Category: Uncategorized
$1 million plus in Emergent Ventures Prizes for coronavirus work
I believe that we should be using prizes to help innovate and combat the coronavirus. When are prizes better than grants? The case for prizes is stronger when you don’t know who is likely to make the breakthrough, you value the final output more than the process, there is an urgency to solutions (talent development is too slow), success is relatively easy to define, and efforts and investments are likely to be undercompensated. All of these apply to the threat from the coronavirus.
We do not know who are the most likely candidates to come up with the best tests, the best remedies and cures, the best innovations in social distancing, and the best policy proposals. Anyone in the world could make a contribution to the anti-virus effort and it won’t work to just give a chunk of money to say Harvard or MIT.
Progress is urgent. I am still keen on talent development for this and other problems, but the situation is worse every week, every day. It is important to incentivize those who are working on these problems now.
The innovators, medical professionals and policy people at work on this issue are unlikely to receive anything close to the full social value of their efforts.
I therefore am grateful that I have been able to raise a new chunk of money for Emergent Ventures — a project of the Mercatus Center — for ex post prizes (not grants) for those who make progress in coronavirus problems.
Here are the newly established prizes on offer:
1. Best investigative journalism on coronavirus — 50k
2. Best blog or social media tracking/analysis of the virus — 100k
3. Best (justified) coronavirus policy writing — 50k
4. Best effort to find a good treatment rapidly — 500k, second prize 200k
5. Best innovation in social distancing — 100k
6. Most important innovation or improvement for India — 100k
What might be an example of a winning project? What if this attempt to build scalable respirators succeeded? That would be a natural winner. Or a social distancing innovation might be the roll out of more meals on wheels, little libraries, online worship, easier ways to work from home, and so on. The vision is to give to people whose work actually will be encouraged, not to give to Amazon (sorry Jeff!), no matter how many wonderful things they do.
These are not prizes you apply for, they will be awarded by Emergent Ventures when a significant success is spotted. (That said, you still can propose a coronavirus-related project through normal channels, with discretionary amounts to be awarded as grants per usual procedures.) And typically the awards will apply to actions taken after the release of this announcement.
I would love to be able to offer more second and third prizes for these efforts, and also to increase the amounts on offer, and perhaps cover more countries too. Or perhaps you have an idea for an additional category of prize. So if you are a person of means and able to consider making a significant (tax-deductible) contribution, please email me and we can discuss.
In the meantime, the rest of you all need to get to work.
If I believed in Austrian business cycle theory, 2020 edition
If I believed in Austrian business cycle theory, I would think that the Fed lowering interest rates and flooding the system with liquidity, post-2008, was a disastrous decision, associated with a cascade of corporate debt, an equity bubble, and massive indirect subsidies to inefficient, now-doomed-to-fail smaller companies.
The restructuring or bankruptcies of inefficient retail, high production cost energy companies, and bad European banks were postponed, but now the bloodbath will come. The coronavirus will be seen as the immediate cause, but it also will turn out to have been the mere messenger of inevitable structural changes.
This will become clear as, post-coronavirus, so many of the companies from those sectors simply do not come back, nor will they birth more liquid replacements or counterparts. We will end up with much more “big business,” and much more on-line commerce, and the status quo ex ante will have been revealed to be full of malinvestment.
Fortunately, I do not believe in Austrian business cycle theory. And for those relatively new to MR, here is my 2005 post If I Believed in Austrian Business Cycle Theory.
Michael Strain and Scott Gottlieb have policy proposals for coronavirus
Congress should make direct cash payments—mailed checks or direct deposits—to low-income households in places with severe outbreaks. Hourly wage workers should not feel compelled to show up to work sick because they need to pay bills. Congress can help these Americans recover and keep other people healthy by financing their time away from work.
In states experiencing severe outbreaks, Congress should waive the requirement that people receiving unemployment insurance payments look for work. Better that such unemployed workers receive financial assistance for rent, mortgages and groceries than to risk spreading the virus by applying and interviewing for jobs. Congress should also waive work requirements in the food-stamp program.
Children in low-income families will miss subsidized meals if schools are closed. Federal subsidies to those households should be increased to account for lost breakfasts and lunches. This might help relieve some of the pressure on low-income parents, who might otherwise feel the need to go to work even if ill.
Cash-strapped states may be reluctant to divert spending from other priorities toward health care, especially as more people use services. States that experience outbreaks may also lose tax revenue. Congress should increase the share of Medicaid spending financed by the federal government to alleviate the budget pressure.
