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Benefit-Cost Analysis and the Coronavirus

Benefit-Cost Analysis and the Coronavirus

We are in the middle of a flurry of decision-making on how to deal with COVID-19.  After much resistance, officials are now canceling public events, closing schools and discouraging other activities that put us in contact with each other.  Travel restrictions and possible shutdowns of workplaces, as we’ve seen in Italy, may be up next.

It’s interesting we haven’t heard anything about benefit-cost analysis in all this.  Nearly all economists profess to think that BCA is the single best decision method.  Almost every introductory economics textbook is built around benefit-cost thinking, and for decades federal regulations have mandated BCA for proposals with significant economic impacts.

But now we are facing immense choices—what could have a more drastic impact than shutting down most of the economy by fiat?—and BCA is nowhere to be found.

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Coronavirus update: reason for alarm; (small) reason for hope

Coronavirus update: reason for alarm; (small) reason for hope

This weekend has continued the discouraging news: reports just about everywhere that the Young Invulnerables packed the bars Friday night; the Petri dishes of airport security lines packed with Americans returning from Europe; and personally, two friends who I have known for almost 40 years getting very sick this past week and not able to be tested for coronavirus (one of whom by the way went in to work Friday to drive school buses full of kids because so many other drivers called out). All of these are going to be vectors for continued transmission of the virus.

In that regard, let me repost the graph from Jim Bianco that I ran last week. Because we are now 4 days into his linear projection of an exponential curve of coronavirus transmissions. Here’s the graph:

And here is how his projections compare with the actual numbers I pulled each day from the Johns Hopkins site:

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Trump Administration Continues to Attack the Environmental Projections First Put Into Place by the Nixon Administration

Trump Administration Continues to Attack the Environmental Projections First Put Into Place by the Nixon Administration

If you, the reader, are uncertain whether to support Trump or whoever the Democratic candidate turns out to be, I urge you to consider the devastating reduction in protections for clean air, clean water, and clean land (thus also clean air/water and food) under the Trump administration’s ‘hate anything Obama’ approach that has put industry blowhards in charge of the Environmental Protection Administration, an agency created on December 2, 1970 to ensure federal research, monitoring, standard-setting and enforcement of environmental protection.

GP: Donald Trump digs coal lUS-POLITICS-TRUMP 1

(Image of Trump at West Virginia campaign rally in August 2017, from CNBC article on Trump rollbacks of regulation, cited below)

Under Trump, we have instead a complete disregard for the environment, a view that harks back to the times when rich owners of factories, mines, or corporate farms exploited and polluted land, waters, and people in their greed for profits. For example, in July 15, 2019, the New York Times reported that the Government Accountability Office found that the administration “did not consistently ensure” that its appointees to EPA panels satisfied federal requirements.  This was during 2017, when the Trump administration dismissed academic scientists from EPA advisory boards in order to replace them with industry-connected appointees.  Panels that had in the past included a very high percentage (more than 80%) of academic scientists were reduced precipitously under Scott Pruitt, Trump’s first EPA head.  Pruitt, of course, resigned in scandal (as so many in the Trump adminsitration have done) in 2018 after loading EPA advisory panels with industry hacks .  See, e.g.,  E.P.A. Broke Rules in Shake-Up of Science Panels, Federal Watchdog Says, NY Times, July 15, 2019; Removing Academic Scientists from Science Advisory Panels, Harvard Environmental & Energy Law Program, Feb. 26, 2018 (noting replacement of scientists with industry insiders and consultants, including a climate change skeptic, following Scott Pruitt’s October 31, 2017 directive).  Scientists removed from the panels refused often to be silent.  For example, some formed their own air pollution panel after Andrew Wheeler, Trump’s next EPA administrator, disbanded the Particulate Matter Review Panel in October 2018.  It had “some of the nation’s top scientists, who were tasked with reviewing how soot and other microscopic air pollutants impact human health.”  Rebecca Beitsch, Scientists booted from EPA panel form their own group, The Hill (Sept 26, 2019).

