Grasping Reality on TypePad, by Brad DeLong

I Am Aware of Coronavirus in Early February

The first time I can find myself speaking publicly about the coronavirus outbreak came on February 3, 2020, in the introductory lead-in to my twentieth century economic history lecture. I then said, roughly:

The next six to nine months are likely to be quite unpleasant for the world

Globally, the public health authorities are still hoping to keep deaths at much, much less than 30 million dead worldwide. This will be accomplished largely by slowing down international travel, and interregional travel in China, for a great deal of time. The National Institutes of Health and other research organizations need to figure out what this sucker is and how to train all of our immune systems up to deal with it. Border control authorities will have to pull people with symptoms aside and quarantine them until they conclude that they do not have it.

This is a new age.

In some ways, however, this new age is like a very old age.

Worthy Reads at Equitable Growth:

1. Go back and read Alyssa Fisher on the problem generated by underfunding the IRS: Alyssa Fisher: Greater IRS Funding Can Help Ensure the Wealthy Pay the Taxes They Owe: "The majority of underreported income and underpaid taxes... occurs among the top decile.... What the IRS is doing about underpayment... is less and less.... Since 2010, congressional majorities... underfund[ed] the IRS... pressured the agency to devote greater attention and resources to some of the nation’s lowest-income working families—those who claim the Earned Income Tax Credit...

2. Two years ago we published Owen Zidar's excellent piece on how the only tax cuts that boost aggregate demand are rate cuts for lower-income Americans: Owen Zidar: Tax cuts for Whom? Heterogeneous Effects of Income Tax Changes on Growth and Employment: "How tax changes for different income groups affect aggregate economic activity... a measure of who received (or paid for) tax changes in the postwar period using tax return data from NBER’s TAXSIM... by income group and state. Variation in the income distribution across U.S. states and federal tax changes generate variation in regional tax shocks that I exploit to test for heterogeneous effects. I find that the positive relationship between tax cuts and employment growth is largely driven by tax cuts for lower-income groups, and that the effect of tax cuts for the top 10% on employment growth is small...

3. A shout-out to Equitable Growth network member Eileen Applebaum, holding down the fort at CEPR. Read her stuff—especially her stuff here at Equitable Growth!: Eileen Appelbaum: "Co-Director at the Center for Economic and Policy Research and Visiting Professor in the Department of Management at the University of Leicester, UK. She has 20 years of experience carrying out empirical research on the effects of public policies and company practices on outcomes for companies and workers. She studies work processes and work-life practices of organizations and their implications for organizational effectiveness...

4. Ian Malcolm: "Fall List Preview #5: Heather Boushey's Unbound. One of Washington's most influential voices on economic policy shows how reducing inequality can stimulate growth. HB also explains a quiet revolution for the better in the dismal science...

5. Friend of Equitable Growth Josh Bevins correctly calls out as "remarkably stupid, even relative to my expectations baseline" a piece by Trump Federal Reserve nominee Herman Cain. The 1980s and 1990s simply did not see a "stable dollar" in any sense those words might ever possibly mean: https://delong.typepad.com/.a/6a00e551f0800388340240a4a39f6a200b-pi: Herman Cain: The Fed and the Professor Standard: "The 1980s and 1990s brought prosperity across the board. This success was driven by a voting bloc of Fed governors, such as Wayne Angell and Manley Johnson, who favored a stable dollar and were able to swing the consensus. The dollar is a unit of measure—like the foot or the ounce—and keeping units of measure stable is critical to the functioning of a complex economy. The result of their stable-dollar policy was prosperity...

A good liar needs to have a good memory. Richard Epstein has a bad memory. Richard Epstein is a bad liar https://mobile.twitter.com/JohnPMacke/status/1251716101819584513.

On Mar 16 he forecast https://www.hoover.org/research/coronavirus-pandemic that the U.S. would see about 500 deaths from coronavirus.

He then on Mar 23 wrote https://www.hoover.org/research/coronavirus-overreaction that that 500 estimate was low, and that he now had a revised forecast of 2,500.

