also infrastructure more–we still need to get to that 6% growth! But I have few quibbles with what is in the book.
Accelerating India’s Development is an exceptionally rich and insightful book. Its comprehensive analysis and innovative recommendations make it an invaluable resource. I will undoubtedly reference it in future discussions and writings. This book is a must-read for anyone interested in understanding and improving life in the world’s largest democracy.
Claude 3 for SCOTUS?
I would vote to confirm:
I decided to do a little more empirical testing of AI’s legal ability. Specifically, I downloaded the briefs in every Supreme Court merits case that has been decided so far this Term, inputted them into Claude 3 Opus (the best version of Claude), and then asked a few follow-up questions. (Although I used Claude for this exercise, one would likely get similar results with GPT-4.)
The results were otherworldly. Claude is fully capable of acting as a Supreme Court Justice right now. When used as a law clerk, Claude is easily as insightful and accurate as human clerks, while towering over humans in efficiency.
Let’s start with the easiest thing I asked Claude to do: adjudicate Supreme Court cases. Claude consistently decides cases correctly. When it gets the case “wrong”—meaning, decides it differently from how the Supreme Court decided it—its disposition is invariably reasonable…
Of the 37 merits cases decided so far this Term,1 Claude decided 27 in the same way the Supreme Court did.2 In the other 10 (such as Campos-Chaves), I frequently was more persuaded by Claude’s analysis than the Supreme Court’s. A few of the cases Claude got “wrong” were not Claude’s fault, such as DeVillier v. Texas, in which the Court issued a narrow remand without deciding the question presented.
Although I’ve heard concerns that AI would be “woke,” Claude is studiously moderate.
Here is much more from Adam Unikovsky. A lot of people are still in denial, or not far enough along to even count as “denying.”
The Pentagon’s Anti-Vax Campaign
During the pandemic it was common for many Americans to discount or even disparage the Chinese vaccines. In fact, the Chinese vaccines such as Coronavac/Sinovac were made quickly and in large quantities and they were effective. The Chinese vaccines saved millions of lives. The vaccine portfolio model that the AHT team produced, as well as common sense, suggested the value of having a diversified portfolio. That’s why we recommended and I advocated for including a deactivated vaccine in the Operation Warp Speed mix or barring that for making an advance deal on vaccine capacity with China. At the time, I assumed that the disparaging of Chinese vaccines was simply an issue of national pride or bravado during a time of fear. But it turns out that in other countries, the Pentagon ran a disinformation campaign against the Chinese vaccines.
Reuters: At the height of the COVID-19 pandemic, the U.S. military launched a secret campaign to counter what it perceived as China’s growing influence in the Philippines, a nation hit especially hard by the deadly virus.
The clandestine operation has not been previously reported. It aimed to sow doubt about the safety and efficacy of vaccines and other life-saving aid that was being supplied by China, a Reuters investigation found. Through phony internet accounts meant to impersonate Filipinos, the military’s propaganda efforts morphed into an anti-vax campaign.
… Tailoring the propaganda campaign to local audiences across Central Asia and the Middle East, the Pentagon used a combination of fake social media accounts on multiple platforms to spread fear of China’s vaccines among Muslims at a time when the virus was killing tens of thousands of people each day. A key part of the strategy: amplify the disputed contention that, because vaccines sometimes contain pork gelatin, China’s shots could be considered forbidden under Islamic law.
…To implement the anti-vax campaign, the Defense Department overrode strong objections from top U.S. diplomats in Southeast Asia at the time, Reuters found. Sources involved in its planning and execution say the Pentagon, which ran the program through the military’s psychological operations center in Tampa, Florida, disregarded the collateral impact that such propaganda may have on innocent Filipinos.
“We weren’t looking at this from a public health perspective,” said a senior military officer involved in the program. “We were looking at how we could drag China through the mud.”
Frankly, this is sickening. The Pentagon’s anti-vax campaign has undermined U.S. credibility on the global stage and eroded trust in American institutions, and it will complicate future public health efforts. US intelligence agencies should be banned from interfering with or using public health as a front.
