Redford on Qualified Immunity and Moral Hazard

 

A few weeks ago, Virginian Audrey Redford, an assistant professor of economics at Western Carolina University, learned that the Virginia House of Delegates solicited open comments on a bill to end qualified immunity in Virginia. The comments would be read aloud to the delegation. So she wrote a comment.  The bill failed by a considerable margin, but she got some satisfaction from knowing that someone read her statement to the delegates. Here it is.

Qualified immunity completely alters the incentive structure for law enforcement officers. It presents a significant moral hazard problem to the community. The inability to punish an officer who misbehaves and harms members of the public creates significant distrust in the community. In no other occupation is an individual protected for “doing their job” when they wantonly step outside of what is permissible. If policymakers are at all concerned with “weeding out the bad apples” in policing organizations, this is the way to do it. The claim that policing is so dangerous that it requires officers to sometimes act in egregious ways is false. The BLS and other non-partisan organizations consistently show that many occupations are significantly more dangerous than policing, including garbage collecting. [DRH note: also farming.] Yet the same immunity is not offered to them. In reality, policymakers afford law enforcement officers such an exception because they are a powerful interest group. They lobby effectively and raise significant funds for their preferred elected officials. To the many delegates who claim to not be in the pocket of any interest group, I implore you to examine the true motivations of why you might be opposed to passing such a bill that protects villains with badges in the community. Law enforcement officials ask ordinary citizens all the time, “if you’re not breaking the law, what do you have to worry about?” Now is the time to hold them to the same standard. Who, if not you, will guard the guardians? I suspect that if legitimate means to resolve this imminent issue are not taken, the community will step in and find a way to solve it for themselves. However, delegates, that may mean they find alternatives outside of the political sphere to stand up for themselves, and we know the government doesn’t like competition.

 

 

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The Economics of Violence: A Short Introduction

The simplistic declarations about violence heard after the “insurrection” of January 6 at the Capitol invite a reflection on the economics of violence. The economist’s starting point is that an individual uses violence when it is in his personal interest to do so—when, given his circumstances and constraints (including subjective moral constraints or the lack thereof), he finds the net expected benefit of violence greater than the net expected benefit of peaceful exchange for him. This is a positive observation about what is, not a normative statement about what ought to be, an important distinction to always keep in mind.

As the late UCLA professor Jack Hirshleifer argued, we must not overlook “the dark side of the force” (of the force of self-interest), which includes “crime, war, and politics.” (I am quoting from the mimeographed July 28, 1993 version of his article “The Dark Side of the Force.”) Cooperation (such as trade) happens but “with a few obvious exceptions, occurs in the shadow of conflict.” Hirshleifer wrote. In positive economics, violence is important:

All aspects of human life are responses not to conflict alone, but to the interaction of the two great life-strategy options: on the one hand production and exchange, on the other hand appropriation and defense against appropriation.

Which strategy one individual chooses depends on his preferences, his abilities in voluntary cooperation, the defensive or offensive production technologies available to him and to others, and his evaluation of the future. But how should we think about political violence?

Open violence—“the war of all against all”—has dire consequences for prosperity. Virtually all individuals have good reasons to want it minimized. Thomas Hobbes formalized the idea that such minimization is what gives legitimacy to the state. Populations accepted the burden of the Roman Empire or the medieval lords or the king or the modern democratic state because these governments were deemed not as bad as attacks from the “roving bandits,” private or governmental, who would have otherwise proliferated and attacked them. The “roving bandit” concept belongs to the theory of economist Mancur Olson, notably in his article “Dictatorship, Democracy, and Development” (American Political Science Review 87:3 [September 1993], 567-576).

Governments do not abolish violence as its threat underlies their injunctions and bans. But the most useful governments prevent violence from degenerating into open violence. They replace the latter with a more subdued, formal, and at least partly constrained form of violence.

This does not mean that revolution is never in the interest of some or many or even—under the worst governments—a majority of the ruled. The collective action necessary to organize a revolution, however, faces daunting problems. Which individuals will start the revolution and pay the necessary personal costs, often with their lives? (On the theory of collective action, a milestone in economics, see Olson’s book The Logic of Collective Action: Public Goods and the Theory of Groups, 1966].)

