Prompted by an exchange on Titter beginning with that nice JA: a pandemic is such a problem for the right, as it's an existential threat to their entire philosophy of individualism. There's a lot of language clutter in there which is probably irremovable (I don't regard myself as part of the "right" but I am very keen on "individualism" re-written as "lack of coercion" or as "as opposed to tribalism") but the exchange continues with my CC can be (largely, in theory) solved by carbon tax; but it is hard to see a pandemic equivalent.The carbon tax part first, prompted by the-Ken-formerly-known-as-ATTP's not understanding my carbon taxes are ensuring that the costs of emissions are factored into those emissions; a subtle but important difference [from the idea that they are a payment for the damages]. I say "my" but the idea is of course not mine, and was transmitted to me by Timmy (via PeteB in that case, but I'm pretty sure there's a better example I failed to find). Also, disclaimer, IANAE. This is all part of prices-are-information theory. For most things, the price of the thing reflects the cost of making it (and marketing it, and so on) and you-the-consumer get to decide if that price is low enough for you to want to buy it. And so we have economically sane activity: things are bought (and therefore, are made) if there is demand, at price. But there are externalities, the most obvious of which is CO2, whose cost is not in the product. And so we risk economically insane activity: things being made, whose (total, true) cost is less than their sale price. Which is to say, the process destroys rather than creates value.
This version of the theory doesn't require govts to use the carbon tax proceeds for any particular cause... building windmills, paying for storm prevention, insulating homes, whatever. The other version, KR's which I shall unkindly call the "naive theory", is that the carbon tax is paying, in advance, for a cost that will be incurred. This is - I now think - a mistake, but one I've made before1. If it is a mistake, it should have some consequences; ideally I'd be able to say "but then when you apply it to this, it all goes wrong". But I think it is only a theoretical mistake; sort-of like the way using a Hamiltonian helps you to get from classical to QM physics.
Pandemics
The Covid pandemic rolls on, depressingly. There's a new strain, of greater transmissibility but as yet not-known-greater-damage; Cambridge(shire) is in tier 4, thus scuppering my plans to visit the Lakes (I say these things for context so that when I come back in years future I'll know about where we are).
But just as, in theory, a carbon tax is a liberty-preserving solution to GW, is there an equivalent to lockdowns (which greatly resemble, because indeed they are, regulation). JA offers In theory we could pay for people to isolate as required. That itself wouldn’t solve the problem but it would surely help but I think that's problematic (I think he intends this as a liberty-preserving solution, not as a solution; but I don't think it is. The liberty it doesn't preserve, in case it isn't visible at first sight, is of the people you'll have to take the money from). If you want the "std" answer (with the caveat that there isn't a std answer4) then I think the best presentation I've seen is Life-Years Lost: The Quantity and The Quality by Bryan Caplan. This attempts to use cost-benefit analysis3 to show that reaction2 to Covid has cost more than the unchecked pandemic would have cost (and was therefore a bad idea).
I don't know whether I believe it or not; I incline towards belief. The analogy I'd use - and argument from analogy is always valid, recall - to answer the inevitable "but people would die; life degraded through lower quality doesn't matter in the same way; you can't sum up lives" is with the inevitable reactions to protectionism: the benefits (preserving our jobs) are visible and accrue to obvious people; the losses (higher costs for everyone; bureaucracy; more govt) are diffuse and hard to see.
interreg
interreg isn't a thing I'm familiar with. My picture is of a poster - found on the kiosk on Jesus Green near the lock - which says there is an initiative to increase tree cover in Cambridge. I can't say I've noticed any such, or even that there are obvious ways to do so. It might draw a hollow laugh from the folks on Milton road who have tied yellow ribbons around their trees to protest plans to cut them down. But don't let me be too negative; there may be some as-yet-unperceived value in the scheme. Indeed this bit is part of Nature Smart Cities across the 2 Seas programme and specifically the Cambridge bit is Cambridge Canopy Project: the average tree canopy cover figure is 16% in England. Cambridge currently has 17% tree canopy cover. We are working to increase this to 19%, which will need more than 800,000m2 of new tree cover.