Moreover, there was a better model. It’s often forgotten but the elimination of smallpox from the planet, one of humanities greatest feats, was a global effort spearheaded by the United States and….the Soviet Union.
…even while engaged in a pitched battle for influence across the globe, the Soviet Union and the United States were able to harness their domestic and geopolitical self-interests and their mutual interest in using science and technology to advance human development and produce a remarkable public health achievement.
We could have taken a similar approach with China during the COVID pandemic.
More generally, we face global challenges, from pandemics to climate change to artificial intelligence. Addressing these challenges will require strategic international cooperation. This isn’t about idealism; it’s about escaping the prisoner’s dilemma. We can’t let small groups with narrow agendas and parochial visions undermine collaborations essential for our interests and security in an interconnected world.
Enhancing FDA Information Sharing for Neglected Tropical Diseases
Many countries look to the US FDA for guidance on approval decisions. In fact the FDA will sometimes receive and evaluate drugs and vaccines whose primary market is in less developed countries. Fexinidazole, for example, is a drug for treating African trypanosomiasis, i.e. sleeping sickness. We don’t get many cases of sleeping sickness in the US but there are many such cases in the Democratic Republic of Congo.
Thus, the US FDA is providing a useful service, both to US pharmaceutical firms and especially to developing countries. That’s great. But Jacob Trefethen of OpenPhil notes that for odd bureaucratic and legal reasons we redact a lot of information that could be useful to the countries that actually will use these treatments. Here, for example, is an excerpt from the approval decision for Fexinidazole:
What’s especially strange here is that as far as Trefethen, or I, can tell, no one wants this! The FDA has no reason to hide this information, the company submitting the proposal surely wants as much information as possible sent to the countries where they will ultimately need to get approval (remember this is successful applications!) and the medical agencies in the developing countries would like to get context to have confidence in the FDA’s decisions. Instead, it seems that these drugs are getting caught in rules intended to protect pharmaceutical firms in other contexts. Thus, Trefethen makes two suggestions:
let’s create a track for products on the Neglected Tropical Disease list, sharing assessments with few or no redactions with the WHO Pre-Qualification (PQ) system, and allow PQ to share those documents further with regulators in partner countries.
Such an approval track already exists in the EU:
[The EU] have an approval track for products that are mostly going to be used elsewhere. If you apply using that track, they loop in regulators from those countries too. They share the documents assessing your clinical data and inspecting your manufacturing site with the WHO prequalification (PQ) team – the team whose stamp of approval speeds things up for many countries with less experienced national regulators. Gavi and the Global Fund need a product to be prequalified in order to buy it through the UN procurement agencies (e.g. UNICEF, for children’s vaccines).
Even without an approval track there are other small changes in priority and emphasis that could improve information sharing. The FDA is not unaware of these information sharing issues, for example, and there are procedures in place for confidentiality agreements with other countries. Trefethen suggests these could be given greater priority.
FDA leadership should set aggressive goals to complete more two-way Confidentiality Commitments with lower- and middle-income country regulators.
Extend the scope of existing commitments, when they’re limited, to allow sharing in more areas – especially related to drug approvals.
Extend 708(c) authority to more country agreements, not just those with European countries, to allow sharing of full documents that include trade secrets.
I’ve long advocated for peer approval, Trefethen gets into the weeds to point to specific ideas to make this a more useful idea, especially for developing countries. See Trefethen for more ideas!
My Conversation with Velina Tchakarova
Here is the audio, video, and transcript. Here is the episode summary:
Founder of the consultancy FACE, Velina is a geopolitical strategist guiding businesses and organizations to anticipate the outcomes of global conflicts, shifting alliances, and bleeding edge technologies on the world stage.
In a globe-trotting conversation, Tyler and Velina start in the Balkans and then head to Russia, China, North Korea, and finally circle back to Putin’s interest in the Baltics. She gives her take on whether the Balkan Wars still matter today, the future of Bulgarian nationalism, what predicts which Eastern European countries will remain closer to Russia, why China will not attack Taiwan, Putin’s next move after Ukraine, where a nuclear weapon is most likely to be used next, how she sources intel, her unique approach to scenario-planning, and more.
