Will Joe Biden have the guts and/or the sense to recognize sunk costs?   There’s not a single person that has spent significant time on the ground in either of those conflicts that thinks either of them are winnable, but they just continue off of a sense of momentum. And getting back to that lack of accountability, not actually having anything be aligned to an objective, nobody could say what winning looked like when I was in Iraq. Our job was to run out the clock, turn off the lights, and close the door. In Afghanistan, same thing. The endless wars notion is just that these wars will continue to go on, because at the end of the day they’re not our wars to fight. We’ve inserted ourselves into the middle of civil wars; we’ve taken sides. Sometimes those sides switch. In Iraq, we’re backing the Sunnis one time, we’re backing the Shia the other. In Afghanistan, it becomes a shifting set of alliances. Ultimately I think that erodes something at the core of our national soul that we kind of paper over. That’s something that I’ll have to sit on a therapist’s couch to better understand. This is from Matt Welch, “Amash’s Successor Peter Meijer: Trump’s Deceptions Are ‘Rankly Unfit’,” Reason, January 8, 2020.   (1 COMMENTS)

Janan Ganesh, in the Financial Times, forcefully argues that the Covid19 has “no grand lessons for the world”. The significance of the pandemic is being stretched as implying the triumph of a “system” over another, but on the basis of poor evidence. Covid19 has taken the world by surprise and it is difficult to claim that systems characterized by more civic trust, or with stronger government, or with more liberal governments, performed better than their opposites. Writes Ganesh: The closest thing to a pattern in this tempest of data is the scarcely believable success of east and south-east Asia. But that region encompasses communist China, the multi-party democracy of South Korea and various polities in between. What systemic lesson is the rest of the world to take from this zone of competence? There is no disgrace in the quest for such certainty. The “narrative fallacy” is a technical term for a very human foible. It refers to our need to see shape and order in scattered events: to explain and not just record them. The alternative, which is to accept the role of randomness in life, is often too much to ask. And so an on-form sports team is assumed to have a sublime new tactic at work. Energy stocks are said to rise “on the back of” an oil-price rise, as though coincidence is unthinkable. This urge to attribute cause and effect is all the stronger in a mortal crisis. Confronted with mass suffering, it is soothing to believe that we will emerge wiser about how best to arrange our societies. A tragedy without a corresponding agenda for reform is all the harder to bear. Unless the data coheres into some shape, however, that is what we have. The evidence does not even throw up many hard-and-fast rules about the right policies for a virus (Taiwan, whose total death toll is seven, has had no national lockdown). Far less does it elevate one model of social organisation over others. In the geopolitical propaganda war, China will claim that its system is the one that worked this year. The liberal west will argue the same, and both will have half a point, without a clinching case. Beyond the tautological — good government is preferable to bad government — the world has amazingly little insight to show for its year of anguish. Its challenge is to resist forcing a narrative on to facts that do not support one. I found the piece refreshing. Miles Kimball, instead, points out that “perfectionism made the pandemic worse”. Kimball writes that “some of the caution about evidence, accuracy, efficacy and side-effects would make sense if we were facing a lesser disease. But when people are dying all around, getting the job done is what counts, even if you get the job done by imperfect means. The way the reproduction ratio works, combining a set of several very imperfects means that pushed the reproduction ratio below the critical value of 1 could crush the spread of the coronavirus.” In other words, “every little bit would have helped reduce the reproduction ratio of the coronavirus, but only things that were big bits were allowed”. Consider particularly his last two points: – Because the vaccine protocol used two doses, the vaccine-rollout plan while vaccine doses are scarce is to vaccinate half as many people with two doses rather than twice as many people with one dose, which the vaccine trials suggest has a high enough level of efficacy that vaccinating twice as many people with one dose would lower the vaccines reproduction ratio much more. – Finally, in something that shocks me, the article at the top, “Highly Touted Monoclonal Antibody Therapies Sit Unused in Hospitals” by Sarah Toy, Joseph Walker and Melanie Evans suggests that there is a reluctance to use monoclonal antibodies because there is not yet evidence that goes far beyond what was needed to get government approval. Monoclonal antibodies work by the same principles as vaccines; the big differences are (a) vaccines get your body to make antibodies, monoclonal antibody treatment directly injects antibodies, (b) the monoclonal antibodies are chosen to be especially high-quality antibodies, while your body might or might not make a lot of high-quality antibodies after you are vaccinated, and (c) you have to vaccinate everyone, but the monoclonal antibody treatment can be given to people after they start to show some symptoms and so can be prioritized better. You can bet that I would ask for monoclonal antibody treatment if I got Covid-19. I shall add that this attitude goes very well with the unrealistic expectation that we can and should aim for “zero risk”. This would imply that either we can reach for big enough guns enough to achieve that goal, or it is better to wait. This strikes me as unrealistic. (0 COMMENTS)

