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From David Splinter, from my email
This is all David:
A related paper by BEA came out today with their updated distributional estimates of personal income. Marina Gindelsky has done a lot of work to produce these estimates.
I have a couple new papers on tax progressivity and redistribution that may be of interest to you. Both used CBO data to avoid the PSZ-AS differences. Abstracts below.
The first paper is about the ends of the distribution: tax progressivity has increased significantly since 1979 (and steadily since 1986) due to more generous tax credits for the bottom, while average tax burdens of the top have been relatively unchanged because lower marginal rates were offset by decreased use of tax shelters. The online appendix shows why the CBO estimates differ from those of Saez and Zucman (see Fig. B7 at the end; it’s mostly due to refundable credits at the bottom and imputed income at the top) and the Heathcote et al. paper you blogged about a couple months ago (it’s technical differences and their inclusion of some transfers, but their most similar measure of tax progressivity was not flat—it increased 21 percent since 1979).
The second paper, with Adam Looney and Jeff Larrimore, is about the middle of the distribution. Since 1979, we found that non-elderly middle-class market income increased 39 percent in real per person terms. The increase was 57 percent when accounting for taxes and transfers. This seems to fit with the “updated” view of stagnation—expanding male wages to also look at untaxed compensation and including female compensation and taxes/transfers shows larger median growth. But there was a structural break in 2000. Before then, middle-class incomes grew at the same rate before and after taxes and transfers, and since then income after taxes and transfers grew three times faster (Fig. 6 on page 19). We don’t discuss the recent market income slowdown (maybe related to the debated labor share break around 2000), but we show that the additional fiscal support that filled the gap looks like an unsustainable way to boost middle-class disposable incomes going forward.”
Wednesday assorted links
My Conversation with John O. Brennan
Here is the audio, video, and transcript — we are both Irish-Americans who were born in Hudson County, New Jersey, and who spent most of our lives working in northern Virginia, the CIA in his case. Here is part of the CWT summary:
John joined Tyler to discuss what working in intelligence taught him about people’s motivations, how his Catholic upbringing prepared him for working in intelligence, the similarities between working at the CIA and entering the priesthood, his ability to synthetize information from disparate sources, his assessment on the possibility of alien life, the efficacy of personality tests and polygraphs, why CIA agents are so punctual, how the CIA plans to remain a competitive recruiter for top talent, the challenges that spouses and family members of intelligence workers face, the impact of modern technology on spycraft, why he doesn’t support the use of enhanced interrogation techniques, his favorite parts of Cairo, the pros and cons of the recent Middle Eastern peace deal brokered by Jared Kushner, the reasons he thinks we should leverage American culture more abroad, JFK conspiracy theories, why there seemed to be much less foreign interference in the 2020 election than experts predicted, what John le Carré got right about being a spy, why most spies aren’t like James Bond, what he would change about FISA courts, and more.
Here is one excerpt:
COWEN: Are CIA agents more punctual than average?
BRENNAN: Some certainly are. Many of them need to be if you’re going to have a rendezvous, a clandestine rendezvous with a spy from overseas, one of your assets or agents. You have worked for hours to get clean so that you make sure that the local security services are not onto you and surveilling you, and your agent has done the same thing so that when you meet at the designated place at a designated hour, you can quickly then have either a brush pass or a quick meeting or whatever.
If you’re not punctual, you can put that agent’s life in danger. I think it’s instilled in CIA, certainly case officers, that time is of the essence, and you need to be able to follow the clock.
Also, I remember when I was CIA director and I would go down to the White House for an executive council meeting or a principals committee meeting. Jim Clapper, the director of National Intelligence, and myself would always be the first ones there because we were always very punctual. I think sometimes the policymakers would look at the clock not as carefully as we would.
COWEN: If you’re hiring for punctuality, and obviously, you would expect employees to show an extreme degree of loyalty, do you worry that you’re not hiring for enough of what’s called disagreeability in the personality literature: people who will contradict their superiors, people who will pick fights? They’re a pain to work with, but at the end of the day, they bring up points that other people are afraid to say or won’t even see.
BRENNAN: We’re not looking to hire just a bunch of yes people. To me, I don’t think punctuality means that you’re looking to instill discipline in an organization. You’re trying to ensure that you’re taking advantage of —
COWEN: But that and loyalty — it would seem to select against disagreeability.
BRENNAN: There’s loyalty to the Constitution. There’s loyalty to the oath of office. To me, there shouldn’t be loyalty to any individuals, including inside the CIA. I would like to think that CIA recruiters would be looking for individuals who are intellectually curious, have critical thinking skills, and mainly have also, I think, some degree of contrariness because you don’t want people just to accept as gospel what it is that they are being told, especially if they’re going to be interacting with spies overseas.
