Ezra Klein recently had a piece on Covid-19 in the NYT, which pointed out that Alex Tabarrok has been ahead of the curve on many issues: [B]est as I can tell, Tabarrok has repeatedly been proved right, and ideas that sounded radical when he first argued for them command broader support now. What I’ve come to think of as the Tabarrok agenda has come closest to being adopted in Britain, which delayed second doses, approved the Oxford-AstraZeneca vaccine despite its data issues, is pushing at-home testing and permitted human challenge trials, in which volunteers are exposed to the coronavirus to speed the testing of treatments. And for now it’s working: Britain has vaccinated a larger percentage of its population than the rest of Europe and the United States have and is seeing lower daily case rates and deaths. When I point this out to people, they often respond that he is not an expert and that we should rely on the opinions of those with expertise in the field. There are two problems with this argument: 1. The experts do not agree among themselves.  Experts in the UK favor challenge trials.  They favor the use of AstraZeneca vaccine.  They favor the first dose first policy.  Indeed you can find experts that agree with Alex on almost all of his Covid recommendations. 2.  Alex is an expert on the subject area that he is discussing—public policy.  He’s not an expert on how to design a new vaccine, but he is not offering advice on how to do so.  Rather he’s offering advice on how to conduct public policy in an environment of uncertainty.  He has expertise in this area. If you look at all the opinions that Alex has offered over the past 15 months, it is hard to find a single one where a lack of scientific expertise has any bearing on his specific policy proposals.  Alex looks at the statements made by public health leaders such as Dr. Fauci, and notices that the arguments are often flawed.  And he’s right.  He notices that countries that have followed his advice are doing better than we are.  He looks at scientific estimates of the risks and benefits of various vaccine approaches.  He understands that it hurts someone just as much when their family member dies of errors of omission as from errors of commission.  Many experts do not understand this point. If I am wrong, please show me where I’m wrong.  Show me an example of the advice Alex offered that was later shown to be wrong because he was unaware of technical scientific information. (2 COMMENTS)

My home in coastal California is insured with State Farm, both for regular coverage and for earthquake coverage. Yesterday I received a post card in the mail from State Farm. The whole thing (almost) is worth quoting: When and where will wildfire protection services begin? Beginning April 1, 2021 [DRH note: this means it has already begun], Wildfire Defense Systems (WDS), under an agreement with State Farm, will provide wildfire protection services to customers with Homeowners and Farm policies in California, Arizona, Washington, Colorado and Oregon. [In light of the service, I’ll forgive the absence of the Oxford comma after “Colorado.”] What will the service cost? There is no additional charge to you for this service. [DRH note: Of course that doesn’t answer the question but it does answer what most customers would mean if they asked the question.] How will this service protect your home? If your home is located in an area with an active wildfire, WDS may visit your property to assess the threat and may take proactive measures. They’ll determine appropriate mitigation methods based on their professional judgment which may include: removing pine needles from your roof, closing up exposed vents so embers do not enter your home, clearing combustibles away from your home, setting up sprinkler systems, extinguishing active fire or smoldering embers on your property, and in some cases, applying fire-resistant gel to your home. If mitigation services are provided, the WDS crew may revisit your home once the fire risk passes to remove their equipment, return previously moved materials back to their original location, and clean the gel from your home if applied. I’ve left off the rest of the postcard because it’s less interesting. I’m not surprised that my insurance rate is not going up. If State Farm can spend, say, $1,000 to reduce the probability of a $300,000 loss by 1 in 200, then it’s worth it for State Farm. And of course I gain too.     (0 COMMENTS)