So far the best proposals I have seen, here is more from the WSJ. Note that paid sick leave can place a high burden on small and medium-sized businesses, here is a Yelowitz and Saltsman critique of paid sick leave, also WSJ.
Thursday assorted links
COVID-19 Event Risk Assessment Planner
The mathematics for calculating the probability of exposure given the number of carriers in a population and group size aren’t difficult but they can be surprising. Even a low number of carriers can generate a relatively high probability for reasonably sized groups. For example, assume you run a firm of 1000 people in the San Francisco Bay Area (population 8 million.) Let’s suppose that there are just 500 carriers in the area. In this case, assuming random draws, the probability that at least one of your employees is a carrier is 6%. You can run your own calculations at Wolfram Alpha following this format:
p=8000000, c=500, g=1000, 1-1(1-c/p)^g //N
where p is the population size, c is the number of carriers, g is the group size and the //N at the end isn’t a division but a command to Wolfram Alpha to give you a numerical answer.
Joshua Weitz on twitter put together this graphic using the same calculations but for the United States as a whole (population 330 million). It says, for example, that if there are 20,000 carriers in the United States then at a small concert of 1000 people there is a 5.9% chance of at least one carrier attending. At the March Madness final in Atlanta with 100,000 attendees there is a greater than 99% chance that at least one attendee is a carrier.
Now here is the most important point. It’s the size of the group, not the number of carriers that most drives the result. For example, suppose our estimate of the number of carriers if off by a factor of 10–that is instead of 20,000 there are just 2000 carriers in the United States. In this case, the probability of at least one carrier at a big event of 100,000 drops not by a factor of ten but just to 45%. In other words, large events are a bad idea even in scenarios with just a small number of carriers.
What signal are low interest rates sending?
Obviously lower interest rates — ceteris paribus — do indicate the government should borrow more, but as Scott Sumner frequently reminds us: “Never reason from a price change.”
Most of all, it seems that rates, including long rates, have declined because of a flight to safety. The price change itself is ambiguous, but if you buy that interpretation we should be spending more, and borrowing more, to invest in safety.
Does infrastructure make us safer? Well, it depends. Public health infrastructure does, and that is where we should be spending more at the margin. I would expect that a lot of traditional physical infrastructure does not make us safer at all, and if you think its economic value covaries positively with gdp, it can make us less safe in the relevant portfolio sense.
Also keep in mind that a lot of marginal borrowing we do short-term and then refinance by borrowing short repeatedly, thus incurring ongoing interest rate risk. That is yet another reason to focus on actual safety rather than on outputs whose values rise sharply with gdp.
Many professional economists are getting this point wrong and thinking we should go longer on those bridges and tunnels.
China sentences of the day maybe it is what God intended
Tinder Has Become A News Service About Coronavirus, Which Is Not What God Intended…Setting my tinder to Wuhan so I can get the real scoop on what’s going on,” one user wrote…US-based Twitter user @drethelin tweeted “Setting my tinder to Wuhan so I can get the real scoop on what’s going on” on Jan. 28 — just before the World Health Organization declared COVID-19 was a public health emergency.
Here is the story, via Michael Rosenwald.
Wednesday assorted links
1. U.S. K-12: “The combination of state, local, and federal school funding makes it so that the districts attended by poor students are funded 2.5% more than non-poor students.”
3. David Cutler proposals for limiting administrative costs in U.S. health care.
4. Why is Covid-19 sparing children? And good Sam Hammond coronavirus recommendations.
My Conversation with John McWhorter
This one was done with an associated public event, ah the good ol’ days! Here is the audio and transcript, here is the summary:
Who can you ask about the Great American Songbook, the finer Jell-O flavors, and peculiar languages like Saramaccan all while expecting the same kind of fast, thoughtful, and energetic response? Listeners of Lexicon Valley might hazard a guess: John McWhorter. A prominent academic linguist, he’s also highly regarded for his podcast and popular writings across countless books and articles where often displays a deep knowledge in topics beyond his academic training.
John joined Tyler to discuss why he thinks that colloquial Indonesian should be the world’s universal language, the barbaric circumstances that gave rise to Creole languages, the reason Mandarin won’t overtake English as the lingua franca, how the Vikings shaped modern English, the racial politics of Gershwin’s Porgy and Bess, the decline of American regional accents, why Shakespeare needs an English translation, Harold Arlen vs. Andrew Lloyd Webber, whether reparations for African-Americans is a good idea, how living in Jackson Heights shapes his worldview, what he learned from his mother and father, why good linguistics students enjoy both Russian and Chinese, and more.
