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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Open Borders and the Environment

My Open Borders neglects two major worries about immigration.

The first is contagious disease; I did not see that one coming, though I try to remedy my oversight here.

The second omission is less excusable.  Somehow I neglected to address immigration’s environmental effects.  Here’s what I should have said – and what I will say if there’s ever a second edition.

1. The obvious environmental objection to immigration is that it raises population and therefore leads to more pollution and other negative environmental effects.

2. The naive reply is that immigration merely redistributes environmental harm from one country to another rather than actually increasing environmental harm overall.

3. The wise reply to this naive reply is that precisely because immigration drastically increases wealth creation, it also ipso facto increases the negative environmental byproducts of wealth creation.  Immigration’s “trillion-dollar bills on the sidewalk” sits inside a gargantuan wallet of harm to Mother Earth.

4. Note: If you buy this argument, you should be similarly afraid of economic development in the Third World.  So rather than opposing immigration, you should oppose economic progress in general.

5. In any case, there is a big complication: the Environmental Kuznets Curve.  Quick summary of the empirics: Moving from low to middle income increases environmental harm, but moving from middle to high income reduces environmental harm.  So environmentally speaking, the best thing for the environment is to move from low to high income as quickly as possible.  And liberalizing immigration does precisely that!  Indeed, immigration lets people leapfrog straight from low to high income without even passing through middle income along the way.

6. Caveat: Standard measures probably overstate environmental quality in low-income countries by ignoring noxious low-tech pollutants like animal and human waste.  So leapfrogging straight to high income is even better than it looks.

7. The Environmental Kuznets Curve works through multiple channels: consumer demand (richer people want greener stuff), norms (richer people care more about the planet), and regulation (richer countries can better afford the economic burden) being the most obvious.  But we can safely liberalize immigration without pinning down the precise mechanism.

P.S. Any related topics you think I should address?

 

 

 

 

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Connect the dots

In recent months, a number of important firms have announced they are relocating from California to Texas. An article by Peter Yared discussing this trend had a graphic that caught my eye:

The movement of these industries is toward three states that have one thing in common—no state income tax. And these are the only three states with no income tax in the southeastern quadrant of the US—say Texas to Florida and south of the Ohio River.

Progressives often discount the supply side effects of tax changes, pointing to examples such as Kansas where tax cuts had little effect.  But Kansas lacks the sort of big cities that would typical draw these firms and its tax cuts were relatively modest.  If you are looking for a low tax state on the Great Plains, South Dakota has no state income tax at all.  The top rate in Kansas (5.7%) is higher than in Massachusetts (5.0%).  That won’t get the job done.

Miami clearly benefits from a mild climate, but Tennessee and Texas have climates that are only average for a southern state.

I’m certainly not a rabid supply sider who thinks that tax rates are all important.  But a person would have to be pretty blind to ignore the migration of firms from places like New York, New Jersey and California, to lower tax places.

Interestingly, Washington State has no income tax, which is unique for a northern state with a big city.  Washington is also home to the two of the three richest people on the planet (the other–Elon Musk–just announced he’s moving from California to Texas.)  Beyond these anecdotes, Washington is also experiencing rapid population growth, which is unique for a northern state with a big city.  Indeed it’s growing even faster than Oregon, which has a slightly nicer climate.

There’s no doubt that climate has been reshaping America in the decades since air conditioning was invented, with people moving to warmer locations.  But for the first time ever (AFAIK), California saw its population fall last year, and it has a delightful climate (even with the recent forest fires.)  High tax Hawaii also lost population.

So while people are gradually moving to warmer locations, state tax policies explain why certain states attract a disproportionate share of the migrants.  Indeed, last year more that half of the US population growth occurred in just two states—Texas and Florida.  I believe that’s the first time that has ever happened.  Add in Tennessee and Washington and you are at nearly two thirds of the nation’s population growth.  Recent limits on the deductibility of state and local taxes has exacerbated this trend.

PS.  Technically, Tennessee has no wage tax.  However, they do tax interest and dividends at 1%.  But even that small tax is being phased out at the end of this year.

PPS.  Yes, housing policies are another big factor in migration—especially for the middle class.

Happy Holidays everyone!

