Author Archives: Arnold Kling

Peter Zeihan watch

Posted on by

I have an essay reviewing Peter Zeihan’s Disunited Nations.

Suppose that Tyler Cowen (The Great Stagnation) and Ross Douthat (The Decadent Society) are correct that we have gained affluence but lost our innovative edge in recent decades. Zeihan would say that these developments both reflect the Order. And he predicts that this will soon change. But he would focus on the loss of well-being from the collapse of the Order rather than on any possible benefits that might come from a more fragmented state power system, with societies perhaps placing a higher priority on innovation and having more tolerance for risk than is the case today.

I also recommend this podcast with Zeihan and Anthony Pompliano. In the podcast, Zeihan says that the coronavirus, by lower the demand for oil, makes it easier for Saudi Arabia to drive the price down, forcing some countries to shut down oil wells that cannot easily be re-started. Zeihan argues that this will be particularly hard on Russia, Venezuela, and Iran, but not so hard on the United States.

And in this essay, he lists many ideas (not his) for government spending, at least some of which are likely to be enacted.

General update, May 6

Posted on by

1. Six years ago, I threw a dance party for myself. I got to select the program of dances. My children were all there. Life was better then.

2. Russ Roberts sent me three pointers. The first one is a Twitter thread from Dr. Muge Cevik. She seems to be another John Alcorn. Her conclusions from various case cluster studies of the transmission process include:

these studies indicate that close & prolonged contact is required for #COVID19 transmission. The risk is highest in enclosed environments; household, long-term care facilities and public transport.

these studies so far indicate that susceptibility to infection increases with age (highest >60y) and growing evidence suggests children are less susceptible, are infrequently responsible for household transmission, are not the main drivers of this epidemic.

these studies indicate that most transmission is caused by close contact with a symptomatic case, highest risk within first 5d of symptoms.

She links to this interesting meta-analysis.

The findings from this systematic review do not support the claim that a large majority of SARS-CoV2 infections is asymptomatic.

3. The next pointer is to John Mandrola, MD.

in one year, will the virus be 1) gone, or 2) less contagious, or 3) less deadly?

He makes the case that the answer is no. In which case, perhaps people should just live their lives as best they can. This is worth a longer comment, which I will try to make later in the week.

4. His third pointer is to Neil Monnery.

Easily the best results to date are from the stringent ‘isolate, test, trace and quarantine’ strategies used by Taiwan, Singapore, Hong Kong, Australia and South Korea. It is an approach that requires great preparation, organisation and execution. The key risk is how these countries will do if there is a second or subsequent wave. If that does not occur, or they manage it, even at many multiples of their deaths to date, they will be the key place to look for future learnings.

As you know, I am skeptical that testing and tracing are what is effective. The tests are so unreliable. Tracing is so hard. I am inclined to credit isolation and mask-wearing. And keep in mind that since most of the deaths are among the elderly, how you handle the elderly is likely to matter more than how you handle the spread among those under 50.

5. Robin Hanson writes,

In a pandemic that might be contained, isolating yourself helps others, keeping them from infection. But if pandemic will end with herd immunity, isolating yourself hurts others, pushing them more to be part of the herd that gives everyone immunity. The externality changes sign!

We need to raise the status of Risky Randy and lower the status of Anti-fragile Arnold.

6. Daniel Goldman writes,

However, given that simply reducing the average contact rate by 50% is enough to significantly reduce the rate of spread of the infection, a few minor decisions are all it would take. Moderately reducing frequency and lengths of outings, and being increasingly aware of one’s surroundings are all it would take to significantly reduce average contact rate. It is also likely that during periods where there are reports of high levels of infectious load, employers would be more willing to let an employee stay home and or cut back services.

His idea is that the government should undertake testing to let people know of impending “hot spots,” and then let people make their own decisions in response. Pointer from John Alcorn.

7. Jose Maria Barrero, Nick Bloom and Steven J. Davis write,

the COVID-19 shock caused 3 new hires in the near term for every 10 layoffs. These sizable new hires amidst a tremendous overall contraction align well with our anecdotal evidence of large pandemic-induced increases in demand at certain firms. Weekly statistics on gross business formation derived from U.S. administrative data also point to
creation and gross hiring activity, even in the near-term wake of the pandemic.

… Drawing on our survey evidence and historical evidence of how layoffs relate to recalls, we estimate that 42 percent of recent pandemic-induced layoffs will result in permanent job loss.

This is a strong blow to the GDP-factory thinking about this crisis. In fact, it is a PSST story.

8. Doc Searls looks at various industries classified using a matrix I suggested a while back. Can’t really excerpt. I strongly recommend the whole post.