Update: Schadenfreunde
Probably a mistake, but I can't resist. At the time of the initial outbreaks, much was made of the incompetence of the right-wing US and UK govts in contrast to the more successful socialist responses of various countries, most notably Germany. But that success - though you could note various factors that made it plausible - was always a bit mysterious, and has fallen apart recently. Though I've left it long enough that they're back below us now (although possibly the over-Christmas data isn't totally reliable, and the sharp falls from US, Germany and France might be spurious). And yes, if you count cumulative deaths then Germany has done significantly better.
Update: economics and morality
The Twitter conversation continues as, apparently, a sequence of misunderstandings on my part: see the conversation, perhaps ending at KR's All I really mean is that how we assess the costs cannot really be done in a truly value-free way. So, even if we do decide to estimate the price of carbon emissions and to then use that to set a carbon tax, this is not a value-free assessment. With which I have no disagreement. Some aspects of economic costs of GW are explicitly value judgements: how much do we value lost mountain glaciers? And some are value judgements, but wrapped in economics: if we lose winter skiing, how many jobs are lost? The latter is more measureable, but still value judgements, because the choices of the people that wanted to go skiing are inevitably part of the economics.
You might - if you have a decent memory - object that this contradicts my earlier That it is easier to agree on economics than morality and in some ways it does, or at least pushes against it. And so - given that there are people who would make the mistake of calling economics value-free - it isn't unreasonable for KR to make this point. I'll paraphrase what I said at Morality and economics: I don’t, of course, mean to suggest that it is entirely an economic and not at all an ethical problem. I mean to suggest (see aforementioned post) that thinking about it primarily as ethical [value-judgement] is unhelpful.
Update: FT's sausage pic
Updated, in response to CIP's comment, the FT's "sausage" pic, which to me shows that initially it was all EU and US; in the middle, EU dwindles to nothing and the US is a small proportion of the global total; and now Europe plus US is 60+% ot the total whilst everyone else is sort-of stable. Admittedly, these are reported, so perhaps it is possible that Europe and US are better at the reporting; but I can't see how that explains it all.
Refs
* Congratulations to James and Jules for being part of Science breakthrough of the year (runner-up).
* Donald Trump's influence will evaporate once he leaves office. Here's why; Julius Krein, in the Graun. This is close to what I think, but few others seem to be saying; our celeb-obsessed news world, sez I. Trump, out of power, will fade away; and doesn't have the staying power to regroup for 2024.
* Not even half-way there - JA
* New Year Wish: Political Wars of Religion? by Pierre Lemieux - the will of the People
* The Biden Administration Just Failed its First Science Integrity Test; Pricing carbon makes good sense but should not come at the expense of scientific integrity; by Roger Pielke Jr.
* Shipping now faces the highest price on carbon for any global industry
Notes
1. Also I have a feeling that when I said this before, Richard Tol said no, it was also paying for damages, so if you prefer you may take his viewpoint with some degree of support.
2. An analogy that he doesn't make is the immune system's allergic response.
3. See my failed attempt to propose similar.
4. Another is Lockdowns and the Presumption of Liberty by Don Boudreaux; or Nice vaccine; pity there's no distribution mechanism by Scott Sumner
42 comments:
The point I was trying to make was related to your tweet where you said "CC can be (largely, in theory) solved by carbon tax;". Carbon taxes essentially solve a market failure, they don't directly solve climate change. Whether or not you regard solving this market failure as also solving climate change involves a fair number of value judgements. It may well be that there is no other way to address climate change that would produce an outcome that would be regarded as "better", but I do think it's worth distinguishing between solving a market failure and solving climate change.
I think that's true in theory but not in practice :-). It's an objection people have raised (here) in the past: that in theory, you could have a carbon tax, but people might just choose to pay it. The practical objection is easy: in fact, people are quite sensitive to prices, and would be steered. The theoretical reply is harder: that if you've priced in GW properly, and people still choose to pay the price, then... there is no problem. That's what people have chosen. You (personally) may not like their choice, just as you may disapprove of your neighbour's choice of... garden plant, or house colour, or hairstyle; but you accept that it is their choice. Of course this nice theoretical framework doesn't deal with inhomogeneities: perhaps your personal preference for no-GW is 10x higher than their prepared-to-pay. But there's also the non-linearity: taking the theoretical perfect-information case, carbon taxes would start ramping up, to reflect the increased damages from higher CO2. So those who were originally prepared to pay would start changing their minds. So rather than no-GW vs GW, there would be somewhat more GW than you and I would personally prefer.