Today the March 16 article—still datestamped March 16—has been silently changed. Why? To make it appear that on Mar 16 he forecast not 500, and not 2500, but 5000 U.S. deaths.

Today the Mar 16 article contains a "Correction & Addendum as of March 24"—the datestamp Mar 24 of which is false—that states that he had intended on Mar 16 to forecast 50,000 U.S. deaths: "my original erroneous estimate of 5,000 dead in the US is a number ten times smaller than I intended to state..."

The Mar 24 datestamp is false because the "Correction & Addendum as of March 24" has itself been silently revised: the "Correction & Addendum as of March 24" originally read: "That estimate is ten times greater than the 500 number I erroneously put in the initial draft of the essay...

Could this be funnier?

Confused? Epstein is now claiming that he originally intended on Mar 16 to forecast 50,000 U.S. dead but "erroneously" put 5,000 in his "initial draft".

• In actual fact, his original Mar 16 forecast was 500.

• In actual fact, on Mar 23 Epstein stated that his initial calculations had been in error, and that a better forecast was "2000-2500".

• In actual fact, on Mar 24, Epstein added his "Correction & Addendum" raising his better forecast to 5,000, and acknowledging that that 5,000 forecast was a tenfold increase over his initial 500 forecast.

• In actual fact, sometime between Mar 24 and today, Apr 21, Epstein silently revised his Mar 16 article—keeping the Mar 16 datestamp—so that it falsely appears that its forecast was not 500 but 5000.

• In actual fact, sometime between Mar 24 and today, Apr 21, Epstein silently revised his Mar 24 "Correction & Addendum" to his Mar 16 article so that it now falsely claims that his original estimate was not 500 but 5000.

• In actual fact, sometime between Mar 24 and today, Apr 21, Epstein silently revised his Mar 24 "Correction & Addendum" to his Mar 16 article to add the—previously never made, and so I conclude entirely false—claim that he on Mar 16 had "intended" to forecast 50,000 U.S. deaths from coronavirus.

I am with Paul Campos here: This is intellectual fraud, pure and simple.

Note to Self: "European Macro History Online Seminar: session 1" will begin in 1 hour on: Date Time: Apr 21, 2020 04:00 PM Paris: Francois Velde on economic effects of Spanish Flu:

Employment in the Spanish Flu

The Early Amazon Effect: Mail-Order Retail in the Spanish Flu

Note to Self: If the mortality rate on true cases is 1% and if it takes two weeks from testing to death then, as the U.S. tested and confirmed cases in March, the U.S. 4/5 of the way through March was catching only one in fifteen cases:

https://delong.typepad.com/files/coronavirus-extrapolations.pdf

That would suggest that currently something like 10 million people in America have or had the disease, and that some 500,000 a day are getting it.

If the share of deaths among those whom the virus brushes past close enough that they develop at least temporary immunity—which is the number we really wish we knew—is not 1% but 0.3%, than those csae numbers are 30 million, and 1.5 million a day...

Other countries have managed to get R[0] well below 1—have begun substantially shrinking the daily number of new cases.

The United States has not:

Our current level of social distancing and lockdown appears to be producing about 30,000 new confirmed cases a day. We are no longer—and have not for two weeks been—ramping up and utilitizing our testing capabilities. On our current trajectory we look to be incurring about 2000 reported coronavirus deaths a day.

Our medical system is handling the current run of cases. But it would be nice to get the number of cases down and the number of tests up so that we could begin implementing test-and-trace. But that requires a lot more tests—which are not there. And that required more effective social distancing to get R[0] substantially below one—which is not there, certainly not at a nationwide level.

