Showing posts with label technocrats. Show all posts
Showing posts with label technocrats. Show all posts

Thursday, May 13, 2021

Great News, Everybody! They Are Just Stupid. Not Evil.

Consider this graph from the COVID-19 vaccine page on the CDC's website: 

Notice the red trendline, which is the 7-day moving average of first doses, and how it peaks around April 11. Notice also how it is now as of May 8th (as reported May 13th) lower than it has been at any time since January 12th. 

What happened on April 11th??? Well, that was when the CDC and the FDA began floating concerns about the Johnson & Johnson (Janssen) vaccine. Concerns that would manifest themselves two days later in a "pause" of administration of that particular vaccine. 

From not allowing experimentation and wide-scale testing, to not allowing challenge trials, to insisting on doing their own, slow trials on vaccines, to delaying the information and launch of the vaccines, to not doing first doses first, to not approving the Oxford-AstraZeneca vaccine, to not doing half doses or using more efficient needles, etc. we have seen over and over our medical regulatory state fail us. The cost is unnecessary deaths, unnecessary and compounding hardship (emotional and economic), and deterioration in the confidence people have in public health. 

So how is this great news? Consider this:

Summary of Recent Changes
  • Update that fully vaccinated people no longer need to wear a mask or physically distance in any setting, except where required by federal, state, local, tribal, or territorial laws, rules, and regulations, including local business and workplace guidance
  • Update that fully vaccinated people can refrain from testing following a known exposure unless they are residents or employees of a correctional or detention facility or a homeless shelter

The CDC and federal officials in general are backpedaling fiercely from every policy and limitation they adamantly were insisting upon over the past several months. It is clear they are in panic mode over the plunging rates of vaccination. They probably correctly understand that there was a coming falloff from both the most vaccine resistant as well as those who had COVID and didn't feel a vaccine was necessary. All of this snowballing against vaccination as cases and deaths decline rapidly.

The great news is they actually do care and don't want a good portion of the U.S. population to die. One would be forgiven for thinking otherwise given the above list of mistakes. But it turns out they are not evil. They just are stupid. Hanlon's Razor for the win!

Wednesday, September 4, 2019

On the Matter of Carts and Horses

I want to be wealthy.

The wealthy take fabulous vacations, drive expensive sports cars, and surround themselves with luxury.

Therefore, I am going to New York for a week at The Plaza. While there, I will do some amazing shopping; eat at Tavern on the Green, The Russian Tea Room, et al.; and take in some fabulous theater. Upon my return, I am buying a Ferrari.

Of course . . . it doesn’t work that way.

Will someone please tell local governments that? PleasePleasePleasePlease?

Thursday, March 6, 2014

Can't Stop The Gods From Engineering

Well, we can all breathe a sigh of relief. The momentum won't end. At least that is the story now that Oklahoma City Mayor Mick Cornett has won re-election. His main opponent, City Councilman Ed Shadid, was apparently threatening to thwart that progress. And he continues to I guess by leading an initiative drive to bring back up for a vote both the >$250,000,000 new OKC convention center and the nearly permanent 1% sales tax associated with the city's long-term MAPS projects.

I'm not here to tout Shadid. The point I wish to make is a larger one. The winner of the mayor's race, Cornett, is seen and self proclaimed as the torchbearer for what I call the Coalition to Spend Other People's Money on Bright and Shiny Things. Shadid is one of the more high-profile challengers to this the received wisdom. But let's put the politicians aside and discuss the issue at hand. That issue is simply one of two questions:

  1. Should we force people through taxes to pay for things they don't seem to want?
  2. Why do we have to use taxes and government spending to express the people's desire?

I believe the first question is the correct framework of the issue. The supporters of MAPS have to believe the second is. I am presuming the people don't want these things because if they did, their wanting them would be sufficient to cause someone in the market to provide them without government involvement. Conversely, the supporters presume that the people* do want these things, but are unable to express that desire through the market. Let's assume the issue is framed properly by the second question, which means the challenge to the supporters is "show me the market failure!" Which really amounts to "show me the externality!"