WMC,
I get all of that, and I agree. However, even if we do price carbon emissions and can implement an associated carbon tax that adjusts according to ever-changing estimates, this can still lead to outcomes that many might regard as having failed to "solve climate change" (low-lying land getting swamped by sea-level rise, for example). My point is simply that how we assess the cost of such outcomes, and whether or not we should address climate change purely through solving a market failure, involve value judgements. This may be your preferred method for dealing with this, but it's not obviously the only, or best, way of doing so (you may, of course, disagree :-) ).
Good article. One add - one cannot count on rational economic behavior at all times that's why there are booms and busts. In the case of fossil fuels we are over investing in an infrastructure that is going to be worthless some day. We could plan a transition or leave Mr. Market in charge.
If a carbon tax is used as the first weapon against climate change, other mitigation and adaptation measures can by calibrated by its success or lack thereof.
There were a lot of BCA's done at the start of the pandemic that supported a hard initial lockdown.
Countries that did that, have fared very well both economically and have had better health outcomes.
Also, using BCAs for a response to an 'emergency' is not really what they're designed for. As the effects of the disease were not well understood. The behaviour around the pandemic is an issue of biosecurity and risk-mitigation. There's typically no time for BCA, and in biosecurity it is ALWAYS better to go hard and go early.
We're never going to know the true cost of any of this, because we don't know what would have happened in any other scenario. People will use the response and the resulting economic fallout to push whatever political ideology they want. But looking at the success we had here in Australia, I can see we reacted in the right way. We went hard and went early.
"the carbon tax is paying, in advance, for a cost that will be incurred"
If we go back to the Coase Theorem, taxing an externality ensures that the production quantity will be optimal to maximize total societal welfare... but it says nothing about the distribution of that welfare. So if the externality hits a particular segment of the population particularly hard, then an argument could be made that the funds raised should be targeted to offset that welfare loss. There are plenty of other arguments to support different uses of carbon tax funds: used to reduce distortionary taxes (to grow total social welfare even more), to support the workers in the taxed industry with job retraining or other measures to offset the hit from government action, to address emissions from sectors which are more difficult to tax for whatever reason, to do R&D for things that the free market doesn't address properly, etc.
-MMM
ps. On the lockdown question: I think Australia and New Zealand show that really hard lockdowns in regions that can isolate themselves pay off nicely. I think the lockdowns we have had in the US have likely saved several million lives (based on an infection death rate of about 1%, applied to about three quarters of the population to reach herd immunity, and then adjusted upwards to reflect over-stressed hospitals). I think we'll still reach 600,000 excess deaths due to COVID... and that stricter lockdowns could have reduced that death number, and a really competent strict lockdown could even have led to a world in which we could have had a weaker lockdown in the long run in addition to saving lives.
Carbon taxes are not efficient at the current time, so alternative to carbon taxes should be preferred. At the current time, not for forever. Carbon taxes will have their day.
Forcing someone to wear a face mask is infringing on their liberty. Their infecting someone with a nasty and sometimes fatal disease isn't infringing on anyone's liberty. Right. We got that.
": I think Australia and New Zealand show that really hard lockdowns in regions that can isolate themselves pay off nicely. "
It's not just Australia and New Zealand, also Taiwan, South Korea, Japan.
Not sure about Vietnam, Laos, Cambodia, but they seem to have low counts too.
Most of Scandinavia has done well too.
Needs correction:
"Forcing someone to wear a face mask is infringing on their liberty." Correct. It is especially true if that person has breathing problems etc and/or is not infectious, as the vast majority of people are not.
" +Their infecting someone with a nasty and sometimes fatal disease isn't infringing on anyone's liberty. Right. We got that" There is a germ of logic there but not very much. First, the evidence on the effectiveness of mask-wearing is marginal, at best. To infect someone don't you have to be within 2 m of them and spraying them with droplets, eg engaged in shouting, singing, laughing etc? Those activities and distancing can be managed in less obtrusive ways. In fact, I suspect mask-wearing seems to disable people's senses, in that they often seem to forget to keep their distance from others
Yes, G, your post needs correction. Please do. I'll wait.
