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From the comments, on Covid and our response

It is simply not a tenable policy to oppose pandemic lockdowns on the premise that COVID-19 only negatively affects a certain portion of the population. First, the fact that COVID-19 disproportionately killed the elderly was not something that was readily apparent right out of the box, when the virus was spreading rapidly. Hindsight is 20-20. Second, focusing solely on mortality is short-sighted given that approximately one-third of all people who get over COVID-19 suffer “long haul” symptoms that persist for months and may even be permanent in some. We cannot simply claim that the non-elderly have no reason to fear COVID-19.

So far, COVID-19 has killed more Americans than we lost in World War II, and it took the war five years to do what the virus did in one year. Even though the majority of the deaths were 65+, these are staggering numbers. Losing well over 100,000 people under the age of 65 in one year alone is nothing to sneeze at, and that’s with lock-downs and other harsh measures being taken. A “let them live their lives” approach would doubtlessly have escalated those numbers greatly.

The best early policy for any pandemic is to ramp up rapid testing as fast as possible, and test people constantly. A widespread testing regime (like in South Korea) would allow uninfected people to live more or less normally, while stifling the spread of the virus by identifying infected people quickly so they can immediately quarantine and prevent further spread. [Alex’s] earlier post on Testing and the NFL is instructive on that point. Such a testing regime could have enabled us to avoid harsher measures later on. But, unfortunately, America was led at the time by a president who did not prioritize testing (and in fact discouraged it to hide the spread of the virus) and sought to pooh-pooh its danger, shrugging off even the slightest mitigation efforts, like masks. Even after he got it, and was hospitalized, almost put on a ventilator, he acted as though it was nothing. That leadership caused a dangerous cognitive dissonance in public perceptions of COVID-19 — a dissonance that is causing people to take unreasonable risks, refuse to get vaccinated, and otherwise take actions that will make it even harder for us to get out from under this pandemic.

Focusing on the Great Barrington Declaration itself, the big problem with its approach is that it presumes that “herd immunity” will naturally occur with COVID-19 at some point. The evidence indicates, however, that natural infection does not lead to permanent immunity. The worse a person’s symptoms from COVID-19, the longer their immunity lasts, but that’s it. The only immunity that is possible now is through vaccination, and even that will require yearly updates as the virus mutates as it is already doing. Eventually we will have it under control. But the suggestion that people under 65 can just safely infect themselves into herd immunity is likely an impossibility, and certainly not a good enough foundation to rest any pandemic policy on. https://www.nature.com/articles/d41586-021-00728-2

None of this is meant to minimize or challenge the obvious economic and mental health effects of certain pandemic policies. There are a great many costs being imposed by lock-downs and other policies. Businesses are failing and not coming back, jobs are being permanently lost, people are feeling isolated, on and on. All of that is tragic, and could have been largely avoided had we aggressively pursued testing (especially rapid-result testing) from the outset. When the next pandemic comes, I hope our descendants remember that lesson. Because once the pandemic started spreading because we didn’t get a testing regime in place, it was too late, and then the harsher policies became inevitable. The horse was out of the barn, and the game changed for good.

That is from James N. Markels, responding to Don Boudreaux in these comments.

Here is another way to put the broader argument, not my preferred first-order response, but I think significant nonetheless.  Given the way government and public choice work, anything that kills over half a million Americans is going to be a big deal for policy, whether we like it or not (Don should be the first to recognize that government will restrict your liberties for far less than 500k deaths!).  You want the best feasible version of a response, as there isn’t really a stable libertarian response pattern out there.  Trying partial but non-sustainable libertarian approaches will in the end get you more and more statism as the virus keeps on defeating you, deaths rise, and calls for ever-greater state action increase.  A lot of what libertarians don’t like about lockdowns in part stems from the “do nothing” response of the first two months of notice that we Americans had when Covid first appeared in China.

Pandemic sentences to ponder

Of course, there are national health systems in Canada, Mexico, England, and France, among many others, and the uniformity of failure across this heterodox group suggests that structure may have made less of a difference than culture.

“One of the common features is that we are a medical-centric group of countries,” says Michael Mina, a Harvard epidemiologist who has spent the pandemic advocating for mass rollout of rapid testing on the pregnancy-kit model — only to meet resistance at every turn by those who insisted on a higher, clinical standard for tests. “We have an enormous focus on medicine and individual biology and individual health. We have very little focus as a group of nations on prioritizing the public good. We just don’t. It’s almost taboo — I mean, it is taboo. We have physicians running the show — that’s a consistent thing, medical doctors across the western European countries, driving the decision-making.” The result, he says, has been short-sighted calculations that prioritize absolute knowledge about everything before advising or designing policy about anything.

