Are you merely a cog in the larger economy? What’s wrong with being a cog? After all, cogs are individual decision-makers, and isn’t that the appropriate focal point of economic analysis? Even if being a cog isn’t so bad, what are the monsters you need to look out for in the digital economy? And what sort of economic policies should be in place to deal with them? These issues worry Diane Coyle, and feature in her new book, Cogs and Monsters, also the subject of this episode. In this conversation, you’ll find much that Coyle and EconTalk host Russ Roberts agree on, but also several important-and subtle-differences. So let’s hear what you think. Use the prompts below to start a conversation. We know these are especially big questions… So pick and choose as you see fit. We’d love to see your thoughts in the comments!     1- What is the nature of Coyle’s critique of economics today? How does Roberts’ critique differ from hers? Which do you think is more apt, and why? How should we be teaching our students and thinking about economics going forward?   2- Coyle asserts that her central question in the book is, “is this a good policy?” What does it mean for a policy to make things better? To what extent can any policy promise to be objective? What should be the role of economists in advising policy makers?   3- What were the failings of the economics profession regarding the 2008 financial crisis? Should we have seen it coming? What about Brexit? Post-COVID supply chain disruptions?   4- Coyle argues that policy makers need some sort of framework to help them make decisions. Though Roberts and Coyle may disagree on the margins, what might such a framework look like, and to what extent can it help us answer questions like whether Stonehenge should be moved to the Birmingham exhibition center or whether the Churchill War Rooms should be converted to affordable housing?   5- Another big question that suffuses this conversation is, what is progress? How do Coyle and Roberts each answer this? Why does Coyle believe the digital economy makes this so hard to assess, and to what extent do you think she’s correct regarding the historical significance of this moment?   (0 COMMENTS)

I recently appeared on a couple of different podcasts to discuss U.S. Border Militarization and Foreign Policy: A Symbiotic Relationship, a paper that Chris Coyne and I recently published in the Economics of Peace and Security Journal. Caleb Brown interviewed me about the paper on the Cato Daily Podcast. This was a short nine-minute discussion in which I articulated some of our core arguments about the process of border militarization and the dangers it poses to civil liberties. Aaron Ross Powell also interviewed me on his new podcast, (Re)imagining Liberty. That episode is nearly an hour long, so we spend a lot more time unpacking how border militarization works and what we can learn from that process. In both podcast discussions, I discuss the role of physical capital and human capital in border militarization. These are crucial to the argument that Chris and I make in our paper, and we think about them in a distinctively Austrian way. That is, we emphasize that capital goods are heterogeneous and have multispecific uses. As we explain in our paper: “At the foundation of any foreign intervention is the desire by interveners to alter the actions of those being intervened upon. If actions abroad already matched the desires of the interveners, then intervention would be unnecessary. To alter foreigners’ actions and ensure compliance, interveners may use a variety of forms of social control, including surveillance, intimidation, imprisonment, occupation, policing, and physical violence.   To effectively engage in this type of social control, the interveners must first invest in capital that is particularly suited to the task. This includes physical capital, such as surveillance equipment, aircraft, armored vehicles, and weaponry. It also includes human capital, skills and knowledge that make soldiers, intelligence officers, and other interveners more effective at producing social control. Capital is heterogeneous and multi-specific. Capital heterogeneity means that once capital is created, it can only be used for some types of projects, but not others. For instance, a Blackhawk helicopter cannot be used to bake bread. However, capital is also multispecific, meaning it can be used for multiple types of projects. A Blackhawk helicopter is useful for foreign wars and for patrolling the U.S.