Results for “alex tabarrok”
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Should we raise taxes?

Martin Feldstein says no. Brad DeLong says yes, at least once the economy recovers further. Alex Tabarrok says maybe, if we can cut the right deal. I would say that taxes, real taxes, already have been raised, the Bush Administration just hasn’t admitted it yet. Milton Friedman has long insisted that the level of government spending is the best measure of what government is taking from the economy.

Addendum: Co-blogger Alex agrees, read his very nice statement of the argument.

Is a $600 a night hotel room better?

Lucy Huber and Alex T. debate that question, and they both seem pretty skeptical.  (I am surprised to see Alex’s view, I might add.)  I would not pay that much for a room, but sometimes when I am invited to events I end up staying in places that I suspect are in that price range, or higher.  I think they have a few big advantages:

1. Location, location, location.  What is a good beach hotel in Miami or Miami Beach these days?  I’m not sure, I don’t even love the beach.  But many people do — the Four Seasons room down there is going for over $1300 a night.  (It is odd to me to pick on $600 a night — in some places that is cheap!)  The best locations in London and Paris are expensive too.  If you have some business appointments, and only two days in Paris, is it so crazy to shell out such money to stay right where you want, so you can sneak into the Louvre during a break?

2. Concierge tickets.  At a very good hotel, the concierge can get you all sorts of reservations and tickets that otherwise would not be available.

3. Swimming pool.  It might be heated, or much better.  The on-site shops can be much better too, which matters for people with less flexible time budgets than mine.  Gyms I find do not vary so much in actual practical quality, though they vary a great deal in attractiveness and general mood.

4. They might have much better business and conference facilities, noting that some very expensive hotels don’t have those at all.

4. The hotel restaurants will be much better (and more expensive of course).  Much better breakfast too, and that is the meal you are least likely to eat out.

5. Some hotels are marvelous architectural landmarks.  I was very impressed by the Burj Al Arab Jumeirah when I visited.  I had only a meal and a tea there, both expensive but worth it.  Google claims “prices from $1,330,” for a room that is, but I suspect the variance of actual price is pretty high.  In any case it ain’t cheap.

6. The beds are more comfortable and the rooms are bigger.

7. The WiFi is less likely to go out, or if there is a problem you will get help more quickly.

8. In Malta only a few hotels have wonderful views.  I wonder what they cost.

So it’s not just status, you genuinely get a lot more for your money.  If you can afford it and have those priorities, that is.

I do, however, have two gripes about very expensive hotels.  First, the staff can be overly solicitous.  The worst version of this is when they want to knock on your door or call you too many times to see how things are going.  I also don’t like how they sometimes reorganize your things, in addition to cleaning up the room.  Do I really need my shoes to be put into the closet?  Second, sometimes the tech-laden shower and room lighting systems are so complicated I find them difficult to operate.  Boo hoo!  Not even a first world problem.  But in those cases perhaps the $400 a night hotel would have been better.

Building credibility?

Or do they want you to like and admire them?  Or maybe they are just telling the truth?

It’s no surprise that social media brims over with videos from real estate influencers. What’s astonishing is that property owners and landlords, some of the most broadly despised people in the country, are logging on to boast about the most ruthless and loathsome things they do. In one video, the protagonist of an account called Build Wealth With Gustavo laughingly bemoans the damage an evicted resident has done to his “house in the hood”; soon, he’s transforming it into an attractive $100,000 rehab project. In another, a landlord exhibits the “nightmare” of a rental trailer trashed by tenants, explaining that rents are so high “because of people like this.” Scroll on, and you might find a maintenance man dancing in the wreckage of an eviction while onscreen text explains his plans to add to the former occupant’s debt. “So who really got the last laugh,” it reads, alongside a smiley-face emoji.

Here is more from the NYT, via the excellent Kevin Lewis.  Don’t forget the comments of Alex T.

The WV Canary in the Coal Mine

West Virginia University has announced a preliminary plan to cut 7% of its faculty and 9% of its majors:

Among the programs recommended for discontinuance, World Languages including all 32 faculty positions. WVU is also recommending the elimination of several programs in the College of Creative Arts, graduate programs in higher education administration and special education.

On twitter there is a lot of bemoaning about the importance of languages but the students are voting with their feet. Indeed, most of these programs are only sustained by foreign language requirements which are increasingly otiose in a world with ubiquitous instant translation. The students are correct, the value of learning a second language has fallen.

