In autumn 1830, Pushkin was confined by a cholera outbreak to the village of Boldino, his father’s remote country estate in southeastern Russia. Desperate to return to Moscow to marry, he wrote to his fiancée: “There are five quarantine zones between here and Moscow, and I would have to spend fourteen days in each. Do the maths and imagine what a foul mood I am in.”
Pushkin went on complaining bitterly but, with nothing else to do, he produced an astonishing number of masterpieces — short stories, short plays, lyric and narrative poems, and the last two chapters of his verse novel Eugene Onegin — in a mere three months.
Here is the full FT piece by Robert Chandler.
We derive a measure of firm-level regulatory costs from the text of corporate earnings calls. We then use this measure to study the effect of regulation on companies’ operating fundamentals and cost of capital. We find that higher regulatory cost results in slower sales growth, an effect which is mitigated for large firms. Furthermore, we find a one-standard deviation increase in our preferred measure of regulatory cost is associated with an increase in firms’ cost of capital of close to 3% per year. These findings suggest that regulatory risk is a major cost to firms, but the largest firms are able to manage that risk better.
That is the abstract of a new NBER paper by Charles W. Calomiris, Harry Mamaysky, Ruoke Yang, a piece written in pre-Covid-19 times. It has never been more relevant, except that the estimates for regulatory costs turn out to be far too low (no criticism of the authors is intended here). To repeat my earlier point, America’s regulatory state is failing us.
Data-analytics company Palantir Technologies Inc. is in talks to provide software to governments across Europe to battle the spread of Covid-19 and make strained health-care systems more efficient, a person familiar with the matter said.
The software company is in discussions with authorities in France, Germany, Austria and Switzerland, the person said, asking not to be identified because the negotiations are private…
European Union Commissioner Thierry Breton said Monday that the bloc is collecting mobile-phone data to help predict epidemic peaks in various member states and help allocate resources.
Palantir has signed a deal with a regional government in Germany, where it already has a 14 million euro ($15 million) contract with law enforcement in North Rhine-Westphalia, the person said. Palantir is also seeking a contract at a national level, the person said, but talks have stalled, the person added.
When a nation or company buys access to Palantir, it can use the data analytics software to pull far-flung digital information into a single repository and mine it for patterns.
Here is the full story. From a distance it is difficult to evaluate these deals, but I will stick with my general claim that the anti-tech intellectuals have become irrelevant, and for the most part they know it.
Top U.S. banks have threatened to give the federal government’s small-business rescue program a miss on concerns about taking on too much financial and legal risk, five people with direct knowledge of industry discussions told Reuters…
Their main concern is that the Treasury Department has said it expects lenders to verify borrower eligibility, and take steps to prevent fraud, money laundering and protect customer information under the Bank Secrecy Act, sources said. Banks are worried they could face regulatory penalties or legal costs down the line if things go awry in the haste to get money out the door, or get blamed for not moving funds fast enough if they perform due diligence the way they would in ordinary times, the sources said.
Here is the full story.
I’ve been working with a generous donor to get a million PPEs (masks) to the myriad healthcare workers in NYC who constantly tell us they’re facing shortages. Yet, hurdle after hurdle of dysfunction is severely inhibiting us from getting donated masks to those in need.