In a decision that will likely save many lives, Biden Administration officials have indicated they will stop holding back second doses and vaccinate as many people as possible as soon as possible. Second doses will be provided as soon as manufacturing catches up.  Here’s CNN: President-elect Joe Biden will aim to release nearly every available dose of the coronavirus vaccine when he takes office, a break with the Trump administration’s strategy of holding back half of US vaccine production to ensure second doses are available. Releasing nearly all vaccine doses on hand could quickly ratchet up the availability of coronavirus vaccines by allowing more people access to a first dose. It could also be a risky strategy as both Pfizer/BioNTech and Moderna’s vaccines require two doses, administered at specific intervals, and vaccine manufacturing has not ramped up as rapidly as many experts had hoped. There’s a small risk, but in my view the potential gains outweigh the risks by more than 10 to 1.  And more vaccines seem to be on the way. I see this an another big win for the Tabarrok/Cowen school of epidemiology.  (As well as other bloggers like Scott Aaronson.) (1 COMMENTS)

The year 2020 gave us a huge amount of evidence about the relative merits of government intervention and free markets. The bottom line is that government failed massively and free markets triumphed spectacularly (with one major exception) within the constraints that government placed on them. The one apparent exception to government failure is Operation Warp Speed but, as we shall see, that apparent exception may not be an exception at all. This is the opening paragraph of David R. Henderson, “Markets Work, Government Doesn’t,” Defining Ideas, January 7, 2021. An excerpt: Yet a look at the evidence as of January 4 gives little basis for the view that lockdowns reduced deaths. It’s true that the COVID-19 death rate for locked-down California, at 675 per million residents, is well below the 988 and 1,029 for, respectively, Texas and Florida, which are relatively open. But the death rates for locked-down Michigan, New York, and New Jersey, at 1,341, 1,980, and 2,180 respectively, are well above the rates for Texas and Florida. To be sure, a more careful analysis that sifts through the data and accounts for factors other than lockdown—maybe climate matters—is needed. But on their face, the data give cold comfort. Moreover, what if a more careful analysis did show that lockdowns prevented COVID-19 deaths? That’s not a slam-dunk case for lockdowns because the costs of lockdowns are huge. They are shattering the careers and livelihoods of hundreds of thousands of restaurant workers, haircutters, gymnasium workers, and others. One might argue that the sacrifice is worth it, but isn’t it easier for vulnerable people, most of whom are old and have co-morbidities, to stay home? They would have to stay home anyway, so why insist that others who are younger and have fewer co-morbidities also stay home? Interestingly, California’s Secretary of Health and Human Services, Mark Ghaly, let the mask (pun intended) slip on December 9 when he admitted that the newly imposed ban on outdoor dining was “not a comment on the relative safety of outdoor dining.” You read that right. What, then, was his and Newsom’s purpose in putting tens of thousands of restaurant livelihoods at risk? Ghaly ’fessed up that the measure had to do “with the goal of keeping people at home.” But wouldn’t he and the other officials need to know what people prevented from dining out would do? What if a number of them instead went to other people’s houses and dined in? We were told again and again that policy decisions must be based on science, only to learn that many such decisions were made by politicians and bureaucrats who had no scientific basis for their decisions. Another excerpt: Consider, by contrast, the private sector. One reason that millions of people have been able to stay at home is that companies like Zoom have made our work from home possible. Note also that one reason we have Zoom is that years ago the US government allowed the founder of Zoom, Eric Yuan, to immigrate from China. If you want to count that as a success of government, you should note that the US government denied his visa applications eight times. The ninth time was the charm. And one reason we have been able to buy items when stores are closed is that Amazon has heroically stepped up to sell us items over the web and, although deliveries are slower than they were, presumably because of volume, they are still relatively quick. In case you’re worried that Yuan and Amazon pioneer Jeff Bezos are getting rich off us, they are. But our wealth from them is forty-five times their wealth from us. In 2004, Yale University economist and Nobel Prize winner William D. Nordhaus found that innovators keep for themselves approximately 2.2 percent of the value they create and that the rest goes to consumers. Read the whole thing. The list of government failures and market successes in the article is not nearly complete. Both areas are target-rich.   (0 COMMENTS)