Revolutions do occasionally happen, though. At some tipping point, the National Guard or other praetorians do not shoot on demonstrators or on the mob attacking the “City of Command,” as political theorist Bertrand de Jouvenel called the center of government power (in his book On Power [1945 for the original French edition]). Bodyguards decamp where the signs become unmistakable that the regime is crumbling, because it is in the private interest of each of them to not be on the losing side. In Romania, Nicolae Ceausescu had no more praetorians when he was arrested by revolutionaries and executed with his wife. In different circumstances, Saddam Hussein was found in a rabbit hole, alone. Syrian ruler Bashar al-Assad did crush the revolution by shooting on the crowds but, perhaps most importantly, by becoming a vassal of the Russian government.

The threat of revolution or revolt can lead some governments to rule by terror, but it can also exert a restraint on state power. The factors at play include the technology (guns and such), the propensity to violence on both sides, and the existing political institutions. Olson provides a historical example of how the threat of revolution can be useful:

In Venice, after a doge who attempted to make himself autocrat was beheaded for his offense, subsequent doges were followed in official processions by a sword-bearing symbolic executioner as a reminder of the punishment intended for any leader who attempted to assume dictatorial power.

Thomas Jefferson would have agreed. He famously wrote:

I hold it that a little rebellion now and then is a good thing.

Interestingly, once he was president, he did not even support ordinary smugglers.

One problem with revolutions, illustrated by the 1789 French revolution and the 1917 revolution in Russia, is that they can strengthen power instead of limiting it. In America, the jury may still be deliberating. Many thinkers, including most economists of the public choice school as well as Anthony de Jasay, have argued that the state as an institution has a logic that leads to growing power.

Even a liberal social contract as Nobel economist James Buchanan theorized it is ultimately based on threats of violence. When some individuals think that the contract is not in their best individual interests and that they would fare better in anarchy, they will want to renegotiate the deal or walk out of it. Only new rules and/or some bribes can prevent a civil war or a revolution. As Hirshleifer said, the option of violence is always lurking in the background.

Classical liberalism claims that individual liberty under the rule law and the prosperity that follows are the best set of institutions to minimize violence—a potent argument. However, Anthony de Jasay, a liberal anarchist (or perhaps a conservative anarchist), has dampened the liberal enthusiasm by emphasizing the need for an effective balance of power between the ruler and the ruled:

Self-imposed limits on sovereign power can disarm mistrust, but provide no guarantee of liberty and property beyond those afforded by the balance between state and private force.

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Romney’s child allowance proposal

Mitt Romney has proposed a child allowance of $4200/year for children under age 6 and $3000/year for children age 6 to 17, which is gradually phased out for people making over $200,000 (depending on the child’s age.) It is to be paid for without boosting the budget deficit, by reducing certain other poverty programs and also eliminating certain tax deductions, such as what’s left of the SALT deduction. (This last element is one of my favorite parts of the plan.)

I don’t know enough about the plan to have a firm opinion, but from a utilitarian perspective it seems to have some positive features:

Equity: The net effect is to shift money from the affluent to the poor, which probably results in a significant gain in aggregate utility.  (Yes, we can’t measure utility, but it seems likely that this factor is a net plus.)

Efficiency: It’s hard to say whether Romney’s plan improves or reduces efficiency, and that’s where I’ll focus the rest of the post.  But the mere fact that “it’s hard to say” is a sort of plus for the plan, because the equity considerations seem to be pretty clearly utility improving. With most welfare proposals, greater equity comes at a cost of lower efficiency.  I think it’s fair to say that either Mitt Romney is a very clever guy, or he has smart advisors, or both. At the end I’ll suggest a modification that would boost the equity of the plan, without any clear loss in efficiency.

1. Some conservatives like the fact that these child benefits would boost the birth rate, pointing to the fact that people say they want more children than they actually have.  I don’t share their worry that the birth rate is too low, and I don’t trust polls.  Some conservatives worry that paying poor people to have kids would cause so-called “inferior” people to reproduce.  I also don’t share this worry.  For me, the effect on births is a non-factor.

2.  Work disincentives can come from either the income or the substitution effects.  The substitution effect in Romney’s proposal is small, as parents don’t lose the child allowance until their income rises to well above $200,000.  So on that basis it won’t discourage poor people from getting a working class job.  There is a very mild work disincentive for upper middle class people experiencing the phase-out of the benefit.  The income effect refers to the fact that poor people might no longer work because they feel they can live on the child allowance without working (perhaps combined with other programs like food stamps.)  It seems to me that this disincentive would be quite modest for the size of benefits proposed by Romney.  Still, in net terms there’s probably a mild work disincentive from the issues I’ve discussed thus far.