Comment of the Day: Phil Koop https://www.bradford-delong.com/2020/04/what-is-the-real-prevalence-of-coronavirus-across-states.html#comment-6a00e551f080038834025d9b4755b8200c: ' Adjusting for lag presumably requires both a model and longitudinal data to input to the model. So the starting point is with cross-sectional random samples. If we guess the true rate of infections is about 3%, then we need a test with very good specificity. An RNA test, even if had 100% specificity, could only tell us about current infections, not cumulative infections. A serologic test can tell us about cumulative infections as of 2-3 weeks ago, provided it has good enough specificity. There is a list of serologic tests here: https://www.centerforhealthsecurity.org/resources/COVID-19/serology/Serology-based-tests-for-COVID-19.html. Some of these are claimed to have 100% specificity, but of those, none are yet approved for use in the US. Of the tests approved for use in the US, the only one with a listed specificity is 95.6% (a suspiciously precise number, given it was tested in "a total of 128 COVID19 positive patients, and 250 COVID19 negative patients (as detected by RT-qPCR).") 95.6%, even if correct, would not be nearly good enough. I think that whatever is right is going to have to start with a good-enough test....

Comment of the Day: Ronald Brakels https://www.bradford-delong.com/2020/03/coronavirus-daily-read-list.html: 'It's 11:00 pm in Washington DC on the 10th of April. Australia's COVID-19 death toll is 54. The United State's is 18,747. The US has 13 times Australia's population, so the per capita death toll in the US is 27 times higher. Both countries had similar time to prepare. At current rates, the US death toll will end up hundreds of times higher on a per capita basis...

Comment of the Day: Moving into life in an Isaac Asimov novel of the 1950s: Dilbert Dogbert https://www.bradford-delong.com/2020/04/comment-of-the-day-_meno-new-zealand-has-a-plan_-new-zealand-has-an-articulate-plan-for-the-next-year-and-we-see-th.html?cid=6a00e551f0800388340240a52150de200b#comment-6a00e551f0800388340240a52150de200b: 'Nice that NZ has a plan. I have a plan. For the rest of my life I will be in isolation, partial. Wear a mask and gloves when going anywhere there are people not family. I am not sure I will change behavior even if a vaccine and/or a drug becomes available. We, the wife and I, are lucky as we have lived in partial isolation for 11 years after moving from Palo Alto to the outer fringes of the Gamma Quadrant. Our risks will be medical appointments, grocery shopping and obtaining needed hardware supplies. Most of our other shopping is via the internet. I am a semi-isolate naturally even though I like people. The wife does her group clubs over the internet. I have a shop and she has a garden. Lucky to have the resources to keep horses that allow us to get out and about in isolation. Damn Lucky!...

Tests per million times cases per test gives you confirmed cases per million. But we want true cases per million.

Tests per million are different across states because (a) the states are undertaking testing with different levels of effort and (b) the prevalence of the virus is different in different states.

Confirmed cases per million are different across states because (c) states are testing at different rates and (b) the prevalence of the virus is different in different states.

Cases per test are different across states because (d) some states are not testing much and hence are still picking (relatively, for their state) low hanging fruit and (b) the prevalence of the virus is different in different states.

We have data on confirmed cases and tests across states. How do we use that to get real as opposed to fake estimates of where the virus is in the different states?

And then there is the lag: how do we do the nowcast, taking proper account of acceleration and deceleration in the progress of the disease?

Georgia, for example, is fifth in cases per test, at 0.24. Georgia is also fortysixth in tests per million, at 6598. And so Georgia is thirteenth in cases per million, at 1590.

If Georgia were testing at the same rate as New York—30000 per million—how many cases would it be reporting, and what would its confirmed caseload be? Its cases per test is presumably elevated because it is not testing very many people, so simply multiplying by 4.5 is not right. What is right?

Comment of the Day: Meno: New Zealand has a plan https://www.bradford-delong.com/2020/04/we-could-be-new-zealand-we-should-be-new-zealand.html#comment-6a00e551f0800388340240a51ff0b5200b: 'New Zealand has an articulate plan for the next year. And we see this as a marathon, not a sprint. We started a month ago with 4 defined levels of social distancing response. We are now up at level 4 (everyone stays home). As the virus is eradicated we will step down to 3, 2, 1. Or back up if needed. Regions could end up on different levels, but probably not as roadblocks and checkpoints are difficult. Our testing rates will not go down as social distancing ends. The aim is zero cases a day, with border quarantine and strong testing levels finding zero cases, with contact tracing set up as a backstop. “Have your staff work from home if practical” comes in early at level 2: my partners and I own a NZ IT firm so we expect our staff will wrk from home for another 2 or 3 months, while schools and etc will open earlier and so will construction work, factories, shops. The govt will not guarantee timing, there are many unknowns, and our tourism industry is totally screwed: but the govt are doing their best to help businesses plan for the upcoming year. You could still do that. Stop just reacting, start planning...