Definitely recommended, fascinating throughout. And here is John’s new book Undaunted: My Fight Against America’s Enemies, At Home and Abroad.
John O. Brennan on UFOs
I thought I would give this segment its own post, again here is the audio, video, and transcript of my Conversation with John O. Brennan, head of the CIA for four years under President Obama:
BRENNAN: I’ve seen some of those videos from Navy pilots, and I must tell you that they are quite eyebrow-raising when you look at them. You try to ensure that you have as much data as possible in terms of visuals and also different types of maybe technical collection of sensors that you have at the time.
Also, I believe, it’s important to reach out into other environments and find out, were there any type of weather phenomena at that time that might have, in fact, created the appearance of the phenomenon that you’re looking at? Were there some things that were happening on the ground, or other types of phenomena that could help explain what seems to be quite a mystery as far as what is there?
I think an important thing for analysts to do is not to go into this type of challenge either discounting certain types of possibilities or believing in advance that it is likely X, Y, or Z. You really have to approach it with an open mind, but get as much data as possible and get as much expertise as possible brought to bear.
COWEN: At the end of all that sifting and interpreting, what do you think is the most likely hypothesis?
BRENNAN: [laughs] I don’t know. When people talk about it, is there other life besides what’s in the States, in the world, the globe? Life is defined in many different ways. I think it’s a bit presumptuous and arrogant for us to believe that there’s no other form of life anywhere in the entire universe. What that might be is subject to a lot of different views.
But I think some of the phenomena we’re going to be seeing continues to be unexplained and might, in fact, be some type of phenomenon that is the result of something that we don’t yet understand and that could involve some type of activity that some might say constitutes a different form of life.
The major reason I take UFO reports seriously is simply the “gradient” of other people who take them seriously — the people with the very highest security clearances! It is not just Brennan and Harry Reid, there are others too, namely people with the very highest level of security clearance who believe these issues deserve further investigation, and are not just weather phenomena, instrument mistakes, weather balloons, etc.
The ideological shift of the libertarian movement on pandemics
In the midst of his libertarian phase, Milton Friedman wrote:
As already noted, significant neighborhood effects justify substantial public health activities: maintaining the purity of water, assuring proper sewage disposal, controlling contagious diseases.
Yet today many libertarians shy away from the actual execution of this for Covid-19.
Here is a 2014 Reason magazine symposium on Ebola, by . Of those four I know Bailey a wee bit (not well), but from the entries and bylines and the very title of the feature — “What Is the Libertarian Response to Ebola? How a free society should respond to a communicable disease outbreak” — they would indeed seem to be self-described libertarians.
All four, as I read them, are willing to accept the idea of forced quarantine of individuals. Not just in extreme lifeboat comparisons, but in actual situations that plausibly might have arisen at that time. If you don’t already know, Reason, while not mega-extreme, typically would be considered more libertarian in orientation than most of the libertarian-leaning think tanks.
Maybe I was napping at the time, but I don’t recall any mega-scandal resulting from those proclamations.
Here is my earlier Bloomberg column rejecting the notion of forced quarantine of individuals for Covid-19, mostly on rights grounds, though I add some consequentialist arguments. I would not trade in the American performance for the Chinese anti-Covid performance if it meant we had to weld people inside their apartments without due process, for instance, as the Chinese (and Vietnamese and others) did regularly.
To be clear, Ebola and Covid-19 have very different properties, and you might favor forcible quarantine for one and not the other. Whether those differences in properties should matter for a rights perspective is a complex question, but still I am surprised to see that quarantine was — not long ago — considered so acceptable from a libertarian point of view, given the current pushback against pandemic-related restrictions.
(Speaking of shifts, here is Will Wilkinson on GBD. While I agree with many of his points, I am curious where Will stands on forcible quarantine of individuals on a non-trivial scale. He does say he favors a “supported isolation program,” so maybe he favors coercive quarantine but he doesn’t quite commit to that view either?)
I am surprised most of all how little interest current libertarians seem to have in the following “line”:
“A unregulated Covid-19 response would have been much, much better. We would have had a good vaccine right away, and tested it rapidly with a Human Challenge Trial. It would be sold around the world at a profit, with much quicker distribution and pandemic resolution than what we are seeing today. This pandemic was awful, but the market would have kicked butt cleaning it up.”
I am not here claiming that view is correct, only that a strong libertarian ought to be amenable to it. And yet I hear it remarkably infrequently, even though I think most committed libertarians would agree if you posed it to them as a direct question.