-Mexico border.” Because capital is heterogeneous, it is more useful for some projects than for others. Indeed, there are some projects that it cannot be used for. As Peter Boettke explains: “If capital goods were homogeneous, they could be used in producing all the final products consumers desired. If mistakes were made, the resources would be reallocated quickly, and with minimal cost, toward producing the more desired final product. But capital goods are heterogeneous and multispecific; an auto plant can make cars, but not computer chips. The intricate alignment of capital to produce various consumer goods is governed by price signals and the careful economic calculations of investors. If the price system is distorted, investors will make mistakes in aligning their capital goods. Once the error is revealed, economic actors will reshuffle their investments, but in the meantime resources will be lost.” When government officials engage in foreign intervention, they invest in a set of capital goods, but their decision to do so is not guided by price signals, profit-and-loss feedback, or economic calculation. If capital were homogeneous, this might not be so troubling. We would have good reason to worry about the capital destroyed during war, but the capital goods created to make war could easily be redirected towards productive uses in peacetime. In our world, however, capital is heterogeneous and multispecific. The coercion-enabling capital created during wartime can be used for new projects, but these are more likely to be violent, coercive projects like police militarization and border militarization than projects that directly satisfy consumer demand.   (0 COMMENTS)

As with the Chinese Cultural Revolution, the radicalism of the woke movement will end up destroying itself. In yesterday’s post, I half-jokingly suggested that maybe the movement is being funded by a right wing billionaire. Today, I encountered a long article at The Intercept by Ryan Grim that makes a similar point: Another leader [of progressive organizations] said the strife has become so destructive that it feels like an op. “I’m not saying it’s a right-wing plot, because we are incredibly good at doing ourselves in, but — if you tried — you couldn’t conceive of a better right-wing plot to paralyze progressive leaders by catalyzing the existing culture where internal turmoil and microcampaigns are mistaken for strategic advancement of social impact for the millions of people depending on these organizations to stave off the crushing injustices coming our way,” said another longtime organization head. “Progressive leaders cannot do anything but fight inside the orgs, thereby rendering the orgs completely toothless for the external battles in play. … Everyone is scared, and fear creates the inaction that the right wing needs to succeed in cementing a deeply unpopular agenda.” In my previous post I criticized Will Stancil’s claim that almost all of the opposition to woke excesses comes from white men.  Grim provides supporting evidence:   The pushback against callout culture, which might be surprising on a surface level, is bubbling up in Black movement spaces. “In the movement for Black lives, there is a lot of the top leaders saying, ‘This is out of control. No one can be a leader in this culture. It’s not sustainable. We’re constantly being called out from the bottom,’” said one white movement leader who works closely with Black Lives Matter leaders. “Nowadays, there’s an open conversation — not open, there is a large conversation — about the problems of this, and it’s being led by people within the movement for Black lives,” he said. “We didn’t have that three years ago, and if we did, they were a minority and were totally isolated. Now it’s so bad that there’s now a growing backlash within our own movements.” Patrisse Khan-Cullors, a founder of the Black Lives Matter movement, called the phenomenon out in the book “How We Fight White Supremacy,” writing, “People don’t understand that organizing isn’t going online and cussing people out or going to a protest and calling something out.” Critics of woke excess are not suggesting that no one deserves to be called out.  The real problem is that the wrong people are being called out.  The radical progressives are destroying themselves. (0 COMMENTS)

Last month, Arnold Kling caught my attention with his profoundly pessimistic and, I thought, reasonably plausible argument that the Fed could go bankrupt. But I don’t follow Fed balance sheets the way my friend Jeff Hummel, an outstanding monetary economist, does. So I asked him what he thought. Jeff gave me a detailed answer, which I post below. I made a number of edits and he approved them. As I wrote before, I don’t believe Arnold Kling’s scenario is quite as scary and imminent as he thinks. To begin with, Kling is making a much stronger claim than the Neil Irwin article he cites. Irwin’s only concern is that rising mortgage rates, by causing a fall in the market prices of Fed held mortgage backed securities (MBS), will prevent the Fed from unloading them. Kling goes further and claims the Fed faces insolvency even if it hangs on to those assets. I think the latter claim is by far the weaker, not that the Fed isn’t facing some problems. But Irwin’s argument is more credible. It is true that currently the Fed’s overall balance sheet has a significant maturity mismatch, borrowing short (bank reserves, currency, Treasury deposits, and reverse