Excerpt:
COWEN: Let’s say I interview a job candidate using Skype or Zoom rather than face-to-face, how is that different linguistically? How should I adjust? What should I expect that’s different?
MCWHORTER: You mean if they’re not actually there in the room?
COWEN: Right, but I see them on the screen.
MCWHORTER: I think that’s fine.
COWEN: You think it’s just as good?
MCWHORTER: It helps bring the world together. Do I need to be in the room with the person, watching what they do with their legs, getting a vague sense of whatever their redolence happens to be?
COWEN: All of these people have showed up, right?
MCWHORTER: Yeah. To tell you the truth, all of that to me is a distraction. I would rather just hear their voice. Frankly, I despise Skype. You’re sitting there, you look bad, and it always cuts out. Yet your whole life these days is about “You wanna Skype?” And I’m thinking, “Yeah, it’s going to cut out, and we’re both going to look bad.”
But I would rather just hear the person. Maybe that’s because I’m kind of linguist-centric.
And:
COWEN: Here’s a very basic question. Let’s say immersion is not possible. How should an adult study a foreign language?
MCWHORTER: It’s hard. Sleep with somebody, frankly.
Recommended.
Four puzzling coronavirus facts
1. Why are we not seeing more problems in Iran if so many people have it?
2. Why is nowhere in the world (with the possible exception of Iran) currently as bad as Northern Italy?
3. Why did Singapore’s containment strategy work, in such a high-density location? Their program is mostly symptom/temperature checking-based, but supposedly a lot of transmission happens before any fever manifested.
4. Why isn’t China seeing a second wave? There aren’t nearly enough infections for herd immunity to be reducing R0.
Is climate really the main/significant source of heterogeneity here? Or is it that Italians (and Iranians?) kiss each other when they greet and then hold long “street conferences”?
What is the proper fiscal response to the coronavirus?
A number of you have been asking me this question, and unfortunately I still do not know. Here is why:
1. I still am not sure how much we want to keep people on the job, as opposed to keeping them away from the workplace (but still being paid?).
2. I am not sure if this will be a rapid, bounce-back recovery, or a tortuous supply-bottlenecked, high risk premium non-recovery. It matters a good deal for our policy choices and also for their timing.
3. Will aggregate supply or aggregate demand end up being the binding constraint, after the two have interacted for a while? Or is that the wrong framework altogether?
3b. Can you build tunnels and bridges with quarantined workers?
4. I see a good chance that the coronavirus will affect regions of the country differently, with climate, temperature, humidity, and population density being possible factors. (Where are the overloaded hospitals in Jakarta? Surely at this point it is not just a data collection issue.) So where exactly should the aid and the fiscal stimulus go? And for what exactly? It seems we will know much more soon, but we don’t know it yet.
5. Do you want to give people cash if they will just go out and spend it on entertainment or in large, crowded stores? Is that what you are hoping they will do? To what extent do we want the “transmitting sectors” to be contracting right now? Does it do much good to send consumers money they will spend on Amazon or pizza deliveries, two sectors that may do fine or even prosper during the tough times?
I do not think we should bail out shale oil producers or cruise lines. Presumably we wish to support businesses with an income gap for coronavirus reasons, but what exactly should we do? I am puzzled by the degree of certainty people seem to exhibit about this issue. I am not arguing we should do nothing, but simply noting I am not yet sure what to recommend. My intuition is to opt for well-targeted federal aid for the most heavily affected regions — Washington state, the Bay Area, and parts of New York — and then take another bite at the apple soon as the numbers develop.
In the meantime, let’s do everything we can on the public health front. Much of that will end up being fiscal policy as well.
Totally false thoughts about the coronavirus (overheard on the street)
“Yes, Trump’s poor coronavirus response is inexcusable. But let’s get real people, the Dem candidates have been holding mass rallies and only today did Bernie and Biden cancel them. Are they so ahead of the curve?”
“Reductions in air pollution due to COVID-19 in China have probably saved more lives than have so far been lost to the virus.”
“Thank god for the automatic social distancing effects of NIMBY.”
“If you want to get ratioed, try suggesting that climate change will help all the more.”
“In part we should be happy to hear there are so many cases in Iran, because the country still seems to be holding together.”
How big a hit will the U.S. economy take?: two scenarios
That is the topic of my latest Bloomberg column, here is one pastiche:
First, consider the relatively optimistic view: Covid-19 will have affects akin to what economists call a seasonal business cycle — which is to say, it will be over quickly and without much lasting damage.