…in East Asia, countries didn’t wait for the WHO’s guidance to change on aerosols or asymptomatic transmission before masking up, social-distancing, and quarantining. “They acted fast. They acted decisively,” says Mina. “They made early moves. They didn’t sit and ponder: ‘What should we do? Do we have all of the data before we make a single decision?’ And I think that is a common theme that we’ve seen across all the Western countries—a reluctance to even admit that it was a big problem and then to really act without all of the information available. To this day, people are still not acting.” Instead, he says, “decision-makers have been paralyzed. They would rather just not act and let the pandemic move forward than act aggressively, but potentially be wrong.”

This, he says, reflects a culture of medicine in which the case of the individual patient is paramount.

Here is more from David Wallace-Wells, interesting throughout and with a cameo from yours truly.

Most Popular MR Posts of the Year

Here is a selection of the most popular MR posts of 2020. COVID was a big of course. Let’s start with Tyler’s post warning that herd immunity was fragile because it holds only “for the current configuration of social relations”. Absolutely correct.

The fragility of herd immunity

Tyler also predicted the pandemic yo-yo and Tyler’s post (or was it Tyrone?) What does this economist think of epidemiologists? was popular.

Tyler has an amazing ability to be ahead of the curve. A case in point, What libertarianism has become and will become — State Capacity Libertarianism was written on January 1 of last year, before anyone was talking about pandemics! State capacity libertarianism became my leitmotif for the year. I worked with Kremer on pushing government to use market incentives to increase vaccine supply and at the same repeatedly demanded that the FDA move faster and stop prohibiting people from taking vaccines or using rapid tests. As I put it;

Fake libertarians whine about masks. Real libertarians assert the right to medical self-defense and demand access to vaccines on a right to try basis.

See my 2015 post Is the FDA Too Conservative or Too Aggressive for a good review of ideas on the FDA. A silver lining of the pandemic may be that more people realize that FDA delay kills.

My historical posts the The Forgotten Recession and Pandemic of 1957 and What Worked in 1918? and the frightening The Lasting Effects of the the 1918 Influenza Pandemic were well linked.

Outside of COVID, Tyler’s 2005 post Why did so many Germans support Hitler? suddenly attracted a lot of interest. I wonder why?

Policing was also popular including my post Why Are the Police in Charge of Road Safety? which called for unbundling the police and my post Underpoliced and Overprisoned revisited.

Tyler’s great post The economic policy of Elizabeth Warren remains more relevant than I would like. On a more positive note see Tyler’s post Best Non-Fiction Books of the Year.

One of the most popular posts of the year and my most popular post was The Gaslighting of Parasite.

But the post attracting the most page views in 2020 by far, however, was Tyler’s and it was…

  1. John Brennan on UFOs.

You people are weird. Don’t expect more UFO content this year. Unless, well you know.

Thursday assorted links

1. The immediate immigration policy dilemmas faced by Biden.  And humans in Mexico 30,000 years ago?

2. Kerfluffle surrounding Philip Lane, chief ECB economist, about making calls privately to banks.

3. Good Dube thread on new wage stickiness paper.

4. Don Boudreaux on Walter Williams (WSJ).  And Jayme Lemke.  And David Henderson.  And Thomas Sowell.

5. The culture that is San Francisco what is up with you people?

6. US vs. UK vaccine review procedures.

7. Delta: “Our partners at Mayo Clinic have advised that virus spread could be reduced by 90 percent with weekly testing, reducing asymptomatic transmission. We’re achieving this expansion of our testing by increasing onsite rapid testing, providing testing kits at workplaces with smaller employee populations, and offering at home testing kits to all U.S. employees.”

8. Some new corporate and banking stuff (WSJ).

Our Antibodies, Our Selves

In 2013 I wrote, Our DNA, Our Selves, arguing against the FDA’s crackdown on genetic readouts from firms like 23andMe. The FDA, however, proved succesful in its crackdown and that is why rapid at-home antigen tests are not available today and why tens of thousands of people are dying from COVID unnecessarily. Regulations have unintended consequences.

Let’s recap:

Consider, I swab the inside of my cheek and send the sample to a firm. The idea that the FDA can rule on what the firm can and cannot tell me about my own genes is absurd–it’s no different than the FDA trying to regulate what my doctor can tell me after a physical examination or what my optometrist can tell me after an eye examination (Please read the first line. “G T A C C A…”).

The idea that the FDA can regulate and control what individuals may learn about their own bodies is deeply offensive and, in my view, plainly unconstitutional.

Let me be clear, I am not offended by all regulation of genetic tests. Indeed, genetic tests are already regulated. To be precise, the labs that perform genetic tests are regulated by the Clinical Laboratory Improvement Amendments (CLIA) as overseen by the CMS (here is an excellent primer). The CLIA requires all labs, including the labs used by 23andMe, to be inspected for quality control, record keeping and the qualifications of their personnel. The goal is to ensure that the tests are accurate, reliable, timely, confidential and not risky to patients. I am not offended when the goal of regulation is to help consumers buy the product that they have contracted to buy.

What the FDA wants to do is categorically different. The FDA wants to regulate genetic tests as a high-risk medical device that cannot be sold until and unless the FDA permits it be sold.

