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As of the middle of April, I think our goal at this point should be to delay what infections we can at relatively low cost. That means eliminating most government controls and letting people make their own judgments about how to do that. The delay gives us a shot a getting lucky that we find therapies or vaccines that work, but that is not assured.

I think this approach will dictated by some new knowledge we have gained over the past month:

(1) Lockdowns (at least in the West) don’t appear that effective. At best they push R down slightly below 1 and come at great cost. That is the experience of Europe. The great cost is evident in the drastic decline in US employment and the growing political pressure to lift them.

(2) Distancing doesn’t require lockdowns. Data pre-lockdown in most areas show that people were already doing significant distancing at the expense of things like conventions and restaurant reservations. This made the marginal effect of lockdowns small, and means that lifting them won’t restore normal levels of economic activity.

(3) SARS CoV2 is significantly more infectious than we thought. This makes attempts to stamp out the virus likely to fail even when done well (see Singapore). Even were one successful, you would have to isolate your country from the rest of the world (as China is now trying to do) which imposes significant costs itself.

(4) SARS CoV2 is significantly less deadly than we thought– especially to healthy young people. The IFR is probably between 0.3% and 0.6% overall and much lower for the healthy young. This means it makes sense for many to run the risk of infection and build toward herd immunity. It also means it makes more sense to concentrate efforts on protecting the vulnerable (even if that is a lot of people).

(5) The dynamics of building toward herd immunity mean that as more people recover from infection and become immune, R falls because there a fewer people to infect. As the number of recovered people increases, the safer it is for the vulnerable. This is a reason to flatten the curve of infection (ideally with people that recover) rather than to bend it down.

I think things will be better the sooner that government imposed lockdowns end. As in other cases where you eliminate harsh regulation, people will adapt in innovative ways to these new circumstances in ways that make their lives better.

BUT, I think that absent finding a great vaccine or great therapies, the facts outlined above mean that you probably have 100,000-500,000 Americans dying and significant losses to the welfare of the living as they adapt to a distanced world.

I wouldn’t end lockdowns because I think that will make things great and return to normal. I would end lockdowns because they make a bad situation worse.

Political Philosophy as Institutional Design

Are differences in political philosophy really just differences about the efficacy of different types of institutions? For a while I have believed that we should be extremely skeptical of government because it is far worse institution than those that operate in a market (e.g. a company) because even in a democracy, voting for elected officials is a far cruder mechanism for reflecting preferences of the people affected by that institution than the signals and incentives of the price system that governs the market.

First a definition: What is the proper measure for efficacy of an institution? Let’s say: an increase in the aggregate welfare of those that interact with it.

I think insight above about government is accurate, but I wonder if it can be generalized (and taken to a higher level of abstraction) to apply to other questions about institutions. For example, do we have more reason to trust the operation of a small town government than a large monopolist (at least in the short term)? How should we think about the efficacy of self-perpetuating boards of non-profit organizations, e.g. churches or universities? Do we have reason to defer to them when they conflict with contrary government desires? Do we have reason to put more faith in decisions of state governments in the US where people can easily move out of a state with a poor government and into a state with a better one?

Slightly more concretely, in the US does this framework help us analyze whether courts should we defer than decisions be made by administrative agencies? In what circumstances? Does it depend on the specific court and the specific agency involved? If so, can we generalize at least somewhat?

At this point I don;t have great (elegant?) answers, but perhaps that will come upon further thought

“In the future everyone will be in show business.”

I remember Penn Jillette making that comment to Glen Beck. Sadly, a Google search for it does not reveal the video in which he said it. Much like Kara Swisher’s “nobody knows” mantra about AOL, it encapsulates a lot.

The general context for the quotation was a prognostication about what jobs people will have in the future, perhaps when technology has eliminated many current jobs.

Many people are able to make a living our of entertaining others in ways that would have been impossible a short time ago, e.g. Youtubers, streamers, podcasters, so perhaps this is not so far fetched.