3.  Many of the other provisions actually boost efficiency.  Several other (inefficient) poverty programs are either reduced or eliminated.  Furthermore, there’s a substantial gain from reducing the complexity of both the welfare system and the income tax system.  Eliminating the SALT deduction also discourages wasteful state and local spending.  So the various provisions that pay for the benefit have a significant positive impact on economic efficiency.

Combining points #2 and #3, I see no clear evidence of either an overall gain or loss of efficiency.  And again, the equity benefits seem pretty clear to me.

One final comment.  Why not make the child allowance fully universal, and then slightly boost the payroll tax (on wage income only) on people making over $200,000 a year to pay for it?  On an equity basis, that would redistribute money from the very rich down to the upper middle class, as people with very high wage income would pay more extra tax than they’d gain from the child allowance, while the opposite is true for the upper middle class—those making modestly above $200,000.

On efficiency grounds, my proposed modification would make the income tax system much simpler, so that’s a net gain.  The increase in the payroll tax rate would be smaller than the implicit marginal income tax during the phaseout range of Romney’s proposal (which mostly applies to people in the $200,000s), so extremely affluent people would face slightly higher MTRs while modestly affluent people would face significantly lower MTRs.  Overall, I doubt there’d be much change in economic efficiency, maybe even an increase.

 

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The Beatings Will Continue Until Morale Improves

How to slow the recovery.

The Biden plan should provide enough relief to carry the economy through the worst of the pandemic. One concrete example is the supplemental unemployment benefit, which Mr. Biden proposes to increase from $300 a week to $400. More important, the extra benefits will last at least through September, then phase out automatically as the labor market improves. Both changes are wise. (emphasis added)

This is from Alan S. Blinder, “Biden’s Stimulus Hits All the Right Notes,” Wall Street Journal, January 20, 2021 (print edition.) The article is gated.

With federal benefits of $400 per week, this translates into $10 an hour for a 40-hour week. That’s on top of state unemployment insurance benefits, which are typically somewhere between $250 and $500 per week. Take even the low end of $250 and that translates into $6.25 per hour for a 40-hour week. So that’s $16.25 an hour. Although unemployment benefits are subject to income taxation, they are not subject to payroll taxes. The employee’s share of payroll taxes is 7.65 percent. So to break even by taking a job, a worker getting $16.25 per hour for not working would have to get at least $16.25/(1 – 0.0765) = $17.60 for working. And if the worker wants to net at least, say, $3 an hour before tax (but after payroll tax) for working, he would have to be paid at least $20.84 for working.

But that very fact means that a few million people, especially those making below $20 an hour, will take their time getting a job. That means that the labor market improvement that Blinder depends on, though it will happen, will be slower than otherwise precisely because of the extra $400 per week. Thus the title of this post.

Blinder claims that this policy is wise; it is anything but.

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Will the Vaccines Mess With Our DNA?

 

A friend on an email group I’m on asked my friend and co-author Charley Hooper the following question about the COVID-19 vaccines:

Are you sure that the vaccine won’t mess with our genes?

Charley allowed me to share his answer:

No, I’m not 100% sure. But I’m one minus epsilon (a very small number) sure.

Biological reason:

I’m not an expert in this area. This is from my reading…RNA is a notoriously fragile molecule. Delivering mRNA successfully to the cells inside our bodies and ensuring that enzymes within our cells do not degrade it are key challenges in vaccine development. Chemical modifications during the manufacturing process can significantly improve the stability of mRNA vaccines. Encapsulating mRNA in lipid nanoparticles is one way to ensure that a vaccine can successfully enter cells and deliver the mRNA into the cytoplasm. 

mRNA does not linger in our cells for long. Once it has passed its instructions to the protein-making machinery in our cells, enzymes called ribonucleases (RNases) degrade the mRNA. mRNA dies a quick death once in human cells.

It is not possible for mRNA to move into the nucleus of a cell as it lacks the signals that would allow it to enter this compartment. This means that RNA cannot integrate into the DNA of the vaccinated cell. There is no risk of long-term genetic changes with mRNA vaccines.