Where the ax should fall may be debatable but the ax must fall somewhere because of demographics. College enrollment peaked in 2010 and has since fallen by 15%. What’s going on in WV is thus a reflection of national trends, magnified by West Virginia’s own decline in  population. Full paying foreign students from China are also way down. Now add to declining college demographics, budgets hit by the great recession and then the pandemic. Now add in the rise of online learning which means that universities can outsource low-demand classes to other universities and save money and quite likely increase quality. (Indeed, the local teacher might have been teaching online anyway so why not substitute with a world expert and great teacher who has the backing of an entire team of delivery experts?) Finally, add in the fact that a substantial part of the electorate would like to see a decline in programs they see as politicized.

Put it all together and the only surprise is how long it has taken for the ax to fall. You can be sure, however, that there is more chopping to be done.

Why the NYC congestion pricing plan is bad

I am seeing some critical comments on my latest column, mostly from people who are not reading it through, or in some cases they are making basic mistakes in economics.  Let me start with part of my conclusion:

I suspect that I could endorse a properly targeted version of congestion pricing for Manhattan, for instance, one that encouraged mass transit without discouraging density.

Many people are responding by making a version of that point and thinking it contradicts me.  Here are a few basic facts about the current proposal:

1. The off-peak price is too high at $17, relative to $23 for peak.

2. There is an odd and unjustified discrete notch at 60th St, which will cause further distortions of its own.

3. There is no difference for cars passing through and cars with passengers spending money or doing something productive in lower Manhattan.

This is not the traffic congestion charge you should be looking to implement.

A second line of responses (Erik B. and Alex) suggests that the congestion charge will not lower the flow of humans into Manhattan.  I am sorry, but demand curves slope downward!  The resulting auto commute does become more predictable and regular, but that holds only because there are fewer trips and to some extent because trips are time-shifted.  (Note that the small gap between the $17 and $23 prices suggests a small benefit from time shifting.)  Fewer outsiders will benefit from Manhattan, and those outsiders will skew richer and older.  The methods for improving the quality of the trip really do lower the number of trip-makers, probably both peak and off-peak.  It is not going to mean higher or even constant throughput for vehicles or humans.  (If you think it does, does that imply a big subsidy to car trips would get us to a carless city?  There are some non-linear scenarios where a congestion charge boosts throughput, such as when otherwise no cars move at all in extreme gridlock.  In reality, it seems cars are moving at about 12 mph in Manhattan.)

The actual possible gain — oddly not cited by the critics — is that a congestion charge might get a given visitor more effective time spent learning from Manhattan.  Though do note an offsetting effect — the higher the traffic problem, the more you will make each trip to Manhattan a grand and elaborate one, and it is your externality-less domestic time in Long Island that will suffer all the more.  So per person learning externalities from effective time spent in Manhattan could go either way, noting the number of visitors still goes down.

You might think such a congestion charge improves welfare (a sounder point than suggesting it will not have a standard price effect), but the whole point is that Manhattan density involves massive positive externalities, including for visitors and note that visitors also finance the  externality-rich activities of the natives:

In some urban settings, the clustering of human talent is of utmost importance. Manhattan is the densest urban area in the US, and it succeeds in large part because it is so crowded. You want to be there because other people want to be there. Even though I don’t live there, I nonetheless benefit from Manhattan, both when I visit and when I consume the television shows, movies, music, and art works that come, either directly or indirectly, out of this urban environment. Manhattan also supports America’s financial center, many tech start-ups, and much more.

I don’t want Manhattan to be less crowded, even though it probably would make many Manhattanites happier and less stressed. I want Manhattan to be efficient for me and others, not just for the residents. If there is any part of America where ideas rubbing together lead to great things, it is Manhattan (and the Bay Area). Arguably, Manhattan should be more crowded, at least if we consider everyone’s interest. That militates against congestion tolls, even though such charges are usually a good idea.

The actually useful solution is to make mass transit, most of all the subway, a reliable and predictable method of getting around.  Right now it is not.  (I doubt if lowering the already low subway prices gets you much.)

If you look at visits into Manhattan, whether by car or not, they already face lots of implicit taxes.  Those include poor roads, mediocre subway performance, high variance public infrastructure including on issues such as trash, pollution issues, some degree of crime, awful connecting infrastructure (NJ Transit anyone?) and much more.  And yet Manhattan is one of the world’s very top TFP factories and we are already taxing entry in so many different ways.