Ezra Klein sees the Biden administration as downgrading the role of economists: Biden has less trust in economists, and so does everyone else. Obama’s constant frustration was that politicians didn’t understand economics. Biden’s constant frustration is that economists don’t understand politics. Multiple economists, both inside and outside the Biden administration, told me that this is an administration in which economists and financiers are simply far less influential than they were in past administrations. Some were frustrated by the change, others thought it a proper rebalancing of roles. But there is nothing like the axis of influence held by Summers, Tim Geithner and Peter Orszag at the dawn of the Obama administration, or that Robert Rubin and Summers held in the Clinton administration. Janet Yellen, the Treasury secretary, holds real weight in internal discussions, and so do some others, but economists are one of many voices at the table, not the dominant voices. This partly reflects Biden himself: he’s less academically minded, and more naturally skeptical of the way economists view the world and human behavior, than either Obama or Clinton. But it goes deeper than that. The backdrop for this administration is the failures of the past generation of economic advice. Fifteen years of financial crises, yawning inequality and repeated debt panics that never showed up in interest rates have taken the shine off economic expertise. I’d add one more factor.  It seems to me that the failure of inflation to move higher has tended to discredit mainstream macroeconomists.  In the mainstream approach to macro, the following three factors are often assumed to lead to higher inflation: 1. A policy of low interest rates 2. Big budget deficits 3.  Sub-4% unemployment (as in 2019) The failure of inflation to rise above 2% is not easy to explain using mainstream models. Readers of this blog know that I attribute the low inflation to a relatively contractionary monetary policy since 2008.  But then I’m not in the mainstream.  I do not believe that interest rates, budget deficits and unemployment have a significant effect on inflation, at least in a country like the US (where there’s little risk of default on public debt.) Of course, these things go in cycles.  Once this new (progressive) approach to policy begins to fail—as all policies eventually do, even successful ones—the pendulum will swing back to those who emphasize the importance of opportunity cost and incentives. It’s an endless cycle. PS.  The same is true of other issues, such as crime and punishment.  An endless cycling back and forth between being hard and soft on crime. PPS.  This also caught my eye: Economists have their ideas for solving climate change — a hefty carbon tax chief among them — but Biden and his team see this as fundamentally a political problem. They view the idea that a carbon tax is the essential answer to the problem of climate change as being so divorced from political reality as to be actively dangerous. Deese gets animated on this point. “I want to double down on that and say, it’s not just a messaging and narrative imperative,” he told me. “It has to be that Americans see and experience that the investments in building out a more resilient power grid actually improve their lives and create job opportunities for them, or their neighbors.” Deese is in for a rude awakening.  Climate change policies that are actually effective are not going to be politically popular.  Carbon taxes are the least painful way of addressing climate change.     (0 COMMENTS)

  The most recent EconTalk with Russ Roberts interviewing Tyler Cowen is quite good. They cover a lot of territory and Tyler has a lot of insights about culture, among other things. Tyler also, to his credit, even points out predictions and thoughts on which, he realizes in retrospect, he was wrong. There’s one issue, though, an important one, on which Tyler still has trouble admitting he’s wrong: the Great Barrington Declaration. Here’s an excerpt from the interview: Russ Roberts: Should we have followed something akin to what the Great Barrington Declaration folks are suggesting: Extreme care with people over the age of 70 and 80 and letting other people mostly go about their business? Tyler Cowen: That’s not my read of what the Great Barrington Declaration [GBD] actually called for. Russ Roberts: That may not be fair to them. That’s my read. Yeah. Tyler Cowen: A lot of the people connected with that institution [DRH note: by “that institution” Tyler means the American Institute for Economic Research] have made very dubious predictions and not backed down from them. They’ve told us that a lot of the cases are phony. It will all be over by–fill in the month. But, it’s typically some time that was a while ago. Very passive attitudes or even hostile attitudes toward vaccines. And, making lockdown the only issue. I think when you look at the overall entire framing of Great Barrington, it’s been extremely harmful. It has led libertarian and conservative movements in the wrong direction. The emphasis should have been, all along, deregulating the process of getting good vaccines out there quickly. And, if you look at what the Great Barrington people did on that it was remarkably little until very late in the process. And, you even have Jeffrey Tucker, well into fall, saying, ‘Vaccines, what vaccines? We need to let everyone get infected.’ Russ Roberts: I’m more interested– Tyler Cowen: So, I’ve been very much opposed to their program as a whole. Though some parts of it, if you present in isolation, do in fact make good sense. Russ Roberts: Yeah. I’m think of Jay Bhattacharya, who on this program I thought was quite sensible about the idea of locking down everyone seems remarkably inefficient and puts an enormous cost on people who are at relatively low risk. Yeah, I have nothing to say about the more institutional implementation of that Declaration [GBD]. But, the original Declaration [GBD] and the epidemiologists and economists who were involved, the three people, made some sense to me. But, yeah, I’m not interested actually in those other side-agendas. Tyler Cowen: It’s not independent from the other agendas. And they also systematically overestimate how many lockdowns are in operation. So, past a certain point most parts of the United States, schools aside, have been mostly open. My state of Virginia, virtually all stores have been open for really a long time. One may or may not agree with that. But, there has not been a major lockdown for a long time in most of the Southeast, and indeed many other parts of the county. Notice what happened. Russ tries as gently as he can to get Tyler to answer his question about the GBD. Russ summarizes the GBD in one sentence. And I think Russ does a great job of that. Tyler says that’s not his read of the GBD but doesn’t say how the GBD differs from what Russ has summarized. Instead, Tyler engages in classic “guilt by association.” Tyler says, “A lot of people connected with that institution have made very dubious predictions.” But the issue Russ asked about was not “that institution” but the GBD. Then Tyler names someone: “And, you even have Jeffrey Tucker, well into fall, saying, ‘Vaccines, what vaccines? We need to let everyone get infected.'” I don’t know if Jeff Tucker said exactly what Tyler said he said, but it doesn’t matter: Jeff Tucker is not one of the authors of the GBD. I had lunch with Jay Bhattacharya on Tuesday and asked him point blank: “Did Jeff Tucker write or edit any part of the GBD?” Jay’s answer: No. This is not a small issue. Had we focused on protecting the vulnerable and n0t locking down the young and healthy and keeping children out of school, we would be in a lot better shape today, with fewer COVID deaths of the elderly and less destruction of the economy. Here, by the way, is the Great Barrington Declaration. See if you think Russ did a good job of summarizing it. (0 COMMENTS)