Clinical reason:

Moderna’s Phase 3 clinical trial of its COVID-19 vaccine enrolled 30,420. We haven’t seen any genetic damage to these participants. Ditto for Pfizer and BioNTech’s trial that enrolled 43,448 participants. How have we not seen any genetic damage in over 70,000 closely monitored individuals?

Economic reason:

Why would a company market a vaccine that could mess up the genetics of its customers? I shudder to think of the lawsuits. This goes against everything I’ve learned from spending the last three decades in the pharmaceutical industry.

Genetic reason:

If the vaccines do alter human DNA, what is the result? To make us healthier, stronger, smarter, more beautiful? That would be extremely difficult to accomplish. To make us mutants? If the vaccines do alter our DNA, I think it’s virtually certain that the alterations would be harmful and perhaps fatal. Who other than an extreme environmentalist or a mass murderer would want this? However, these vaccines were developed by drug companies, not mass murderers. There’s no group of people that I know of that had both a motive for such a crime and the ability to perpetrate it.

Insider information reason:

Have we heard of large numbers of employees at Moderna, Pfizer, and BioNTech avoiding the new vaccines? No.

 

 

 

 

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The new (center) left

In recent years, the reporting at The Economist has moved somewhat to the left. Here’s a recent example:

But the assumption of rational self-interest constrains the welfare state significantly. Generous benefits, and the high taxes needed to fund them, will put rationally minded people off work, undermining economic growth and the government’s capacity to help people in need.

In practice, though, Mr Saez explained, the world works differently. . . .

Employment rates for prime-age men are remarkably similar across rich countries, Mr Saez pointed out, despite big differences in tax and welfare systems. Average tax rates in France are roughly 20 percentage points higher than those in America across the income distribution, yet about 80% of middle-aged men work in each country. (Americans do work more hours, but, as Mr Saez noted, this too reflects social choices, such as the shorter working week specified in French law.) There is strong social pressure for healthy men not to be seen as “freeloaders”, which pushes against the incentives created by higher taxes or bigger welfare cheques. Where social pressures to work are more ambiguous—as for the young or old or, in many places, women—generous benefits tend to have larger effects on employment decisions, Mr Saez noted. But this reinforces rather than undercuts the idea that social factors have important effects on economic decisions.

This isn’t exactly wrong, but it seems a bit misleading.  The tone of the article is sort of dismissive of conservative arguments that the welfare state discourages work, but the actual empirical evidence suggests that it discourages work among the young, the old, women, and among men it leads to shorter work hours.  This is one reason why per capita GDP (PPP) is far lower in Europe than in America. It’s not true that “the world works differently”; it works exactly the way that classical economic theory predicts.  The European welfare state makes Europe a much poorer place.  That may be fine (perhaps people prefer the extra leisure time), but it’s foolish to minimize the effect.

And to head off criticism, note that while some European welfare states have incomes well above the European average, so do some American states.  Lots of things affect income, not just welfare and taxes.

Over the past quarter century, the center left has shifted a bit left on public policy issues:

1990s-style neoliberalism                                2021 post-liberalism

1. Singapore style forced saving                  Expanded social insurance programs

2. Private infrastructure projects.              Public infrastructure projects

3. Progressive consumption taxes              Progressive income/wealth taxes

4. Fiscal responsibility                                   Deficits don’t matter

5. Monetary stabilization policy                 Fiscal stabilization policy

6. Low wage subsidies                                   Higher minimum wages

7.  Privatization                                                More aggressive antitrust

In 1996, Clinton ran for re-election on ideas such as “the era of big government is over” and “ending welfare as we know it.”  Fiscal stabilization policy was a complete non-starter.  We were moving toward budget surpluses, with an eye on the demographic time bomb created by lower birth rates and longer life expectancy.

Why the recent move toward a slightly more socialist approach to policy?  (Yes, it’s far from outright socialism, but for the most part the list above is not a move toward the Nordic model, at least the post-1990 Nordic model.)

Some might quote Keynes’s famous remark about how to respond to new information, but I’m not convinced that this can explain the shift.  I’m only an expert on one of the 7 areas above (stabilization policy), but in that one area I’ve seen a lots of bad arguments for the move toward fiscal policy, arguments that reflect a misunderstanding of macro theory and an ignorance of macroeconomic history.  So I have little confidence that the other 6 examples are any better justified.  Especially when I see dubious claims that a less effective policy (minimum wages) can be justified on the basis of being more politically acceptable than a more effective policy (low wage subsidies).  We have an EITC program!  And we have a new government where the Democrats have an easier time with new spending programs (requiring 50 senators) than regulatory changes (requiring 60 senators).