Here is one excerpt on a matter of great importance:
COWEN: Maybe we’ll come back to Bulgaria, but let me try some questions about the broader world. Why is it you think China will not attack Taiwan? They claim it as theirs, and arguably, in five to ten years, they’ll be able to neutralize our submarine advantage from the US with underwater drones and surveillance of our submarine presence. At that point, why don’t they just move on Taiwan and try to take it?
TCHAKAROVA: Well, I do understand that there is a lot of analysis coming out right now, especially on behalf of the military experts, not only in the United States but also in other parts of the world, pointing to this realistic scenario that we may see a military attack by China on Taiwan not later than 2027. And why 2027? Because it is being anticipated as the year when China will be able to catch up militarily with the United States.
I do not share this assessment. I just don’t see why China will have to take such a big risk in achieving something that it can achieve in a much smarter and more efficient way. What do I mean by that? I call this approach “death by a thousand cuts.” That would mean that China could spend a little bit longer in a slow but steady political, social, economic, and societal penetration of Taiwan. We could argue it’s the old Soviet playbook. It could be done in a more subtle way, using plausible deniability.
Taiwan is still the most successful democracy in the Indo-Pacific. That means, also, it is vulnerable to this kind of penetration, where you can practically use agents provocateurs on the ground. You can buy up a lot of institutional or individual players. You can start doing all this subversion process in a longer timeframe, but it could bring about bigger success than actually risking military intervention, which is not giving you, I would say, even a 50–50 chance of success.
The terrain of Taiwan, if we compare it with the most sophisticated war that’s going on right now, is much more difficult. You have a very, very limited window to attack. In the case of Taiwan, this window of opportunity is probably limited only to two periods in the whole year, which, of course, is also known by everyone in the region. That particularly means the defense of Taiwan. You have a window of opportunity in April and then in October, so you cannot attack at any time in the year.
It is a sophisticated military attack that cannot be conducted on the whole of the island. Even though China is catching up militarily right now, I think that the mindset of this Chinese leadership — the way the Chinese leadership is actually conducting strategy — does contradict such risky endeavor, again because time is on China’s side. China only needs to really prepare this sum of minor actions in a longer period of time. At least, this is what I would actually do as a strategist, which would promise a much better percentage of success than, like I said, an adventurous military attack.
Now, we may argue that under unanticipated circumstances for the political leadership — think of a situation where the political stability in China is shaken, where the Chinese leader, Xi Jinping, is somehow put into a corner to take a very, let’s say, ad hoc decision on the matter because of certain circles of the hawks, of the military hawks. Of course, we have this possibility as well. It could be a black swan event, something that has happened in China, and this makes him take this decision in order to draw the attention away from internal problems.
Foreign policy adventures are always gathering public support. It’s not 100 percent to be excluded, but in my scenario, I would actually point to, as I explained, this death-by-a-thousand-cuts approach rather than a military attack on Taiwan.
COWEN: Are we now in a world where the laws of war are basically obsolete?
It is worth repeating that issues of foreign policy are very much the most important issues. And here is Velina on Twitter.
Backlash effects are real, for drug policy too
It was less than two years ago that officials in British Columbia, the epicenter of Canada’s drug overdose crisis, unveiled what they called “bold action.”
The experiment, backed by Canada’s police chiefs, was to decriminalize the possession of small amounts of some drugs — including methamphetamine, cocaine, fentanyl and heroin — for personal use. The approach, officials said, would reduce the stigma that can discourage users from seeking treatment and the criminal records that can prevent them from rebuilding their lives.
If the three-year trial produced results, it could be a template for the rest of the country.
But now, with complaints about public drug use rising and a provincial election looming, they’ve abruptly reversed course. The center-left New Democratic Party government, which championed the policy, last month received approval from Ottawa to recriminalize drug possession in most public spaces.
Here is more from Amanda Coletta The Washington Post. We are at margins where many such experiments — because they are not working well enough — are in danger of being reversed.
Do we need antitrust action against “big alcohol”?