Moreover, the FDA wants to judge not the analytic validity of the tests, whether the tests accurately read the genetic code as the firms promise (already regulated under the CLIA) but the clinical validity, whether particular identified alleles are causal for conditions or disease. The latter requirement is the death-knell for the products because of the expense and time it takes to prove specific genes are causal for diseases. Moreover, it means that firms like 23andMe will not be able to tell consumers about their own DNA but instead will only be allowed to offer a peek at the sections of code that the FDA has deemed it ok for consumers to see.

Ten years later we now need rapid antigen tests but the issue, as Michael Mina points out in an excellent interview with Malcolm Gladwell, is that we have medicalized all tests and readouts. Instead of thinking about the individual as having a right to know about their own body, we treated every test or readout as if the only user were a physician. Thus, instead of thinking about the value of these tests for individuals and for public health, the FDA failed to approve rapid antigen tests because it regarded them as inferior to PCR tests, for a physician diagnosing disease.

Here’s Mina (roughly transcribed and lightly edited)

The only pathway that we have to evaluate tests like this are medical diagnostic pathways, pathways designed specifically to ensure that a physician like a detective is getting all the information they need to diagnose a sick person… We have so devalued and defunded public health…that we don’t have a regulatory pathway to approve a test whose primary objective is stopping an epidemic versus diagnosing a sick person. And that has held everything up. All the companies that could be producing these rapid tests in the millions and millions, they have been sitting on these tests trying to hone them so they can pass FDA standards as a medical diagnostic.

It’s not just slowing down their approval it’s actually bottle necking the companies into creating tests that are not going to be as scalable as they are having to use more expensive reagents and packing the tests with instruments so they can pass FDA review when in reality they are just these little pieces of papers. If we can do the cheap version they can be made very fast but the just won’t get through the FDA.

Gladwell: I find your explanation unconvincing. How dumb is the FDA?…If you make the exact argument you made to me…the FDA is not going to see your logic?

It’s not that they are not smart it’s that this is a regulatory body, they just don’t have a pathway. You can’t apply for approval for a public health test tool…In our country the medical establishment is extremely strong, you can’t go to get a cholesterol test without getting a prescription from your doctor. Why can’t we know that? It’s all through this very heavy medical lens and changing that, getting that big ship to turn is turning out to be a very, very difficult task but leading to potentially tens or hundreds or thousands of deaths that don’t need to be happening.

Infected versus Infectious

As I said in my post Frequent, Fast, and Cheap is Better than Sensitive we shouldn’t be comparing virus tests head-to-head, as if all tests serve the same purpose. Instead, we should recognize that tests have comparative advantages and a cheap, fast, frequent testing regime can be better in some respects than a slow, infrequent but more sensitive testing regime. Both regimes can be useful when used appropriately and especially when they are used in combination.

Eric Topol has a good graphic.

Image

As Topol also notes:

In order to get this done, we need a reboot at @US_FDA, which currently requires rapid tests to perform like PCR tests. That’s wrong. This is a new diagnostic category for the *infectious* endpoint, requiring new standards and prospective validation.

The FDA has sort-of indicated that they might be open to this.

Much, much too slow, of course. Matching a virus that grows exponentially against a risk-averse, overly-cautious FDA has been a recipe for disaster.

Frequent, Fast, and Cheap is Better than Sensitive

A number of firms have developed cheap, paper-strip tests for coronavirus that report results at-home in about 15 minutes but they have yet to be approved for use by the FDA because the FDA appears to be demanding that all tests reach accuracy levels similar to the PCR test. This is another deadly FDA mistake.

NPR: Highly accurate at-home tests are probably many months away. But Mina argues they could be here sooner if the FDA would not demand that tests for the coronavirus meet really high accuracy standards of 80 percent or better.

A Massachusetts-based startup called E25Bio has developed this sort of rapid test. Founder and Chief Technology Officer Irene Bosch says her firm has field-tested it in hospitals. “What we learned is that the test is able to be very efficient for people who have a lot of virus,” she says.

The PCR tests can discover virus at significantly lower concentration levels than the cheap tests but that extra sensitivity doesn’t matter much in practice. Why not? First, at the lowest levels that the PCR test can detect, the person tested probably isn’t infectious. The cheap test is better at telling whether you are infectious than whether you are infected but the former is what we need to know to open schools and workplaces. Second, the virus grows so quickly that the time period in which the PCR tests outperforms the cheap test is as little as a day or two. Third, the PCR tests are taking days or even a week or more to report which means the results are significantly outdated and less actionable by the time they are reported.