Here is why. We've got lots and lots and lots of evidence that the market generally works at delivering the goods (the goods people want). That puts the burden of proof firmly on those who wish to make the case for the second question. Why is the market not able to connect demand and supply in this case? Ultimately that gets to what economists call externalities--positive externalities in this case. For some reason it must be that the benefits that would come from these projects cannot be sufficiently realized by those who would be the suppliers of these projects in the free market. But is a convention center really like clean air? There are lots of private suppliers of convention centers. What makes the OKC market so unique that convention centers become a public good?

Looking back to the funding into what is today Chesapeake Arena where the OKC Thunder play, why would private investors not be rewarded enough to build and improve such a facility? A self-serving, non-peer reviewed economic impact analysis is not relevant to this question. I understand how bright and shiny bright and shiny things are. This is a question of a cost/benefit analysis--both parts of which are critical to making a good investment decision. If only someone impartial studied these things . . .

Good public policy is shaped by setting aside what emotionally feels good for what critically is in the best interest of the public. Figuring that out is hard, but it is especially hard if you never look. See beyond the seen. Until the coalition can answer the second question effectively, I have to presume that the first question is the one to ask--the answer to which seems obvious.

*There is a BIG underlying assumption here that what is in the general (majority) interest of the public is expressed through the voting process and that that interest is a desirable end to impose on all of the people. It is not hard to poke holes in this assumption. If thirty people are trying to decide on what movie to go see where they all have to see the same movie, having fifteen of them vote on the movie will leave some of the voters dissatisfied and likely will leave some of the non voters dissatisfied too.

PS. Note that I am only discussing the economic efficiency facet of this debate wholly ignoring the important ethical argument about if it is right to tax some people (largely lower income/lower wealth people who have a harder time escaping the sales tax) for the benefit of some people.

Sunday, November 24, 2013

Highly linkable

Gun rights are dead. Long live gun rights! Caplan offers some great insight into the Briggs-Tabarrok Effect, a study which shows that gun access doesn't lead to more violence but does lead to more suicide. The points Caplan makes are right in line with the concept that magnitude matters.

As you sit down for Thanksgiving dinner this week and Uncle Fred begins ranting about how, "The dollar has lost 97% of its value! When I was your age, I was older!You're gonna carve the turkey with that? That's not a knife; this is a knife..." You can confidently dispute at least part of his claims.

The government picking winners and losers wouldn't be quite as infuriating if it came at a decent cost.

Landsburg makes a great case for the magnitude of tragedies that happened ~50 years ago today. And Boudreaux supports the argument thoroughly.

"Failure is always an option." -- A great point among many made in this post. (HT: Russ Roberts)

Instead of a carbon tax, how about a carbon subsidy? That is not the point of this post; rather the point is don't be so presumably sure about the sign attached to the externality.

Saturday, November 2, 2013

Did we really expect Big Bird to be good at running the world's largest health insurer?

In 2009 in the midst of an economic and financial crisis, the President of the United States chose to direct his administration's efforts toward solving the problems of health insurance as he saw them. For some reason he believed massively increasing third-party payment (a condition that we have no evidence and no theory to suggest should work) was the key solution along with price controls, production quotas, and government-provided alternatives. There were lots of reasons to believe this would not work out well, but the generally overlooked one was the world's largest mega-conglomerate has a horrible track record of getting from intentions to effective and efficient execution.

The virtues of Obama's intentions were well disputed. Arguments were also strongly and sufficiently offered against the effect these policy changes would bring about. But few, Megan McArdle the exception, predicted the websites wouldn't work. Yet we shouldn't be surprised. All reasonable philosophies of political economy leave room for the failure of democratic governance. Coming from a libertarian, free-market philosophy, I believe these schemes are destined to fail because government lacks the proper incentives. But others coming from a progressive philosophy should expect that sinister Republicans, conservatives, tea-partiers, et al. will thwart the efforts of the enlightened. It only becomes utopian nonsense when after the supposed thwarting the defense of failure is "It would have worked if it weren't for you meddling kids."

The website failure is a demonstrative microcosm for why Obamacare is doomed. These aren't glitches, this is a canary in the coal mine.