repos) and lending long (both Treasuries and MBS). But marking an institution’s balance sheet to market, as Kling suggests, is not necessarily the best to way to evaluate an institution’s solvency if it intends to hold all its assets until maturity. Fed assets will continue to pay their fixed returns (or inflation-adjusted returns on the less than 7 percent of long-term Treasuries the Fed holds) as long as they are not sold. In that case, the Fed does not have to worry about changes in market prices, unless there is an outright default on its assets. Even in the case of a default, the Fed doesn’t hold any mortgages directly. It instead can hold only MBS that are guaranteed by one of three federal government sponsored enterprises. So it is not clear that the Fed itself would take a hit from defaults. Moreover, there does not appear to be a major concern about mortgage defaults as occurred in the 2007-2008 financial crisis. The main worry is rising mortgage interest rates due either to inflation or to the Fed’s dumping its MBS on the market, causing a fall in the value of the Fed’s MBS portfolio. If the Fed doesn’t sell any MBS, Kling argues, inflation will nonetheless cause rising interest rates on Fed liabilities. To address that issue, we need to take a closer look at the Fed’s current balance sheet. Its total liabilities as of May 11, 2021, were $8.94 trillion. Its total assets and capital, of course, equal that. Of its assets, $2.71 trillion were MBS (30.3 percent) and $5.77 trillion were Treasury securities and a minor amount of Federal agency debt (64.5 percent). The Fed also holds as assets gold certificates of only $11 billion, valued at $42.2 per ounce. Other assets include minimal amounts of Treasury coin, SDRs, foreign assets, special lending facilities, bank premises (Fed buildings and other physical assets), etc. Fed liabilities include $2.22 trillion of Federal Reserve notes (24.8 percent of its total balance sheet), bank deposits of $3.30 trillion (36.9 percent), and Fed borrowing either in form of Treasury deposits of $0.92 trillion (10.3 percent) or in the form of reverse repos of $2.17 trillion (24.3 percent). The remainder on that side of the balance sheet is either other minor liabilities or the Fed’s capital account ($42 billion). However, the only significant liabilities the Fed pays interest on are bank deposits and reverse repos. Thus, over a third of the Fed’s liabilities are essentially interest-free loans through Federal Reserve notes and Treasury deposits. And only the interest rates on reverse repos are partly market driven, whereas the interest rate on bank deposits (reserves) is set entirely at the Fed’s discretion. Moreover, Kling’s implication toward the end of his post that the Fed might have to “induce banks to keep reserves by raising the interest rate paid on reserves” is completely mistaken. A single bank can get rid of its deposits at the Fed in basically three ways. First, it can sell reserves to other banks, which has no effect on their total outstanding quantity. Second, the bank can have the Fed convert the Fed deposits into currency, which actually would reduce the amount of interest the Fed has to pay. Normally banks do the second only to satisfy their customers’ demand for currency. Third, a bank can convert reserves into a reverse repo loan to the Fed, but because the Fed sets reverse repo rate below the interest rate on reserves, that also reduces the Fed’s interest costs. In short, no matter how high market interest rates go, the Fed does not have to raise interest on reserves to get banks to hold them. Indeed, despite the elimination of formal reserve requirements in 2020, banks are still subject to implicit reserve requirements through the back door. Back in 2015 the Fed imposed the Basel Accord’s Liquidity Coverage Ratio (LCR), which I wrote about here and here. Not only does the LCR compel banks to hold more high-quality highly liquid assets, such as reserves, than they otherwise might choose. But also other forms of capital requirements, including stress tests, have similar, non-public, and sometimes ad hoc liquidity requirements, as detailed by Bill Nelson and Francisco Covas. Of course, the rate of interest on reserves can affect how much money banks create through the money multiplier. But because the Fed can always alter the quantity of reserves, we are now in a complicated mix of policy options the Fed can play with. At the beginning of May the Fed raised the interest rate on reserves from 0.04 percent to 0.09 percent and on reverse repos from 0.03 to 0.08 percent. So for the sake of argument, consider an extreme stylized case in which both rates rise by another 1.0 percentage point and everything else remains the same. The Fed’s annual revenue would then fall by $54.7 billion ([3.30 trillion + 2.17 trillion] x .01]). Initially, all that would do is reduce the amount the Fed regularly pays to the Treasury. Although prior to the financial crisis, the Fed was remitting