The Miracle of the Internet

The internet has performed incredibly well in the crisis. Charles Fishman, at the Atlantic, gets an inside picture from AT&T:

The surge in traffic, on the internet as a whole and on AT&T’s part of the network, is extraordinary in a way that the phrase 20 percent increase doesn’t quite capture. AT&T’s network is carrying an extra 71 petabytes of data every day. How much is 71 petabytes? One comparison: Back at the end of 2014, AT&T’s total network traffic was 56 petabytes a day; in just a few weeks, AT&T has accommodated more new traffic every day than its total daily traffic six years ago. (During the pandemic, the AT&T network has been carrying about 426 petabytes a day—one petabyte is 1 million gigabytes.)

It’s not an accident. Like HEB in Texas

…AT&T rehearses for disaster. Last May, the company ran an internal war game on how a pandemic would affect its ability to keep phone and internet service running. The company does these exercises routinely to try to get ready—to build teams of people and their reflexes, and also to understand what they will need on the ground.

Tom Hazlett at City Journal points out that the strength of the American internet in particular has been due to greater investment and non network-neutrality.

The payoff is that Netflix (or Hulu, Amazon, or YouTube) have forged bargains with ISPs: if you subscribe to Comcast, you might notice that Netflix is so integrated into its network that a button on your cable TV remote clicks you right from CNBC (owned by Comcast) to Netflix—away from the cable operator’s shows and onto a streaming “over-the-top” media platform. These non-neutral arrangements, along with side payments between the companies, fundamentally support Internet growth.

So while Netflix and Amazon have been throttling their video services in Europe, reducing their customers’ data consumption by one-fourth in response to surging demand, high-definition streaming, following a long trend, remains the U.S. norm. In a 2012 paper in the Journal of Law & Economics, Michal Grajek and Lars-Hendrik Röller found that higher levels of regulatory control (with rules designed to force network sharing) undermined investment incentives, reducing information infrastructure across Europe by 23 percent….U.S. network investments are higher than in Europe, accounting for population and relative economic output.

Despite arguments that the U.S. is falling behind, these network investments pay off. American Internet users consume considerably more data than do Europeans on a per-capita basis. According to Cisco, ISP end-users in the U.S. and Canada stream 115.6 gigabytes of data per month, compared with 43.8 gigabytes in Western Europe and 10.6 gigabytes in Asia Pacific.

Saturday assorted links

World’s Largest Producer of Rubbing Alcohol Can’t Manufacturer Hand Sanitizer

How many stupid, outrageous, maddening government failures can you document in just 500 words? Jim Doti and my former colleague Laurence Iannaccone should win a prize for this piece in the WSJ:

…the U.S. is, by far, the world’s largest producer of alcohol. That distinction is a result of the Energy Policy Act of 2005, which required fuel producers to blend four billion gallons of corn ethanol into their gasoline by 2006 and 7.5 billion by 2012. The immediate result was a spike in the price of corn and an increase in food prices world-wide. U.S. farmers soon solved this problem by diverting millions of acres of land to growing corn. Ironically, this increased overall CO2 emissions, much to the chagrin of the environmentalists who had championed the mandate as a way of fighting global warming.

Long before policy makers had seen their error, however, farm states had so fallen in love with ethanol that they successfully lobbied the federal government to raise the mandate to 32 billion gallons a year by 2022. Keep in mind that the oil industry would gladly pay billions of dollars in extra taxes each year not to use it.

The negative effects of this forced usage of corn-based ethanol in refined petroleum include higher gas prices (alcohol costs more than oil per British thermal unit) and more than 30 million acres lost to subsidized corn production — an area that vastly exceeds all the land lost to urban, suburban and exurban “sprawl” over the past century. And while the U.S. now has inordinate supplies of excess alcohol, fuel producers can’t use it, since adding any more to gasoline will damage car engines.

Surely now, with people clamoring for germ-sanitizing alcohol, this excess supply can be put to good use. Not so fast. The Food and Drug Administration and Bureau of Alcohol, Tobacco, Firearms and Explosives have prohibited the use of ethanol in place of isopropyl alcohol even though both are equally effective as germ-killers.

On April 3 the FDA announced that “ethanol made at plants producing fuel ethanol can be used as rubbing alcohol if it contains no additional additive or chemicals from the plants and they can ensure water purity and proper sanitation of equipment.” But it’s unclear how much supply will increase, since the FDA also stated that it would “consider each plant on an individual basis and grant approval only if a plant meets quality control specifications.”

