Archive for May 2020

 
 

The wisdom of Larry Summers

Tyler Cowen directed me to a recent interview with Larry Summers:

The real crime is not that we miscalibrated on some economic versus public health trade-off. The real crime is that we have not succeeded in generating far greater quantities of testing, far greater mechanisms for those 40 million unemployed people to do contract tracing, far more availability of well-fitting, comfortable, and safe masks, and that we’re under-investing in the development of new therapeutics and vaccines.

When something costs $10 to $15 billion a day, you need to make decisions in new ways. We should not be waiting to see which of two tests works best. We should be producing both of them. We should not wait for vaccines to be proven before we start producing them. We should be producing all the plausible candidates. Remember, one week earlier in moving through this is worth a hundred billion dollars: two months’ worth of the annual defense budget.

While you might emphasize different solutions, he’s absolutely right that there was never a tradeoff between public health and the economy. The trade-off was between laziness and the economy. We could be lazy, or we could have a good economy. We chose lazy.

Occam’s Razor and Chinese conspiracy theories

Conspiracy theories are a powerful drug, as Penn Jillette once observed (in a Joe Rogan interview.) So powerful that people rarely stop to consider how implausible many of the claims actually are.

Let’s start with the conspiracy theory that China initially covered-up the severity of the pandemic. There’s actually some truth in the theory (as I’ll explain later), but first let’s consider the implausible lengths to which some push the conspiracy theory.

China first admitted person-to-person transmission of coronavirus on January 20, 2020. On January 23rd, the central government put Hubei into lockdown. The close proximity of those two dates is easy to explain if you don’t believe in vast dark conspiracies. If you are conspiracy-minded, you need some pretty fancy footwork to explain why China waited until January 23 to lock down Hubei.

Think of it this way. What would China’s government have done if they had known about the severity of the epidemic prior to January 23? The answer is obvious. A Hubei lockdown would have been vastly preferable if done earlier. Today, China locks down entire provinces when there are just a couple dozen cases. There is only one plausible explanation for China delaying the lockdown until January 23—ignorance. They knew they had some sort of “problem”, but they were ignorant of the extremely dangerous epidemic they actually had on their hands.

And the same applies to other areas where China has been blamed, such as the delay in allowing the world to know the disease was highly contagious, or the delay in shutting down flights out of China. If the Beijing government had fully known what was going on, it would have known that this information would get out eventually. It would have known that the flights would be cancelled quite soon–if only by foreign countries. It could have gotten a lot of positive PR by doing these things first.

And yet, there clearly were Chinese cover-ups. So what sort of “conspiracy theory” makes sense? Not a grand conspiracy theory, but a couple small, boring, mundane conspiracies.

The first conspiracy was the Wuhan’s government’s decision to silence doctors so as to not threaten the Wuhan economy, especially as a major conference that was being planned. This was a very small conspiracy, probably not known by Beijing. The local government had no idea it was the beginning of a global disaster.

During January, the problem did become increasingly visible, even to the central government. But it was still a very small epidemic, a total of 17 deaths by January 22. What did the Chinese central government assume when they first heard about this problem? I’d guess it was exactly the same thing I assumed when I first heard about it—“Oh, another SARS problem”. On the other hand, it was known fairly early that coronavirus was much less deadly than SARS, which killed only 800 people worldwide. They weren’t wrong about the lesser severity of the illness, rather they were wrong about the implications of a high R0. Heck, the US stock market didn’t understand this as late as mid-February, by which time stock traders had far more data on coronavirus R0 than the Chinese government had in mid-January.

Given those facts, the Chinese government probably initially believed that things like travel bans were unneeded. Why do I think that? Because they didn’t even impose travel bans within China! They also recalled how panic over SARS had significantly damaged the Chinese economy in 2002, and wanted to prevent panic until the scale of the problem was better understood. Their attitude was “we’ll hold back info until we know exactly what we have on our hands.” Unfortunately, that’s how authoritarian governments behave.

Thus for at least 6 days (maybe 13) they covered up strong evidence of human-to-human transmission, although they never denied it was possible.

So far it seems like I’m making excuses for China. Actually, I’m not. The initial censoring of Chinese doctors was completely inexcusable, as was the later delay in acknowledging evidence of the transmissibility of the virus. Rather I’m saying these are the sorts of small-bore conspiracies that occur all the time in a country like China. Heck, under Trump they even occur here, as when Trump repeatedly lied in claiming that there was no shortage of testing equipment, or of PPE, or his claim that the disease was contained.