The fundamental issue is this: if a test is cheap and fast we shouldn’t compare it head to head against the PCR test. Instead, we should compare test regimes. A strip test could cost $5 which means you can do one per day for the same price as a PCR test (say $35). Thus, the right comparison is seven cheap tests with one PCR test. So considered a stylized example. If a person gets infected on Sunday and is tested on Sunday then both tests will likely show negative. With the PCR test the infected person then goes to work, infecting other people throughout the week before being the person is tested again next Sunday. With the cheap test the person gets tested again on Monday and again comes up negative and they go to work but probably aren’t infectious. They are then tested again on Tuesday and this time there is enough virus in the person’s system to show positive so on Tuesday the infected person stops going to work and doesn’t infect anyone else. Score one for cheap tests. Now consider what happens if the person gets tested on another day, say Tuesday? In this case, both tests will show positive but the person doesn’t get the results of the PCR test until next Tuesday and so again goes to work and infects other people throughout the week. With the cheap test the infected person learns they are infected and again stops going to work and infecting other people. Score two for cheap tests.

Indeed, when you compare testing regimes it’s hard to come up with a scenario in which infrequent, slow, and expensive but very sensitive is better than frequent, fast, and cheap but less sensitive.

More details in this paper.

HIV detection on demand

Ms. Brown would get her results in just 20 minutes, thanks to one of
two new tests that AIDS workers say have revolutionized testing for
H.I.V…

On Thursday, the Food and Drug Administration’s Blood Products Advisory
Committee heard testimony on whether to recommend over-the-counter
sales of the rapid test for home use. The agency approved a home
testing kit in 1996, but users have to mail a blood sample to a
laboratory and wait for results by telephone.

Proponents say
rapid testing in the home will reduce the stigma and other obstacles
that prevent many people, including one in four of the nearly one
million Americans who are infected with H.I.V., from getting tested and
starting treatment. Research shows that people who learn they are
infected are less likely to infect others.

Here are the details, note that test is an easy oral swab.  I am not much worried about immediate suicides ("The most emotional responses come from negatives," says the article).  But what are the further ramifications?

1. The test is in the hands of the individual, and the kit presumably does not issue a credible AIDS-free certificate.  So perhaps we return to a greater reliance on trusting the word of the individual — "don’t worry, I tested negative a few weeks ago."  Formal certificates of health might become less expected.

2. Will lovers-to-be ask for an on-the-site test?  There is a stigma attached to asking a partner about his or her status.  It suggests you often sleep with people whose health status you are unsure about; the alternative impression is "of course I’ve never done this before, and I bet you haven’t either.  I’m not used to asking.  HIV, what’s that?"  And how much fun is it to watch a potential partner waiting for the results?  Do you bring little consolation cards in case the test turns out badly?  The resulting unwillingness to pry may further increase the reliance on verbal assurances.  Again, the presence or lack of a certificate — however dated — may provide a clearer focal point and thus greater information and clarity.

3. How often should you test yourself?  Given the signaling point from #2, what should you tell your next partner?  That you test yourself every year?  Every month?  Every day?  Which frequency would you find most reassuring in a potential partner?  Keep in mind the probability of a lie or false result. 

You can spin this one either way.  You might assume that someone who self-tests every day has dangerous habits.  Alternatively, you might assume (at least in pure theory) that the previous partners have been monitoring the test results, and that you don’t need to.  "Hey, if two hundred people have slept with you in the last year, a few of them must have checked you out."  Don’t you usually find the presence of other "customers" reassuring?

4. Say you test yourself after every new partner.  You have a better sense of who infected you, which in turn identifies a greater number of infected agents in advance and also deters self-recognized infectors.  Therefore people will test themselves less often than is socially optimal.  The main benefits from testing may accrue to others, not to yourself.

Hmm…it’s not so simple after all.  But I still believe this test is likely a positive development.  Comments are open…

p.s. We thank Robin Hanson for his guest blogging!

Why I don’t like Fischer Random 960

As you may know, a major tournament is going on right now, based on a variant of Fischer Random rules, sometimes misleadingly called “Freestyle.”  Subject to some constraints, the pieces are placed into the starting position randomly, so in Fischer Random chess opening preparation is useless.  You have to start thinking from move one.  This is a big advantage in a game where often the entire contest is absorbed into 20-30 moves of advance opening preparation, with little or no real sporting element appearing over the board.

Yet I don’t like Fischer Random, for a few hard to fix reasons:

1. Most of the time, at least prior to the endgame, I don’t understand what is going on.  Even with computer assistance.  I could put in five to ten minutes to study the position, and get a sense of the constraints, but as a spectator I don’t want to do that.  As a relatively high opportunity cost person, I am not going to do that.

1b. Classical chess sometimes generates positions where one does not really understand what is going on.  Then it is thrilling, precisely because it is occasional.  A perpetual “fog of war,” as we receive in Fischer Random, just isn’t that thrilling.  In the opening, for instance, I don’t even know if one player is attempting “a risky strategy.”  I am not sure the player knows either.  And I don’t feel that watching more Fischer Random would change that, as there are hundreds of different possible opening positions, mostly with different properties.

2. The younger players have a notable advantage, because they are better at calculating concrete variations and rely less on intuition.  (We already see this in the current results.)  Experience is simply worth much less in this very novel format.  For any one tournament, that is an interesting intrigue.  But over time it is a bore, as if only rookies and sophomores could win NBA titles.  In fact what spectators enjoy watching is Steph Curry going up against Lebron James, or the analogs in chess.  We want to see Magnus meet Fabiano again, not watch two eighteen-year-olds slug it out.  Sorry, Pragga!  You’ll have your day in the sun.