Lockdown socialism watch

Posted on by

Timothy Taylor writes about the Fed getting into the corporate bond market,

The Fed is starting with $50 billion for the “Primary” fund and $25 billion for the “Secondary” fund. The idea is to then leverage this amount with debt in a 10:1 ratio so that it could end up financing $750 billion in purchases.

You might remember that Congress put all sorts of conditions on giving loans to small business. They had to promise to keep employees and do other things. You can bet that the big boys are going to get their money no matter how many people they lay off.

An idea for a seminar

Posted on by

I was musing the other day about the possibilities for changing higher education. I am fond of a seminar model in which there are about 6 to 8 students. The professor assigns material and in each class period a student presents a paper on that material, which is discussed by everyone in the seminar.

With the prospects for institutions this fall up in the air, I was thinking that I could offer a seminar, either this summer or in the fall. The title would be “Ways of knowing,” and it would deal with epistemology. A list of topics:

1. British empiricism and the Quine critique
2. Bayesian rationality
3. Forecasting–Tetlock Superforecasters
4. Complexity–Manzi Uncontrolled
5. Human nature and cultural influence–Pinker The Blank Slate, Harris The Nurture Assumption
6. Human nature and cultural influence–Henrich The Secret of our Success
7. Human nature and cultural influence–Mitchell Innate
8. Cognitive biases–Kahneman Thinking Fast and Slow
9. Cognitive biases–Haidt The Righteous Mind
10. Cognitive biases and motivated reasoning–Kling The Three Languages of Politics
11. Order and design–Don Boudreaux The Essential Hayek

My ideal seminar students would be college age and self-motivated.

Retiring the 3DDRR updates

Posted on by

The original idea of taking the ratio of cumulative deaths today to that three days earlier was to be able to detect a sharp turn in the direction of the virus crisis. But it is not taking sharp turns, and at this point it is dominated by day-of-week factors.

For the record, today it is at 1.08, continuing its very gradual decline. Outside of New York, it is also declining, standing at 1.09.

If we look at 7-day intervals to correct for day-of-week effects, then we are not going to detect any sharp turning point. But that is probably the best we can do. I think that the simplest number to report would probably be either the 7-day total, or that total divided by 7 to get a daily average.

What I would most like to report would be 7-day averages broken out by age and whether or not the person resided in a nursing home.

What I will report, given what I can find, is the 7-day average outside of New York, because I think that the trend outside of New York will determine whether or not I win my bet against the models. The highest value so far is for 1546 average deaths per day for April 25 through May 1. The second highest value so far is 1539, for April 29 through today, May 5.

This figure rose from 705 for April 1-7 to reach 1476 April 15-21. It has been a plateau since then. Perhaps the shutdown orders stopped what otherwise would have been a steady increase. I would prefer to believe that the lockdowns had no significant effect, but we should let the facts speak for themselves. Going forward I will follow this 7-day average outside of New York to see what happens with easing the lockdowns. I won’t report this indicator every day, because it moves too slowly. Probably report about once a week or so.

General update, May 5

Posted on by

1. A reader writes, “epidemiology as GDP-factory-ism”

So many epidemiology models seem to use THE value for R, or THE case fatality rate (CFR) or THE infection fatality rate (IFR). But these rates differ for different people and different circumstances. It seems the same kind of simplification that treats output as a single something. The simplification can be useful some times but there is such a temptation to use it without asking that question.

If you want to know why I am so adamant and ornery about the models, that is it. They remind me of macroeconometric models, which I am confident are misguided.

The modelers are still at it. The NYT reports,

The daily death toll will reach about 3,000 on June 1, according to an internal document obtained by The New York Times, nearly double the current number of about 1,750.

I would like to make the following bet with these modelers. I bet that the daily death toll in the last two weeks of May averages less than 2500. Whoever loses the bet has to shut up. If I lose, I stop blogging about the virus. If the modelers lose, then they have to stop reporting results from their models.

Note that Daron Acemoglu and others have disaggregated the typical model into more than one risk bucket. Tyler Cowen enthuses, “I would say we are finally making progress.” I say it’s just more social-engineering drunks searching under the lamppost.

2. Another reader points to an essay by Sean Trende. Difficult to excerpt, the essay seems quite rational to me.

No states are on anything resembling an exponential growth trajectory, almost all states are past a peak, and most states are substantially so. This would suggest that in many states, the question really should be how to reopen while keeping hospitals from being overwhelmed again.

As Tyler Cowen once predicted, we went from insufficient fear to excess fear. With excess fear, it will be difficult to re-start the economy. Even if restrictions are lifted, people will not be confident as consumers or entrepreneurs.