Also bogus: the assumption that the only bad outcome from COVID is death. BC is totally ignoring the other costs of COVID. The ambulances and the parking lot of the hospital is full of COVID, the admitting room is full of COVID, the ER full of COVID, ICU full of COVID, and silly you, you fall off a ladder, or slip on ice, or have a heart attack. Didn't even need to get COVID to be hurt or killed by it.
Long haul COVID.
Our society is being overwhelmed by magical thinking.
Oh, and "free market" solution to COVID was posted here before.
https://mustelid.blogspot.com/2020/11/coronavirus-days-scotus.html
Last comment.
That might set up a Nash Equilibrium, where the price of not wearing a mask set the level of the virus infections.
Free Market Paradise. Except Nash Equilibrium is not optimal.
Vaccine. Nash Equilibrium is when the risk of the vaccine and the risk of the disease are equal. Optimal use of vaccine is to wipe out the disease. Completely. Gets rid of the risk of the disease, the risk of the vaccine and more.
Nash Equilibrium is not optimal.
> Oh, and "free market" solution to COVID was posted here before
Are you referring to your comment?.
I didn't think that was a realistic FM or Libertarian solution. Instead, its a solution where the state carefully constructs a market, which is rather different.
I'm not sure the NE concept is useful; it certainly won't govern the vaccine takeup rate. I don't think there is much need to worry about the VTUR; enough people will want it; there are a lot of noisy anti-vaxxers but not a large enough proportion of the population I think to matter. And anyway it would be months before we run through enough of the pop to need to go out actively seeking non-compliers.
How do you own real estate?
What is the root of ownership of land?
I couldn't actually decipher your climate commentary, unless maybe you said "carbon tax good," but I was more interested in the Covid part anyway, though I'm not sure if you addressed the question of why the US and Europe failed so miserably to cope with the pandemic, despite having enormous resources and highly developed scientific medicine.
I have a theory, which you may not like. The US and Europe each have relatively free societies with very free travel and, and in particular confronted the pandemic without central direction and strategy, by abdication of national leadership in the case of the US, and by political design in the case of Europe. By contrast, the success stories have national isolation and unified leadership. Europe is essentially a failed state, a polity which has some of the characteristics of a unified state but is missing some key aspects, and which probably could not protect itself from external enemies or internal crises. The US has some isolation other advantages but suffered from the worst leadership of at least the last 70 years.
Could punitive taxes on blogs touting Hydroxychloroquine serve to offset the impact of covid on the lack of carbon taxes?
> What is the root of ownership of land?
A somewhat puzzling comment. Is it supposed to relate to previous discussion? Or is it a sudden request for enlightenment? You will be aware, of course, of a variety of theories justifying same.
> I couldn't actually decipher your climate commentary
It is a relatively subtle point but you need not trouble yourself with it if not interested :-). The link to Timmy's comment is the most succinct explanation, if you don't want my surrounding waffle.
Indeed I didn't address why EU / US have done so badly. I've just updated it with the FT "sausage" pic which doesn't explain it either, but does provide some visual. Free travel - from political openness, and from relative wealth of the citizenry - does probably explain quite a bit; but free travel is of course a good thing, of itself, and not something people will give up easily. Lack of self-discipline, some more. Failed leadership, in the US is obvious, in the EU less so, and while I have my beefs with the EU, calling it a failed state is IMO well OTT. Plenty of other states - most of S America - are far more "failed" and yet seem at the moment to be stable, Covid-wise.
The root of ownership of real estate is successful state violence. In your case, William the Conqueror.
If you consider real estate a valid free market, then why not other things like a free market solution to COVID?
> is successful state violence
Doubtful, at least in theory. In practice, many or most parts of the world have been conquered at some time or another, and tenure unchallenged for long enough tends to stick. But the Louisiana purchase was trade not violence. In theory, it is trivial to imagine a state that has not been conquered, so your theory is at best an incomplete one.
And of course real estate is somewhat different to state sovereignty. Sovereignty gets you the right to set the rules for private exchange of land within your territory, or forbid it, if you're communist enough or similar.