The Biden administration may be realizing that a corporate minimum tax is inconsistent with the multitudinous tax preferences that Leviathan himself gives corporations in order that they do what he wants them to do. Here is another idea to finance the $2.3 billion of proposed “infrastructure” or whatever pleases Leviathan: tax rocks instead. The proposal is succinctly explained in my article “Joe Biden’s Economic Agenda: An Early Appraisal,” in the Spring issue of Regulation: However, corporations don’t pay taxes any more than, say, rocks do: if the government were to tax rocks, the actual incidence of the tax would fall on some flesh‐and‐blood individuals. In the case of corporations, those individuals are some combination of shareholders, employees, and consumers. If it is feared that people would just get rid of all the rocks they possess, there is a large number of other, more sticky, candidates for a tax that would not officially target individuals. The government could tax pets, cars, bees, marriage contracts, or churches. In the latter case, perhaps God will pay? Another idea: tax pension funds and 401k’s that hold corporate stocks. (An estimate puts at 30% the proportion of American corporations’ stocks that are owned by American households’ retirement accounts.) (0 COMMENTS)

Even economists who regard themselves as definitely immune to the crude materialist fallacies [i.e., thinking in terms of material wealth] constantly commit the same mistake where activities directed toward the acquisition of such practical knowledge are concerned—apparently because in their scheme of things all such knowledge is supposed to be “given.” This is from Friedrich Hayek, “The Use of Knowledge in Society,” American Economic Review, September 1945. I thought of this passage today when I took my iPhone to an independent repair shop. I pointed out to the guy, Steve, that the usual plug into my iPhone didn’t fit. I speculated that it was because the one in my car had left a little piece in there and showed him the cord from my car, which looked as if it had lost a piece. Steve told me it’s because I bought a low-quality cord. He got a little tool and took all of 10 seconds to pull a little piece out of the phone and Voila, the normal cord fit. So I bought a new 6-foot cord from him for $15. He said it was higher quality and it looked it. “How much do I owe you for fixing the phone?” I asked. “Twenty dollars,” he replied, and then quickly, “That’s the charge for my experience and wisdom.” “Sounds right to me,” I answered and handed him my MasterCard. (0 COMMENTS)

In any given period of history, there is always a battle of ideas. Thus it’s interesting to think about which ideas are gaining ground in the 21st century.  These groups seem to be winning: 1. Marijuana legalization advocates 2.  Gay marriage advocates: There is an equally dramatic increase in support for interracial marriage. 3.  The New Atheists: 4.  International trade advocates: 5.  Immigration advocates: On many other social issues, including gun control, abortion, and right to die, there has been no major shift in public opinion in the past two decades.  However, the right to die polling shows an interesting drop in support followed by a recent recovery to 2001 levels: Despite the big fall in religious observance, a large majority of Americans continue to believe in God, although the number has trended downward in recent years. Is there an overarching trend that would explain all of this polling data?  Something like secular cosmopolitanism with a libertarian streak?  Utilitarianism?  What do you think? Could the internet be driving these trends?  Perhaps having the entire world at one’s fingertips makes people more cosmopolitan. (0 COMMENTS)