Here’s a catalog of all the ways various forces conspire against this effort at EVERY level: – Employers threaten to fire doctors & nurses if they speak frankly about shortages so it’s hard to determine the most at-need hospitals & if everyone in the chain is doing their job
– CDC and WHO messaging about “no need for masks” provide cover for hospitals, limiting reputational damage and protects them from class-action lawsuits for not providing adequate PPE to their staff (which should be their job)
– US PPE compliance is messy and confusing (different agencies setting different rules) which limits supply – All 50 states, Federal agencies, hospitals, NGOs, and businesses bid against each other, pushing prices up
– US authorities punishes anyone for “price gouging” so importers and suppliers are reluctant to order PPEs from vendors for fear of being penalized – As a result, US importers and suppliers of N95 masks get outbid by foreign competitors so the US loses out
– Because there are no export controls, local supplies of N95 masks get purchased by foreign buyers and are exported – FDA fails to authorize KN95 masks thus choking off total mask supply as KN95s are cheaper & available in larger quantities than N95s (they have similar specs)
– As a result, US Importers are hesitant to order KN95s (mostly produced overseas) because they’re worried they’ll get held up at customs or that hospitals would refuse to accept them even as free donations as they fear legal liability if healthcare worker gets ill using them
– Healthcare workers don’t get the protection they need but they can’t complain to the press – Rinse, wash, repeat – (Chinese state propaganda uses this as proof that the US is just as bad as the CCP for silencing whistleblowers)
That is a tweet storm by Melissa Chen.
I propose adopting innovation prizes with awards large enough to justify investments in broad-spectrum antiviral drugs developed up to phase III clinical trials in the FDA drug approval process. I also emphasize the importance of starting this effort with pathogen families of known pandemic potential, such as respiratory viruses.
…the medical community needs—and currently lacks—a class of drugs designed for emerging viruses of pandemic potential. These broad-spectrum drugs that target entire viral families can be developed as individual drugs or platform technologies.
Just before the outbreak of COVID-19, researchers at the Johns Hopkins Center for Health Security stated that “broad-spectrum [antiviral] therapeutics should be pursued given their potential value.”
There is much more at the link.
Consumers open up Facebook, Instagram, Snap, and WhatsApp dozens of times a day. Businesses, on the other hand, are checking Square, Stripe, QuickBooks, Netsuite, Brex, FreshBooks, Xero, Gusto, DoorDash, Mindbody, Toast and other tools that show them sales, orders, customers, and expenses. Almost every one of these platforms has been granted permission to access—read and write—bank accounts, and helps run the business.
The stimulus bill is going to direct funds through the Small Business Administration, but the SBA doesn’t really make loans. It simply guarantees loans made by banks. For many banks, the way you apply for an SBA 7a loan is to prepare tons of documents, go to your local branch, and then wait as long as 90 days. Wells Fargo has a fancy website, but for SBA loans it directs you to your local branch for a process that takes dozens of hours of form collections and physical signatures followed by months of waiting. Many private lenders approve loans in hours, so the SBA process has historically been an adverse selection lending trap.
It’s March of 2020, the world is under quarantine, all financial data exists in digital form, and billions of people use the internet—we can and should do better. Here’s how this can work, and Silicon Valley is standing by to build this, open source it, and get it out in days so that these small businesses can weather this storm.
Each and every financial services company can place a button on their website or in their app that sucks in relevant data from each business—much of it unforgeable, like credit card receipts as validated by the credit card processor—and spits out an instant machine readable package for aid. If Federal assistance needs to go through an SBA-approved bank (an odd construct, since most of these loans are meant to be forgiven) then this machine readable package can go out to whatever bank out of the 3000+ active SBA lenders can authorize it the quickest. To prevent fraud, that bank can be granted permission to the same set of financials—without loan officers, in person visits, scans and faxes. And if it comes back clean, route the money to the financial service that has already performed the Know Your Customer check on that merchant. A very complex problem is reduced to several hundred lines of code, aided by tools that nearly every small merchant in the United States uses.
That is by Alex Rampell, there is more at the link. More generally, we need to be honest with ourselves about who is capable of generating rapid response and who is not. Here is a Reason piece on the successes of the tech community.
One of the craziest unforeseen consequences of the crisis is that many people are delaying medical care but in places without a lot of coronavirus cases that’s creating a big hit on revenues.
ProPublica: Most ER providers in the U.S. work for staffing companies that have contracts with hospitals. Those staffing companies are losing revenue as hospitals postpone elective procedures and non-coronavirus patients avoid emergency rooms. Health insurers are processing claims more slowly as they adapt to a remote workforce.