It does not make good economic sense to impose higher yet entry fees into that TFP factory.  Given that multiple externalities are present, the correct mix is to lower many different costs of entry and mobility (including within Manhattan), while shifting the relative use benefits toward mass transit and the subway.  Density really does have positive externalities here, and we all know how much idea makers and distributors are undercompensated.

There are a few more threads of responses on Twitter.  One is to note the noise and pollution costs of vehicles.  That is relevant, but fairly soon we will have lots more electric vehicles, which should be encouraged.  The tolls will become a revenue source that lasts forever and they will not be taken away, but the noise and pollution costs of the vehicles soon will be much lower.

Another thread is to argue that most of the people who drive will switch to mass transit if there is a congestion cost.  Some will, but we are asked to believe that a) current traffic congestion is so awful, b) people put up with it anyway, and c) they nonetheless can be easily nudged into taking mass transit.  That is an uncomfortable blend of views that fails to understand the initial motivations behind the car trips.  There are plenty of people with young kids, or elderly relatives, or multiple packages, or multiple stops, or unreliable mass transportation for getting back home at the end of the evening.  Many of those people cannot feasibly switch to mass transit and that is precisely why they put up with the bad traffic.  Say you finish your Manhattan doings at 10:45 p.m., and have to get back to your New Jersey home in a timely and safe manner.  The PATH train will work for some, but a lot of these people really do need cars to consummate the trip.

(It is a theoretically defensible argument to claim that this congestion tax is the only way of financing mass transit improvements. That may or may not be true, but if it is one should still “regret” the plan, which is not the attitude people are taking.  And are there guarantees this will lead to a refurbishment of the subway?  It has proven remarkably difficult to improve the system, and that is with rising NYC budgets.  Another argument that might work is if non-car visitors so hate seeing cars in Manhattan that the net human inflow, due to auto trips, goes down rather than up.  Do note however that the car trips are still helping to finance retail and cultural infrastructure that attracts the non-car visitors, so don’t just take complaints about cars at face value.  Furthermore this car hatred factor also should become less serious as we transition to electric vehicles.)

On net, do you think our most important cities should be more or less dense?  If you support YIMBYism, which surely does make traffic worse, have you not already answered that question?  So either become a NIMBY or — better yet — be a little more consistent applying your intuitions about the net positive externality from Manhattan density.  A simple way to put the point is that an export tax on your TFP factory is unlikely to be the best way to reduce congestion.

The Growing Market for Cancer Drugs

In my TED talk on growth and globalization I said:

If China and India were as rich as the United States is today, the market for cancer drugs would be eight times larger than it is now. Now we are not there yet, but it is happening. As other countries become richer the demand for these pharmaceuticals is going to increase tremendously. And that means an increase incentive to do research and development, which benefits everyone in the world. Larger markets increase the incentive to produce all kinds of ideas, whether it’s software, whether it’s a computer chip, whether it’s a new design.

…[T]oday, less than one-tenth of one percent of the world’s population are scientists and engineers. The United States has been an idea leader. A large fraction of those people are in the United States. But the U.S. is losing its idea leadership. And for that I am very grateful. That is a good thing. It is fortunate that we are becoming less of an idea leader because for too long the United States, and a handful of other developed countries, have shouldered the entire burden of research and development. But consider the following: if the world as a whole were as wealthy as the United States is now there would be more than five times as many scientists and engineers contributing to ideas which benefit everyone, which are shared by everyone….We all benefit when another country gets rich.

A recent piece in the FT illustrates:


AstraZeneca’s chief executive returned from a recent trip to China exuberant about an “explosion” of biotech companies in the country and the potential for his business to deliver drugs discovered there to the world….Many drugmakers are tempted by China’s large, ageing population, which is increasingly affected by chronic diseases partly caused by smoking, pollution and more westernised diets….the opportunity lies not just in Chinese patients, but also in the country’s scientists. “The innovation power has changed,” said Demaré. “It is no more ‘copy, paste’. They really have the power to innovate and put all the money in. There’s a lot of start-ups and we are a part of that.”

As I concluded my talk:

Ideas are meant to be shared, one idea can serve the world. One idea, one world, one market.