Worse yet, the FDA reversed course on April 16, announcing additional restrictions that effectively prevent any sales, even though ethanol companies had already produced and shipped millions of gallons of high-grade alcohol for hand sanitizer. With U.S. ethanol inventories at all-time high of about 900 million gallons, you’d think the FDA would let us have a little for our hands.

Coronavirus sports markets in everything, multiple simulations edition

For $20, fans of German soccer club Borussia can have a cut-out of themselves placed in the stands at BORUSSIA-PARK. According to the club, over 12,000 cut-outs have been ordered and 4,500 have already been put in place.

Here is the tweet and photo.

And some sports bettors are betting on simulated sporting events.  (Again, I’ve never understood gambling — why not save up your risk-taking for positive-sum activities?  Is negative-sum gambling a kind of personality management game to remind yourself loss is real and to keep down your risk-taking in other areas?)

Via Samir Varma and Cory Waters.

Limiting liability for a resumption of business activity

I have a short Mercatus policy brief on that topic, co-authored with Trace Mitchell.  Excerpt:

Risk from reopening cannot fall to zero, but investments in safety by employers can bring real gains in many cases. Ideally, a plan should both minimize risk and encourage employers’ safety investments. In essence, policymakers should (1) limit liability in the short term to cases of recklessness, (2) use direct regulation to prohibit some obviously risky options, and (3) create and fund a COVID-19 compensation program while capping liability for covered entities.

To understand how this combination of options might work in practice, consider the simple example of the restaurant. Many states are allowing partial reopenings of restaurants, albeit with social distancing, which might comprise outdoor seating, limited seating within the restaurant, or both. Yet some practices that would be very dangerous in the current situation, such as open buffets, have been made illegal per se. This arrangement takes some of the highest-risk problems off the table, and for the better. It is also appropriate for regulation to mandate soap-and-water washing facilities for workers in all restaurants, to provide another example of a sensible regulation.

It is still necessary, however, for these businesses to have stronger liability protection, so that restaurants may proceed with greater certainty, and also solvency. While the number of future COVID-19 transmissions in restaurants is unlikely to be zero, restaurants can only do so much to limit risk, vulnerable individuals still can opt to stay away and indeed are likely to do so, and tracing particular cases to particular restaurants is very difficult. For all of those reasons, we do not expect the traditional liability system to perform well in the case of restaurants, and we wish to limit its applicability, while of course keeping other safeguards in place. In essence, our proposal takes that commonsense approach to restaurants and applies it to the economy more broadly.

I would stress that nursing homes require a fully separate treatment.  Here is a related Marc Thiessen piece.  Here is Ross Marchand on state-level experimentation with liability.

Alexander Wendt on why we should take UFOs seriously

He has more than just the usual hand-wringing, here is one excerpt:

Sean Illing

…What’s the Occam’s razor explanation for these UFO sightings?

Alexander Wendt

To me, the Occam’s razor explanation is ETs.

Here is another:

Sean Illing

If some of these UFOs are the products of alien life, why haven’t they made their presence more explicit? If they wanted to remain undetected, they could, and yet they continually expose themselves in these semi-clandestine ways. Why?

Alexander Wendt

That’s a very good question. Because you’re right, I think if they wanted to be completely secretive, they could. If they wanted to come out in the open, they could do that, too. My guess is that they have had a lot of experience with this in the past with civilizations at our stage. And they probably know that if they land on the White House lawn, there’ll be chaos and social breakdown. People will start shooting at them.

So I think what they’re doing is trying to get us used to the idea that they’re here with the hopes that we’ll figure it out ourselves, that we’ll go beyond the taboo and do the science. And then maybe we can absorb the knowledge that we’re not alone and our society won’t implode when we finally do have contact. That’s my theory, but who knows, right?

Here is the full piece, interesting and intelligent throughout.

Friday assorted links

Facts about labor markets ouch, when are rising wages bad edition

Workers in the bottom quintile of the wage distribution experienced a 35 percent employment decline while those in the top quintile experienced only a 9 percent decline. Large differences across the wage distribution persist even after conditioning on worker age, business industry, business size, and worker location. As a result, average base wages increased by over 5 percent, though this increase arose entirely through a composition effect. Overall, we document that the speed and magnitude of labor market deterioration during the early parts of the pandemic were unprecedented in the postwar period, particularly for the bottom of the earnings distribution.

That is from a new paper by many authors, including Cajner, Decker, and Hurst.  Via Adam Ozimek.