Friday, April 19, 2013

When it comes to justifying economic development initiatives and incentives, public officials and those seeking favorable treatment from state and local government generally find it easy. And the most common drumbeat is “Jobs! Jobs! Jobs!” But I’ve noticed a trend where it seems the economic profession’s criticisms are affecting a positive change. Alas, I believe the change is chimerical.

We now hear the champions of economic development talking the talk that “not all economic development is created equal” and “there are some developments that are just not worth the price”. But I think this is a sales pitch to quiet the dissent without actually making a change. The mantra is still JOBS!, but now we hear of “primary” or more desirable jobs versus “secondary” or less desirable jobs. The definition of these two alleged distinct types of jobs shows some fundamental misunderstandings of economic analysis.

Here is the idea. Suppose you are an economic planner representing a regionally large, nationally small but important city. Oklahoma City is a good example. Two prospective firms are each considering a new location in one of a few cities, and Oklahoma City has made the short list for both firms. You know what each wants, say it is a ten-year tax break that amounts to $5,000,000, but the problem is because your city operates under strict balanced budget accounting, you are only authorized to give up to $5,000,000 in tax incentives away. That amount may go up or down in a year, but for now that is all you can agree to. Both firms want it, and you know with high certainty that either firm will take it and choose your city but without it the firms will go elsewhere. You want the jobs (because, after all, it is JOBS!); so you must decide to which firm to extend the incentive.

  • Firm A is a call center that will have 100 employees who will take calls from around the world to solve computer technology problems for a fee.
  • Firm B is a high-end automotive mechanic service employing 100 who will compete with local dealerships to offer high quality auto repair. The customers base is expected to be nearly 100% local.

The average wage and distribution of wages is the same between the two firms.

To the economic planner Firm A is offering “primary” jobs while Firm B is offering “secondary” jobs. Never mind the fact that jobs are not a good but a cost—there is a reason people aspire to retirement and Garfield hates Mondays. Firm A is “bringing in wealth” by exporting the service calls and importing the customers’ payment for service. Firm B is “moving around wealth” by selling auto repair for payment all within the locality. The preference is intuitive since in Firm A’s case revenue is flowing into the city rather than just revolving around the city as with Firm B. But the intuition here is a deeply flawed economic analysis. It stems from fundamentally misunderstanding the economics of exchange.

When a firm adds value to society, it does so by using less resources than it provides. The measure of this is profit. But profit in the case of both firms flows to the owners who may or may not reside in your community. Because you as economic developer are trying to grow quality jobs, you must consider which jobs are more desirable--remember, you only can give the incentive to one firm. Firm A gives up call center services exporting them outside of the community in exchange for money from outside the community which is partially used to pay the 100 employees' wages. Firm B gives up auto repair services for money all of which remains in the community. Firm B is retaining all of the benefit within the community while Firm A is sending away half of the benefit.

To make this clearer we should remove the monetary component, which serves to muddy the analysis. Ultimately, money is a proxy for what it can buy. At its essence exchange is still a bartering process; it's just that half of the barter is anything you want it to be (anything money can buy--so not love, Dr. McDreamy). Let's replace money with food. Perhaps now we can see it clearly: Firm A is sending computer services out of the community in exchange for food while Firm B is facilitating people within the community exchanging auto services for food. Both exchanges are mutually beneficial to the parties involved. But if you are going to prefer the local society over the society at large since you're the local economic developer, then you should prefer Firm B because that firm is retaining all the benefits (goods and services along with gains from trade) within the community.

Thursday, April 18, 2013

Greed versus Envy

The White House put out a budget just a couple months late of when it is supposed to, which is a rather good record in comparison to the Senate who hasn't passed a budget in four years. Contained within it was an interesting proposal--capping the amount a person can save for retirement through tax-deferred accounts such as traditional IRAs where taxes are paid only once distributions begin, which is usually during retirement.

The maximum a person could set aside in an IRA would be $3 million--an amount Obama feels is plenty enough. Just when you thought we were doing all we could to punish saving and reward consumption, we get this to up the ante. Here is a voice of concern about the implications for tax-deferred savings accounts in general. Here is another. Seems there might be unintended consequences from the government deciding for us how much deferred consumption is enough.