3. Alberto M. Borobia and others look at a cohort of patients at a major teaching hospital in Madrid. It is worth poring over the tables at the end. As I read table 3, out of 665 patients under age 50, only 5 died. That is a mortality rate of less than 1 percent among those hospitalized. To compute the overall infection fatality rate for those in that age group, one would have to multiply by the probability that an infected person becomes hospitalized. If the latter is 0.1, for example, then the IFR would be less than 1 in a thousand. Pointer from John Alcorn.

He also points to a study by Zichen Wang and others of patients in three New York hospitals. As I read the tables, obesity does not seem to be associated with a greater likelihood of death, but hypertension does.

And he points to yet another study, in the LA area. They find that a big difference of male vs. female.

One thing I would like to see from these cohort studies is a really careful analysis of the relationship between the risk from age and the risk from comorbidities, given that the high correlation between the two.

4. Robin Hanson writes,

We are starting to open, and will continue to open, as long as opening is the main well-supported alternative to the closed status quo, which we can all see isn’t working as fast as expected, and plausibly not fast enough to be a net gain. Hearing elites debate a dozen other alternatives, each supported by different theories and groups, will not be enough to resist that pressure to open.

Winning at politics requires more than just prestige, good ideas, and passion. It also requires compromise, to produce sufficient unity. At this game, elites are now failing, while the public is not.

I am not rooting for the elites to win. I don’t think any top-down solution is going to work well. Letting individuals decide which risks they are willing to take is probably the best approach. As someone who will be making risk-averse choices, I do not think others’ riskier choices pose a significant threat to me.

5. A commenter writes,

We shouldn’t be trying to conquer fear so we can go back to the old economy. We should be building the new economy that has an order of magnitude fewer casual human interactions.

Maybe this is overstating it. But I do think that we will see new patterns of specialization and trade, and we need a lot of capitalism to get there.

Fear factor

Posted on by

In an interview, Paul Romer says,

The key to solving the economic crisis is to reduce the fear that someone will get sick if they go to work or go shop. So it’s really about building confidence. The thing about testing is that it’s easy to explain and it doesn’t frighten people the way digital contact tracing does. It’s not subject to technological and social, political uncertainty the way digital contact tracing is. It doesn’t require the organizational capacity that doing human contact tracing does. It’s really just a very simple, easy-to-explain idea—that to control the pandemic, we need to get a reasonable majority of the people who are infectious into a quarantine, and then we’re good.

I agree with his first sentence. But is mass testing the solution for fear? Clearly, it would work for Paul, and for other people who are fond of abstract theory that has some math to it. But I don’t think my own fear would be any less if there were mass testing. And I can imagine that such a regime would actually stoke fear in a lot of people.

Some other thoughts:

1. Politicians and public officials try to convert fear into Fear Of Others’ Liberty. Their success at this is what expands government and reduces freedom.

2. We are now in a position where anything other than a lockdown causes fear. It takes someone with a lot of pro-Trump mood affiliation or a very disagreeable person like myself to not fear lifting restrictions.

3. Based on what I can infer from my reading, one should really fear being elderly and in a nursing home. One also should fear being elderly and having obesity, heart problems, or hypertension. You should have some fear of being in an enclosed area in which someone else is singing, talking loudly, coughing, or sneezing.

When I need to be in an indoor setting with people other than my wife, I have less fear if everyone, including me, is wearing a face covering. I would not fear being outdoors or touching surfaces touched by others.

But as you know, I wish that public health officials were doing more to verify what to fear and what not to fear, and stop giving us their Bubba Meises and their model forecasts as if they were Science.

On culture and consciousness

Posted on by

A commenter wrote,

During good times culture dominates but under stressful periods consciousness dominates

Interesting how this seems like the complete flip of Scott Alexander’s thrive/survive model of progressive/conservative political minds. Oddly both models seem to make sense. Maybe I’m making a false equivalence

During good times the society should keep doing what it has been doing. When it is stressed, it may be better off trying something different.

I think that Scott is looking at things from an individual’s point of view. The conservative individual is biased toward sticking with the tried and true, on the theory that things could be worse. The progressive individual is biased toward novelty, on the theory that things could be better.

One can link the two notions by suggesting that in good times the society does best by relying on conservatives, while in times of stress it may do better relying on progressives.

I would rather not think in terms of personality types. My philosophy of risk taking is to take risks that have high upside and low downside and avoid risks that have high downside and low upside. That philosophy sometimes favors novelty and sometimes doesn’t.

General update, May 4

Posted on by

Many interesting links from Tyler Cowen yesterday.