excess earnings to the Treasury totaling only an average of $30 billion per year, since the enormous increase in the Fed’s balance sheet after the financial crisis, the amount has on average more than doubled, with $109 billion being remitted in 2021. Back in 2019 remittances had temporarily fallen to $56 billion, before the Covid further expansion of the Fed’s balance sheet, but that has been their lowest since at least 2010. So there seems to be ample room for the income spread between Fed assets and liabilities to fall without serious problems for a couple of years, after which market conditions could have changed. Even if continuing inflation at current high levels (something you and I both doubt) ultimately leads to Fed policies that reduce remittances to zero, and losses begin to impinge on Fed capital, the Treasury before then could increase its interest-free deposits at the Fed, easily and quickly substituting for the Fed’s interest-bearing reverse repos. Treasury deposits were used by the Fed as a major source of funds during the financial crisis, and during Covid they rose to a peak of $1.7 trillion. Only after that did reverse repos begin to replace Treasury deposits, which fell to $550 billion in Sep 2021, but they are again on the rise. Or, with Congress’s approval, various accounting tricks can maintain the Fed’s nominal solvency. For example, back in 2015, Congress passed a Transportation act that put a cap on the Fed’s surplus capital, which is the amount of capital that exceeds the amount provided by the member banks. So that year, the Fed, in addition to its regular remittances to the Treasury of $97.7 billion, had to turn over $19.3 billion from its capital account. Again, in 2018, Fed turned over $3.2 billion from its capital account on top its regular remittances. There is no reason that Congress could not instead provide subventions to the Fed’s capital account, although doing so would probably gain more public attention. Or, if push came to shove, the Treasury’s gold could simply be revalued from $42.2 per ounce anywhere up to its current market price of around $1,800 per once. At the max, that could raise its capital account by $450 billion. Not that I think this will likely be necessary if the Fed hangs on to its MBS. I do admit that, if the Fed tries to taper down by selling MBS on the secondary market, then rising mortgage interest rates pose a more serious problem. Any net reduction in Fed earning assets is inevitably going to reduce Fed remittances to the Treasury no matter what else happens, just as past net purchases increased remittances. True, a major part of the current rise in mortgage rates is from the unusually low rates of 2021.The annual average rate for 30-year fixed mortgages has now risen to 5.25 percent. The average for the entire year of 2021 was only 2.96, while back in 2018 that average was as high as 4.55 percent. And in most of the years between 2019 and 2021 it was above 4.00 percent. I think the Fed, based on past performance, could weather a sell off of MBS, but only if mortgage rates don’t soar much higher. Yet before the Fed began purchasing MBS, the rates on 30-year fixed mortgages were generally around 6.00 percent and, if we go back to the 1990s, even higher. So Fed holdings of MBS may have depressed mortgage rates by as much as two percentage points. If so, the price at which the Fed sells off MBS could fall quite low, eventually wiping out Fed remittances to the Treasury. And in this case, the GSE guarantees won’t make any difference. The options available, however, are the same as those I mentioned above for the Fed hanging on to its MBS. But if Irwin is correct, his prediction is quite ironic: the very high inflation that the Fed itself created undermines its ability to reduce the size of its bloated balance sheet. Still, the Fed could easily reduce its MBS portfolio slowly, as Irwin points out, by letting “its holdings shrink” as they mature, and not rolling over the portfolio with new purchases. Unfortunately, most of its MBS portfolio, an amount of $2.6 trillion, has a remaining maturity of over 10 years, unless the underlying mortgages are paid off earlier.   (0 COMMENTS)

David Beckworth has a very interesting podcast with George Selgin. This exchange caught my eye: Beckworth: Well, I was about to say we now provide a forecasted nominal GDP gap series, which is nice because it actually comes out on a monthly basis. It’s a forecast of a quarterly series, nominal GDP. But every month, the blue-chip forecasters update their forecast on nominal GDP, so it’s a nice metric. In fact, I was talking to Evan Koenig of the Dallas Fed recently. In fact, he was at the Hoover Monetary Policy Conference, and he said they were at the Dallas Fed forecasting, looking at nominal GDP. And they didn’t have this fancy nominal GDP gap model. They’re just doing basic nominal GDP forecasting. And they knew, man, by third, fourth quarter, it was going to be going above trend, and things should have tightened sooner.Selgin: Evan is one of the sources that I was relying on. I follow what he says on these topics very closely, so I also drew on that. A year ago, I did not realize that the Fed had decided not to make up for inflation overshoots with lower than average future inflation, which is required under average inflation targeting.  