Substitutes Are Everywhere: The Great German Gas Debate in Retrospect

In March of 2022 a group of top economists released a paper analyzing the economic effects on Germany of a stop in energy imports from Russia (Bachmann et al. 2022). Using a large multi-sector mathematical model the authors concluded that if prices were allowed to adjust, even a substantial shock would have relatively low costs. In contrast, the German chancellor warned that if the Russians stopped selling oil to Germany “entire branches of industry would have to shut down” and when asked about the economic models he argued that:

[the economists] get it wrong! And it’s honestly irresponsible to calculate around with some mathematical models that then don’t really work. I don’t know absolutely anyone in business who doesn’t know for sure that these would be the consequences.

The Chancellor was not alone in predicting big economic losses; some studies estimated reductions in output of 6-12% and millions of unemployed workers. The key distinction between the economists and the others was in their understanding of elasticities of substitution. When the Chancellor and the average person think about a 40% reduction in natural gas supplies, they implicitly assume that each natural gas-dependent industry must cut its usage by 40%. They then consider the resulting decline in output and the cascading effects on downstream industries. It’s easy to get very worried using this framework.

When the economists replied that there were opportunities for substitution they were typically met with disbelief and misunderstanding. The disbelief stemmed from a lack of appreciation of the many opportunities for substitution that permeate an economy. In our textbook, Modern Principles, Tyler and I explain how the OPEC oil shock in the 1970s led to an increase in brick driveways (replacing asphalt) and the expansion of sugar cane plantations in Brazil (for ethanol production). Amazingly, the oil shock also prompted flower growers to move production overseas, as the reduction in heating oil costs from growing in sunnier climates outweighed the increase in transportation fuel expenses. While these examples highlight long-term changes, short-term substitutions are also possible, though their precise details are usually hidden from central planners and economists.

Chapter 3 Supply and Demand. - ppt video online downloadThe misunderstanding came from thinking that we need every user of fuel to find substitutes. Not at all! In reality, as fuel prices rise, those with the lowest substitution costs will switch first, freeing up fuel for users who have more difficulty finding alternatives. Just one industry with favorable substitution possibilities, combined with a few moderately adaptable industries, can produce a significant overall effect. Moreover, there are nearly always some industries with viable substitution options. To see why reverse the usual story and ask, if fuel prices fell by 50% could your industry use more fuel? And if fuel prices fell by 50% are their industries that could switch into the now cheaper fuel?

People often find it easier to imagine new uses rather than ways to reduce existing consumption. However, it is typically the new uses that are scaled back first. Tyler and I illustrate this with our jet and rubber ducky graph. Although jet aircraft won’t shift away from oil even at high prices, rubber (actually plastic) duckies, which are made from oil, can find substitutes–wood, for example–when oil prices rise. And if plastic ducky manufacturers cannot find substitutes, they go out of business, freeing up more oil for other uses. In this way, the market identifies the least valuable goods to cease production, another kind of substitution.

Substitution is a more nuanced concept than many people imagine. Here’s another example. Imagine that an economy has an energy-intensive goods producing sector and that there are few substitutes for the fuel used in this sector. Disaster? Not at all. We don’t need a fuel substitute, if we can substitute imports of the energy-intensive goods for domestically produced versions. Storage is also a substitute and notice that the more you substitute away from a fuel in final uses the greater the effective storage. If you use 1 gallon a day a 10 gallon tank lasts 10 days. If you use a quarter gallon a day it lasts 40 days. Everything is connected.

All of these myriad changes happen under the guidance of the invisible hand, i.e. the price system. Remember, a price is a signal wrapped up in an incentive. Thus Bachmann et al. wisely recommended letting energy prices rise to convey the signal and not insuring energy users so the incentive effects were fully felt on the margin.

So what happened? Gas from Russia was indeed cut very substantially but the German economy did not collapse and instead proved as robust as predicted, perhaps even more so. (The Chancellor’s predictions were off the mark but, to be fair, the government also did do a good job in sourcing new supplies and building reserves.) Moll, Schularick, and Zachmann have revisited the analysis and conclude:

The economic outcomes confirm the core theoretical argument that macro elasticities are larger than micro elasticities and that “cascading effects” along the supply chain would be muted as opposed to destroying the economy’s entire industrial sector. As foreseen, producers partly switched to other fuels or fuel suppliers, imported products with high energy content, while households adjusted their consumption patterns….Market economies have a tremendous ability to adapt that was widely underestimated. In addition, the German economics ministry (BMWK) was very successful in quickly sourcing gas supplies from third countries and building LNG capacity. Finally, it probably helped that German policymakers refrained from imposing a price cap on natural gas (like in many other European countries) and instead opted for lumpsum transfers based on households’ and firms’ historical gas consumption.