The actions of the Chinese government speak louder than its words. It’s very clear from their actions that they had no idea they were facing a serious problem until late January. There were some worrisome indicators, but if those indicators weren’t worrisome enough for them to act to protect their own people, their own economy, and the CCP’s own reputation, why would you expect them to act in such a way as to protect nursing homes in Lombardy? Do you seriously believe they actually understood what they were covering up?

Occam’s Razor also applies to the lab release theory. We know that dozens of epidemics have come from viruses jumping from animals to humans without any “lab” being involved. Why construct an entirely new theory for this epidemic?

Even more bizarre, the lab conspiracy theorists are so dumb that they think they are discrediting the CCP. Actually, the CCP would look far better (in a ethical sense) if the virus accidentally escaped from a lab doing valid and useful scientific research, rather than from disgusting “wet markets” that the CCP refused to shutdown. When conspiracy theorists are so dumb they don’t even know they are putting out pro-CCP propaganda, it doesn’t exactly inspire confidence that they are on the right track.

Of course it’s certainly possible the virus did escape from a lab during research on bat coronaviruses. I really don’t care.

As for the effect of these actions, the cover-up only hurt a few places like Hong Kong and Taiwan, which had a combined death toll of 11. In contrast, America has had over 100,000 deaths, and wasn’t hurt at all by the Chinese cover-up. Since our policy was to twiddle our thumbs until we had 10,000 cases, a warning a week or two earlier would not have made the slightest difference. Unless you think the CCP could have completely stopped the epidemic when there were already thousands of infections in multiple provinces. But in that case, why couldn’t the US have stopped the epidemic early on? Is the accusation against China that they are evil because they failed to competently do what we are too lazy to do?

I also find that people are so anxious to latch onto what they (often wrongly) see as anti-China conspiracy theories that they believe too many such theories, which conflict with each other. If the lab theory were true, especially the version that has a human engineered virus, then the other Chinese government conspiracies make even less sense. Why wait until January 23rd to act? The lack of interest at the federal level and the bungled initial response at the local level are what you expect from a natural virus, not one that escaped from a high security national lab.

PS. Today’s FT has a good article on the Chinese cover-up. This guy’s views are very similar to mine:

“We should put together a comprehensive white paper about the virus in which we recount what happened between the end of December and [Wuhan’s quarantine on] January 23, what we did and why we made mistakes,” Yao Yang, a prominent economist at Peking University, said last month in a local media interview. “We should state clearly that during this period we did indeed drag our feet and weigh [various] pros and cons, but did not purposefully engage in a cover-up.”

And then let’s investigate why the US government also dragged it’s feet, and also understated the problem.

PPS. Recall my April 4 post that suggested that 80% of the deaths might have been avoided by starting social distancing 2 weeks earlier. This Columbia University study suggests that 55% of the deaths might have been avoided by starting just one week sooner:

More than 35,000 lives would have been saved in the US if social distancing measures had begun just a week earlier than they actually did in mid-March, according to a new estimate by researchers at Columbia University.

They said simulations based on several models showed that 61 per cent of the US cases of infection as of May 3 – more than 700,000 – and 55 per cent of the more than 65,000 recorded deaths could have been averted if social distancing and other safety measures had been in place a week earlier.

Yikes!

PPPS. At the opposite extreme, here’s a spectacularly bad prediction I made in April:

About 34,000 Americans have already died of Covid-19 and the experts tell us that we are roughly half way through the first wave of the epidemic, which is expected to fall back this summer (and perhaps rise again next winter.) So if the models are correct, Orange County might end up with another 22 more coronavirus fatalities by late summer.

Just today, Orange County had another 14 deaths. While the fatality rate plunges much lower in NYC, it is soaring much higher here in OC.

The importance of level targeting

I have a new podcast interview with David Beckworth. In the interview I keep bringing up the importance of level targeting. My fear is that the Fed will eventually get there, but fail to announce the policy in advance. Most of the benefit from level targeting comes from the initial announcement effect, not from the subsequent attainment.

Revisiting the mistake

Back on April 4, I made this claim:

I also predict that in a month or two, when we have a good grasp on the likely death totals from this epidemic, or at least this wave of the epidemic, there will be news stories showing how many of those deaths could have been prevented merely by starting the social distancing at the national level at the same time it was done in Washington (which was about 2 weeks earlier). And the numbers will give you a sick feeling in the pit of your stomach. I don’t know the exact numbers, but if there are say 100,000 deaths, it might be the case that on the order of 80% could have been eliminated by starting two weeks earlier. And no, this is not a dig at Trump (or de Blasio), the country was not mentally prepared for doing something like this two weeks earlier. But it won’t change the reality of the fact that we as a society made a huge error. Social distancing may not even be the right answer, as some tough guys claim, but given that we ended up doing it anyway, not doing it two weeks earlier was super costly. Hiroshima costly.