“Despite the risks our providers are facing, and the great work being done by our teams, the economic challenges brought forth by COVID-19 have not spared our industry,” Steve Holtzclaw, the CEO of Alteon Health, one of the largest staffing companies, wrote in a memo to employees on Monday.
The memo announced that the company would be reducing hours for clinicians, cutting pay for administrative employees by 20%, and suspending 401(k) matches, bonuses and paid time off. Holtzclaw indicated that the measures were temporary but didn’t know how long they would last.
…Tenet Healthcare, a Dallas-based publicly traded company that runs 65 hospitals, said it would postpone 401(k) matches and tighten spending on contractors and vendors. Emergency room doctors at Boston’s Beth Israel Deaconess Medical Center have been told some of their accrued pay is being held back, according to The Boston Globe. More than 1,100 staffers at Atrius Health in Massachusetts are facing reduced paychecks or unpaid furloughs, and raises for medical staff at South Shore Health, another health system in Massachusetts, are being delayed. Several other hospitals have also announced furloughs.
The CARES bill has billions for hospitals but there seems to be a gap between funding sources that hasn’t been bridged. It’s peculiar that ER physicians often don’t work for the hospitals where they work.
Special hat tip: the excellent Kevin Lewis.
Here is a new AEI paper by Anna Scherbina. I have not read it and am not endorsing (or criticizing) its conclusions, here goes:
We investigate the optimal duration of the COVID-19 suppression policy. We find that absent extensive suppression measures, the economic cost of the virus will total over $9 trillion, which represents 43% of annual GDP. The optimal duration of the suppression policy crucially depends on the policy’s effectiveness in reducing the rate of the virus transmission. We use three different assumptions for the suppression policy effectiveness, measured by the R0 that it can achieve (R0 indicates the number of people an infected person infects on average at the start of the outbreak). Using the assumption that the suppression policy can achieve R0 = 1, we assess that it should be kept in place between 30 and 34 weeks. If suppression can achieve a lower R0 = 0.7, the policy should be in place between 11 and 12 weeks. Finally, for the most optimistic assumption that the suppression policy can achieve an even lower R0 of 0.5, we estimate that it should last between seven and eight weeks. We further show that stopping the suppression policy before six weeks does not produce any meaningful improvements in the pandemic outcome.
I hope there is a variable in the analysis for “risk of extreme societal pressures,” though I am not sure if those are higher for extreme lockdown scenarios or for extreme “let it rip” scenarios. In any case, such risks are a significant factor in how I view these questions.
And now I must teach! (on-line, of course). But I wanted to get this up for your attention before the evening closes.
Trump administration officials are asking India to lift restrictions to give the U.S. access to pharmaceutical ingredients needed to produce a range of drugs, amid fears of a potential U.S. drug supply shortage prompted by the coronavirus outbreak, three sources familiar with the matter told NBC News.
The two governments are holding discussions aimed at easing newly imposed restrictions on pharmaceutical exports from India, which Delhi introduced to ensure the country would have medicine needed to handle the pandemic inside of its borders, the sources said.
With coronavirus potentially disrupting the global supply chain for medicine, India earlier this month restricted the export of 26 pharmaceutical ingredients and the medicines made from them, including acetaminophen — a common pain reliever. India is the world’s leading supplier of generic drugs and is a key source for active pharmaceutical ingredients, or APIs, used to produce a range of medicines.
We need to get on this one right away, I have heard similar worries from very reliable sources. Here is one article.