It is at least 20x more fashionable to obsess over the costs of lockdowns, combined with various denialist claims about the severity of the problem.
As for masks, how about this?:
“Masks? Masks are great, of course they are a public good. Markets are great at producing and maintaining value-maximizing voluntary norms such as mask-wearing!”
I cannot help but think that the views above in quotation marks would have been the dominant libertarian response in the 1980s or 1990s, and that the various brews appearing today are yet another sign of our Douthatian decadence.
Tuesday assorted links
1. A game design take on QAnon.
2. Is it counterproductive to pay people to take the vaccine? (NYT) And it seems the EU is moving up its vaccine approval meeting to the 21st, they must be as reckless as the Canadians and the German Bundesministerium für Gesundheit. More here, from someone who should know. And Ryan Bourne on who should be vaccinated first.
3. “Dr. honorific obligation for thee but not for me…”?
4. How much will facial recognition be regulated in 2021?
5. Does the new history of corn involve early trade with South America!?
Champerty on the Blockchain
One of the peculiarities of the law is that third party contracts to finance a lawsuit in exchange for a percentage of any recovery have long been unenforceable under the doctrine of champtery. As with contingent fees, the idea is that third party financing will generate frivolous lawsuits. In contrast, Helland and I found that contingent fees improve legal quality because lawyers won’t take cases that are likely to fail on a contingency basis but they will take them on an hourly-fee basis. Contingent fees and third-party funding also reduce credit constraints and extend the legal system to people who cannot finance their own cases. Third-party finance is reasonably common in Australia and doesn’t seem to have had major negative consequences. It’s also becoming more common in the United States even though the law is still unclear.
For someone who believes in markets, third party contracts are just contracts. As Helland and I said in our AEI monograph, Two Cheers for Contingent Fees, it’s one thing to think that the tort system is broken or out-of-control and quite another to think that the appropriate way to address this is to interfere in the right of tort victims and financiers to contract. In fact, Robert Cooter once likened tort claims to Arrow-Debreu securities and argued for a market in unmatured tort claims (UTCs). Today, we are somewhat closer to that market on the blockchain!
The Avalanche blockchain is hosting a new kind of token designed to allow retail investors to invest in the outcome of lawsuits.
The so-called ‘Initial Litigation Offering’ is the brainchild of Avalanche creator Ava Labs, US law-firm Roche Cyrulnik Freedman LLP and Republic Advisory Services, a consultancy.
Many individuals lack the funds to pursue legal action; litigation financing allows investors to cover the costs of a claim in return for a portion of the payout, should the claim prove successful. For the new ILO on Avalanche, the right to such a payout has been tokenised, and would be delivered as a digital asset.
As usual, it’s a little unclear what the blockchain is doing since the real issue is to measure the outcome of the cases and distribute the funds and that requires trust. Still, the blockchain will increase liquidity–potentially allowing anyone in the world to invest (again, assuming trust in the originator)–and it will also help with unenforceability. Ironically, one of the problems with these contracts has been that knowing that they are unenforceable the victims renege on the deal after winning their cases! If instead the money goes into a smart contract on the blockchain it will be much harder for the victims to renege. Innovations like this may also push the law to clarify the legality of third party financing.
Addendum: The first case they plan to tokenize looks appropriate. A farmer was growing approved hemp but the local sheriff razed his cropland causing a billion dollars in damages.
Collective action problems with testing and vaccines
About testing, Megan McArdle writes:
The high rate of false negatives means that testing provides the most protection when it’s deployed at the population level. At the group level, it’s only a weak, adjunct tactic to other precautions. And at the individual level, it’s borderline useless.
it depends on the test of course (I think she is too negative on the individual test), but the general point is well taken. So basically, in the Straussian sense, one might wish to exaggerate the private (and social) benefits of testing.
Alternatively, consider vaccines. If thousands of people use a vaccine early and it goes badly, that might lead to adverse publicity for vaccines in general. If only one person uses a vaccine early, and keels over dead, probably it goes unnoticed.
So for vaccines in the early, still quite unsafe stage, the Straussian might wish to exaggerate the risks, to limit the number of those trying it (whether on grey or black markets or flying to China, or whatever). All the more reason to talk up testing.
Once vaccines are confirmed as safe enough, there are increasing returns to spreading the vaccines in a particular area. One person getting vaccinated won’t materially lower R, but half of the community being vaccinated will drive R well below one, allowing most economic activity to resume normally.
So the Straussian will wish to exaggerate the private (and social) benefits of getting the vaccine, at least once a certain security is present about vaccine safety.