But thinking about this more abstractly leads to some important insights:

  • People will continue to work, even if current jobs change.
  • The skills and characteristics that are socially valuable now, may not always be so.
  • Although scarcity of tangible goods, is unlikely to go away anytime soon, if it did would people simply trade in the currency of popularity? Status would cease to be correlated with wealth and instead become correlated with popularity. (Even more than now.)
  • Are we already on this road? Despite the great wealth of billionaires, the differences in material well being between the rich and poor in the US is probably less than ever. This is because to the extent that the wealth is consumed (and much stays invested until given away) goes to purchase status goods or rarer good with a small incremental increase in quality.
  • If material wealth ceased to be as important, there would still be inequality, but it might well be in the number of fans that your endeavors had. Is that better, given the difficult in redistributing that sort of immaterial wealth?
  • What if patents (and other intellectual property) ceased to be necessary because inventors were compensated in status rather than monopoly rents? Would this lead to a flowering of creative endeavors or just lead to different problems such as how to make sure foundational creators were adequately compensated with status?
  • Is the redistributive impulse really about wealth or status? Probably the latter, notwithstanding that no one talks about it in those terms. Thus, if the redistribution of material wealth were entirely successful– or ceased to be important, there would still be differences in status between people. Would we really be better off in the eyes of the redistributionists?

For those of us who have been successful at accumulating material wealth, how would we feel in a society that valued popularity but not our skills? We might find out when, in the future, everyone is in show business.

On Becoming More Like Sweden

Samuel Hammond released a paper on The Free-Market Welfare State. I had a few thoughts:

1. I am generally sympathetic to the idea of trading greater micro-economic freedom for a somewhat more generous income support system. I would prefer that that greater generosity come from the private sector, but even without that modification, such a trade would probably leave us better off than the status quo.

2. The studies used to support the proposed changes are remarkably weak. I don’t doubt there are improvements to be made but I would hope for better empirical data.

3. Consider whether such changes are more likely if many of these programs were block granted to the states, perhaps with some increase in funding. Then you get to use states a laboratories and potentially try many different reforms, while competition for workers encourages states to design better programs.

4. Consider dynamic scoring of the revenue effects of regulatory relaxation (i.e. more micro-economic freedom) and using those increased revenues to pay for more generous income support payments. I suspect that making such payments more generous is the only way they might be approved politically. (This is the same reason why the 2017 tax bill could not be revenue neutral, BTW.)

5. Is there any reason this needs to be linked to the state? Consider making state payments supplemental to those provided by private organizations. For example, the government could set a support level of $10K/year, that would reduce by a dollar for each dollar of private support made available, and give citizens tax credits for money given to such private support. I know this suggestion is too crude to workable, but it would be nice to avoid the state crowding out the supports of civil society further than it already has.

6. Given the magnitude of medical costs, you probably need to address those specifically in ways that don’t involve spending more money. This is bound to be politically problematic, but you might be able to do something as part of a larger trade.

Why Does the News Focus on Government?

Tyler Cowen writes “The real puzzle this year is why so much of America’s noxious discourse has become concentrated in national politics.” This is an interesting question, but the phenomenon of America’s discourse being focused on politics (and government) is not unique to this year. I don’t have a great answer, but I do a have a few thoughts:

1. The mass media discourse is only a small part of the actual discourse in America. If you looked closely at the proliferation of online discussion platforms, I suspect you would see the vast majority of discussion is on non-political topics. Politics has some universal interest, however, so it is disproportionately covered by media with a universal reach.

2. We know more about what is going on in government and that leads to news coverage of the political. The easy access to information makes stories about the political easy to write so they get written. The easy access exists both because (I) politicians are elected creatures and want to reach a mass audience, and (ii) open government laws make it easier to get information about government activities than those of private entities.

3. I question whether this phenomenon is stable. Just as no TV show gets a 30 share anymore, I hypothesize that coverage of politics will become more niche just like everything else. I am not sure whether that change would be good or bad.

Behavioral Changes in Large Groups

As I listened to this podcast I was struck by the link between the selfless behavior described and behavioral economics. They both seem mainly to describe behavior in small groups.

For example, the behaviorists describe many ways in which individuals are irrational in decision making (e.g. being more averse to losses that they would value like gains). Yet stock markets operate efficiently at least in the sense that no one can use these insights to consistently profit. The behavior is observed in individuals, but in not when they act with many others in a crowded market. Why? The structure of the market (*e.g. opportunities for arbitrage) bleeds the irrationality out of market prices.