3. Fischer Random cuts off chess from the rest of its history.   That is otherwise a big advantage of chess over many other games and contests.  I like seeing that a player’s move is connected to say an idea from Tal in the early 1960s, or whatever.  I like “Oh, the Giuoco Piano is making a comeback at top levels,” or “today’s players are more willing to sacrifice the exchange than in the 1970s,” and so on.

4. I get frustrated seeing all those Kings sitting on F1, not able to castle in the traditional sense.  There are rules for castling in Fischer Random, but it feels more like pressing the “hyperspace” button in the old Space Invaders video game than anything else.  Who wants to see a Knight on C1 for twenty-five moves?  Not I.

5. I agree that current opening prep is insanely out of control.  I am fine with the remedy of 25-minutes per player Rapid games, or anything in that range, with increment of course.  Those contests are consistently exciting and they are not forced draws (you can play something weird against the Petroff, or to begin with) nor are they dominated by prep.

6. If you don’t want to watch Rapid, I would rather randomize the first few opening moves than the placement of the pieces.  If you don’t control the first three (seven? ten?) first moves, once again opening prep becomes much tougher.  So what if some games start with 1. b4 b6?  The resulting position is still playable for both sides and furthermore it still makes intuitive sense to chess spectators.  Of course the computers would restrict this randomization to sequences that still are playable for both sides.  The very exact nature of current chess opening prep in fact implies you need only a very small change in the rules to disrupt it, not the kind of huge change represented by Fischer Random.

That all said, I am all for experimentation, it’s just that some of them should be strangled in the crib.

Conditional Approval for Human Drugs

Recently a new drug to extend lifespan was granted conditional approval by the FDA–the first drug ever formally approved to extend lifespan! (By the way, the entrepreneur behind this breakthrough, Celine Halioua, is an emergent ventures winner for her earlier work rapidly expanding COVID testing. Tyler knows how to spot Talent!)

Great news, right? Yes, but there are two catches. First catch: the drug is for extending the lifespan of dogs. Second catch: Conditional approval is only available for animal drugs. Conditional approval was permitted for animal drugs beginning in 2004 for minor uses and/or minor species (fish, ferrets etc.) and then expanded in 2018 to include major uses in major species. What does conditional approval allow?

Conditional Approval (CA) allows potential applicants (referred to from this point as “sponsors”) to make a new animal drug product commercially available after demonstrating the drug is safe and properly manufactured in accordance with the FDA approval standards for safety and manufacturing, but before they have demonstrated substantial evidence of effectiveness (SEE) of the conditionally approved product. Under conditional approval, the sponsor needs to demonstrate reasonable expectation of effectiveness (RXE). A drug sponsor can then market a conditionally approved product for up to five years, through annual renewals, while collecting substantial evidence of effectiveness data required to support an approval.

Here is where it gets even more interesting. Why does the FDA say that conditional approval is a good idea?

First, it’s very expensive for a drug company to develop a drug and get it approved by FDA. Second, the market for a MUMS [Minor Use, Minor Species, AT] drug is too small to generate an adequate financial return for the company. The combination of the expensive drug approval process and the small market often makes drug companies hesitant to spend a lot of resources to develop MUMS drugs when there is so little return on their investment.

By allowing a drug company to legally market a MUMS drug early (before it is fully approved), conditional approval makes the drug available sooner to be used in animals that may benefit from it. This early marketing also helps the company recoup some of the investment costs while completing the full approval.

…Similar to conditional approval for MUMS drugs, the goal of expanded conditional approval is to encourage drug companies to develop drugs for major species for serious or life-threatening conditions and to fill treatment gaps where no therapies currently exist or the available therapies are inadequate.

Sound familiar? These are exactly some of the points that I have been raising about the FDA approval process for years. In particular, by bringing forward marketing approval by up to 5 years, conditional approval makes it profitable to research and develop many more new drugs.

Conditional approval is very similar to Bart Madden’s excellent idea of a Free to Choose Medicine track, with the exception that Madden makes the creation of a public tradeoff evaluation drug database (TEDD) a condition of moving to the FTCM track. Thus, FTCM combines conditional approval with the requirement to collect and make public real-world prescribing information over time.

But why is conditional approval available only for animal drugs? Conditional approval is good for animals. People are animals. Therefore, conditional approval is good for people. QED.

Ok, perhaps it’s not that simple. One might argue that allowing animals to use drugs for which there is a reasonable expectation of effectiveness but not yet substantial evidence of effectiveness is a good idea but this is just too risky to allow for humans. But that cuts both ways. We care more about humans and so don’t want to impose risks on them that we are willing to impose on animals but for the same reasons we care more about improving the health of humans and should be willing to risk more to save them (Entering a burning building to save a child is heroic; for a ferret, it’s foolish.)