And let’s not even talk about the tens of thousands of preventable deaths each year from kidney failure.

Time for some soul-searching?

Even as I typed “Hiroshima” I wondered if my claim would eventually look foolish. About 10,000 Americans had died at that point.

Today there are 94,000 official Covid-19 deaths and many additional unofficial deaths. The eventual toll will likely exceed 150,000.

But what about the preventability question. Could 80% of these deaths have been prevented at virtually no extra cost? Quite possibly.

I’m not sure it was accurate to claim that Washington began social distancing about 2 weeks earlier than other states; it’s much more complicated than that. But it did start social distancing somewhat earlier. And Washington has since gone from being by far the worst hit state to well down in the pack. Each week it slips further down the list in terms of deaths per million (right column):

535

There are other pieces of information. The combined population of Denmark and Norway is a bit higher than Sweden, and yet those two countries have barely 20% as many fatalities as Sweden. I don’t cite this figure to take sides on the Swedish policy, rather to indicate that if we were going to do social distancing anyway, then (in retrospect) it would have made more sense to start 2 weeks earlier. Two weeks is a long time when caseloads are exploding upward.

Tyler Cowen linked to another interesting study. Here’s the abstract:

We test whether earlier social distancing affects the progression of a local COVID-19 outbreak. We exploit county-level rainfall on the last weekend before statewide lockdown. After controlling for state fixed-effects, temperature, and historical rainfall, current rainfall is a plausibly exogenous instrument for social distancing. Early distancing causes a reduction in cases and deaths that persists for weeks. The effect is driven by a reduction in the chance of a very large outbreak. The result suggests early distancing may have sizable returns, and that random events early in an outbreak can have persistent effects on its course.

I view all of this as a collective mistake (including myself), which might explain the relative lack of moral indignation, at least given the death total. We prefer to point fingers at specific villains (as with Bush/Iraq, although even in that case Bush’s role is greatly overstated.)

Social distance and trash the economy?

or . . .

Allow a huge death toll?

There are good arguments both ways. But for the sake of God don’t do both!

Alas, we did both.

PS. Creating a kidney market is still extremely important. And on that issue I do point fingers (at deontological ethicists.)

We have nothing to fear except a lack of fear itself

Lots of people are scratching their heads about the relative strength of the stock market. By that I mean strength relative to the underlying economy, where unemployment is probably about 20%. The election odds favoring Trump are another mystery.

This twitter thread by Ryan Booth suggests the virus may be almost gone by the end of August. I won’t say I “believe” this, but I also don’t see any reason to assume he’ll be wrong.

Here’s part two of the thread.

Now of course there’s the “second wave” theory for the fall and winter. But the severity of the second wave is hugely dependent on the severity of the epidemic in late summer.

This is hard to grasp, as the severity of the first wave did not depend at all on the level of the epidemic at the beginning—one case was enough to lead to 10 million (although of course in practice there was more than one case from overseas.)

But with the first wave we made no attempt to prevent it from getting out of control until it was too late. This fall will be the exact opposite. We will madly overreact to any new outbreaks. We’ll be all over it like a **** on **** (I forgot the metaphor). Perhaps not as insanely over-reactive as the Chinese, but pretty insanely. If we have only a few cases going into September, then it’s likely we’ll be able to prevent the second wave from getting out of control, just as many other countries have already been able to do.

I’ve always assumed that we could no longer do the things the Australians and New Zealanders are doing, because Covid-19 has already become so far out of control in the US. But if the US caseload really does fall to extremely low levels in late summer, then we would be able to replicate the success of the places that are currently successful.

The thing that makes me most skeptical of this rosy scenario is that there’s a sort of natural tendency for R0 to move back toward 1.0. (Homeostasis?) As things become safer, people will react rationally and become more reckless. So we have to hope that the same Americans that are irrational scaredy-cats (i.e., excessively afraid of nuclear power, flying in planes, chemicals in food, second hand smoke, child kidnapping, etc.) will also be overly frightened of Covid-19. We need the continued irrational cowardice of Americans, now more than ever.

Please Americans, don’t let me down when we most need your innumeracy, your irrational fear of risks that you cannot see!!

Please, cower in fear.

PS. Today, NPR interviewed some guy recommending meditation as a way to control one’s fear of Covid-19. I recommend the opposite for most Americans, a nonstop diet of the most hysterical twitter threads, blogs and cable news shows.

Then life will become truly wonderful for numerate people like you and me, as we take blissful, uncrowded vacations in relative safety.

HT: Razib Khan