The argument here will be familiar to many MR readers, and it now appears in a Bloomberg column of mine. Excerpt:
I say this as a longtime advocate of abstention, so make of it what you will, but: If Southern Glazer’s actions are limiting the supply of alcohol and boosting its price, then so much the better.
There is an overwhelming body of evidence that drinking alcohol leads to more traffic fatalities, reduced productivity and higher rates of violence, not to mention the unquantifiable cost in ruined lives. Legal prohibition of alcohol proved unworkable, but some of the benefits of reduced consumption can be gained by allowing prices to rise and to stay high. One NIH investigation estimated the costs of alcohol use amounted to 2.6% of US GDP.
If a monopoly has some positive social consequences, all the more reason to let it persist. I would also be pleased, for example, by a monopoly in non-medical marijuana.
There are many instances of unlawful monopoly power in market economies, and most of them are best ignored. The FTC, like most parts of the government, does not have unlimited resources.
There are numerous other arguments in the piece.
The Marginal Revolution Theory of Innovation
A FDA panel voted against approving MDMA (ecstasy) for post-traumatic stress disorder. Putting aside the specifics of the case, I was vexed by this statement on innovation from one of the experts voting no:
“I absolutely agree that we need new and better treatments for PTSD,” said Paul Holtzheimer, deputy director for research at the National Center for PTSD, a panelist who voted no on the question of whether the benefits of MDMA-therapy outweighed the risks.
“However, I also note that premature introduction of a treatment can actually stifle development, stifle implementation and lead to premature adoption of treatments that are either not completely known to be safe, not fully effective or not being used at their optimal efficacy,” he added.
A textbook example of making the perfect the enemy of the good. But the problem is even worse. Holtzheimer seems to think that treatments spring from the lab perfectly formed like Athena springing from the brow of Zeus. Indeed, Holtzheimer suggests that treatments should be kept in the lab until they are perfect. News flash: there are no perfect treatments–no drug or device in use today is completely known to be safe, fully effective, and used at its optimal efficacy. Not one. If we follow Holtzheimer’s counsel, we will never approve a new drug.
Innovation is a dynamic process; success rarely comes on the first attempt. The key to innovation is continuous refinement and improvement. A firm with sales gains greater resources to invest in further research and development. Additionally, they benefit from customer feedback, which provides valuable insights for enhancing their products and processes. Learning by doing requires doing. But if imperfect treatments are never approved, scientists often don’t return to the lab to refine and improve them. Instead, the project dies. Thus, when considering innovation today, it’s essential to think about not only the current state of technology but also about the entire trajectory of development. A treatment that’s marginally better today may be much better tomorrow.
Small steps toward a much better world.
Why some additional regulation would help crypto
That is the topic of my latest Bloomberg column, here is one part of the argument, which focuses on the bill that recently passed the House but may stall in the Senate:
As for the policy details: Is this a good bill? Mostly, yes. Without a coherent regulatory framework, the US crypto sector won’t be competitive with those of other nations. That damages the potential for American innovation, encourages some entrepreneurs to take their businesses abroad, and could eventually limit the integration of crypto with mainstream financial infrastructures, which would put the US financial sector at a disadvantage.
The bill has the critical provision of requiring crypto infrastructures to be sufficiently decentralized, at least if that infrastructure is to fall under the jurisdiction of the CFTC rather than the SEC. These decentralized crypto infrastructures, which would include Bitcoin and the Ethereum network, are considered to be “digital commodities,” and are granted greater freedom. Such assets are not like shares of Apple stock, where the buyer expects a very particular kind of corporate responsibility and predictable financial reporting. So the bill stipulates that, for many crypto assets, initial issuance must involve tighter disclosure and regulation, with a role for the SEC. Over time, as the blockchain for that asset became more mature and well-established, regulation would relax.
Any particular proposal for such rules will necessarily involve some ambiguities and be susceptible to being gamed (by companies) or abused (by regulators). What is considered “adequate” decentralization, for example, is ultimately a subjective question. Still, this bill seems like a reasonable place to start for crypto regulation.
The alternative to such regulations of course is complete regulatory discretion, which is currently part of the status quo. And here is Alex’s recent post on crypto regulation.