I think that the FDA’s excellent arguments for conditional approval apply to human drugs as well as to (other) animal drugs and even more so when we recognize that human beings have rights and interests in making their own choices. The Promising Pathways Act would create something like conditional approval (the act calls it provisional approval) for drugs treating human diseases that are life-threatening so there is some hope that conditional approval for human drugs becomes a reality.

Dare I say it, but could the FDA be lumbering in the right direction?

Two Updates on the Value of Vaccines

1) From the recent annual meeting of the American Society of Tropical Medicine & Hygiene (abstract 6949) we learn that the R21/Matrix-M malaria vaccine maintained it’s efficacy over 4 seasons.

…Importantly, maintained high efficacy over four malaria seasons with only four doses is demonstrated, with no concerns to date of rebound in those who have not received repeated booster doses of the malaria vaccine. These data show that the R21/MM vaccine could significantly reducing malaria cases and deaths in children living in malaria endemic areas by inducing well maintained protective immunity.

This is excellent news and further supports my call for rapid, emergency distribution of malaria vaccines.

2) Glennerster, Kelly, McMahon, and Snyder estimate the value of a universal coronavirus vaccine. The COVID vaccines have been very valuable (see our Science paper) but each new variant of concern causes a spike in death rates. As new variants emerge, we modify the vaccines but that takes time and happens only after the death rate spikes. In addition, no one is thrilled with boosters. A universal coronavirus vaccine, and there are dozens in the works, could preclude the need to adjust vaccines on the fly and avoid or greatly ameliorate the death spikes. Based on reduced US mortality alone, Glennerster et al. estimate that a universal vaccine would be very valuable–so much so that an Advance Market Commitment on the order of $6-$10 billion would easily pass a cost-benefit test even if it had just say a 40% chance of accelerating a universal vaccine.

As I said repeatedly during COVID, billions<<Trillions.

How Were So Many Economists So Wrong About the Recession?

That is the topic of my latest Bloomberg column, I thought it was time to call out all the Orwellian rewriting of intellectual history going on, so here goes:

As Treasury Secretary Janet Yellen said last week: “So many economists were saying there’s no way for inflation to get back to normal without it entailing a period of high unemployment, [or] a recession. And a year ago, I think many economists were saying a recession was inevitable. I’ve never felt there was a solid intellectual basis for making such a prediction.”

Many of those economists may have been relying on the work of … Janet Yellen. Her own (highly regarded) macro research focuses on nominal price and wage stickiness and output-inflation trade-offs, predicting that if there is a significant fall in aggregate demand, employment should also fall, giving rise to a recession. She is also co-author (with many distinguished colleagues) of a well-known paper arguing that there is an output/inflation trade-off even at high rates of inflation.

Economist Christina Romer (often with co-authors) has provided some of the most persuasive evidence that negative monetary policy shocks induce recessions in output and employment. Her work has been especially influential — worthy of a Nobel Prize, in my opinion — because it does not rely on a complicated mathematical model of the economy, and it had been accepted on a bipartisan basis. Paul Krugman has been predicting for most of this year that the recent disinflation would not cause a recession, and he deserves credit for getting this right. Yet he is less keen to tell us that for many years he trumpeted the predictive virtues of old-style Keynesian macroeconomics, using models that predict disinflation will lead to a loss in output and employment.

Krugman has lately further explained his position — complete with unironic headline — suggesting that the untangling of broken supply chains had helped lower the rate of inflation. That point, too, is correct. He didn’t mention that there also has been a massive negative shock to aggregate demand: High rates of M2 growth became slightly negative rates of M2 growth. Fiscal policy peaked and then retreated. The Fed raised interest rates from near-zero levels to the range of 5%, and fairly rapidly. It also sent every possible signal that it was going to be tight with monetary conditions.

…There is a reason that so many economists had been predicting a recession — and it is not because they are out of touch, or repeating talking points from Donald Trump’s presidential campaign. They predicted a recession because that is what experts such as Yellen, Krugman, Romer and many others had been teaching for decades. I do not myself presume to have any immunity from the general confusion here, as all along I thought there was a reasonable chance of a recession.

Larry Summers was wrong about the recession, but at least he has been consistent in his application of model-based reasoning, and now somehow he is the whipping boy for having done this.  Let’s hope that some historical memory holds and this one does not get swept under the rug…

The resurgence of crypto

Crypto and bitcoin, among their other uses, are Rorschach tests for commentators. As these institutions evolve, are you capable of changing your mind and updating in response to new data? Sadly, many people are failing that test and instead staking out inflexible ideological ground.

Bitcoin prices are now in the range of $44,000, and the asset has more than doubled in value this year. Perhaps more surprisingly yet, NFT markets are making a comeback. Many of the older NFT purchases remain nearly worthless, but interest in the asset class as a whole has perked up.