So what explains the shift?  I suspect it’s a mix of various factors.  Monetary policy failures like the Great Depression and the Great Recession are almost always misdiagnosed as a failure of capitalism.  The move toward an information economy has made income less equal.  The zero lower bound makes monetary policy seem less effective than it is.

More speculatively, the center right might feel increasingly comfortable viewing the center left as their “tribe”.  The days of P.J. O’Rourke’s “Republican Party Reptile” is long gone.  It’s no long cool to be associated with an ideology that has become increasingly nationalistic and anti-intellectual.  Meanwhile, the demise of communism has removed some of the taint from the left.  Media outlets such as The Economist and the Financial Times, and think tanks like the Niskanen Center, seem increasingly at home in the center left.

PS.  I used the term “post-liberal” as its relationship to liberalism is analogous to the relationship of post-Keynesian to Keynesianism. Similarly, modernism was followed by postmodernism.  In any case, neoliberalism is already taken, and neo-neoliberalism just sounds stupid.

 

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Why Is the Vaccine Distribution So Difficult?

Imagine if food were allocated and distributed by the government. Wouldn’t this prevent hunger and famines, which have certainly killed more people than epidemics in the history of mankind? Most students of economics should have a ready answer. The opposite approach—that government allocation is more efficient than the anarchy of the market—is illustrated by the story of the Russian official who, shortly after the collapse of the Soviet Union, asked British economist Paul Seabright, “Who is in charge of the supply of bread to the population of London?” (recalled by Philip Coggan in his recent book More).

There is somebody in charge of the supply of Covid-19 vaccines in the United States, and that is precisely the problem. (That both the federal government and states government are involved is not the basic problem; on the contrary, decentralization prevents the centralization of error and improves the Soviet-inspired distribution system, if only by permitting experimentation.) A Wall Street Journal story sounded the alarm (again) on the dramatic inefficiency of the current distribution system (Elizabeth Findell, Jared S. Hopkins, and Dan Frosh, “Covid-19 Vaccines Are Getting Stuck at the Last Step,” January 17, 2021):

In South Texas, a man slept in his car for two nights straight so he wouldn’t lose his place in a line of hundreds of people at a mass-vaccination event. In Western Kentucky, residents registered for vaccination slots online, only to find when they arrived that their doses had been taken by walk-ins. In New Mexico, state officials scrambled to hire more people to staff a vaccination hotline after it was overwhelmed with callers. …

“It’s crazy that people have to call around to see what different providers have the vaccine, rather than having a central place,” [Texas state REp. Vikky Goodwin Goodwin] said. “People are thinking that we had months and months to prepare for this.”

Isn’t it tragic that such things happen and the same failed government interventions are proposed (like by Ms. Goodwin above) after nearly three centuries of modern economic analysis? When prices don’t clear the market, people wait in line and those at the end of the queue don’t even know if they will get anything when their turn comes. In this respect, the United States is not worse than other regulated countries but it is often not better either.

We should not exaggerate the Sovietization of the American economy. Looking at the throve entrepreneurship deployed by American private businesses during the pandemic suggests that the economy is more resilient than many would have thought. Yet, the trend of the past few decades is unmistakable. Sometimes, it even looks like military Sovietization, from the retired army officer running Operation Warp Speed to president Biden considering deploying the National Guard to set up Covid-19 vaccination clinics.

Even if government intervention is judged necessary in a pandemic, less Sovietized and more efficient ways would be more productive. The federal government could buy enough Covid-19 vaccines from the manufacturers by bidding up prices to obtain enough for the whole population—that is, by bidding high enough to divert enough economic resources to manufacturing and shipping these vaccines. It could then offer the vaccines for free to interested health providers and pay the shipping by Fedex and UPS. Even better,  the government (at the federal or state levels) could offer vouchers to anybody who wants the vaccine and let Amazon (or any retailer) buy the vaccines and sell them in exchange for the vouchers or for ordinary cash from those who are willing to pay. With tens of thousands of intermediaries with incentives to deliver the vaccines because it pays to do so, the distribution would proceed like for food or computer equipment.