1. Stephen M. Hedrick wrote in 2004,

Perhaps we should not assume that each and every disease can be controlled by vaccination. Considering the biological invention that has been directed toward thwarting T cell responses and antibody reactions, the possibility exists that for some agents, the acquired immune system is not up to the task. Other avenues of treatment might be more efficacious, but in a more fatalistic vein, one might conclude that the most effective means of controlling disease, as it has always been, is public sanitation, vector control, and education. A parasite can’t replicate in a host to which it has no access. It is antithetical to biomedical science as practiced in western countries, but technology may not be the answer to most of the world’s infectious diseases.

2. David Goldhill sounds like me.

3. Dhal M. Dave and others write concerning shelter in place orders (SIPOs),

using daily state-level measures of social mobility from SafeGraph, Inc., we document that statewide SIPOs were associated with a 5 to 10 percent increase (relative to the pre-treatment period) in the share of the population that sheltered in place completely on anygiven day. This treatment-control differential increases during the first week following SIPO adoption and then remains constant or slightly declines. Next, turning to COVID-19, difference-in-differences estimates show that the adoption of a SIPO had little effect on COVID-19 cases during the five (5) days following its enactment, corresponding to the median incubation period. However, after the incubation period, and intensifying rapidly three weeks or more after the policy’s adoption, SIPO adoption is associated with an up to 43.7 percent decline in COVID-19 cases. Approximately 3 to 4 weeks following SIPO adoption, this corresponds to approximately 2,510 fewer cumulative COVID-19 cases for the average SIPO-adopting state. Evidence from event study analyses is consistent with common pre-treatment trends. . .While statewide SIPOs were negatively related to coronavirus-related deaths, but estimated mortality effects were imprecisely estimated.

My guess is that if they could have shown that government restrictions lower death rates, they would have shouted it from the rooftops.

4. CNBC reports,

data released from the country’s central bank and a leading Swedish think tank show that the economy will be just as badly hit as its European neighbors, if not worse.

Pointer from Scott Sumner. I agree with Scott that this is no surprise.

Lin and Meissner find

Job losses have been no higher in US states that implemented “stay-at-home” during the Covid-19 pandemic than in states that did not have “stayat-home”.

Pointer from John Alcorn.

Most of the change in behavior comes from individual decisions. At the margin, the government restrictions are probably stupid. They keep hospitals from performing helpful procedures on non-virus patients. They restrict access to beaches and parks, when it is likely that fresh air is a good thing nowadays. They impose the greatest change in behavior on the young people with the lowest risk. And they do not have a visible effect on death rates–probably because the people who are at risk and have choices about behavior are already doing what they can to minimize their exposure to the virus.

5. Russ Roberts says that we need to let the price system work in the market for masks.

Markets are failing in America because we’re not letting them work. It’s not a market failure. It’s a policy failure.

. . .You get more stuff when you let the price go up. We should use prices in a crisis, not just in normal times.

6. Bryan Caplan writes,

Populists notwithstanding, there is nothing “dishonorable” about raising prices to eliminate shortages. If governments or customers refuse to see this great truth, there is nothing dishonorable about raising prices in less-visible ways. Businesspeople, you do not merely have a right to “gouge.” As long as shortages persist, gouging is the right thing to do. Gouge is good!

His point is that business owners themselves are too reticent about raising prices.

7. J. Feliz-Cardoso and others write,

The EuroMOMO network monitors weekly all-cause age-specific excess mortality in countries in Europe through a standardised approach.

Can one find anything comparable here? The authors recalculate excess mortality using their own methods. They seem to find that it is concentrated among those over age 65, especially men.

Contemporary socialism

Posted on by

Nathan Pinkoski writes,

American socialism offers an alternative explanation of the classical theme of economic inequality, why some are wealthy and others are not. Under the logic of traditional socialism, class is the barrier to economic prosperity. If class were eliminated, then wider prosperity would be possible. But if the struggle is to equalize minorities, the principal barriers to economic prosperity are now sexism, racism, xenophobia, and homophobia.

…The new villain is not the bourgeois, but the white heterosexual American Christian male.

…there is only one vanguard, the “woke.” To enforce unanimity, the vanguard deploys its activists, media-adjuncts, and ultimately the power of the state not to persuade but to destroy opponents. The vanguard seeks to destroy rather than to persuade because persuasion involves compromise with those who have reservations about some of particular practical goals of the moral crusade, as well as self-examination about the whole theoretical basis for the moral crusade. The upshot of these hesitations is to risk falling back unto mere reformism, giving up the revolutionary passion. The vanguard cannot allow this. A revolution permits no obstacles, delays, or scruples.