These developments should induce us to reevaluate crypto in a positive direction. If in the past you have argued that crypto is a bubble, can it be the bubble is back yet again? Typically bubbles, once they burst, do not return in a few years’ time. You still will find Beanie Babies on eBay, but they are not surrounded by any degree of excitement. Similarly, the prices of Dutch tulip bulbs appear normal and well-behaved, as that bubble faded out long ago. Bitcoin, in contrast, has attracted investor interest anew time and again.

It is time to realize that crypto is more like a lottery ticket than a bubble or a fraud, and it is a lottery ticket with a good chance of paying off. It is a bet on whether it will prove possible to build out crypto infrastructure as a long-term project, integrated with mainstream finance. If that project can succeed, crypto will be worth a lot, probably considerably more than its current price. If not, crypto assets will remain as a means for escaping capital controls and moving money across borders, or perhaps to skirt the law with illegal purchases.

What might such an infrastructure look like? To make just a few guesses, your crypto wallet might be integrated with your Visa and other credit cards (perhaps using AI?). Fidelity, Vanguard, large banks and other mainstream financial institutions will allow you to hold and trade crypto, just as you might now have a money market fund. Crypto-based lending could help you invest in high-return, high-risk overseas opportunities with some subset of your portfolio. Stablecoins will circulate as a form of “programmable money,” and they will circulate on a regular and normal basis; such a plan was just initiated by the French bank SocGen. On a more exotic plane, AI-based agents, denied standard checking accounts, might use crypto to trade with each other.

I’m not arguing such scenarios are either good or bad, simply that the market sees some chance of them happening. And they are far more than “crypto is a fraud or a bubble.”

Whether that infrastructure will meet market and regulatory tests is difficult to forecast. It has never happened before, and thus no one can claim to be a true expert on the matter. Thus your opinion of crypto should be changing each and every day, as you observe fluctuations in market prices and other changes in the objective conditions.

In this perspective, there are some pretty clear reasons why the price of bitcoin is higher again. First, real interest rates have been falling, and fairly rapidly. Ten-year rates are now closer to four per cent than to five per cent. Since crypto financial infrastructure is a long-term project that won’t be completed in a year or two, lower real interest rates raise the value of that project considerably. The value of bitcoin rises as well, just as many other long-term assets rise in value with lower real interest rates. And if interest rates continue to fall, crypto prices could easily continue to rise.

The resurgence of crypto likely has other causes. The story of SBF is receding from the headlines with the end of his trial. That makes crypto look less scammy. On the regulatory side the United States did not try to shut down Binance, in spite of alleged scandals at the exchange. That is the regulators signaling they are not going to try to destroy crypto. Soon the SEC may approve spot bitcoin ETFs, which would make it easier and safer to invest in that asset. Nor have state laws popped up that might be trying to shut down crypto markets. Finally, the election of Donald Trump as President has not faded as a possibility, and in the past Trump has been supportive of crypto. Overall, the tea leaves are signaling that the U.S. government is making its peace with crypto, or at least with some parts of the market.

So with crypto the most important thing is to keep an open mind. As of late, events have been doing much to signal open and growing possibilities, rather than a world where crypto is shut down.

The Indian Challenge to Blockchains: Digital Public Goods

In my post, Blockchains and the Opportunity of the Commons, I explored the potential of blockchains to create new commons:

Blockchains and tokenization are a way to incentivize the creation of a commons. A commons is an unowned place, platform, or protocol that helps people to meet, communicate and transact. Commons underlying modern life include TCP/IP, SMTP, HTTP, GPS and the English language. We don’t see these commons clearly because they are free, ubiquitous and, like air, taken for granted. What we do see are platforms like Airbnb, Uber and the NYSE and places to meet and communicate like OkCupid, Twitter, Facebook and YouTube. What blockchain and tokenization offer is the possibility of creating commons to replace all of these services and much more.

For the most part, the potential has not been realized. But the core idea of substituting a protocol for a firm has been taken in a different direction in India. Instead of blockchains, India has been experimenting with digital public goods. A digital public good is open source software with open data and open standards–available for use or even modification and adaption by anyone. The blockchain community, for example, has long aspired to develop a blockchain-based Uber, connecting drivers and riders without a corporate intermediary. India has achieved this through digital public goods instead.

Namma Yatri is an open-source, open-data Uber-like protocol with 100% of the commission flowing directly from rider to driver. Namma Yatri is built on the Beckn Protocol, a product of the Beckn Foundation which is backed by Infosys co-founder Nandan Nilekani (Tyler and I had the opportunity to talk with many people behind the project including Nandan on a recent trip to India). Namma Yatri has booked over 15 million trips in just one year of operation, mostly in one city, Bangalore. I expect it will expand rapidly.

Namma Yatri is only one example of a digital public good in the India Stack, a collection that includes identity (Aadhaar), payments (UPI) and digital data sharing (e.g. digital lockers). Since its launch in 2008, for example, India’s Aadhaar system has created a digital identity for over 1.2 billion people allowing them to open some 650 million bank accounts. This has enhanced financial inclusion and facilitated direct government payments of pensions and rations, reducing corruption. Likewise, the UPI system built modern payment rails which are then leveraged by banks and firms such as Google Pay and WhatsApp. The resulting payments system does some 10 billion transactions a month and is one of the fastest and lowest cost in the world.