The obvious answer is that no one knows for sure. But let’s discuss some options: Bloomberg points to expectations of fiscal stimulus.  But what news do we have today that would make fiscal stimulus more likely?  One can argue that the Georgia election results increased the likelihood of more stimulus, but that information was fully priced in yesterday morning, and indeed mostly priced in Tuesday night (when stock futures declined.) Another possibility is the turmoil on Capital Hill yesterday.  You might expect that sort of chaos to hurt stocks, and indeed usually it would.  But in this case, one side effect seems to be a weakening of what one might call “Trumpism”.   Maybe that boosted stocks. A counterargument is that President Trump was good for stocks.  But it’s always important to think in terms of effects at the margin.  The Republican agenda of tax cuts and deregulation was probably good for stocks.  But that sort of policy would likely be continued by future GOP nominees.  On the other hand, Trump’s signature issues such as protectionism and immigration restriction were less popular on Wall Street. Stock traders might view the week’s turmoil as being likely to nudge the GOP from Trump-style conservatism to a more palatable Mitt Romney approach (although I don’t think he would lead that movement.)  In addition, if Trump becomes less of a political force then the GOP may be better able to regain support from moderate voters, a prospect that Wall Street might view favorably. I realize that this is all speculation on my part, but I would not rule out the possibility that this stock rally is about more than just the Georgia election.     (1 COMMENTS)

Last week, I posed the following question on Twitter: Why is “I don’t really understand what I did to upset you, but I’m sincerely sorry for whatever it was” so ineffective? If you respond, “Because figuring out how you upset someone is easy,” you are crazy!!! — Bryan Caplan (@bryan_caplan) January 1, 2021 Few of the responses impressed me, but perhaps that’s because I failed to flesh out the hypothetical.  I’m picturing a scenario where: a. The speaker speaks in a sincere tone of voice. b. The listener has failed to directly say, “I am upset with you because X.” c. The speaker has asked “What did I do to upset you?” and the listener has refused to provide any direct answer.   In my experience, this situation is common.  The main reason people say, “I don’t really understand what I did to upset you, but I’m sincerely sorry for whatever it was” is to restore amicable relations despite the speaker’s befuddlement.  And while I’m well-aware that this is an ineffective strategy, I’d really like to know why. What was so unsatisfactory about my respondents’ exegesis?  Most of them seemed to assume, despite my warning, that figuring out how you upset someone is easy.  And that’s patently untrue. Several respondents suggested that only Aspies and autistics struggle to figure out the source of others’ malcontent.  Absurd!  Neurotypicals badly misunderstand each other all the time.  Look at any playground – or Thanksgiving dinner. What’s really going on?  Here are a few stories worth considering: 1. Individuals falsely imagine that their emotions are easy for others to grasp.  It’s a trick of introspection: Since the reason why you’re upset is usually obvious to you, you naively infer that such reasons are obvious to all.  If others claim otherwise, they must be playing dumb. 2. Individuals are too impulsive to ponder whether their emotions are easy to grasp.  But when they’re angry, humiliating and tormenting whoever upset them feels good.  And the sarcastic “Mad, what makes you think I’m mad?” is well-engineered for humiliation and torment. 3. Individuals know that their emotions are not easy for others to grasp, but they strategically pretend otherwise to punish and assert dominance. You could claim that pressuring others to figure out why you’re mad is educational.  “Why am I mad?  You tell me” sounds like a Socratic seminar.  However, it’s hard to believe that many people simultaneously feel angry and didactic. The best response came from University of Chicago philosopher Agnes Callard: Because what the person who is upset at you wants, first and foremost, is not your apology or atonement but your understanding–of what you did, and of what they suffered as a result. Your speech suggests ignorance on both fronts. — Agnes Callard (@AgnesCallard) January 1, 2021 But if the listener genuinely wanted your understanding, why wouldn’t they simply tell you why they’re upset?  Or at least tell you when asked?   To repeat, I fully understand why people would respond poorly to a sarcastic or resentful, “Sorry for whatever I did.”  As long as the tone is well-meaning, however, you should accept this apology with joy.  Would I?  Absolutely: By the way, I would love to get an apology half as good as “I don’t really understand what I did to upset you, but I’m sincerely sorry for whatever it was” from anyone who has treated me poorly! I instantly forgive the next person who says this to me. — Bryan Caplan (@bryan_caplan) January 2, 2021 Per Dale Carnegie, I apologize to others often.  I average about ten apologies per day.  It costs me nothing, makes the people around me feel better, and helps me be a better person.  If I’ve upset you yet failed to apologize, the reason is probably that I haven’t noticed that anything is wrong, or can’t figure out what it is.  I’m not a mind-reader.  Yet if you directly tell me what’s amiss, I will strive to make things right. (0 COMMENTS)

