Why We Can’t Have Nice Things, Part XXIV
WashingtonTimes: Residents in rural America are eager to access high-speed internet under a $42.5 billion federal modernization program, but not a single home or business has been connected to new broadband networks nearly three years after President Biden signed the funding into law, and no project will break ground until sometime next year.
A big part of the problem is the piling on to any government program a host of progressive wish-list items including:
• Preference for hiring union workers, who are scarce in some rural areas.
• Requiring providers to prioritize “certain segments of the workforce, such as individuals with past criminal records,” when building broadband networks.
• Requiring eligible entities to “account not only for current [climate-related] risks but also for how the frequency, severity, and nature of these extreme events may plausibly evolve as our climate continues to change over the coming decades.”
If this sounds familiar, recall my post on Building Back Key Bridge Better (note the date).
By the way, the FCC estimates that 7.2 million locations, i.e. houses and businesses, don’t have broadband access. $42.5 billion is enough to give all 7.2 million locations a 4-year subscription to Starlink (7.2 million locations * $120 per month * 48 months=$42.7 billion), and I am sure Elon would give us a discount so I didn’t include set up costs. Of course, the FCC decided that Starlink was not eligible for the program citing “SpaceX’s failure to successfully launch its Starship rocket.” Note that the FCC made their decision in 2022, years before the program was to rollout.
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.
Do not stifle supply and then subsidize demand
That phrasing comes from Arnold Kling, right? It is also the topic of my latest Bloomberg column. Here is one bit:
Unfortunately, the US already was setting a bad example for the British. Recent plans from the Biden administration called for a broadly similar approach to housing policy, namely subsidizing demand. Earlier this year, Biden called for $10,000 tax credits for Americans buying starter homes and for those selling them. That too will boost the demand for housing and raise prices, and thus much of the value of the subsidy will be captured by current homeowners.
The Biden plan could increase home prices further yet. If Americans come to expect that the government will act repeatedly to prop up home prices, housing will appear to be a safer investment. Thus there will be yet another reason for demand to rise.
Like Sunak’s, Biden’s plan also calls for more construction, namely two million new or renovated affordable homes. The problem is that in the US, most of the obstacles to new construction come at the city, county and state levels. The Biden plan mentions tax credits for cheaper homes, and there are efforts to jawbone local governments to allow more building. But again, the federal government is better at handing out cash than inducing America’s decentralized political system to deregulate construction. So if this plan were to move forward, the likely outcome — as in the UK — would be subsidized demand and stifled supply, leading to higher home prices.
Lessons our governments still need to learn…
Congratulations to SSI Inc.!
Here is the tweet announcement. Here is Bloomberg coverage from Ashlee Vance.
Wednesday assorted links
2. China’s demographics are not as bad as you might think.
4. Might Russia sell some land to China?
5. Radical claims about batteries.
6. “Using three longitudinal samples of funded and unfunded grant applications from three of the world’s largest funders—the NIH, the NSF, and the Novo Nordisk Foundation—we find that the percentage of promotional language in a grant proposal is associated with the grant’s probability of being funded, its estimated innovativeness, and its predicted levels of citation impact.” Link here.
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.
Eating well in Stockholm
Yes, the fancy expensive places are great. But more generally, I recommend that you order the dishes with game and lingonberries, most of all lingonberries. Soups here are above average, and I do not generally love soups. The pizza is surprisingly good, make sure you order it with “pizza salad,” which turns out to be cabbage. If you are craving non-Western food, I would try Persian before Indian or Chinese. At breakfast, butter is consistently good. Overall, Stockholm is a quality food city, though it is not superb when it comes to breadth.
What I’ve been reading
Jill Ciment, Consent: a memoir. A good short book on how you can have a creepy life for decades, and not be so aware of it. In this case, a 17-year-old girl (Ciment) ends up marrying a man who first slept with her when he was 47 and married. They had an apparently normal marriage for decades, or did they? How much does “creepy” matter anyway? She doesn’t seem to be complaining about unhappiness. But is it just wrong anyway?
Hugh Warwick, Cull of the Wild: Killing in the Name of Conservation. A well-written and subtle account of the tensions and paradoxes involved in attempts to conserve nature. What if conserving one animal leads to the destruction of others? I am slowly learning how many British people are obsessed with hedgehogs. And I hadn’t known how much the importation of earthworms in the 18th century, from Britain to North America, shaped the environment.