Hat tip: Alex Wollman.

Uh-oh, reverse Flynn effect edition

A reverse Flynn effect was found for composite ability scores with large US adult sample from 2006 to 2018 and 2011 to 2018.

Domain scores of matrix reasoning, letter and number series, verbal reasoning showed evidence of declining scores.

Three-dimensional rotation scores generally increased from 2011 to 2018.

Differences in ability scores were present regardless of age, education, or gender.

The steepest slopes occurred for ages 18–22 and lower levels of education.

That is from a new paper by Elizabeth M. Dworak, William Revelle, and David M. Condon.  Alex T. comments.

Klein on Construction

Here’s Klein writing about construction productivity in the New York Times:

Here’s something odd: We’re getting worse at construction. Think of the technology we have today that we didn’t in the 1970s. The new generations of power tools and computer modeling and teleconferencing and advanced machinery and prefab materials and global shipping. You’d think we could build much more, much faster, for less money, than in the past. But we can’t. Or, at least, we don’t.

…A construction worker in 2020 produced less than a construction worker in 1970, at least according to the official statistics. Contrast that with the economy overall, where labor productivity rose by 290 percent between 1950 and 2020, or to the manufacturing sector, which saw a stunning ninefold increase in productivity.

In the piquantly titled “The Strange and Awful Path of Productivity in the U.S. Construction Sector,” Austan Goolsbee, the newly appointed chairman of the Chicago Federal Reserve and the former chairman of the Council of Economic Advisers under President Barack Obama, and Chad Syverson, an economist at the University of Chicago’s Booth School of Business, set out to uncover whether this is all just a trick of statistics, and if not, what has gone wrong.

After eliminating mismeasurement and some other possibilities following Goolsbee and Syverson, Klein harkens back to our discussion of Mancur Olson’s Rise and Decline of Nations and offers a modified Olson thesis, namely too may veto points.

…It’s relatively easy to build things that exist only in computer code. It’s harder, but manageable, to manipulate matter within the four walls of a factory. When you construct a new building or subway tunnel or highway, you have to navigate neighbors and communities and existing roads and emergency access vehicles and politicians and beloved views of the park and the possibility of earthquakes and on and on. Construction may well be the industry with the most exposure to Olson’s thesis. And since Olson’s thesis is about affluent countries generally, it fits the international data, too.

I ran this argument by Zarenski. As I finished, he told me that I couldn’t see it over the phone, but he was nodding his head up and down enthusiastically. “There are so many people who want to have some say over a project,” he said. “You have to meet so many parking spaces, per unit. It needs to be this far back from the sight lines. You have to use this much reclaimed water. You didn’t have 30 people sitting in an hearing room for the approval of a permit 40 years ago.”

This also explains why measured regulation isn’t necessarily determinative. Regulation provides the fulcrum but it’s interest groups that man the lever.

Some of this is expressed through regulation. Anyone who has tracked housing construction in high-income and low-income areas knows that power operates informally, too. There’s a reason so much recent construction in Washington, D.C., has happened in the city’s Southwest, rather than in Georgetown. When richer residents want something stopped, they know how to organize — and they often already have the organizations, to say nothing of the lobbyists and access, needed to stop it.

This, Syverson said, was closest to his view on the construction slowdown, though he didn’t know how to test it against the data. “There are a million veto points,” he said. “There are a lot of mouths at the trough that need to be fed to get anything started or done. So many people can gum up the works.”

Read the whole thing.

ESG Versus Innovation

Some wise words on ESG and innovation from the excellent Bart Madden:

Excessive focus on looking good in the short term via ESG metrics can be at cross-purposes with a long-term planning horizon keyed to innovation. A sizable portion of a firm’s major innovations may not move the needle much as to ESG metrics but may score high in the eyes of customers as to value creation (and quite possibly improve their customers’ ESG performance). Recent research reveals a tendency during quarterly earnings conference calls for those managements who have reported weaker-than-expected profits to talk less about financial results and more about their ESG progress.31 Keep in mind that innovation is the key to sustainable progress that jointly delivers on financial performance and taking care of future generations through environmental improvements.

Addendum: Bart has a history of smart investing.