That is a lot of Straussian tightrope walking to be done!
From the reckless oh so reckless Bundesminister für Gesundheit
Wir haben als EU die Impfstoffentwicklung erfolgreich unterstützt u uns gemeinsam Impfdosen gesichert. Alle nötigen Daten zu BioNTech liegen vor. UK + US haben bereits Zulassungen erteilt. Eine Prüfung der Daten u die Zulassung durch die EMA sollten schnellstmöglich erfolgen.
Es geht dabei auch um das Vertrauen der Bürgerinnen und Bürger in die Handlungsfähigkeit der Europäischen Union. Bund und Länder sind ab dem 15.12. in der Fläche einsatzbereit: Erste Impfdosen stehen quasi bereit und könnten direkt nach der Zulassung verimpft werden.
Jeder Tag, den wir früher beginnen können zu impfen, mindert Leid und schützt die besonders Verwundbaren.
In other words, he is pissed that the EU has not yet approved any vaccines. Link here, via Andreas Backhaus. Of course, if you are a good Bayesian this also should lead you to update your sense of the speediness of the FDA…
Monday assorted links
1. Ross Douthat says have more kids. And Scott Sumner random thoughts.
2. Income More Reliably Predicts Frequent Than Intense Happiness.
3. Revision of an earlier FT report: Chinese Belt and Road lending isn’t falling off by as much as reported.
4. More on battery progress. And speculative claims about iron powder as a power source.
*A Sound Mind: How I Fell in Love with Classical Music*
That is the new book by Paul Morley, with the parenthetical subtitle “(And Decided to Rewrite its Entire History)”.
It is one of my favorite books of the year, though I recommend it most to those who already have a background in the topic. It is wide-ranging, with plenty of emphasis on the contemporary and why Harrison Birtwistle is the brilliant composer you never properly understood. If you grade music books on “how many different pieces of music does it make me want to listen to/relisten to,” this is one of the best music books of all time.
Here is one excerpt I liked:
Eno said that he was interested in the Borgesian idea that you could invent a world in reverse by inventing the artefacts that ought to be in its first. You think what kind of music would be in that world — in this case, background music made as art — then you make the music and the world forms itself around the music…
Bang on a Can produced a live instrumental version of the four pieces, and Eno has humbly said that their interpretation moved him to tears. Husband-and-wife artists Lou reed and Laurie Anderson heard it performed live and they said it was heartbreaking. Without thinking, or rather, with thinking, Eno had composed a piece of music that is all at once flat and multidimensional, barren and detailed, near and far, music and sound, feeling and unfeeling, spiritual and vacant, real and unreal, mundane and magical.
It is the kind of book that suddenly stops and reels off 89 numbered points you are supposed to be interested in. And I am. But sprawling it is, and your mileage may vary. And yes most of it is about actual “classical” music, whatever that is supposed to mean these days. This is one book I will not throw out.
Remote Work Impact on Ending The Great Stagnation?
Jeff Allen emails me:
If the Great Stagnation is ending (we will see), it seems as if the COVID-forced remote work revolution has to have played some sort of role.
Speaking from personal experience as a white collar Exec, the productivity gains for our highest value workers has been immense. The typical time-sucks and distractions of in-office work have been eliminated, as have their personal time investments like physically visiting the grocery store or running errands. Mental focus on productive efforts is near constant.
Perhaps most importantly, work *travel* is not happening. Valuable collaborations with colleagues, customers, regulators or other partner companies aren’t delayed by the vagaries of the various groups’ availability to meet in person, navigating being in different cities, flights, hotels, etc. Collaboration happens as soon as you have the idea to meet via Zoom. And a lot *more* collaboration happens as a result. It may be lower productivity collaboration than meeting in person around a whiteboard (maybe), but the sheer quantity of it means on net there’s perhaps been a boom in cross-pollination of ideas.
Not to mention all of the wasted productivity time that work travel eats up by putting high value workers in low productivity transit mode….Uber to airport, security lines, wait for flight in the terminal, maybe grab an hour of in-flight WiFi to catch up on email, land, taxi on the airstrip for 20 minutes, Uber to hotel…is completely gone from our lives.
In general, I think we drastically overrate the value of work travel.
I’m sure this Mass Virtualization event doesn’t benefit all workers equally.
But could it be an accelerant for certain high-value innovations worked on by the best of the best in science and technology?
I’m not saying I don’t want the world to go back to normal. Travel is great. In-person human interaction certainly has many benefits (duh). But I think we should ask ourselves how we can retain some of the best advantages this last year has brought us, even after the vaccines and herd immunity bring us back to something resembling normalcy in 2021.