Ebbe Dommissse, Anton Rupert: The Life of a Business Icon is a very favorable biography of who was probably South Africa’s richest man, with cigarettes being the central part of his business empire. For a contrasting perspective, read Pieter h de Toit, The Stellenbosch Mafia: Inside the Billionaire’s Club.
Charles King, Every Valley: The Desperate Lives and Troubled Times That Made Handel’s Messiah. This is what you would want from a book on Handel’s Messiah. I hadn’t known that Handel was briefly supported by the Medici in Florence. By the way, Suzuki will be conducting the Messiah in DC in late December, be there or be square!
Phumlani M. Majozi, Lessons from Past Heroes: How the rejection of victimhood dogmas will save South Africa. A libertarian Zulu approach to what the subtitle promises.
David Albright with Andrea Stricker, Revisiting South Africa’s Nuclear Weapons Program: Its History, Dismantlement, and Lessons for Today. It is odd how little-mentioned this episode in world history has become, in any case this is the go-to book on it, interesting throughout.
Still in my pile is Nathaniel Popper’s The Trolls of Wall Street: How the Outcasts and Insurgents are Hacking the Markets, which covers the WallStreetBets phenomenon.
“Analyzing my text messages with my ex-boyfriend”
With sentiment analysis over time, messages containing the word “sorry, and more. Trends! There is also a graph on how often “marginalized identity” was discussed, and presented below is the graph for the word “love.” The blue spikes come from the ex-boyfriend.
Recommended, here is the link, via Michael Rosenwald.
Tuesday assorted links
1. Profile of Jennifer Harris, “Queen Bee” of Bidenomics? (NYT)
2. “1982 was a pivotal year for science-fiction and horror cinema. Eight beloved movies — “E.T.,” “Tron,” “Star Trek: Wrath of Khan,” “Conan the Barbarian,” “Blade Runner,” “Poltergeist,” “The Thing” and “Mad Max: The Road Warrior” — were released within six weeks.” Link here NYT.
5. The changes to the California AI bill.
6. Bird flu update (NYT).
Are we overestimating the foreign-born population by about 2 million?
It seems so, here is one study from the Chicago Fed, by Kristin Butcher, Lucas Cain, Camilo Garcia-Jimeno, and Ryan Perry:
Standard estimates based on the main household survey used to shed light on labor markets—the Current Population Survey (CPS)—suggest that after a significant drop during the pandemic, recent rapid growth has brought the foreign-born population back to, or above, levels predicted by the pre-pandemic trend. However, we document that the weighting factors used to make the CPS nationally representative have recently displayed some unusual movements and conclude that standard estimates of the foreign-born population may currently be too high. We also show that recent labor market indicators are inconsistent with increased foreign-born induced slack.
Ive also read some privately-produced Zonda research, with a letter from the U.S. Census (neither on-line), basically supporting this conclusion, in the range of 1.7 million to 2.2 million. So the current foreign-born population in the U.S. isn’t near as unprecedented as some people would like you to believe.
Extraordinary Labor Market Developments and the 2022-23 Disinflation
From a new NBER working paper by Steven J. Davis:
Two extraordinary U.S. labor market developments facilitated the sharp disinflation in 2022-23 without raising the unemployment rate. First, pandemic-driven infection worries and social distancing intentions caused a sizable drag on labor force participation that began to reverse in the first quarter of 2022, and perhaps earlier. As the reversal unfolded, it raised labor supply and reduced wage growth. Second, the pandemic-instigated shift to work from home (WFH) raised the amenity value of employment in many jobs and for many workers. This development lowered wage-growth pressures along the transition path to a new equilibrium with pay packages that recognized higher remote work levels and their benefits to workers. Surveys of business executives imply that the shift to WFH lowered average wage growth by two percentage points from spring 2021 to spring 2023. A direct inspection finds that average real wage growth from 2021 Q1 to 2024 Q1 in the U.S. economy was at least 3.5 to 4.4 ppts below the path suggested by pre-pandemic experience. This large shortfall in real wage growth aligns well with the interpretation of the 2022-23 disinflation offered here.
Of course this is an attempt to answer the question “why didn’t we have a recession?
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.”
Monday assorted links
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.