David Theroux, RIP

I was saddened to hear of the sudden passing of David Theroux, the President of the Independent Institute. I was a professor of economics at Ball State University in Muncie, Indiana when David approached me to be the research director (later Vice-President) of II. I had great colleagues at Ball State but was never happy about living in Muncie. Nevertheless, leaving academia was a big leap. My career at the time, however, was in the doldrums and when things aren’t happening it’s good to throw some variance into the mix…so I leapt. David and his wife Mary made my wife and I feel very welcome in Oakland. I remember fondly my young children playing in their garden in their beautiful house in the Oakland hills.

David was a great intellectual entrepreneur. He was the founding Vice President for the Cato Institute and the founding President of the Pacific Research Institute for Public Policy. He started the Independent Institute on a shoestring budget in 1986, building it into a major institute that produced many important books and research articles.

Among the highlights of Independent’s extraordinary publications are Crisis and Leviathan: Critical Episodes in the Growth of American Government by Robert Higgs (1986, with a 25th anniversary edition in 2012); Antitrust and Monopoly, by Dominick Armentano (1990); Beyond Politics: The Roots of Government Failure, by Randy Simmons (updated edition 2011); Out of Work, by Lowell E. Gallaway and Richard Vedder (1997); Entrepreneurial Economics, by Alexander Tabarrok (2002); The Empire Has No Clothes, by Ivan Eland (2004); Making Poor Nations Rich, edited by Benjamin Powell (2007); The Enterprise of Law, by Bruce Benson (2011); Living Economics, by Peter J. Boettke (2012); Liberty in Peril, by Randall Holcombe (2019); and many more.

All told, Independent Institute books produced under David’s direction received more than 50 prestigious book awards, including three Eric Hoffer Book Award Grand Prizes, the Templeton Freedom Award, two Mencken Awards for Best Book, eight Sir Antony Fisher International Memorial Awards for Best Book, three Benjamin Franklin Awards, ten Independent Publisher Book Awards, the Peter Shaw Memorial Award, and three Choice Magazine Awards for Outstanding Book.

David spotted talent in other people, encouraged them, and made things happen. He was a prime mover in launching Bruce Benson’s important work on the law merchant and a big supporter of the great Robert Higgs (who started The Independent Review).

I learned a lot from David, especially about militarism and libertarian foreign policy, the marketing of ideas, and also about what it means to be an entrepreneur. I recall two instances in particular. The first was during the Microsoft trial when we had published the excellent book Winners, Losers & Microsoft: Competition and Antitrust in High Technology by Stan Liebowitz and Stephen Margolis. II opposed the antitrust case against Microsoft, seeing it as waste of resources in a rivalrous industry (in retrospect, yup we got that one right). Larry Ellison at Oracle (a Microsoft competitor) didn’t like our work and hired detectives to buy the Independent Institute’s garbage and sift through it (yes, really!) to try to discredit us. The story become a page one headline in the New York Times (Independent Institute not really Independent!). I was worried about the impact on the Institute but David  always saw the positive even in “bad news.” At the time I found this frustrating as this seemed to me like a failure to see reality but David had the entrepreneur’s faith that vision, a positive attitude, and hard work can make reality. He kept calm and steered us through the difficulties to further strengths. I was wrong. David was right. He made it happen. The second time was when II was launching its scholarships for low-income children to attend private schools in Oakland. I sketched out a careful, well-thought out plan to get us ready to go in a year. David said no, “I want it ready in six weeks!”. I thought this was insane. But we did it! No surprise that David was an entrepreneur and I was an academic. Ultimately, of course, I returned to academia by moving to GMU but not before learning many valuable lessons from David and my years at the Independent Institute.

He will be missed.

The US Government is Digging in the Couch to Find Change to Buy Drugs

The richest government the world has ever known is having trouble finding the money to buy Paxlovid, a critical medical treatment for COVID.

STAT: The White House has held off on buying millions of courses of Pfizer’s highly effective antiviral drug that the White House already committed to buy due to budget constraints, according to public contract disclosures and the Department of Defense, which issues the contracts.

In January, the White House announced that it was doubling its order of Pfizer’s antiviral, named Paxlovid, committing to buy an extra 10 million courses. But according to public contracts, the White House has only actually contracted for 835,000 of those courses to date.

“Contract options will be exercised when funding becomes available,” Department of Defense spokesperson Jessica Maxwell said in a statement to STAT.

The problem isn’t lack of money per se but rules and regulations designed to create “transparency” and avoid “corruption” and the resulting bureaucracy and vote players. Another example of the Mancur Olson problems Ezra Klein and I discussed and an example of how declining trust leads to rule complexity.