Testing participation vs. testing capacity

This paper argues that testing participation –and not testing capacity–is the biggest obstacle to a successful “test and isolate”-strategy, as recently proposed by Paul Romer. If 𝑅0=2.5,at least 60percentof a population needs to participate in a testing program to make it theoretically possible to achieve an effective reproduction rate for the whole population,𝑅′′, below 1. I also argue that Paul Romer’s assumption about quarantine length is problematic,because it implicitly assumes that an infected and tested person is quarantined during the entire duration of the illness. With more realistic assumptions, where the fraction of the illness duration that is spent in quarantine depends on the test frequency, at least 80percentof the population must participate to keep 𝑅0′′<1, even if participants in the test program are tested every five days.Comprehensive testing,as proposed by Romer,is probably still a very cost-effective means of reducing the reproduction rate of the infection compared to mandatory lockdown policies, but it seems less promising than he suggests.How-ever, comprehensive testing might also reduce voluntary social distancing in a non-cost-effective way because testing and isolating infected individuals decreases the risk of infection for an individual if social distancing is not practiced.

Here is the full paper by Jonas Herby.

Why is child abuse not opposed more passionately on the Right

From an email from Paul Foster:

From my perch, there are two primary reasons the right doesn’t more passionately oppose child abuse. The first has to do with parents’ rights. The general conservative view of the child welfare system is of a group of liberal ladies who think they know better than parents and who are especially skeptical of religious parenting, especially conservative Christian parenting. (The NYT op-ed opposing home schooling was an almost-too-perfect totem in that regard.) As a result, while many on the right will say “sure, flat-out abuse is bad,” they’ll assume that “abuse” will be defined eventually to include homeschooling, imparting religious views (especially on traditional gender roles), and the like. The early 20th-century attempt to eradicate the German language and culture through the public schools is often pointed to, as is (at least among the hipper conservatives (I swear we exist!)) that one Simpsons episode where a social worker gives demerits to Marge and Homer’s household for “toilet paper hung in improper overhand fashion.”

The second reason–and this is probably true for both the right and the left–is that you can’t even think of a solution by reasoning from your political views. “Adults shouldn’t beat kids” is universally accepted, but your views on taxes or your reading of Ayn Rand or that latest anti-Pelosi meme doesn’t give you anything helpful in actually stopping adults from beating kids. Without a political solution, it tends to fall by the political wayside.

Here are my previous recent posts on related questions concerning child abuse.

America’s reopening will depend on trust

That is the topic of my latest Bloomberg column, here is one bit:

The first wave of the Covid-19 pandemic brought serious economic damage for thinly capitalized face-to-face retailers, such as small family-owned restaurants. But many of those same institutions will lead the recovery — that is, if they have built up trust among their patrons. If they ask me to sit outside to eat my meal, I will trust that their kitchen procedures are “clean enough,” because I believe that the boss is watching [there I am referring to two of my favorite local places].

It is also worth asking whom I do not trust. When it comes to providing a fully clean and safe store, I do not trust most of the big-box retailers. I trust them just fine in ordinary times, but no single manager can oversee the entire cleaning and disinfectant operation. And can they monitor Covid-19 in the air? If they tell me that “all possible precautions have been taken,” I might believe their words, but I won’t believe that is enough.

And:

The NBA is wondering if it can resurrect its playoffs at a dedicated location with television coverage but no audience in the stands. So far the teams are hesitant, in part because they are afraid of public resentment if the league’s millionaire players have access to Covid-19 tests while the general public does not.

The reality is that if the NBA announced it was buying up a lot of tests, it would boost the supply of tests. That could provide testing with valuable positive publicity, with the NBA serving as a role model for what other businesses might do. Yet the NBA does not yet trust its fans to see things in such a positive light, and so reopening is delayed. There might be some danger to playoffs games without fans, but surely less than in, say, collegiate or professional football, where injuries and concussions are built into the very nature of the competition.

Which are the businesses that you really trust in matters pandemic?

Thursday assorted links

1. Tips for slowing livestock growth due to plant closures.

2. “The Arizona Department of Health Services told a team of university experts working on COVID-19 modeling to “pause” its work, an email from a department leader shows.

3. Florian Schneider has passed away.

4. Source code for the Imperial College model.  And Sue Denim is very upset about the quality of that source code.  Another reader with a strong technical background wrote me equally critical remarks.  Are there further opinions on this?

5. Sujatha Gidla on her experience with Covid-19 (NYT), and here is my earlier CWT with her, one of my favorite episodes.