Note to Self: We could be New Zealand. We should be New Zealand: New Zealand has tested 1 in a 100 people, has a 2% positive rate, and has suffered only 0.8 deaths per million so far...

Plutarch: Life of Cleomenes http://penelope.uchicago.edu/Thayer/E/Roman/Texts/Plutarch/Lives/Cleomenes*.html: 'As long, then, he said, as the ephors kept within bounds, it had been better to bear with them; but when with their assumed power they subverted the ancient form of government to such an extent as to drive away some kings, put others to death without a trial, and threaten such as desired to behold again in Sparta her fairest and most divinely appointed constitution, it was not to be endured...

Worthy Reads from Equitable Growth:

1. Best thing of the week—a must-see: an incredibly engaging interview with Columbia's Alexander Hertel-Fernandez: Worker and Management Preferences for Specific Aspects of Labor Organization...

2. The Quarterly Journal of Economics puts its stamp of approval on Cengiz, Dube, Linder, and Zipperer. This makes me even more surprised that the minimum-wage effects wars are till going on. At least for minimum wages near current U.S. levels, there literally is no downside to raising the minimum wage: Arindrajit Dube: On Twitter: "Pleased to announce that our paper quantifying the overall effect of US minimum wages on low-wage jobs is now forthcoming at the Quarterly Journal of Economics...

3. I confess I do not understand why Jeff Miron and Dean Baker disagree with our Fearless Leader Heather Boushey's tame observation that more informaiton relevant to societal well-being is better than less: Emily Stewart: GDP: Democrats Want to Know Who’s Benefiting from the Economy’s Growth: "Democrats are pushing for is for the BEA to produce a new metric, the 'income growth indicator', to be reported quarterly and annually with GDP numbers starting in 2020 that would show who is and isn’t benefiting from economic growth...

4. Methinks this oldie-but-very-goodie from Jesse Rothstein does go a little bit too far in its enthusiasm for the fact that the EITC is in the tax code. In fact, there are pluses and minuses. And the EITC is in the tax code not because of rational reasons but because Senator Russell Long chaired the Senate Finance committee back in the day: Jesse Rothstein (2015): The Earned Income Tax Credit: "The Earned Income Tax Credit is a federal refundable tax credit designed to encourage work, offset federal payroll and income taxes, and raise living standards.... The EITC has grown to be one of the largest and least controversial elements of the U.S. welfare state, with 26.7 million recipients sharing $63 billion in total federal EITC expenditures in 2013. The placement of the EITC within the tax code has three important effects...

5. Equitable Growth alumnus Nick Bunker sends us to the always-valuable Brookings Hamilton Project on how the post-2000 prime-age female labor-force participation define was not due to anything other than a weak economy in which it was hard to get well-paying jobs: Trends in Women’s Labor Force Participation: "much like 2000 is now recognized as a pivotal year for the U.S. labor market, 2015 is beginning to look like another turning point. In part due to the ongoing strengthening of the labor market, both prime-age women’s labor force participation and prime-age men’s participation have increased sharply from 2015 through the beginning of 2019. Figure 1 shows that prime-age women now participate at higher levels than prior to the Great Recession and have now made up 70 percent of their January 2000–September 2015 decline...

4149 words: https://github.com/braddelong/public-files/blob/master/lecture-east-asia-text.pdf

East Asia was on the downside of the Malthusian cycle when western Europe erupted into the eastern Pacific in the 1800s: populous, with many ingenious and efficient non-machine technologies for squeezing output out of very limited resources, but desperately poor. “The West” brought machine technologies and the global market. It also brought a measure of contempt for east Asia. Nearly all western observers thought the idea that the Mysterious East might catch up to the north Atlantic in any reasonable historical timeframe was absolutely ludicrous.