Samuel Little, a man who confessed killing 93 women over four decades, died in a California prison in late December” (Hannah Knowles, “Deadliest Serial Killer in American History Dies at 80, with Police Still Searching for his Victims,” Washington Post, December 30, 2020). He illustrated in a horrible way what Nobel-winning economist Gary Becker taught us: criminals are rational in the sense that they respond to incentives; those who are not rational don’t stay long on the market. Becker was awarded the 1992 Nobel Prize in economics for “having extended the domain of economic theory to aspects of human behavior which had previously been dealt with—if at all—by other social science disciplines such as sociology, demography and criminology.” The higher the cost for a given benefit, the fewer crimes will be committed. (Recall that benefits are subjective.) Ex ante, the expected cost of a crime from the criminal’s viewpoint is given by his likely punishment times the probability of being caught and condemned (assuming he is risk neutral). Of course, he will do anything that can be done at low cost to reduce the second factor in his expected punishment. For Little, an efficient criminal, this meant killing only women who were less likely to be missed by somebody and whose deaths were thus less likely to be successfully investigated. His victims were prostitutes, drug addicts, homeless women… He has not been the only criminal pervert in history to do so: Jack the Ripper comes to mind. The Post writes:  He boasted to investigators of killing with impunity and avoiding “people who would be immediately missed.” In a terrible sentence, which also reminds us of the obstacles (including occupational licensure and zoning) that American governments have raised against black flourishing in America, Little, who is himself a black man, explained to the Washington Post: I’m not going to go over there into the White neighborhood and pick out a little teenage girl.   (0 COMMENTS)

I have a long-standing dispute with Tyler Cowen about the epistemic value of betting.  To my mind, my position is modest: Bets advance our knowledge by clarifying contentions and raising the price of error.  While isolated bets don’t “prove” anything, they tip the argumentative scales in favor of the winner.  And a long track record of successful betting is a strong sign of reliable judgment.  Furthermore, the refusal to make bets at all shows that deep down, you know that you don’t know what you’re talking about. In contrast, Tyler’s position is extreme: Bets have zero epistemic value. Why would he think this?  While Tyler has multiple arguments against the epistemic value of betting, his “nuclear option” is just “If you’re so foresighted, why aren’t you the proud owner of a successful hedge fund?”  Instead of betting your friends that the unemployment rate will sharply fall in a few years, why haven’t you mortgaged your home to buy the S&P?  (Better yet, buy option contracts that only pay if the S&P sharply rises).  I’ve already heavily criticized this argument, but now I’d like to share yet another reason why Tyler is deeply mistaken. Suppose I say, “Unemployment will fall to 4% by January 1, 2022.”  You say I’m wrong – and use Tyler’s nuclear option against me.  “If that’s right, you should leverage every penny you can on the S&P.”  Sounds good, right? Think again.  It’s totally possible that the market already agrees with me!  The current level of the S&P could be exactly the level you’d expect if the unemployment rate were destined to equal 4% on January 1, 2022.  If so, my claims about unemployment and my disinterest in buying stock options are fully consistent. In sharp contrast, it makes no sense to simultaneously hold my view on the path of unemployment and refuse to bet on unemployment.  Why?  Because as long as I’m right and you disagree, I will profit. I don’t need to worry about “what the market has already figured out.” I don’t need to understand a thousand other factors that influence the S&P. I don’t need a Theory of Everything. As long as I genuinely know one disputed fact about the future, and my opponents are intellectually honest, they will bet me and I will take their money. End of story. P.S. In 14 days, I expect my betting track record will hit 22 for 22.   (1 COMMENTS)