 

 

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Partisanship and Support for Immigration

Here’s a neat new piece in Social Science Quarterly by Richard Hanania.  The set-up:

I conducted a preregistered study with a representative sample of white Americans. The survey asked them how open they would be to accepting certain refugees into the United States. The characteristics of the refugees were changed along the following three dimensions:

  • Race: Refugees were either from the white country of Ukraine, or the predominately non-white country of Venezuela. Although one might suspect that this treatment would invoke stereotypes about Venezuela and Ukraine instead on non-white and white people as such, American ignorance about most of the rest of the world makes this unlikely. Luckily, the study was carried out before Ukraine jolted to the top of the headlines due to Trump’s impeachment.
  • Voting behavior: Respondents were told that the new migrants would settle in Florida, a swing state, and either vote Democrat, like most immigrant groups, or vote Republican, due to previous experience with socialism. Both these stories seem plausible enough.
  • Skill level: Refugees were said to be either high- or low-skilled, that is able to pull their own weight economically or likely to rely on government assistance.

Hanania’s punchline:

Race had no statistically significant effect on any group. Both conservatives and liberals, however, changed their views based on how they would vote. Only conservatives were affected by whether the refugees were said to be high-skilled and therefore presumably beneficial to the economy, or low-skilled and likely to rely on government assistance. Figure 1 below shows how partisanship, but not necessarily race, matters. The gap between the groups “very liberal” and “very conservative” in support for immigration is cut by around two-thirds when refugees are said to support Republicans instead of Democrats!

More striking to me, though, is this graph.

Notice: Not only do very liberal respondents like white migrants more than the very conservative do; very liberal respondents like Republican migrants more than very conservative ones do!  To my mind this is strong evidence that Republicans’ core prejudice is not racism but xenophobia.  They’re even relatively hostile to immigrants on their own side of the aisle.

No wonder Asians are so Democratic.  Given their traditional values and high income, you’d expect them to be Republicans.  But Asians correctly sense that Democrats respect them more.

Years ago, I proposed a simple voting model that I call the Respect Motive.  Long story short: “People vote for whoever respects them more.”  As long as liberals care more about Republican migrants than conservatives, expect migrant Republicans to be few and far between.

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Yglesias’s Reasonably Strong Case for Way More Integration

As a long-time advocate of expanded immigration, I am delighted to have left/liberal Matthew Yglesias as an ally. Yglesias, who helped found online magazine Vox, is one of the rising stars in journalism and, especially, economic journalism. His latest book, One Billion Americans, advocates what the title says: we should change institutions so that we have 1 billion Americans. This book is particularly needed now. Yglesias’s major argument for more population, though, is not mine: he wants the United States to continue to be the world’s dominant power and worries that if we do not greatly expand our population, China will dominate.

In making this case, he advocates changing several government policies beyond immigration. In fact, he writes much more about those policy changes than he does about changing immigration policy. So, for example, we learn more about his proposals for government-funded childcare, housing, and transportation policy than we do about how many new people and what kinds of people he wants to let into the country each year. He does say he does not want open borders, but he does not say what immigration reform he wants instead.

On the non-immigration issues, he vacillates between intolerance of other people’s choices and great tolerance: he is intolerant of voluntary contracts between employers and employees that do not include paid parental leave, but he is highly tolerant of people’s decisions about what kinds of dwellings to live in. Where he is tolerant, he makes a good case. Where he is not, the book fails. Still, the big picture he paints is good: he shows that we can relatively easily triple the U.S. population without making our country too crowded or overly stressing most of our institutions.

These are the opening three paragraphs of David R. Henderson, “A Reasonably Strong Case for Way More Immigration,” my review of Matt Yglesias, One Billion Americans: The Case for Thinking Bigger, 2020.

Another excerpt:

Yglesias points out that in 2018, the U.S. fertility rate fell to an all-time low of 1.72 births over the lifetime of the average woman. He argues, probably correctly, that an important factor causing women to have fewer children is the increasing cost of raising them. Whether the primary caretaker is a woman or a man, the persistent growth in real wages is raising the opportunity cost of rearing children. The law of demand rears its ugly head: when the price of something rises, then, all else equal, people buy less of it.

In a book that advocates massive increases in immigration, a natural next step to take would be to argue for reducing the cost of child rearing by allowing millions of immigrants, probably disproportionately women, into the United States from the poorest countries in Latin America, such as Guatemala and El Salvador, the poorest countries in Africa, such as Zimbabwe and the Congo, and the poorest countries in Asia, such as India. It would not be hard to get 50 million immigrants from those places in a period of, say, five years. They would benefit and many current U.S. families would benefit from a dramatic fall in the cost of childcare.