Here is a related Robin Hanson post on the importance of work from a distance. Of course remote work is, to some extent, a way around both immigration and NIMBY restrictions. You will note this is all very much in line with my earlier take that, if the great stagnation ends, it will be because we have placed the internet at the center of our institutions, rather than using the internet as an add-on.
From my email, on bioethicists
Hi Tyler. I had a brief career as an ethicist. I realized quickly that the incentives are all wrong if what we want is people who will think hard about humanity’s pressing ethical dilemmas and who will suggest intuitively appealing solutions.
Since almost all ethicists are academics, they have to publish, and in order to publish you have to be novel, and since the basic principles of ethics are little changed for millennia the incentives to do thorough homework on the basis of principles which are widely understood and accepted is not great.
Furthermore, if you decide to be a utilitarian, then basically all ethical issues will boil down to cost/benefit analyses which you have to outsource to technocrats, so your unique expertise as an ethicist will be worth little.
For whatever it’s worth, one could justify most of the widespread opinions of bioethicists and other ethicists who reach conclusions quite repugnant to utilitarians on the basis of “care ethics”. The result is not important and even the rule is not important, what is important is the amount of personal concern you project to specific human beings. Most people would prefer not to expose their close family members to mortal danger so adopting a policy deliberately exposing strangers to such danger appears un-caring.
If ethicists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid.
The name of the author has been anonymized to protect the innocent.
Sunday assorted links
1. That Biogen conference in Boston was worse than you thought. And Swedish deaths now at 2/3 of April peak.
2. The bull semen storage culture that is India.
3. Will the French invest in “enhanced soldiers”?
4. The Economist on hydrogen-powered flight.
5. James Flynn has passed away.
6. Very good Ross piece (NYT).
What might an end to the Great Stagnation consist of?
If indeed it did, they are asking a similar question at The Economist. In recent times you might cite the onset of Apple’s M1, GPT-3, DeepMind’s application of AI to protein folding, phase III for a credible malaria vaccine, a CRISPR/sickle cell cure, the possibility of a universal flu vaccine, mRNA vaccines, ongoing solar power progress, wonderful new batteries for electric vehicles, a possibly new method for Chinese fusion (?), Chinese photon quantum computing, and ongoing advances in space exploration, most of all from SpaceX. Tesla has a very high market valuation, and Elon is the world’s second richest man.
Distanced work is very important, and here is a separate post on that.
I would say that almost certainly the great stagnation is over in the biomedical sciences. It is less obvious that the great stagnation is over more generally, as we might simply retreat into our former sloth and complacency once we are mostly vaccinated. Applied Divinity Studies has posed some pointed questions about why we might think that stagnation is over.
If you are looking for a quick metric to indicate the great stagnation might be over, consider total factor productivity. It is entirely possible that tfp in 2021 will be 5 or more, its highest level ever. (To be sure, this will show up as a measured increase in inputs more than as tfp, but we all know why those inputs will be increasing and that is because of science…yes this is a problem with tfp measures!) Over the two years to follow after that, we should be seeing very high tfps around the world. So that will be very high tfp for a few years.
Again, that is not proof of a permanent or even an ongoing end to the great stagnation. But it is something.
Two more general points seem relevant. First, many of the biomedical advances seem connected to new platforms, new modes of computation, new uses of AI, and so on, and they should be leading to yet further advances. Second, there are (finally!) some very real advances in energy use, and those tend to bring yet other advances in their wake, and not just advances in bit space.
But not all is rosy. If you recall my paper with Ben Southwood, the obstacles standing in the way of faster scientific progress, such as specialization and bureaucratization, mostly remain and some of them will be getting worse.
My The Great Stagnation, published in 2011, offered some pointed predictions. It argued that the “next big thing” was already with us, namely the internet, but we simply hadn’t learned to use it effectively yet. Once we put the internet at the center of many more of our institutions, rather than treating it as an add-on, the great stagnation would end. Numerous times (using roughly a 2011 start date) I predicted that the great stagnation would be over within twenty years time, though not in the next few years. The Great Stagnation in fact was an optimistic book, at least if you read it to the end and do not just mood affiliate over the title.
By no means would I say that specific scenario has been validated, but as a prediction it is looking not so crazy.
The gains from truly mobilizing the internet may in fact right now be swamping all of the accumulated obstacles we have put in the way of progress.
I also wrote, in 2011, that as the great stagnation approaches its end, we will all be deeply upset, and long for the earlier times. That too is by no means obviously wrong.