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Poor regulation causes scarcity

(Dan here…another  of David Zetland’s students Hanna writes on regulation…a reminder of what also matters during this heated political climate, and from a younger generation. The first mention of water wars at AB was 2007 I believe.)

Poor regulation causes scarcity

Hannah writes*

In 2014, Flint was plunged into a water crisis. However, this was not the result of over abstraction or drought. Instead, the city’s water scarcity which continues today was caused by poor regulation. The tragedy in Flint demonstrates the critical role that regulators play in ensuring both the quantity and quality of the water delivered to communities.

Over the last five years, it has become clear that senior officials were aware of the water quality issues in Flint but continued to claim that the water was safe to drink. This inaction had serious consequences including multiple lawsuits and the trial of Michigan’s health director accused of involuntary manslaughter. From the start, much of the blame for the disaster was directed at the Michigan Department of Environmental Quality (MDEQ). The Flint Water Advisory Task Force Final Report [pdf] from March 2016 said that the MDEQ “failed in its fundamental responsibility to effectively enforce drinking water regulations.”

The failures were not limited to responding to residents’ concerns about the water quality either; the chain of blunders date back to the original switch of city’s water source to the Flint River which triggered the crisis. The report said the shift was rushed, a concern which had been raised at the time by former utility’s administrator for Flint, Michael Glasgow. Furthermore, the report blamed the MDEQ for not treating the river water with corrosion control as is mandated by federal law. A 2017 review [pdf] of the MDEQ by the Environmental Protection Agency (EPA) heavily criticised the state, reporting multiple errors including failing to properly implement key provisions of the Lead and Copper Rule.

 

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Novel Coronavirus and Better Unsafe than Sorry

It is possible that a known pharmaceutical called remdesivir inhibits the reproduction of the Covid-19 coronavirus. It inhibits (some) RNA dependendent RNA Polymerases — the type of enzyme the virus uses to replicated its genome and express its genes. It is known that it is a potent inhibitor of the RNA dependendent RNA Polymerases used by the MERS coronavirus

update: here is a good site for Covid-19 data.

So what will be done with remdesivir ? What should be done ? Is what will be done anything like what should be done ?

I think I can guess what will be done. Different groups will work on different projects. Some labs will attempt to produce and purify the Covid-19 RNA dependent RNA polymerase to check if remdesivir inhibits it too. The patent holder, Giliad Science will start a two Phase III trials of remdesivir. Results will be reported and then the FDA will decide whether to approve it for use.

This is good as far as it goes, but I don’t think it goes close to far enough.

I think that aside from the trials, Remdesivir should be given to patients and contacts of patients. It is known to be safe (from the trial which shows that it doesn’t cure Ebola). Also a whole lot of it should be produced starting a month ago.

The first proposal implies changing the law — making an exception to the Food and Drug Act. It also requires some organization without shareholders to bear the liability for side effects (The bill should make the US Federal Government liable). It goes completely against the standard logic that it is against patients’ interests to treat them with unproven drugs. There are two reasons to abandon that logic. First it is unconvincing in general. Second the risk of reacting too slowly to a budding pandemic is huge.

The mass production of Remdesivir is a simpler decision. The risk is a high chance of wasting tens or hundreds of millions of dollars. The risk of business as usual is a small chance of tens of millions of deaths, because drug shortages prevent effective control of the epidemic.

The logic of regulation and policy is first do no harm and better safe than sorry. Safety is not currently possible. A small c conservative approach is also small c crazy.

update:

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Atlanta and downstream friends

(Dan here…another  of David Zetland’s students Johanna writes on groundwater…a reminder of what also matters during this heated political climate, and from a younger generation. The first mention of water wars at AB was 2007 I believe.)

Atlanta and downstream friends

Johanna writes*

This post offers some insight into the problems of water management in Atlanta (the capital of Georgia) and the effects of those problems on its downstream neighbors Florida and Alabama. These problems are part of a 30-year water allocation drama in the Apalachicola-Chattahoochee-Flint (AFC) basin.