The gender wage gap (GWG) has been a concern in the United States since the 1950s. Congress began enacting equal pay legislation in the 1960s. In 2019, then-Senator Kamala Harris proposed a plan requiring all companies with 100 or more employees to earn “equal pay certification” by proving that men and women are paid equally for performing the same tasks or face a 1% fine on their profits for every 1% wage gap. Members of Congress are pushing for equal pay in the private sector, an outcome they have not yet achieved. Shifting demographic and labor market conditions have reduced the GWG. According to the 2016 Joint Economic Committee Democratic Staff, the national average wage for full-time females was 79 cents for every dollar earned by a male, compared to 72 cents in 1999. But such raw data comparisons can be misleading. They do not control for many factors affecting wages, yet they continue to spark debate among policymakers attempting to remedy this disparity. The GWG in the United States remained at roughly 60% from the 1950s through the late 1970s. Studies suggest a 9% gap narrowing in the 1980s, while the 1990s witnessed only a 3.5% decline. Researchers argue that while the GWG had been converging slowly, the rate has been static since 2000. Harvard economist Claudia Goldin argues that the education gap has closed. She contends the GWG may have more to do with labor market structures and differences in the occupational desire for flexibility, negotiating style, or job preferences between genders. Goldin contends that the GWG that remains can be explained by the substitutability of the individual and the flexibility of the job. Fields like pharmacy and technology—linear occupations—have little to no gender gap due to a flexible labor market allowing individuals to work remotely or part-time to adjust for personal choices. In contrast, non-linear occupations, e.g., finance and legal professions, have larger wage gaps and more limited flexibility. Factors considered when charting occupations using a linear scale include time pressure, personal contact, establishing and maintaining relationships, structured versus unstructured work, and decision-making freedom. Literature exploring the GWG within government agencies and branches is limited. In 1978, George Borjas found the GWG for the Department of Health and Human Services to be larger than that of the public universities it monitored for wage discrimination. After examining the office of Senator Elizabeth Warren, The Washington Free Beacon’s Bret Scher reported a GWG nearly 10% wider than the national average. With equal pay legislation pending in Congress, we might expect to see a smaller or even zero GWG for congressional employees. Many academic studies on the gender wage gap in the public and private sectors exist; only a few examine the GWG for congressional staff. In a working paper, political scientists Joshua McCrain and Maxwell Palmer focus on the GWG in the US House and Senate. They argue that the wage gap is important because staffers influence policy outcomes. My recent paper co-authored with Meg Montgomery examines the GWG in congressional offices using data from 2000 to 2016. We find that a GWG exists similar to the gap in the private sector. Our research indicates education, experience, working in the Senate, and marriage consistently explain the gap. On average the offices of Republican members of Congress exhibit a larger gap. The gap is wider in the Senate than in the House of Representatives, although wage gaps exist in both the Democratic Party and the House of Representatives. Intrestingly enough the gender of the Congress member does not seem reduce the GWG. Nor does the Congress members advocation for women’s rights or labor market issues. In other words, female Congress members do not help to reduce the GWG, nor does their claim to advocate on these issues. Why does a GWG exist for Congressional staffers when Congress can eliminate it? Public choice economics offers one potential explanation. In economic organizations, the monitoring costs of principals (voters) are too high; thus, agents (politicians) can shirk. A politician can deviate from constituents’ preferred policy positions and seek their interests. However, shirking may only explain why staffer wage gaps persist without constituents complaining. Why gaps remain might involve additional considerations. Consider the linearity of a Congressional staff position. According to a Congressional Management Foundation survey, the average congressional staff job is “high stress and high volume” with a turnover rate between 40% and 60%. Congressional staffers claim this is a way to serve their country; therefore, an attraction-selection-attrition cycle exists even for those with public service motivations. Still, the job satisfaction survey reports that 55% of staffers say work-life balance is important, but only 26% are very satisfied with that balance. Additionally, 57% claim that decision-making autonomy is important, but only 31% are very satisfied with their ability to make independent decisions. Being a congressional staffer might be more non-linear because of the job’s lack of autonomy, time pressures, and personal contact. Thus, Goldin’s non-linear explanation for the GWG of congressional staff positions may explain why the gap exists in an organization that attempts to mitigate it. The average gender wage gap from 2000 to 2016 was 77 cents to the dollar. We find a 71 cent GWG for congressional staff members- about 6 cents larger than the national average. Using a study from 1970 through 2010, they compare the congressional staff GWG to those estimates and find it is slightly smaller and slightly larger than the average of the public and private sectors. House and Senate members exercise discretion over the budgets for their staff. One would expect that Congress members who advocate equal pay legislation would pay their staff equal salaries. Evidence of a gender wage gap suggests that such advocacy is not carried into practice. Furthermore, the explanation of the congressional staff GWG is much the same as in other industries. Congress might operate as a non-linear industry offering less flexibility and substitutability among workers. Like Goldin, we argue that labor market restructuring, and not legislation, might be key in narrowing the gender wage gap. If Congress wants to close the gender wage gap, policies allowing for greater labor-market flexibility are the answer, including on Capitol Hill. One positive to the pandemic is that employers now understand how their workforce can operate flexibly and remotely which may help reduce the gender wage gap. (0 COMMENTS)