Or even to offset overshoots of NGDP, which is appropriate under some plausible interpretations of flexible average inflation targeting. If I had known, I would have been freaking out about inflation even earlier. But the Fed knew.  Given what we now know about their FAIT policy regime and their NGDP forecasts, their behavior seems increasingly incomprehensible.  What were they thinking? (0 COMMENTS)

Even if it was often more wishful thinking than unambiguous reality, it used to be that American economic freedom was a (classical) liberal model that many other world governments hoped to imitate or at least felt obliged to offer excuses for not following. Now, it seems, the situation is clearer: America is becoming a dirigiste model that European politicians and bureaucrats are consciously vying to plagiarize. At least, this is obvious in the matter of international trade. It must be admitted that it is not the first time the US government has been on the frontlines of protectionism in the “free world.” From the Civil War to Franklin D. Roosevelt (and his “hillbilly free trader” Secretary of State Cordell Hull, as later described by Senator Paul Douglas of Illinois), America had some of the highest tariffs in the developed world. More generally, American trade policy has seesawed between regulated free trade and protectionist regulation. See Douglas Irwin’s extraordinary book Clashing over Commerce and my review in Regulation—for example: In 1976, by some calculations, the U.S. market was more protected by nontariff barriers than the European Economic Community and Japan, although exports were less subsidized in America. In the same review, I wrote: But what is surprising, at least for an amateur student of American history, is the nearly continuous protectionist tendency of the U.S. government from the Founding to the present time and, when free trade was defended, the modesty and prudishness of its defenders. In the early 1830s, Sen. Henry Clay, inventor of the “American [protectionist] system,” stated that “to be free,” trade “should be fair, equal, and reciprocal.” So-called “fair trade” is not a recent invention. More often than not in the 19th century, the benefits of international trade were understood to attach exclusively to exports, like in the old mercantilist thought. There was not much understanding that tariffs are a tax on domestic consumers. So what’s happening now? Nudged by the French government, the European Union government is building up a set of protectionist legal instruments presented as a response to, and imitation of, restrictive trade actions taken by the administrations of both Donald Trump and Joe Biden. The continuity between the two latest presidents, who would claim to be so different, says something about the dire condition of American politics. A story in the Financial Times provides examples (Andy Bounds, “France gets its way, thanks to Brexit,” June 6, 2022). We learn that the new protectionist activism in France and at the EU is partly a response to Donald Trump’s US administration, which slapped tariffs on steel and aluminium on national security grounds. Even the Defense Production Act (DPA), a remnant of the Korean War that was invoked by Trump at the beginning of the Covid pandemic and which Biden has also used, is the object of envy: Brussels was finally prompted to toughen its stance last year, when US president Joe Biden invoked the Defense Production Act to restrict exports of vaccine ingredients in the midst of the Covid-19 pandemic. Thierry Breton, the EU’s internal market commissioner, threatened to withhold supplies of vaccines to the US unless it lifted its de facto ban. He said he needed a similar tool to the DPA — most recently used to increase production of baby formula and airlift supplies from Europe. An imitation DPA would allow the EU restrict exports when deemed expedient—which of course means that it will prevent others from importing and stop the efficient sharing of supplies during an emergency: The French commissioner’s team is now working on a Single Market Emergency Instrument, which would allow export restrictions on five or six categories of goods, such as raw materials, in an emergency. (0 COMMENTS)

Former Google ads boss Sridhar Ramaswamy says that we live in a world that seems to give out free content when we use a search engine. But that world comes with a hidden cost–search results that distort what we find and serve advertisers rather than searchers. Ramaswamy talks with EconTalk host Russ Roberts about how Google […] The post Sridhar Ramaswamy on Google, Search, and Neeva appeared first on Econlib.