Malthusian poverty meant no domestic middle-class to demand domestic manufactures, and productivity levels in Asia were hopeless as far as manufactured exports were concerned. The military and political power gradient vis-à-vis the north Atlantic meant no ability to impose tariffs, even had a domestic middle class on whose demand one might be able to build a community of engineering practice and progress existed. The lack of a powerful domestic bourgeoisie meant rule by princes for whom broad-based economic growth was simply not a priority. And in general a “Confucian” religious orientation meant that right moral attitude was more important than the rationalization of techniques and methods.

As Melissa Dale says: If we were sitting here in the 1950s, we would not have predicted anything like east Asia’s miracles.

Yet we have had four: first the early industrialization of Japan, then the extraordinary drive of Japan to global north status from 1950 to 1975, then the four east Asian tigers, and now coastal China.

All that surprises...

https://delong.typepad.com/files/coronavirus-extrapolations.pdf

Ludwig Wittgenstein: Wittgenstein's Ladder https://en.wikipedia.org/wiki/Wittgenstein%27s_ladder: 'My propositions serve as elucidations in the following way: anyone who understands me eventually recognizes them as nonsensical, when he has used them—as steps—to climb beyond them. (He must, so to speak, throw away the ladder after he has climbed up it.) He must transcend these propositions, and then he will see the world aright...

https://www.icloud.com/keynote/0YKEi7HeOrVGvKYtt9FEqH7nA

Left-wing avowedly socialist—parties in pre-World War I Europe wanted, for the present, only weak tea. The Socialist Party of Germany’s Erfurt and Gotha programs seek things like: universal male and female suffrage; the secret ballot, proportional representation and an end to gerrymandering; annual government budgets; elected local administrators and judges; the right to bear arms; free public schools and colleges; free legal assistance; abolition of the death penalty; free medical care including midwifery; public burial insurance; progressive income and property taxes; a progressive inheritance tax; a 36-hour minimum weekend; an occupational safety and health administration; equal status for domestic and agricultural workers; and a national takeover of unemployment and disability insurance “with decisive participation by the workers in its administration”. Rather white bread, no? Even their declared intention that:

the German Social Democratic Party… fights… every manner of exploitation and oppression, whether directed against a class, party, sex, or race...

would raise few eyebrows today, in western Europe at least.

But there was also:

• “By every lawful means to bring about a free state and a socialistic society, to effect the destruction of the iron law of wages by doing away with the system of wage labor…”
• “The transformation of the capitalist private ownership of the means of production—land and soil, pits and mines, raw materials, tools, machines, means of transportation—into social property and the transformation of the production of goods into socialist production carried on by and for society…”
• “This… emancipation… [is] of the entire human race…. But it can only be the work of the working class, because all other classes… have as their common goal the preservation of the foundations of contemporary society…”

There was a tension here.

Let us talk about the rise of socialism, as background to the rise of really existing socialism—the system that lived behind what Winston Churchill called the Iron Curtain from 1917-1991, that shook the world, and that in the end turned out to be far, far, far from the brightest light on the tree of humanity’s good ideas.

Let us very briefly race through history—moral, intellectual, political, and social—from the year -350 to the year 1917, when Lenin and his Bolshevik Communist Party staged their coup in Russia.

There was a profound shift from the belief in “divine right” and “natural order” as the fundamental grounding for an unequal society to enlightenment values—that human institutions should be rationally designed on the basis of a rational understanding of human psychology in order to attain the greatest good of the greatest number, and thus that inequality is not given by the gods or by the requirements of nature, but rather is a thing to be allowed to the extent that it incentivizes cooperation and industry and thus enriches us all.

Back in the century of the -300s, Aristotle had taken it for granted that a good society was only possible if the society allowed for philosophy. And philosophy was only possible if you had a leisured upper class. And a leisured upper class was possible only with large scale-unfree labor—serfdom, or its harsher cousin slavery. Thus it was and thus it would always, be unless and until humans obtained the fantasy technologies of the mythical Golden Age...

https://www.icloud.com/keynote/0l4Z5qINR94b5ZcNGuXSt_fvg

https://github.com/braddelong/public-files/blob/master/lecture-rise-of-socialism--350-1917-text.pdf