A FM solution to Covid would be excellent; I'm puzzled as to why you think I would be opposed. Certainly my objections to your particular scheme should not be seen as opposition to FM. An obvious easy first step, from the point we're now at, would be allow sale of the vaccine (at the moment, private sale is not I think explicitly forbidden but is implicitly so). I would suggest that as a first step perhaps 20% should be sold - in the sense of permitting the vaccine suppliers to sell it - to the highest bidders. After all, if you can't do something as easy as not forbidding selling vaccine on the FM, there's really no hope for any more complex FM solution.
So Wiki says "However, France only controlled a small fraction of this area, most of it inhabited by American Indians; for the majority of the area, what the United States bought was the "preemptive" right to obtain Indian lands by treaty or by conquest, to the exclusion of other colonial powers."
Treaty of course means "You give up most of your land and we maybe don't kill you".
A better counter example would be islands with short histories without disputed ownership. There are a few of them.
COVID: Short term, only behavioral modifications (masks, social distancing, etc) have much impact. Vaccine will not be a large factor till Spring or even later.
Auction of vaccine actually might be a good thing. Oh, not due to "free market" type concerns. Education of "skeptics".
Many people know the price of everything and the value of nothing.
Not a fixed percentage, but perhaps some more or less random amount. So wild price swings get reported breathlessly on the nightly news.
On the evening of a price jump, the local pharmacy calls Joe Skeptic, and gives him a special deal just for him and his family. Take it or leave it. Tells him "you can always buy it on the vaccine market". Or show up Thursday at 10:30 AM with arms bared. Your choice.
"Some aspects of economic costs of GW are explicitly value judgements: how much do we value lost mountain glaciers? And some are value judgements, but wrapped in economics: if we lose winter skiing, how many jobs are lost? The latter is more measureable, but still value judgements, because the choices of the people that wanted to go skiing are inevitably part of the economics."
I'd say the difference between impacts on skiing and, say, loss of an alpine ecosystem or a species like the pika is that skiing is a market activity and therefore the "value" can be discerned through market economic mechanisms (e.g., revealed preference or hedonic valuation approaches), whereas ecosystem or species loss can mostly only be valued through survey methods (e.g., contingent valuation). See, e.g., https://www.sciencedirect.com/science/article/pii/S0959378016305556 for a US skiing impact analysis.
-MMM
Zat is a good point but only in that it does get you a good handle on the value, if the good is in effect traded. But both reflect values; I meant that in the skiing case one can forget this.
Re my sunniness on vaccine take up: https://twitter.com/NaomiOreskes/status/1344695812006277120?s=19
What is the economic value of a vaccine?
In total, the sum of avoided (misery, death, lost wages, medical costs ...) less the total negative side effects (misery, death, lost wages, medical costs ...)
With me so far?
If so, then what is the value to you? Personally?
If no one else has taken the vaccine?
If everyone but you has taken the vaccine?
The cost of the vaccine is of the order of $100 per dose. How, I wonder does that relate to its value. If it was 100% protective and your vaccination certificate allowed you free movement, how much would you pay? I think I'd pay significantly more than $100. Even at this time of year, and more come the summertime.
If the US and UK govts don't significantly improve their present pathetically slow rate of roll-out, there's going to be an internet market for the stuff.
In general, not any vaccine specifically.
Remember that a vaccine protects both directly and indirectly.
If everyone else has had the vaccine, what is the value to you?
That's a strange question, and ambiguous. Do you mean, if everyone else has had the vaccine what would I pay for it myself (answer: nothing: herd immunity would render it useless to me). Or do you mean, what is the utility value of everyone else having the vaccine except me (in which case, the cost of adding me or not is trivial, so why exclude me?). The answer in the second case is the obvious one: it is the value of returning to "normal" life, which of course I would struggle to put a clear value on. So neither interpretation of your question produces anything interesting.
You seem to be trying to lead me somewhere via wise Socratic questioning, but you're not really coming across as wise, so if you have a point, please just make it.
So you agree that the society's total value of the vaccine is significantly more than the cost?
And that the value of the vaccine to an individual depends on what others do?
The best outcome for you personally is that everyone else takes the vaccine and you don't.
Much like a game of https://en.wikipedia.org/wiki/Prisoner%27s_dilemma ?