Will Stancil has a long twitter thread that at least indirectly defends wokism. But it’s an odd sort of defense, as he doesn’t actually critically evaluate the ideas advocated by the woke, rather he makes two points.1. Because the woke often challenge the privileged position of white men in our society, white men might have hidden biases that prevent then from fairly evaluating woke ideas.2. In Stancil’s experience, almost all of the opposition to woke ideas comes from white men.Stancil doesn’t seem to be trying to convert anyone, as he’s employing exactly the sort of woke reasoning process that the non-woke find so annoying. He is saying that I’m likely to be wrong because of my white male biases. That is, he’s using woke-style reasoning to attack opposition to wokism: And that’s why I struggle to see any critique of “wokeness” (or “cancel culture” or “political correctness”) as valid, ESPECIALLY coming from a white man: society is almost perfectly constructed to validate and rationalize these particular biases, to accept and spread them. To me, point #1 above seems obviously true. I might be wrong about wokeness because woke people attack the comfortable position of white men like me. Yes, that’s true. I might be wrong. Now tell me why I am wrong. Or at least offer some evidence. After all, I hold plenty of political views that are not normally seen as benefiting me.Instead, Stancil uses a weird sort of “appeal to a lack of authority”. During the Enlightenment, intellectuals began attacking appeals to authority, and tried to replace dogma with reason (not always successfully.) The woke often seem to want to replace (often flawed) reason with an appeal to the views of those lacking authority, the downtrodden. They seem to suggest that we should believe them because they are oppressed. But the woke in America are not typically downtrodden. Almost everyone I’ve ever encountered expressing woke ideas is middle class or higher.Point #2 above might seem to provide at least implicit evidence of white male bias.  But Stancil’s claim that opposition to woke excesses is a white male thing is simply wrong.  Almost everyone I know is opposed to extreme wokeness.  And I live in Orange County, which is only 20% white male.So who’s living in the epistemic bubble—Will Stancil or me?Here are some recent poll results: [O]nly 6% of respondents favored schools assigning white students the status of “privileged” and non-white students the status of “oppressed” – versus 88% opposed, including 78% strongly opposed. That’s exactly the sort of woke excess that most of us complain about. Here’s another: When asked whether teachers should present students with multiple perspectives on contentious political and social issues, 87% agreed, compared to 6% who believe teachers should present one perspective that the school believes is correct. Unwillingness to entertain non-woke ideas is exactly the sort of cancel culture that most of us complain about. My sense is that many people in universities, elite media companies and corporate HR divisions live in a sort of bubble, and have no idea that their views are considered absurd by at least 90% of the countryIn fairness, polls show much more than 6% support for some of the less contentious ideas of progressives on race, gender, sexual preference, etc. But when people like me complain about the woke, we have precisely two things in mind—excessive focus on identity and excessive cancel culture. That’s it. Unfortunately, progressives who think the woke have occasionally gone too far (such as Matt Yglesias), as well as libertarians like me, are lumped in with extreme right wingers that actually do have appalling views on race and gender. It’s analogous to the 1930s, when anti-communists included both sensible liberals and fascists. PS. Matt Yglesias is an example of how opposition to wokeness also comes from people who are not white men—from “people of color.” You might reply, “Oh, come on, Yglesias is basically a white man.” But to the woke he’s a Hispanic, er sorry . . . a Latinx. And that’s part of the problem with identity politics—its (unscientific) insistence that gender identity is fluid while racial identity is carved in stone. PPS. I sometimes wonder if the woke movement is secretly funded by a right wing billionaire, as it’s driving millions of Hispanic and Asian voters into the GOP. “You woke people say it’s simply a question of black and white. OK, well then we’re white.” (0 COMMENTS)

On May 18, in response to a May 16 post by Igor Chudov titled “’Vaccine Against Variants’ is Impossible and Will Endanger the Naturally Immune,” my friend and co-author Charley Hooper wrote: Chudov presented two main points. First, creating a vaccine to address many of the SARS-CoV-2 variants will be difficult, if not impossible. Second, there’s some evidence that a pan-SARS-CoV-2 vaccine could harm those who were originally unvaccinated but now have immunity due to natural infection. If his two points are correct, then any mass vaccination campaigns could hurt many people. But here’s why I’m not concerned: (1) The technical difficulties of developing a pan-SARS-CoV-2 vaccine will be overwhelming. Igor Chudov describes this issue. (2) The pandemic is over. I live in a lightly populated