But that is not where Yglesias goes. Instead, he advocates massive new government programs to subsidize the provision of childcare. He writes that “the United States has been shamefully slow compared with some peer countries to provide subsidized child care.” But the closest he comes to explaining why U.S. policy is shameful is to argue that because other countries are doing it, we should too.

Read the whole thing.

 

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Donehower on the Net Fiscal Effect of Low-Skilled Immigrants

When I emailed the editors of the National Academy of Sciences report on The Economic and Fiscal Impact of Immigration about Jason Richwine’s criticism, they responded swiftly and scrupulously.  Series editor Francine Blau put me in touch with Gretchen Donehower, one of the authors of the section.  Donehower sent me the following response.  Reprinted with her kind permission.


Hi Bryan,

Thanks for reaching out.

Richwine is correct in that piece that he writes, and we actually exchanged a bunch of emails to verify back in February of this year.  The $35k cell (upper left-hand corner of Table 8-12) is the net fiscal impact of someone who comes to the US aged 0-24 whose parents’ average education falls in the <HS category.  The average age in that cell comes from the average age of actual persons age 0-24 who have entered the US in the last 5 years (with 2012 being the base year for the calculations done then).  All of the other age groups are categorized by the person’s own education. The reason that the 0-24 age group must be treated differently from the other age groups is that the vast majority in that cell have not yet completed their own education.  In other words, it wouldn’t make sense to treat a child in 6th grade as a high school drop out, because she hasn’t had the chance to finish high school yet.  What to do then?  We decided to use the taxes and benefits that accrue to kids by parental education group while they are ages 0-24 but starting at age 25, we predict their future taxes and benefits based on a predicted educational distribution.  The prediction is based on educational transmission functions from parent to child in the past (see annex 8.4 for details, it’s on page 488 in my copy).  These result in future trajectories of taxes and benefits based on weighted averages of education groups, meant to represent a predicted path for that child.

So, Richwine is right.  He is also right that in Table 8-13, the estimated impact of a person exactly age 25 at entry with <HS education has a fiscal impact of -186K and this probably implies that it is negative for age 24 also.  However, he is most certainly not right that it is negative for age 5 on average.  Those educational transmission functions come from data.  I did not make them up.  It is more likely that a child of <HS immigrant parents will at least complete HS than that she will not.  That’s not an interpretation, that’s just what the data showed.  If it hadn’t showed that, the $35k number would have been much lower.  So, somewhere between age 0 and age 25 there is an age when the net fiscal impact is probably close to zero.  I don’t have that sitting around, but it would be an interesting thing to dig out if the calculations are ever done again.

I hope that helps.  The whole idea – predicting a person’s future – is pretty complex and if it wasn’t obvious enough in the write up how I did it I do apologize.  If you’d like to talk further, we can keep emailing or set up a phone or zoom sometime.

Thanks,

Gretchen

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Richwine on the Net Fiscal Effect of Low-Skilled Immigrants

In Open Borders, I heavily rely on the National Academy of Sciences report on The Economic and Fiscal Impact of Immigration to estimate the net fiscal effect of immigration.  Recently one of my graduate students pointed out this post by Jason Richwine criticizing my interpretation of the results.

Among dropouts, immigrants in the 25-64 and 65+ age categories are clearly fiscal burdens, as they cost taxpayers $225,000 and $257,000, respectively. Caplan, however, is tantalized by the age 0-24 column, which shows positive $35,000. “Even young high school dropouts more than pull their weight,” he concludes.

That conclusion is based on a misunderstanding of the table. Among immigrants in the age 25-64 and 65-plus columns, the education rows refer to the education of the immigrants themselves. However, in the age 0-24 column, education refers to the education of the immigrants’ parents. As p. 464 of the National Academies’ report explains, “If the immigrant arrives before age 25, we instead predict a future education level … based on parental education.” The reason the fiscal impact appears positive is that the model assumes that the children of high school dropouts will get more education than their parents did. In other words, most of Caplan’s “young high school dropouts” are not dropouts at all.

Richwine concludes in a gentlemanly manner:

This is an understandable mistake, as the National Academies authors should have been clearer that the age 0-24 column has a different interpretation than the other two age columns. Nevertheless, Caplan’s misinterpretation has led him far astray.

Did I indeed misread the report?  Yes.  Volume editor Francine Blau connected me with Gretchen Donehower, one of the authors of the section, and she confirmed my mistake.