Here’s another telling example. Operation Warp Speed was perhaps the most successful government program in more than a half century but it was funded only because the Trump administration and then the Biden administration finagled the rules, almost certainly breaking some laws in the process. But that is sometimes the only way to get things done today, especially at speed.

Both administrations funneled far more money than Congress allocated to Operation Warp Speed, in particular, and to its successor efforts to buy vaccines and therapeutics.

Nearly 10% of the funding Congress set aside to support hospitals and health care providers, or $17 billion, was funneled to buy vaccines and therapeutics, as STAT first reported. Other funding for Operation Warp Speed was taken from money designated for the Centers for Disease Control and Prevention and the Strategic National Stockpile, as Bloomberg reported. An additional $5 billion came from a fund for Covid-19 testing efforts, according to a document obtained by STAT.

The difficulty of finding funds in an emergency is one reason I have suggested a pandemic or emergency trust fund. Even though it would only represent nominal savings it would nevertheless matter because it could be accessed quickly.

Who has the power?

The WSJ has several good piece on electric power in the United States, many of which are relevant to my recent podcast with Ezra Klein. Starting with the increased unreliability of America’s electric grid.

The U.S. power system is faltering just as millions of Americans are becoming more dependent on it—not just to light their homes, but increasingly to work remotely, charge their phones and cars, and cook their food—as more modern conveniences become electrified.

… Much of the transmission system, which carries high-voltage electricity over long distances, was constructed just after World War II, with some lines built well before that. The distribution system, the network of smaller wires that takes electricity to homes and businesses, is also decades old, and accounts for the majority of outages.

We need more power but are relying on transmission lines we put into places decades ago when we could still build things. The second WSJ article is on the 17-year travail to get a new power cable from hydropower rich Quebec to Boston.

Blackstone made other discoveries that altered the project. Its environmental consultants spent the summer of 2010 watching patches of blue lupine for endangered Karner blue butterflies and frosted elfins, a threatened species. They spotted two Karners and wrote a plan for avoiding damage to the wildflowers upon which the butterflies rely. Arrangements were also made to protect bald eagle nests that might be present during construction and identify shagbark hickories big enough for the endangered Indiana bat to roost.

When it became clear developers wouldn’t get state approval to dig beneath Haverstraw Bay, where endangered Atlantic sturgeon live, they redrew the route again.

These adjustments weren’t enough to stop opposition from several groups that normally aren’t aligned: the Sierra Club, energy companies, a bipartisan group of lawmakers and a labor union. Sierra Club argued that importing power threatened the development of in-state renewable-energy projects and could cause environmental damage in Canada.

That stand put the environmental advocacy club on the same side as the operator of a soon-to-close nuclear power plant called Indian Point as well as the Business Council of New York State and the Independent Power Producers of New York Inc., which fought the line on behalf of entrenched electricity providers.

Lawmakers objected for local reasons, with one saying he didn’t like that the power line’s energy would bypass dozens of upstate counties. The International Brotherhood of Electrical Workers Local 97 argued it threatened upstate renewable projects, would eliminate the need for additional gas-fired plants and “be deleterious of New York state energy jobs.”

The developers pledged $40 million to train New Yorkers for green-energy jobs and agreed to fund an environmental trust with $117 million. The trust would help pull invasive plants from Lake Champlain, restore oyster reefs around New York City and pay for implanting acoustic transmitters in adult sturgeon so scientists could study the fish.

Blackstone still faces one last step: That supply contract needs the approval of the New York Public Service Commission. One group that still opposes it is Riverkeeper, a nonprofit dedicated to protecting the Hudson. Riverkeeper initially supported the project before turning against it in 2019, saying the transmission line could lead to additional dams in Quebec that would possibly expose indigenous groups to methylmercury—a neurotoxin created by microbes in freshly flooded soils that can pass up the food chain to people who live off the land.

Hydro-Québec, the supplier of power to Champlain Hudson, has no plans for new hydropower facilities, its CEO said. There have also been no reported cases of mercury poisoning resulting from consuming fish caught in Hydro-Québec’s reservoirs during more than 40 years of monitoring, according to a spokeswoman.

…“The last thing we want is more dams because of new markets,” said John Lipscomb, a patrol-boat captain and vice president for advocacy for Riverkeeper. “We are investigating and will continue to look at opportunities to stop the project.”