area of Northern California. Except in medical facilities, it is rare for me to see anyone with a mask and it’s been that way for a month or two. Life has gotten back to normal: crowded bars and restaurants, in-person meetings, parties, travel, gyms, sports, etc. Combine that with a lot of “vaccine hesitancy” in my town and we should be primary candidates for SARS-CoV-2 infections and fatalities. But the sky hasn’t fallen because the virus has mutated into highly contagious but relatively benign forms. The new variants are almost as contagious as the all-time record holder, measles. Which means that, unless you’ve been living in a cave, you’ve probably been exposed many times to people capable of infecting you. Whether you’ve been vaccinated or not, you probably have good immunity at this point. And, if you do become infected and have symptoms, your illness probably won’t be bad. For a quick point about how contagious the measles virus is, if no one in the whole world had any immunity to measles and you, and you alone, were infected, you could infect the whole planet in 25 days. This assumes an infection factor of 18 (every infected person can infect 18 others), three days for an infection to manifest, and adequate mixing (via travel, public events, etc.). The number for the SARS-CoV-2 variants is almost the same: 28 days. People aren’t getting measles once a month. People aren’t getting COVID once a month. The only conclusion we can draw is that most of us have substantial immunity to SARS-CoV-2. (3) Most of the new vaccines won’t be developed. Why? In addition to Point 1, because people like me [Charley consults to pharmaceutical companies] will inform the vaccine developers that there won’t be much of a market for their new vaccines. The demand is just not there. Plus, the FDA was incredibly permissive with giving emergency use authorizations to the Pfizer/BioNTech and Moderna vaccines. Don’t expect a repeat anytime soon. With the FDA back to its normal habits, vaccines might take years to develop. Consider the Novavax vaccine, which still hasn’t been approved by the FDA. Drug companies won’t see a way to make money on the new vaccines. Most will be abandoned. (4) Even if the new vaccines are developed, few will use them. Unpopular vaccines won’t be mandated. The demand just isn’t there. People are ready to move on. They aren’t afraid of COVID anymore. Will governments require vaccinations? Other than some authoritarian governments, I don’t think so. People, including me, lined up to get the original vaccines. They will stay away in droves for the new ones in an act of civil disobedience. Any government that relies on popular support will quickly see the new vaccines as a losing proposition.   I have two points to add. First, on Charley’s statement in point (3) above: Plus, the FDA was incredibly permissive with giving emergency use authorizations to the Pfizer/BioNTech and Moderna vaccines. Don’t expect a repeat anytime soon. With the FDA back to its normal habits, vaccines might take years to develop. Note that Charley is describing, not recommending. He and I both think that the FDA should be extremely permissive, at a minimum. He has written a whole book recently, Should the FDA Reject Itself?, that makes that case in some detail. Second, I want to add a point made by co-blogger Scott Sumner: we now have a cure for COVID-19: Paxlovid. A cure beats a vaccine. (0 COMMENTS)

If globalization is good for the global economy, then you might expect the current wave of nationalism to be bad for the global economy. Is there evidence to support that claim?Consider the two biggest factors that are currently slowing global growth:1. Russia’s attack on Ukraine2. China’s zero Covid policy The role of nationalism in Putin’s expressed goal of recreating the Russian empire is obvious. But what about China? China faces a dilemma due to the fact that its population was vaccinated with a relatively weak vaccine. As a result it adopted a zero Covid policy, which was actually fairly successful at containing Covid until the highly contagious Omicron variant appeared on the scene. Now China is shutting down entire cities in an almost hopeless attempt to arrest the spread of Covid. Why don’t Chinese citizens use a highly effective mRNA vaccine as a booster? Because the Chinese government won’t let them. And why won’t they let them? Because that would be tantamount to admitting that their homegrown Sinopharm vaccine was inferior. In other words, nationalism. Xi Jinping is much more nationalistic than several previous Chinese leaders. People like Hu Jintao and Deng Xiaoping were all about opening up China to the outside world, to learn from others. I doubt they would have made this mistake.  (Of course Mao was extremely nationalistic.) PS. In a comment after my previous post on Paxlovid, commenter Garrett directed me to TheZvi’s blog: Many have made the observation that if you had told people two years ago that we would have a cure (not a vaccine, but a cure!) for Covid-19 that was free, safe and effective, but that no one wanted to take it, and Congress wasn’t willing to fund further purchases, people would not have believed you. And yet here we are. Incredible. (As is the lack of news coverage.) (0 COMMENTS)