Here’s the relevant NAS passage:

Because an individual’s tax payments and benefit receipts differ so much by the individual’s educational attainment, to predict future flows for an immigrant one must first predict the educational level that individual and his descendants will attain. An immigrant who arrives after age 25 is likely to maintain the education level observed on arrival, so we assume no change in educational attainment after age 25. If the immigrant arrives before age 25, we instead predict a future education level by estimating regression functions that predict offspring education based on parental education.

In hindsight, I was always a little puzzled by the NAS tables.  What does it mean, after all, to report the net fiscal impact of a 10-year-old college graduate?  I was also somewhat puzzled by how young immigrants could have such a favorable fiscal effect when taxpayers are immediately paying massive sums to educate so many of them.  But I deferred to the NAS numbers instead of double-checking the text.  I did read the whole chapter, but this qualification failed to register.  Mea culpa.

In light of Richwine’s correction, here is my revised position on the NAS report.

1. Young immigrants (ages 0-24) whose parents are high school dropouts have a positive net fiscal effect.

2. But the dropout parents themselves generally have a negative effect, even if they arrive as young adults.

3. Even 25-year-old immigrant high school dropouts have a negative net fiscal effect (-$186,000), though 25-year-old immigrant high school graduates have a positive net fiscal effect (+$72,000).

 

I continue to stand by several closely related controversial claims, most notably:

1. Immigrants have a much more favorable fiscal effects than matching natives.  The table showing that 25-year-old immigrant dropouts have a net fiscal effect of -$186,000 also shows that 25-year-old native dropouts have a net fiscal effect of -$388,000!

2. If you consider this an inadequate basis for restricting the reproduction of natives, it is hard to see why it is an adequate basis for restricting the migration of foreigners.

 

Last point: If there is a second-edition of Open Borders, I’ll definitely fix the mistake and thank Richwine for pointing out my error.

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Wretched Refuse? vs. Ominous Speculation

An army of immigration skeptics warn that mass immigration paves the road to socialism and tyranny.  When they express these fears, they almost always find a receptive audience.  Even thinkers inclined to favor immigration often get cold feet when they visualize the new arrivals’ broader political effects.

Yet if you search for actual research on what economists call “the political externalities of immigration,” you won’t find much.  George Borjas himself writes: “Unfortunately, remarkably little is known about the political and cultural impact of immigration on the receiving countries, and about how institutions in these receiving countries would adjust to the influx.”  Indeed, to the best of my knowledge there isn’t a single book published on this general topic.

Until now.  Early next year, Cambridge University Press releases Alex Nowrasteh and Ben Powell’s Wretched Refuse? The Political Economy of Immigration and Institutions.  Immigration skeptics will no doubt protest that both authors are well-known for their pro-immigration stances.

Yet the fair question to ask skeptics is: Shouldn’t you have published your book on this topic years ago?    They, after all, are the ones predicting doom.  The fact that Nowrasteh and Powell are beating them to the punch is deeply revealing at the meta level: Even the more scholarly critics of immigration rely heavily on ominous speculation.  In social science, pessimists normally present concrete evidence of social ills, and critics try to rebut them.  For immigration, the critics often have to create the pessimists’ case for them, then rebut it – because the pessimists don’t go beyond vague Cassandra cries.

I’ll discuss Wretched Refuse? in depth when it releases.  For now, I’ll just say that I’ve read the book, and it’s excellent.  Pre-order now!

 

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Murray Rothbard on Humane Immigration Policy

 

I lift my lamp beside the golden door.

 

It all boils down to this: In all the talk about freedom to leave or to enter, are we really interested in freedom, justice, and humanity, or are we only interested in scoring Brownie points in the Cold War game? If the former, we should not merely be content to condemn Russia or Cuba for not letting their people go; we should hail any occasion when some of their people do go, and we should welcome all of them to our shores with good fellowship and open arms. If we truly wish to be the land of the free, we must return to the traditional American policy before World War I of welcoming immigrants, of lifting our lamp by the golden door. America was built by immigrants, and we lost a good deal of our soul when the lamp nearly went out after World War I and immigration was sharply restricted by a combination of racism and labor union restrictionism. Let us return to our own noble heritage and be the beacon-light of freedom once more.

This is from Murray Rothbard, “From Cuban to American Socialism,” Reason, December 1980. It was highlighted today on the Reason web site here.

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