 (Map source)

In Atlanta, population growth, legal disputes, and droughts result in water scarcity. Atlanta is one of the fastest-growing urban cities in the US, relying only on surface water supplies drawn from the Chattahoochee River, the source of the Tri-state water dispute with Alabama and Florida. The litigation began in 1990 when Alabama sued the Corps to stop allocating water to Atlanta. In 2014 Florida filed a complaint in the Supreme Court stating that Georgia has harmed the environment downstream and a bid for equitable apportionment (background on the litigation).

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A threatened groundwater source

(Dan here…one of David Zetland’s students Lenaide writes on groundwater…a reminder of what also matters during this heated political climate, and from a younger generation)

A threatened groundwater source

Lenaide writes*

Imagine living in a city located on top of the largest groundwater source and longest river in France, but to also have both of these sources be under the threat of scarcity. That it is the current state of Beaugency, France.

Beaugency has two water sources: the Beauce aquifer, which I will focus on in this blogpost and the Loire river, which I will only briefly mention at the end.

The aquifer, covering about 10 000 km2, is referred to as the water tower of the department, as it provides water to about 1 million inhabitants. Since the beginning of the 1990s, special attention for its care and sustainable use has been given to it as there was a major drought, forcing regulations to be put in place. However, these did not last, and thirty years later here we are with falling water levels and deteriorating water quality .

The aquifer provides drinking water for citizens and water for irrigation (mostly) and industrial uses. (For more info on the extraction, specific uses, and historical regulations imposed check out this website.)

 

Figure 1

Climate and agriculture threaten the Beauce groundwater.

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The Debate within Unions over Health Care is about the Nature of Unionism Itself

The Debate within Unions over Health Care is about the Nature of Unionism Itself

Casual observers of the political scene got an insight into union politics when a small storm erupted over a flyer distributed by Nevada’s Culinary Union attacking Bernie Sanders and his Medicare for All proposal.

Politico has a piece surveying similar disputes in other states and nationwide.  Some unions, like the building trades and the Teamsters, want to keep the insurance plans they’ve negotiated for their members; most others want universal public insurance.

Aside from the specifics of each individual bargaining agreement and its health care provisions, this issue reveals the fundamental difference between two forms of unionism.

Business unionism is based on the idea that union members, drawing on their own resources, can create the best conditions for their work.  From this point of view, the greater the difference between how well off union members are compared to the nonunion workers around them, the more attractive the union will be, the more members it will have, and the more benefits they can win at the bargaining table.

Social unionism also wants to promote the interests of its members, but it believes that what can be achieved society-wide, through coalition-building and political action, is far greater than what any single union can achieve on its own.  Instead of increasing the gap between union and nonunion workers, social unionists want everyone to move up together as far as possible.

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WSJ Misleads Its Readers, Defends Big-Government on Student Loans

Alan Collinge of StudentLoanJustice.Org” and I go back a long ways. I have sponsored his posts at Angry Bear. Other sites have done the same. The point to all of his words in unfair practices by nonprofit and for profit higher education schools with regards to student loans before and after college. There is no escape from Student Loans. Thank you Joe Biden.

The Wall Street Journal editors recently published an editorial, The Great Student Loan Write-Down, in which they cite a recent Congressional Budget Office report claiming the government is going to be forgiving over $200 Billion in student loan debt over the next decade. They also cites another CBO report which uses so-called “fair value” accounting to claim the government will be losing $11 Billion from the lending system over roughly the next decade. Judging from the angry vitriol in the comments under this editorial, the WSJ certainly succeeded in awakening the indignation of its conservative readership.

The astonishing truth is the assumptions upon which the WSJ and the CBO reports are resting their claims on are false. In fact, the opposite of what they are claiming is true. WSJ readers, and the public at large should be very concerned by what follows. Past the leap, IBRs and “fair value” costing.

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