Today I turn 50, which makes little sense to me.  I can’t be 50, because that’s how old my dad is, right? Anyway, ten years ago I shared 40 things I learned in my first 40 years.  Today I’m just going to look back over the last ten.  What did I do with my decade? 1. Most importantly, I had my fourth child.  Sweetness and light, a daily joy.  I can tell that many parents’ appreciation for their children is heavily laden with Social Desirability Bias.  But not mine. 2. I published Selfish Reasons to Have More Kids: Why Being a Great Parent Is Less Work and More Fun Than You Think.  This remains my least-cited book, but will almost certainly be the one that adds the most value to the world.  Dozens of people have told me I actually convinced them to have another kid.  And according to this Twitter poll, my words have caused the births of over a hundred new souls.  Using standard value of life calculations, that’s about a billion dollars worth of value for the world. How many additional children have my arguments in *Selfish Reasons to Have More Kids* caused you to have?https://t.co/TwDBLRiADM — Bryan Caplan (@bryan_caplan) July 29, 2020 3. I wrote and published The Case Against Education: Why the Education System is a Waste of Time and Money.  While I’m unlikely to transform academic opinion on this issue, it’s already getting hundreds of citations, partly because researchers are starting to feel obliged to acknowledge that educational signaling might be important.  And perhaps it will slightly slow the policy juggernaut of educational profligacy. 4. I wrote and published Open Borders: The Science and Ethics of Immigration.  Definitely my most persuasive work.  Though given the inherent difficulty of persuading anyone of anything important, perhaps I should say “least unpersuasive.” 5. As I wrote Open Borders, I acquired a whole toolkit of visual storytelling skills.  Educational psychology notwithstanding, I successfully took what I learned as a consumer of graphic novels and transferred it to actually producing graphic novels.  Better yet, I was patiently mentored by my collaborator, the great Zach Weinersmith. 6. I homeschooled my elder sons, starting with middle school and continuing through high school.  The time commitment was modest, but I would have gladly done much more.  As I often told my favorite students, “You are not an interruption of my work.  You are my work.”  During these six years, I’ve given my sons an immense knowledge base.  Besides standard fare, they have wide-ranging knowledge of social science, speak fluent Spanish, and know human history forwards and backwards.  Their first academic publication came out yesterday.  And the college application process turned out very well indeed, though I’m not going to say much more until they show up on campus. 7. I also taught my eldest a great deal about how to win friends and influence people.  Some lectures, but mostly learning by doing.  That’s how they recruited so many eminent historians for their History Twins Podcast.  Along the way, I spent many hours teaching them how to game the corrupt boondoggle that is academia. 8. I started homeschooling my younger kids a year ago due to COVID.  Though I’m plainly less suited for teaching elementary subjects, my newest students are learning far more than they did at FCPS.  And they spend about 60% as much time on schoolwork as they used to.  Through herculean efforts, I’ve also rounded up enough playmates for my kids to have a decent childhood in our dystopian age.  All the parents who used to fret about homeschoolers “lack of socialization” really should look in the mirror.  I know quite a few kids whose parents have isolated them from other kids for over a year.  My homeschoolers, in contrast, get to play with other kids all the time. 9. I’ve made many new friends all over the world, even during COVID.  Especially the surreally awesome Steve Kuhn.  Like the painting says, Steve, thanks a million! (0 COMMENTS)

My Policy Ed video for the Hoover Institution’s PolicyEd video series is out. Here it is on YouTube. A summary of the 4-minute video: Both good and bad income inequality exist. Good inequality comes from entrepreneurial innovation that improves the lives of consumers, even if the inventor gets wealthy. On the other hand, using political muscle to get rich leads to bad inequality, as it comes at the expense of consumers. It is vital to have government policies that can distinguish between good and bad inequality to increase innovation, strengthen the economy, and ultimately give people more incentive to innovate. And notice the 2 people I use to illustrate each. One of them is in the picture above. Can you guess who it is?   (0 COMMENTS)