…in this scenario there is also a rapid path back to recovery. At some point the terror of Covid-19 will lift, just as cases in many parts of China now seem to be declining. Once public health conditions improve, retail, entertainment and services can gear back up. Both production and purchasing power will bounce back, similar to how they normally do after the first-quarter doldrums.
Or:
But there is a much more worrying scenario. Rather than drawing an analogy with temporary seasonal cycles, an alternative model draws a parallel with cascading disruptions. Have you ever tried building a sand pile and noticed that, at some point, adding a few more handfuls of sand causes a kind of avalanche, leaving just an amorphous heap?
This less sanguine option might look like this: The Chinese economic slowdown leads to a permanent loss of momentum and a global recession. At the same time, with Lombardy closed down, the Italian government defaults, but the European Union is unable to resolve the matter (and the associated bank failures) in a timely and resolute manner. Governments vacillate between policies that make it easier for people to stay at home to limit the spread of the disease and policies designed to get them back in the workplace.
The U.S. would be caught up in the general loss of confidence, as well as the contagion from European banks. But that is only the beginning. As schools close to limit the spread of Covid-19, single parents would have to stay home, and the resulting production bottlenecks would plague the U.S. economy. Maybe New York City would have to cut back on the number of subway trains it runs, and much of the city’s economy would grind to a halt. Supply chain problems from China would persist, hitting everything from medicines to the ordinary goods found in a Walmart.
The problems of missing goods in the supply chain, workplace absenteeism, family health emergencies, and investor uncertainty would compound each other. Any individual act of spending or production, rather than jump-starting further economic activity, would run up against another bottleneck and fade to insignificance. The confidence boost would fail to materialize. Untangling this mess of problems is much harder than just getting people to go back out to dinner and the movies again, and could take years. Traditional demand-side stimulation from the Fed or from the fiscal side would not itself reverse the stagnation.
Recommended.
Tuesday assorted links
1. Further evidence for the importance of female role models: “We find that, among high-ability female students, being assigned a female professor leads to substantial increases in the probability of working in a STEM occupation and the probability of receiving a STEM master’s degree.”
2. Which Conversations with Tyler guest is your intellectual doppelgänger? A fun test you can take.
3. “According to the researchers, consumers notice no difference when a quarter of the milk butter in a cake is replaced with larva fat. However, they report an unusual taste when it gets to fifty-fifty and say they would not want to buy the cake.” Link here.
4. Krugman reviews Piketty (NYT).
5. Kevin Drum’s simple theory of DT’s optimism about the coronavirus. And the economics of mandated sick pay. And “Detroit to restore water service to unpaid homes to allow people to wash their hands to avoid coronavirus.“
What I’ve been reading
1. Nicholas Hewitt, Wicked City: The Many Cultures of Marseille. Every city should have a good book about it, and now Marseille does. I would say you have to already know the city, however, to appreciate this one.
2. Peter Johnson, Quarantined: Life and Death at William Head Station, 1872-1959. British Columbia had a quarantine station that late, and this is its story. Leprosy, smallpox, and meningitis are a few of the drivers of the narrative. It continues to startle me how much pandemics and quarantines are a kind of lost history, though they are extremely prominent in 19th century fiction.
3. Steven Levy, Facebook: The Inside Story. Probably the best history of the company were are going to get, at least for the earlier years of the company. Even the jabs at the company seem perfunctory, for the most part this is quite objective as a treatment.
4. Katie Roiphe, The Power Notebooks. Power, sex, dating, and romance, but surprisingly substantive. Much of it is written in paragraph-long segments, and willing to be politically incorrect. “Rebecca West: “Since men don’t love us nearly as much as we love them that leaves them a lot more spare vitality to be wonderful with.”
5. Sean Masaki Flynn, The Cure That Works: How to have the World’s Best Healthcare — at a Quarter of the Price. A look at how to translate ideas from Singapore’s health care system into the United States. It overreaches, but still a useful overview and analysis.
6. Paul R. Josephson, New Atlantis Revisited: Akademgorodok, The Siberian City of Science. Imagine the Soviets trying to build a “city of science,” and meeting problem after problem. Yet “Marchuk acknowledged that in a number of fields researchers had contributed to…the speeding up of scientific technological progress. The physicists built synchroton radiation sources with broad applications; the biologists tacked plant and animal husbandry with vigor; the mathematicians, computer specialists, and economists were engaged in modeling and management systems.”