6. A new real-time journal COVID Economics.

7. Tankersley interviews Hassett and covers the brouhaha (NYT).

8. Effective Altruist forum ranks Fast Grants as one of their top two projects.

10. Jerry Seinfeld on success.

11. “A county in Washington State dealing with a coronavirus outbreak has identified a confounding new source of spread: “Covid-19 parties” organized so that people can deliberately mingle with an infected person in the hope of getting their own illness out of the way.”  (NYT link)  I wonder what they play for the music.

12. How are the social sciences evolving?  Less rational choice, for one thing.

13. Why are meatpacking plants hit so hard?  Holds true for numerous countries — is it the deliberate circulation of cool air?

14. Emily Oster and Galit Alter have a new Covid public health information site.

Save Grandma, Save the Economy

The meat supply is starting to fail. Meat processing factories seem especially susceptible to COVID-19 probably because of mist, chilled air circulation, the creation of aerosols and close worker contact. What other industries could be affected? What would happen if the energy, transportation, or pharmaceutical sector failed? We aren’t even sure which industries are critical. Who would have thought that nasal swabs would be a critical industry? In researching vaccine production I was stunned to learn that glass vials may be a bottleneck. Glass vials! How then do we best protect the workers in our critical industries? Should everyone else practice social distancing, closing of non-essential firms and work from home or should everyone else return to work as if everything were normal?

Social distancing, closing non-essential firms and working from home protect the vulnerable but these same practices protect workers in critical industries. Thus, the debate between protecting the vulnerable and protecting the economy is moot. “Lockdowns” protect vulnerable people and protect vulnerable industries. Save grandma, save the economy.

The point is simple but made formally in Social Distancing and Supply Disruptions in a Pandemic by Bodenstein, Corsetti and Guerrieri.

Abstract: Drastic public health measures such as social distancing or lockdowns can reduce the loss of human life by keeping the number of infected individuals from exceeding the capacity of the health care system but are often criticized because of the social and economic costs they entail. We question this view by combining an epidemiological model, calibrated to capture the spread of the COVID-19 virus, with a multisector model, designed to capture key characteristics of the U.S. Input Output Tables. Our two-sector model features a core sector that produces intermediate inputs not easily replaced by inputs from the other sector, subject to minimum-scale requirements. We show that, by affecting workers in this core sector, the high peak of an infection not mitigated by social distancing may cause very large upfront economic costs in terms of output, consumption and investment. Social distancing measures can reduce these costs, especially if skewed towards non-core industries and occupations with tasks that can be performed from home, helping to smooth the surge in infections among workers in the core sector.

Addendum: I wrote “lockdowns” because I am in favor of getting back to work with mass testing and safety protocols so I don’t think that a “lockdown” is necessarily the optimal policy. Indeed, I think we could get the meat processors back up and running with testing at the door and safety protocols. But we are not having a rational discussion about the tools and the investments that we need to reopen the economy. Instead, the people protesting to reopen the economy are also protesting against the use of a key tool to reopen the economy, masks! Welcome to crazy town.

What to Watch

My viewing habits are less hi-brow than Tyler’s, perhaps especially now when I am seeking escape and mind rest. Here’s a few things I have enjoyed and some that I have not.

DEVS on Hulu. If you know what the Everett interpretation is you will probably enjoy this science-fiction drama with big ideas on quantum computing and free will but also enough suspense, action and human relationships to drive the drama forward. From the director of Ex Machina. Sonoya Mizuno steals the show, super charismatic in an off beat way.

Westworld on HBO. A few interesting scenes but mostly disappointing.

Formula 1: Drive to Success on Netflix. I have no real interest in car racing but this documentary–each season is a season–is very well produced. Great shots from within the cars and each episode is tightly crafted, dare I say formulaic, so you want to watch the next. Popcorn but good popcorn. An extended version of Rush. I had no idea a team can cost $300-$500 million a year.

Bosch on Amazon. A police noir set in the real Los Angeles.  Bosch is the Sisyphus of police detectives, driven to find justice for the victims but the victims never thank him, justice doesn’t bring them back and each day brings another. A study in character.

Extraction on Netflix. Awful. Brainless. If you want action, watch Fauda about a special Israeli Defense Unit. It’s well done and you will learn something even if what you will learn is how decent people turn into terrorists in an endless cycle of retribution and misery.

Impostors on Neflix: A light con-woman caper. Good for one season but harder to sustain once you’ve seen behind the curtain.

Beforeigners on HBO: My only share with Tyler. I look forward to a second season.

Top Chef on Amazon (I bought the new Season). Still my go to for competence-porn and don’t we all need some of that? Plus makes me look forward to restaurants.