So there you have it, a power line that could benefit millions is threatened by a brew of “Baptists” defending a few flowers and fish, bootleggers protecting their rents, shakedown artists trying to get a share of the proceeds and hysterics longing for a return to the state of nature.

Addendum: Oh yes, the third relevant piece is about how Americans are turning to their own generators and batteries (expensive and not exactly environmentally friendly) to try to deal with the unreliable grid. I will be getting one of these systems for my own home, which also came up in the podcast with Klein.

Twice the speed, half the time, no loss of learning

News you can use:

We presented participants with lecture videos at different speeds and tested immediate and delayed (1 week) comprehension. Results revealed minimal costs incurred by increasing video speed from 1x to 1.5x, or 2x speed, but performance declined beyond 2x speed. We also compared learning outcomes after watching videos once at 1x or twice at 2x speed. There was not an advantage to watching twice at 2x speed but if participants watched the video again at 2x speed immediately before the test, compared with watching once at 1x a week before the test, comprehension improved. Thus, increasing the speed of videos (up to 2x) may be an efficient strategy, especially if students use the time saved for additional studying or rewatching the videos, but learners should do this additional studying shortly before an exam. However, these trends may differ for videos with different speech rates, complexity or difficulty, and audiovisual overlap.

See my piece, Why Online Education Works, for more on time and cost savings. Try MRU for great economics videos.

The FDA Is Still Much Too Strict

Here is just one bit from a superb post on the FDA by psychiatrist Scott Alexander at Astral Codex Ten.

I worry that people are going to come away from this with some conclusion like “wow, the FDA seemed really unprepared to handle COVID.” No. It’s not that specific. Every single thing the FDA does is like this. Every single hour of every single day the FDA does things exactly this stupid and destructive, and the only reason you never hear about the others is because they’re about some disease with a name like Schmoe’s Syndrome and a few hundred cases nationwide instead of something big and media-worthy like coronavirus. I am a doctor and sometimes I have to deal with the Schmoe’s Syndromes of the world and every f@$king time there is some story about the FDA doing something exactly this awful and counterproductive.

A while back I learned about Infant Short Bowel Syndrome, a rare condition with only a few hundred cases nationwide. Babies cannot digest food effectively, but you can save their lives by using an IV line to direct nutrients directly into their veins. But you need to use the right nutrient fluid. The FDA approved an early draft of the nutrient fluid, but it didn’t have enough fish oil, which is necessary for development, so a lot of the babies still died or ended up with permanent neurological damage. Around the late 90s/early 00s, researchers figured out what was going on and recommended adding fish oil to the IV fluid. The FDA responded that they had only approved the non-fish-oil version, it would take them a while to approve the new version, and until they did that adding fish oil was illegal. A bunch of babies kept dying and getting permanent neurological damage, and everyone knew exactly how to stop it, but if anyone did the FDA would take away their licenses and shut them down. Around 2010, Boston Children’s Hospital found some loophole that let them add fish oil to their nutrient fluid on site, and infants with short bowel syndrome at that one hospital stopped dying or ending up permanently disabled, and the FDA grudgingly agreed to permit it but banned them from distributing their formulation or letting it cross state lines – so for a while if you wanted your baby not to die you had to have them spend their infancy in one specific hospital in Massachusetts. Around 2015 the FDA said that if your doctor applied for a special exemption, they would let you import the correct nutritional fluid from Europe (where, lacking the FDA, they had just added fish oil to the fluid as soon as researchers discovered it was necessary), but you were only able to apply after your baby had already sustained serious damage, and the FDA might just say no. Finally in 2018 the FDA got around to approving the corrected nutritional fluid and now babies with short bowel syndrome do fine, after twenty years of easily preventable state-mandated deaths. And it’s not just this and coronavirus, I CANNOT STRESS ENOUGH HOW TYPICAL THIS IS OF EVERYTHING THE FDA DOES ALL THE TIME.

Read the whole thing! I actually had to read it in several sessions, it’s not that long but bouts of anger interspersed with moments of laughter made me have to put it down momentarily to recover. There is a lot more in the post on reforms.

Best quick intro to my views on the FDA is this post (follow the links) and my paper on off-label prescribing.

Addendum: Scott updates the infant fish oil story and provides much more detail. He got some things wrong and the FDA as an agency ends up looking better but the broad outline about the FDA system looks right. I am leaving the post up for posterity but this specific part isn’t correct.