The trick is to allow the market to clear as fast as possible. Even the government’s preferred clientèles would be better served by a liberalization of entrepreneurship and a large measure of economic freedom.

It would go less smoothly in states, such as New York State, that have set up their own Soviet-style allocation of vaccines, but individuals could at least cross state lines to buy a vaccine if they want. And competition would, to a certain extent, push state governments not to hamper private distribution.

If ordinary economic markets are not allowed to clear, expect the political market to clear with the help of patronage, random access, and waste. We have seen much of that since the beginning of the pandemic. It would not be surprising if, as recently reported, a large number of vaccines are trashed because not enough government-prioritized recipients are available at any given time or place. (See also Scott Sumner, “Regulation and Vaccines: It’s Much Worse Than You Think,” Econlog, January 17, 2021, who correctly defends a free market in vaccines.)

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A Shocking USPS Admission

USPS: We Don’t Care; We Don’t Have To

Last Monday, January 11, I mailed off my estimated tax payments to California’s state government (an agency called the Franchise Tax Board) and the federal government (IRS). Both, but especially the check to the IRS, were for large amounts.

At about 10 a.m., I put them in a mail box close to my office in downtown Monterey. The sticker on the box says that pick up is at 12 noon.

At about 2:20 p.m. I received a call from a man at a nearby men’s club. He explained that he had received my letter to the Franchise Tax Board in that day’s mail. He had used my return address to track down my phone number. I thanked him profusely, rushed over to the club, and picked up the letter. My concern, of course, was about what happened to the check to the IRS. Was it badly misplaced also? And if it was, would the person who received it be as responsible and as resourceful as this nice man?

I walked from there to the downtown post office. When it was my turn, the woman I talked to said she would get the postmaster. I waited about 10 minutes until he came to the front. I started to explain the situation. My first surprise was that he told me that the mail from that box hadn’t been picked up yet. I was surprised because I was showing him the letter that I had put in that box. How did he think I got it? When I finally got him to listen and understand, I told him my bigger concern: was the IRS check similarly misplaced?

He answered that he didn’t know and couldn’t know at this point. Then he told me a shocking number. He said that the postal service loses about 2 percent of the mail. Even though I had my mask on, I think he saw my eyes widen.

“Two percent?” I said, “that’s terrible.”

“No, it’s not,” he answered. “We have billions of pieces per day.” (I think he overestimated by at least an order of magnitude, but that doesn’t matter for these purposes.)

“Two percent is a large number,” I answered. “FedEx doesn’t lose 2 percent of its shipments.”

“You can’t mail something with FedEx,” he said.

“Yes, you can,” I replied, “You can put a letter in a FedEx envelope.”

“Then use FedEx,” he answered.

“Meanwhile,” I said, “I’ve got this problem that I did use USPS and I want to make sure my check to the IRS will be delivered.”

“We can’t cross that bridge until we come to it,” he said.

I didn’t understand what that meant in this context, so I asked, “What’s that bridge look like? How would you know we’ve come to it?”

“We would know when the IRS contacts you and says they didn’t get the check.”

“I’m pretty sure they don’t get in touch when that happens,” I replied. “I won’t know until April when I file my taxes and they tell me I owe a big amount rather than sending me my usual small refund. They would also charge me interest and a penalty.”

“So that’s how we would know,” he said.

(I’ve since realized that if I don’t see that the check has cleared by, say, January 22, then it was lost. It’s not clear what I would do. Would I call the IRS? Good luck with that. Would I put a stop payment on the check and send another one? I’m nervous about putting a stop payment on a check to the IRS.)

One of the interesting things about the interaction, which shouldn’t have been surprising, is how little this guy seemed to care and how blasé he was about a 2% loss in mail.

As I say, though, incentives matter. And the USPS’s incentive to deliver all the mail is very low.

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Noubar Afeyan on Academia, Business, Immigration, and the American Dream

Tyler Cowen has posted an outstanding interview of Noubar Afeyan, co-founder of Moderna, which produces one of the two COVID-19 vaccines approved so far by the Food and Drug Administration. Tyler is at the top of his game, asking really good questions, and you can just see the respect that that creates in Afeyan.

Some highlights follow.