We quantify the causal impact of human mobility restrictions, particularly the lockdown of the city of Wuhan on January 23, 2020, on the containment and delay of the spread of the Novel Coronavirus (2019-nCoV). We employ a set of difference-in-differences (DID) estimations to disentangle the lockdown effect on human mobility reductions from other confounding effects including panic effect, virus effect, and the Spring Festival effect. We find that the lockdown of Wuhan reduced inflow into Wuhan by 76.64%, outflows from Wuhan by 56.35%, and within-Wuhan movements by 54.15%. We also estimate the dynamic effects of up to 22 lagged population inflows from Wuhan and other Hubei cities, the epicenter of the 2019-nCoV outbreak, on the destination cities’ new infection cases. We find, using simulations with these estimates, that the lockdown of the city of Wuhan on January 23, 2020 contributed significantly to reducing the total infection cases outside of Wuhan, even with the social distancing measures later imposed by other cities. We find that the COVID-19 cases would be 64.81% higher in the 347 Chinese cities outside Hubei province, and 52.64% higher in the 16 non-Wuhan cities inside Hubei, in the counterfactual world in which the city of Wuhan were not locked down from January 23, 2020. We also find that there were substantial undocumented infection cases in the early days of the 2019-nCoV outbreak in Wuhan and other cities of Hubei province, but over time, the gap between the officially reported cases and our estimated “actual” cases narrows significantly. We also find evidence that enhanced social distancing policies in the 63 Chinese cities outside Hubei province are effective in reducing the impact of population inflows from the epicenter cities in Hubei province on the spread of 2019-nCoV virus in the destination cities elsewhere.
That is by Hanming Fang, Long Wang, and Yang Yang, of course do beware data quality issues.
8. Invest more in pandemic preparation. By now it should be obvious how critical this is. It’s fine to say “Obama is already working on this issue” but the fiscal constraint apparently binds and at the margin this should get more attention than jerry rigging all the subsidies and mandates and the like.
I say think probabilistically…A one percent chance of one hundred million deaths is, in expected value terms, one million deaths and that is a big deal. Probably the United States is less vulnerable than it was in 1918, but how many people would die in China, India and many other locales? How much disruption to trade, travel, and the world economy would take place? Even in the United States, our public health systems would break down quickly and render many modern medical advances useless (e.g., when would the Tamiflu run out?). Having lots of living space is wonderful, but it pays off only if people stay home from work and that means dealing with massive absenteeism. Not pretty. Better safe than sorry.
Oddly Stephens never mentions that we are living in a raging epidemic now, namely AIDS, which has run for several decades. For all the virtues of retrovirals, the modern world was quite slow in combating or even checking the disease and still many people, including U.S. citizens, engage in very risky behavior. Our collective response was not terribly impressive. Greater wealth does help, but greater wealth also means we should spend more to limit the problem…
The main thing we should do — invest in public health infrastructure — is in any case a good idea with many possible payoffs, whether a pandemic comes or not. It is a better investment of money than pursuing the ideal of universal health insurance coverage. I might add that one of the better arguments for universal coverage is simply that it could lead to better monitoring of some public health issues.
See also my text with Alex. And here is me on pandemics and local public health infrastructure, November 2018. And here are my earlier writings on avian flu.
Carl Danner writes me:
“Essential activities” has no objective definition. It implies some blanket degree of risk acceptance that can’t be accurate by any underlying calculus, i.e. as if someone has specifically weighed whether we can tolerate these particular activities because they provide enough value to offset the incremental risk of conducting them. But the reality is more likely that those conducting most activities (including “essential” ones) are now undertaking risk mitigation measures intended to reduce the chance of virus transmission to very low or nonexistent levels.
What we need instead — and the logical place for governments to go in unwinding these blanket restrictions — is a recognition that any beneficial economic activity should be allowed if undertaken using a protection protocol appropriate to its particulars and sufficient to prevent virus transmission. This would get government out of the business of choosing which businesses or occupations are essential, vital, important or whatever — including all the problems attendant to making such discretionary determinations across the entire economy for a sustained period. Without that revised approach, we could start to develop occupational licensing/certificate of need type problems as a general feature of the economy.
In other words, this part of the virus response should transition to a health and safety regulatory concern that is important, but handled like most of the others. For example, poor food hygiene can also kill you, but governments generally don’t respond by deciding which cuisines are essential and which are not. Rather, anyone willing to follow the safety rules can put up any menu they want. So it should be for economic activities of all kinds.