With million of players rather than two. You win by defecting (not taking the vaccine) while everyone else cooperates (takes the vaccine).
And this leads to a https://en.wikipedia.org/wiki/Nash_equilibrium
In which we never reach herd immunity. Which is provably not optimum.
> the society's total value of the vaccine is significantly more than the cost?
Err well obviously or we wouldn't have bothered make it. So you start off with the bleedin' obvious and end up with...
> In which we never reach herd immunity
which simply doesn't follow from your previous. Rather than using your shaky logic, look to examples of other vaccination programmes.
https://en.wikipedia.org/wiki/Jacobson_v._Massachusetts
Of course, the New Hampshire seat belt exception analogy applies.
Amusing. NHSBE has broken down in recent years.
https://www.nhpr.org/post/you-asked-we-answered-why-doesnt-everyone-wear-seat-belts-nh
"He who refuses to do arithmetic is doomed to talk nonsense." John McCarthy
Assume that a vaccine has a 100:1 benefit ratio. Use any other meaningful ratio if you don't like that one.
Assume the vaccine is 100% effective. Use another meaningful number if you like.
Assume that herd immunity is exactly 80%.
Either 80%+ gets vaccinated, or the sum of infected + vaccinated = 80%.
Assume that everyone knows exactly how many have been vaccinated before them when they get the chance to be vaccinated.
The first person sees that they have an 80% chance of being infected, and a net payoff of
(80% * 100) : 1
The second person sees that they have a {Population = n} ((n-1)/n) * 80% chance of being infected and a net payoff of ((n-1)/n)
Do the math. Does a completely rational population acting strictly in self interest ever reach herd immunity?
Show the "weak logic".
(((n-1)/n) * 80% * 100):1
I must add, for large n.
n=2 the second also the last person will take the vaccine.
> Jacobson v. Massachusetts
Thanks for drawing that to my attention. I agree it was reasonably decided in the light of US law, and the Supremes general habit of not interfering in the States unless there is clear need. In particular the assertion that the law was "unreasonable, arbitrary and oppressive" seems obviously wrong. it *is* an infringement of liberty, but since any fule kno that liberty is not absolute, mere IOL of itself isn't going to get you anywhere. And given that you can buy your way out, it is hard to see the law as harsh.
As to your logical chain, it is multiply broken. No-one knows the exact probabilities and efficacies, and indeed motivated people can have beliefs wildly at divergence from the scientifically accepted values. Most of the nay-sayers won't do or understand the maths either. No-one knows the vaccination rates near them, and the population is most certainly not rational, so I fail to see why you think you "logic" has any relevance to the real world.
Offbeat Humour from TF.
"We don't know exactly" is hardly convincing.
"Line jumpers" might actually be a good thing.
News stories about people getting the vaccine ahead of time by connections, bribery, dishonesty, skullduggery, scheming, cheating and such might mean that someone that might be vaccine skeptic might respond to a call from his/her doctor.
"Hey Joe, if you and your family can come down to the clinic after closing tomorrow, I can sneak you Covid vaccine jabs (shots on this side of the pond). Come to the back door and don't tell anyone!"
Agreed, which is why the people whining about Rubio getting vaccinated are so silly.
"I fail to see why you think you "logic" has any relevance to the real world."
So one might take actual distributions of possible probabilities and parameters, and also people's opinions about possible probabilities and parameters, and update a prior according to the best of Bayesian statistics.
I'm not going to attempt this.
Or one might just try some realistic range of possibilities. Easy to do with a computer program.
Or I might just reduce this to some simple words.
Up to the point of herd immunity, the total value to society of a vaccination falls slower than the value to each individual being vaccinated. As a result, individual choice often fails to produce the ideal or even a good or acceptable vaccination result. Even if the individual choice is fully rational and fully informed, which real people are often not.
As a result, other methods need to be used.
Coercion.
Appeals to duty to God, King, Queen, Country, decency, family, clan, tribe, ...
Bribery.
Require a vaccination for a plane flight, a cruise trip, a hotel stay, entry into a restaurant, ...
Let people opt out... if they pay enough. Sure, you can get on the plane if you don't have a current vaccination. Just need to buy extra insurance for $$$$ to cover the risk of you infecting others.
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