On individualized medicine

We have a program in cancer vaccines. You might say, “What does a cancer vaccine have to do with coronavirus?” The answer is the way we work with cancer vaccines is that we take a patient’s tumor, sequence it, obtain the information around all the different mutations in that tumor, then design de novo — completely nonexistent before — a set of peptides that contain those mutations, make the mRNA for them, and stick them into a lipid nanoparticle, and give it back to that patient in a matter of weeks.

That has been an ongoing — for a couple of years — clinical trial that we’re doing. Well, guess what? For every one of those patients, we’re doing what we did for the virus, over and over and over again. We get DNA sequence. We convert it into the antigenic part. We make it into an RNA. We put it in a particle. In an interesting way, we had interesting precedents that allowed us to move pretty quickly.

Big question I wish Tyler had asked as a follow-on: Do you think the FDA will loosen its reins enough that Moderna and others can deal that way with individual patients without getting permission and doing large-scale tests?

The Academic Scientific Community vs. the Business Scientific Community

Look, the scientific method, the scientific community — it works on advances that are predicated on current and prior advances. Incremental advances are the coin of the realm. It’s not that they’re conservative. It’s just that the process, the communal process of accepting truth as that which can’t be negated, causes you to therefore be, in every which way, questioning everything.

I learned long ago the expression organized skepticism. That’s what science is predicated on. As a result, if you come forward with something that is not fully supported by and connected to the current reality, people don’t know what to do with it. What many academic scientists do is to spend the next 5, 10 years putting the connections in place to make what’s being proposed a natural extension of what existed before.

In industry, we don’t have that need, and the reason Moderna was able to really be the pioneer in the space of establishing a therapeutic platform, even before a vaccine platform, is because for us, the lack of connection between what we were able to do and what had been done before was marginally interesting, but we weren’t trying to publish it.

When you patent something, you don’t have to show that it’s a natural extension of what people did. You just have to describe something that is novel, that is unobvious. In fact, the less connected, the more unobvious, and/or the less connectible.

Note this sentence: “What many academic scientists do is to spend the next 5, 10 years putting the connections in place to make what’s being proposed a natural extension of what existed before.” It reminds me of the old joke about the academic who, observing that a TV works in practice, wants to understand whether it works in theory.

On Immigration and the American Dream

This next is my absolute favorite of the interview.

I also would say that as a country, there’s so many people who have the experience of coming here, that that experience can also be transmitted to people who are born here, for whom the same mindset of being willing to imagine a better . . . If you look, every single person who comes to this country imagines a better future for themselves. That’s my belief. Maybe not every single person — 99 percent.

Imagine if all of us were also born imagining a better future for ourselves. Well, we should be, but we’ve got to work to get that. An immigrant who comes here understands that they’ve got to work to get that. They have to adapt. The problem is, if you’re born here, you may not actually think that you’ve got to work to get that. You might think you’re born into it.

This will be a funny thing to say, and I apologize to anybody that I offend. If we were all Americans by choice, we’d have a better America because Americans by choice, of which I’m one, actually have a stronger commitment to whatever it takes to make America be the place I chose to be, versus not thinking about that as a core responsibility.

That brings up two memories, one old, one relatively recent.

The old memory is that when I came to this country in 1972, at age 21, I had the American dream in mind and I noticed right away that a large swath of the people I ran into in Los Angeles, whether at UCLA or in the city generally, who had grown up in the United States, didn’t.

The more-recent memory is of an interaction I had with a man who was considering running for the Republican nomination for president in 2016. I think the conversation happened in 2015, and it was at a Hoover Institution roundtable I had been invited to. I can’t name the person without violating the confidentiality rules.

He made a statement about immigrants that surprised me. He said (and I think I’m getting his words almost word for word), “So many immigrants come here and act right away as if they just arrived at home base after hitting a home run.”

When it was my turn to talk, I said, “Person X, I’m an immigrant and I thought when I got my green card I’d arrived at home base or at least at third base. I was given a list of crimes that, if I committed them, would get me booted out of the country and none of these crimes were ones I planned to commit.”

Then I made the mistake of asking about his record in a previous office he had held. He answered about his record but didn’t address my point about immigration. This man had the attitude that Afeyan attributes to many Americans: Simply by being born here, he seems to think that he’s made the rounds to home base.

I really don’t know what some politicians and some Americans expect out of us immigrants.

 

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Criminal Incentives: A Horrible Illustration

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.

 

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