Challenges remain. The development of digital public goods relies on funding from non-profits, governments, and private consortiums, raising questions about long-term sustainability. These goods need regular maintenance and updates, and some require backend support. Namma Yatri began as a completely free app for drivers and users but if there is a problem who do you call? To support the back-end office, and to pay for updated inputs (such as maps) the service has started to use a subscription fee. Nothing wrong with that but it’s a reminder that firms are not so easily dispensed with. Privacy is another concern. While blockchains offer privacy at the technology layer, privacy for digital public goods depend on legal and normative frameworks. For instance, India’s Aadhaar system is legally restricted from police use, a smart balance that needs to be maintained in changing times.

Despite these challenges, there is no denying that India has built digital public goods at scale in a way that demonstrates an alternative pathway for digital infrastructure and a challenge to blockchains.

What the Kia-Hyundai Crime Wave Tells Us About the Long-Term Decline in Crime

Motor vehicle thefts (per capita) are about one third the level they were in the early 1990s, a drop which is consistent with the Great Crime Decline, the large fall in many crimes since the early 1990s. A lot of ink has been spent trying to explain the great crime decline–abortion legalization, lead abatement, increased imprisonment, more policing–these are just some of the leading theories.

In recent years, however, there has been a notable increased in motor vehicle theft–not back to earlier peaks–but a substantial increase. Theft hasn’t increased uniformly across the board, however. Thefts of Kias and Hyundais have seen massive increases–in some places thefts of these cars have increased by a factor of five or ten in just a few years. The reason is simple–most cars today have electronic immobilizers which mean that without the key present these cars can’t easily be hotwired. Some enterprising thieves, however, discovered that Kia and Hyundai neglected to install these devices and they spread the word through Tik-Tok videos about a method to quickly and efficiently jack these cars.

I propose that the micro can shed light on the macro. Consider the four theories for the great crime decline that I mentioned earlier–abortion legalization, lead abatement, increased imprisonment and more policing. The first two, abortion legalization and lead abatement, are theories about why there are fewer criminals–these theories say that people improved and that is why crime declined. But better people shouldn’t steal any car models, including Kias and Hyundais! Moreover, people haven’t suddenly become worse. Thus, offender-based theories cannot explain the sharp rise in motor vehicle thefts. There have been some changes in punishment, imprisonment and policing, in recent years but these have been slow moving and fairly small and in addition they also don’t explain the rise in Kia and Hyundia thefts in particular.

Obviously, what explains the rise in thefts of Kias and Hyundias in particular is the discovery that these vehicles were unguarded, unprotected and unsecured. Notice that being unguarded, unprotected and unsecured swamped any effect coming from abortion legalization, lead abatement, increased imprisonment or more policing.

The failure of the big four to explain the rise in Kia and Hyundai thefts isn’t proof that these theories are wrong. But lets ask the inverse question, can the rise in Kia and Hyundai thefts suggest an explanation for the great crime decline? In other words, can we explain the great crime decline by an increase in security. Begin with the most direct case, motor vehicle theft. Car immobilizes and other security devices began to be installed in the 1990s so the timing fits. Moreover, the timing fits multiple countries. One of the weaknesses of theories of the great crime decline such as increased imprisonment and policing is that these theories work for the United States but the crime decline occurred in many industrialized countries at about the same time. Canadian crime rates, for example, fall in near lockstep with US rates but with very different prison and policing strategies. Immobilizer technology, however, happened at similar times in similar places and where we saw delays or early adoption we also see delayed or early falls in motor vehicle theft. In addition, motor theft declined first for newer cars (secured) rather than for older cars despite the fact that the newer cars are the more desirable for thieves–again this fits the security hypothesis better than an offender or punishment hypothesis.

The security hypothesis fits motor vehicle theft but the connection is less clear with respect to other crimes. Home security devices have increased and become higher quality over time but the change was less rapid and less precisely timed to the early 1990s. The rise of credit cards and decline of cash could have reduced muggings, although again the timing doesn’t appear to be precise. Violent crime would seem even less likely to be security related–although cameras and lights surely matter–but keep in mind that a lot of violent crime is a side-effect of property crime. Vehicle thefts, muggings and drug deals turn into homicides, for example. In addition, there are “life of crime” or “career” effects. If you make motor vehicle theft and burglary less profitable that makes a life of crime less profitable which can reduce crime in general even without specific deterrence.

Overall, the security hypothesis carries some weight, especially in explaining multiple countries. I don’t fully discount any of the major theories, however. Multiple causation is important.

The main less I draw is this: The increase in Kia and Hyundai thefts suggests that the crime wave declined not because the ocean became more gentle but because we built more secure sea walls. The big waves are still out there in the vast ocean and if we lower the walls we shouldn’t be surprised if another big crime wave comes rolling in.