We should not lift restrictions until the number of new cases is declining and low and we have enough testing capacity to squash new outbreaks. But we should start to think about what safety protocols may be reasonable in the future. For example, I think we could allow any firm to reopen that does not deal with the public and where all the employees wear masks. Any workplace that disinfects twice a day and checks worker temperatures might be another appropriate allowance. Another possibility is quarantining at work. I don’t see the latter as useful for most workplaces but for say a nuclear energy plant or air traffic controllers it might be appropriate to bring in mobile homes, as they do for fracking workers in North Dakota. Going somewhat farther afield we might use cellphone data to decide on zones of quarantine, e.g. home or work or driving in between. Obviously such systems can be spoofed but the point would be to offer this as a temporary and voluntary system to move towards normalcy.
Hat tip: Michael Higgins.
NPR: “We have a culture here in Germany that is actually not supporting a centralized diagnostic system,” said Drosten, “so Germany does not have a public health laboratory that would restrict other labs from doing the tests. So we had an open market from the beginning.”
In other words, Germany’s equivalent to the U.S. Centers for Disease Control and Prevention — the Robert Koch Institute — makes recommendations but does not call the shots on testing for the entire country. Germany’s 16 federal states make their own decisions on coronavirus testing because each of them is responsible for their own health care systems.
If only America had a federal system we might have had earlier and faster testing.
We do another CWT, here is the audio and transcript (link corrected), a very good installment in the series. Here is part of the summary:
Ross joined Tyler to discuss why he sees Kanye as a force for anti-decadence, the innovative antiquarianism of the late Sir Roger Scruton, the mediocrity of modern architecture, why it’s no coincidence that Michel Houellebecq comes from France, his predictions for the future trajectory of American decadence — and what could throw us off of it, the question of men’s role in modernity, why he feels Christianity must embrace a kind of futurist optimism, what he sees as the influence of the “Thielian ethos” on conservatism, the plausibility of ghosts and alien UFOs, and more.
A welcome relief from Covid-19 talk, though we did cover Lyme disease. Here is one excerpt:
COWEN: Does the Vatican have too few employees? There’s a Slate article — it claimed in 2012, the Roman Curia has fewer than 3,000 employees. Walmart headquarters at the time had 12,000. If the Church is a quite significant global operation, can it be argued, in fact, that it’s not bureaucratic enough? They don’t actually have state capacity in the sense that state capacity libertarianism might approve of.
DOUTHAT: Right. State capacity libertarianism would disapprove of the Vatican model. And it reflects the reality that media coverage of the Catholic Church doesn’t always reflect, which is that in Catholic ecclesiology and the theory of the institution, bishops are really supposed to be pretty autonomous in governance. And the purpose of Rome is the promotion of missionary work and the protection of doctrine, and it’s not supposed to be micromanaging the governance of the world Church.
Now, I think what we’ve seen over the last 30 years — and it’s been thrown into sharp relief by the sex abuse crisis — is that the modern world may not allow that model to exist; that if you have this global institution that has a celebrity figure at the center of it, who is the focus of endless media attention, you can’t, in effect, get away with saying, “Well, the pope is the pope, but sex abuse is an American problem.”
And to that extent, there is a case that the Church needs more employees and a more efficient and centralized bureaucracy. But then that also coexists with the problem that the model of Catholicism is still a model that was modern in the 16th century. It’s still much more of a court model than a bureaucratic model, and pope after pope has theoretically tried to change this and has not succeeded.
Part of the reality is, as you well know, as a world traveler, the Italians are very good at running courts that exclude outsiders and prevent them from changing the way things are done. Time and again, some Anglo-Saxon or German blunderer gets put in charge of some Vatican dicastery and discovers that, in fact, the reforms he intends are just not quite possible. And you know, in certain ways, that’s a side of decadence that you can bemoan, but in certain ways, you have to respect, too.
Definitely recommended, a very fun CWT with lots of content. And again, here is Ross’s (recommended) book The Decadent Society: How We Became a Victim of Our Own Success.