But you see, deferred consumption amounts to deferred taxation. And that is where the greed angle comes in. Obama would have us believe that greed is good in this case--the greed the government has for tax revenue now rather than later. Yet there are two facts that make me doubt that greed is the true motive here:

  1. The proposal is estimated to generate a negligible amount of $9 billion in tax revenue over the next decade--about 3% of 1% of what the federal government plans to spend over that time. 
  2. If this were really about accelerating tax payments from the future to the present, then part of the proposal would include allowing unlimited Roth IRA contributions where taxes are paid up front. 
The absence of the second component in the budget makes me think this is more about envy than greed.

Saturday, April 6, 2013

Highly linkable

I'm back from my unintentional hiatus. Now that my bracket is busted and other things have been put to bed, at least for a while, I can get busy with a lot of blogging that has been on my mind. To begin, let's get some good links in.

Megan McArdle takes just six minutes in this Cato Daily Podcast to very effectively explain what insurance is and what it is not and why Health and Human Services Secretary Kathleen Sebelius is in the camp of confusion. The all-too conventional wisdom is that insurance is about a transfer of expense, but this should obviously be nonsense. How could a redistribution scheme be a profitable endeavor? Insurance is rather a transfer of risk.

While we enjoy the excitement of March Madness, let us not forget the madness that is the non-free market of college athletics. Dave Berri has a column on Freakonomics asking simply, "How about a free market for college athletes?"

Speaking of Freakonomics, if you'd like a scary example of how quickly a consortium of "experts" can slip into technocratic thinking and tyrannical behavior, listen to this Freakonomics podcast on fighting obesity. There was a strong vein of Kling's oppressor-oppressed narrative running through these progressives.

John Cochrane explains why boogeyman-like fears of genetically modified organisms (plants, foods, etc.) is not only misplaced, anti-science, and anachronistic, but it is also very bad for the poorest among us. GMO just ain't the big, bad wolf.

Finally, Stephen Landsburg makes a point in principaled agreement with me by showing in two videos how magnificently wealthy we are.

Wednesday, March 20, 2013

Elizabeth Warren suggested what?

A $22 per hour minimum wage might be reasonable.

Here is a telling passage from the full article on Huffington Post:
"If we started in 1960 and we said that as productivity goes up, that is as workers are producing more, then the minimum wage is going to go up the same. And if that were the case then the minimum wage today would be about $22 an hour," she said, speaking to Dr. Arindrajit Dube, a University of Massachusetts Amherst professor who has studied the economic impacts of minimum wage. "So my question is Mr. Dube, with a minimum wage of $7.25 an hour, what happened to the other $14.75? It sure didn't go to the worker."
It seems she basically believes that employers wouldn't pay workers without people like her making them. Now that is dumb. She also severely confuses average worker productivity with marginal worker productivity. Claiming that the minimum-wage worker in 1960 grown at the rate of productivity growth is the equivalent to the minimum-wage worker in 2013 is 1 + 2 = 7. That is dumber. Has nothing else changed since 1960? Job descriptions, labor pools, employer compliance with regulations, et al. all the same? Are we really sure the worker who should be earning the MINIMUM wage today is equal to the worker in 1960 who should have been earning the MINIMUM wage plus the AVERAGE growth in worker productivity?

Think about this simplified thought experiment that ignores A LOT of other changes: A grill cook with little capital equipment at a fast-food burger joint in 1960 can produce 200 burgers per hour. A grill cook with lots of capital equipment at a fast-food burger joint in 2013 can produce 500 burgers per hour. Should the worker in 2013 be paid a full 2.5x more than the worker in 1960, or should the guy who bought the capital equipment be paid something, which eats into the 2.5x for the worker?