Catching up on Wall Street Journals from December today, I came across an obit of federal judge Ralph K. Winter. I never met the man although I gather that a number of my friends have. But it’s amazing how one quote can stick out in your memory from over 40 years ago. I remembered that quote and found the publication it was in. Winter wrote “Campaign Financing and Political Freedom” for the American Enterprise Institute in October 1973. I think I was on the mailing list for their domestic policy publications. (I think my marked up copy disappeared in my fire.)  One reason those pubs were really good is that Yale Brozen, an economics professor at the University of Chicago, had a real academic entrepreneurial eye for a good study and had a large role in choosing authors and topics. (Incidentally it was written with John R. Bolton, who became famous for his hawkish foreign policy views.) I remembered that Winter had made a strong cogent case against the campaign finance laws that were about to happen and I found it persuasive. Here’s the part I remembered clearly and still love: Candidates seem never to lose because the public is indifferent to them or to their platforms; they seem to lose because they cannot raise enough money. Tom Wicker tells us that Fred Harris and Paul McC!oskey saw their campaigns founder “for want of means to wage a primary campaign,”” a state­ ment that is true in the same sense that if a mayoral candidate in New York City were exposed as Martin Bormann, his withdrawal statement would mention only difficulties in raising campaign funds. LOL. (0 COMMENTS)

We find that shocks to unemployment are followed by statistically significant increases in mortality rates and declines in life expectancy. We use our results to assess the long-run effects of the COVID-19 economic recession on mortality and life expectancy. We estimate the size of the COVID-19-related unemployment to be between 2 and 5 times larger than the typical unemployment shock, depending on race/gender, resulting in a 3.0% increase in mortality rate and a 0.5% drop in life expectancy over the next 15 years for the overall American population. We also predict that the shock will disproportionately affect African-Americans and women, over a short horizon, while white men might suffer large consequences over longer horizons. These figures translate in [to] a staggering 0.89 million additional deaths over the next 15 years. This is from Francesco Bianchi, Giada Bianchi, and Dongho Song, “The Long-Term Impact of the COVID-19 Unemployment Shock on Life Expectancy and Mortality Rates,” NBER Working Paper No. 28304, December 2020. An excerpt: For the overall population, the increase in the death rate following the COVID-19 pandemic implies a staggering 0.89 and 1.37 million excess deaths over the next 15 and 20 years, respectively. These numbers correspond to 0.24% and 0.37% of the projected US population at the 15- and 20-year horizons, respectively. For African- Americans, we estimate 180 thousand and 270 thousand excess deaths over the next 15 and 20 years, respectively. These numbers correspond to 0.34% and 0.49% of the projected African- American population at the 15- and 20-year horizons, respectively. For Whites, we estimate 0.82 and 1.21 million excess deaths over the next 15 and 20 years, respectively. These numbers correspond to 0.30% and 0.44% of the projected White population at the 15- and 20-year horizons, respectively. These numbers are roughly equally split between men and women. Francesco Bianchi is an economist at Duke University, Giada Bianchi is an MD in the Division of Hematology, Department of Medicine, Brigham and Women’s Hospital Harvard Medical School, and Dongho Song is an economist at the Johns Hopkins University’s Carey Business School. The authors write: We interpret these results as a strong indication that policymakers should take into consideration the severe, long-run implications of such a large economic recession on people’s lives when deliberating on COVID-19 recovery and containment measures. Without any doubt, lockdowns save lives, but they also contribute to the decline in real activity that can have severe consequences on health. I’m not sure why they are confident that there is zero doubt that lockdowns save lives. They admit in the last quoted sentence above that lockdowns “contribute to the decline in real activity that can have severe consequences on health.” What if lockdowns are responsible for half of the bad unemployment consequences, and voluntary actions in response to the fear of getting the virus are responsible for the other half? Then, assuming a linear relationship between unemployment and fatalities, the lockdowns would be responsible for half of 0.89 million to 1.37 million deaths, which translates to between 450,000 deaths and 685,000 deaths. Can they really be confident that lockdowns saved at least 450,000 lives? (3 COMMENTS)