Saturday, February 16, 2013

Obama's confusion about "wise" investment

In his latest State of the Union address, President Obama referred to investing, investors, or investment 13 times. Here are a few of those references:
So let's set party interests aside, and work to pass a budget that replaces reckless cuts with smart savings and wise investments in our future.
It's not a bigger government we need, but a smarter government that sets priorities and invests in broad-based growth.
If we want to make the best products, we also have to invest in the best ideas.
Unfortunately, making wise investments isn't as easy as asking Mr. Obama how many licks it takes to get to the cash-flow center of a public equity fund. The track record of government investment is abysmally poor. And we shouldn't expect it not to be. The government lacks the vital characteristics necessary for successful investment decision making. Most importantly the necessary incentives are not only absent; they are in reverse. Government does not have a profit motive properly aligned with success (consider this the front-end of good investment incentives)--that is not to say that individuals and groups within government lack a profit motive. Government also does not have the correct feedback system whereby success is rewarded and failure is punished. Consider this the back-end of good incentives, and this is the reversed incentive part. Government tends to reward failure at the expense of success.

Another vital component largely and effectively absent from government is talented investors. Rather than attracting and nurturing creative, entrepreneurial innovators and risk takers, government tends to attract and nurture assembly-line bureaucrats and rent seekers.

Government is the wrong process for "wise" investment. Obama doesn't seem to understand this. His administration's malinvestments into solar, et al. are clear evidence of this. Aside from the fraud, there is a key problem with these types of investment. For the investment to be wise, it isn't sufficient to know what the actual technology of the future will be. As very difficult as that part of the task is, an equally challenging feature is getting the timing right.

Being too early to invest in even the right technology can still destroy resources; i.e., not be a wise investment. Imagine travelling in time to 1980 to invest in teaching HTML coding, manufacturing Boeing 787s or Airbus 380s, or building contemporary Whole Foods grocery stores in mid-western cities.

A famous investor adage is, "In the end I was right, I my timing was just too early." Another is that, "The market can stay irrational longer than you can remain solvent." We seem to be testing those two adages via government "investment" at an alarming rate.

Tuesday, December 4, 2012

Planes, trains, and central planning

I recently took the family to the 36th annual Oklahoma City Train Show. Since my 3-year-old son thinks trains are the reason for man's being, this event was a big hit. Several of the displays were quite impressive. It is always amazing to me how diverse and intense human interests can be.

Looking at the various model towns and layouts, I couldn't help but think how much these models look like the real world but are in fact so very different. There is a lesson here for economics. Our models are vague facsimiles of what human existence looks like. They are not complete representations. We zone and plan cities as if we were designing a model train set rather than establishing incentives/disincentives in relative darkness.

The human world is filled with incredible complexities no individual or group can possibly know, understand, or fully appreciate. The train set world is a design-able project aimed at satisfying one train enthusiast or at most a small group. The human world must evolve over time with many random, chaotic elements interceding. The train set world is fixed.

There is no cause and effect in designing model train layouts aside from the designer wanting something and then acting to bring it about. But cause and effect is multidimensional and phenomenally jumbled in the human world. Of course this inconvenient fact need not stop our attempts at assigning cause to effect. Hence, renters and multi-unit housing cause higher crime rates and lower home values. Good urban planning causes successful restaurants and profitable entertainment districts.

Yet again I hear Hayek:
The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.

Tuesday, September 11, 2012

TEAnocratic Nonsense or Let's Ban Bans

Economist Barry Nalebuff has always been an insightful, out-of-the-box thinker. I've long admired his work.

So it is with great disappointment that I read this.

Nalebuff wants to rewrite New York City Mayor Michael Bloomberg's proposed regulation that bans beverages in NYC from being sold in sizes greater than 16 ounces. If "rewrite" meant "erase completely and never bring up again in the Land of the Free", then I'd be on board. But Nalebuff instead wants to reconfigure the regulation to be smarter. Apparently, the dumbness of the regulation only occurred to him once he realized his former beverage company's products were out of compliance. He does make a case for one kind of smarter regulation. But that is far short of sufficient to justify such a blatant violation of free choice with both its benefits in principal and practicality.

Very disappointing to see yet another good thinker turned into a technocrat. He fails to realize that his preference shouldn't necessarily be everyone else's preference and that government regulation's effectiveness along one dimension (in this case potentially a more effective health rule in one health dimension) comes at the expense of less effectiveness in most other dimensions (in this case certainly less effective consumer utility). Or perhaps as a professor of economics he rejects revealed preferences—a foundational tenet of economics.