Likewise, the selfless traits of individuals (and perhaps their innate sense of justice) also seem to get lost when they deal with others in large anonymous market– witness past political demands for mandatory minimum sentences, multi-level marketing schemes, people taking advantage of government programs who are not truly needy.

The simple conclusion is that crowded markets (and perhaps other spheres) produce more rational results– but that is not always a good thing.

I suspect there are deeper insights to be had about institutional design to incorporate this insight, but for now I leave that to others.

Microsoft TV

Why is there not Microsoft TV to compete with $99 boxes from Apple, Roku, Amazon and Google?

Ii seems to me Microsoft should sell a $99 box that runs a variant of Windows 8.1. If Apple, Roku and Amazon can make such a box, why can’t Microsoft. This device could run media apps for Windows RT and the Xbox One.

I am probably being overly simplistic, but it seems like For the first time in years Microsoft’s platforms are well aligned to make this happen. Xbox One is running a variant of Windows, so making its apps run on this device should not be too difficult. The Windows RT apps run in a much more constrained environment that is well suited for a device rather than a PC. Now that WIndows is running on ARM, if necessary they could use an ARM processor. Windows now runs leaner than ever, reducing the hardware resources (and cost) needed for such a box. The acquisition of Nokia gives Microsoft access to personnel skilled in hardware manufacturing and sales.

This may not be a billion dollar business, but it preserves Microsoft’s ability to keep its platforms and services wherever people might want them and that should be important to them, especially if their services are not welcome on boxes running of other platforms, e.g. Android TV, Fire TV or Apple TV.

Realizing the Promise of Using Xbox One as a Media Hub

The original unveiling of the Xbox One touted its prowess as a media consumption device. Its HDMI input would allow it to be used to watch TV and other apps would bring the user other media. The new Kinect would allow everything to be controlled futuristically by voice.

With the release of the Smartglass beta, some of that promise may finally be realized, but it was not always so.

When the Xbox One came out, the Xbox wasn’t so great at processing certain 5.1 signals from the HDMI in, voice proved to be awkward as a primary input mechanism and the Xbox interface combined with a controller or remote was not a great experience either. Further, those people with DVRs could only watch live TV. They could not access or set shows to record.

The new smartglass beta overcomes the most serious of those problems. Here are the ways:

  • It provides a slick, easily navigable second screen interface to access content on all the Xbox One media apps.
  • It duplicates the functionality of a DVR remote so that you can access all the other features of your DVR besides live TV.
  • It provides an serviceable way to move around the Xbox onscreen interface.
  • It provides additional information on various possible media selections, e.g. a program synopsis.
  • Controls for volume, play and pause (and other transport controls) are available from anywhere—no matter what content source you are watching, be it Netflix or live TV.
  • Finally one guide and Bing searches are really useful enabling relatively easy access to content across services.
  • It turns out a second screen better than voice control.

Further, the sound pass-through issues with the HDMI in appear to have been resolved and the Kinect acts as a really effective IR blaster to control your DVR, TV and Receiver.

Although it is not perfect and there is much room for improvement, this my be the best integration of a remote control with robust second screen content selection out there. The Harmony app has no second screen content selection and all other second screen apps are unique to individual media sources and lack any universal remote capability.

Despite its promise, the current implementation is not without its problems:

  • When switching to watch TV, the Xbox One does nothing to get to live TV on your DVR— the only place channel selections can operate. Smartglass should send command to make sure the DVR is displaying live TV whenever starting the TV app and whenever changing channels after using the remote control functions. (For TiVo sending the following three commands would do just that: Menu, Guide, Guide (which will get you to Live TV no matter where you are).
  • It takes too long for TV listings to load on smartglass.
  • Support of OneGuide in Xbox apps is inconsistent. For example there is no Netflix in OneGuide and Vudu doesn’t show selections from your library.
  • In experienced some freezes and dropouts when watching a TiVo Roamio  on one of my Xbox Ones, but not when using a TiVo Mini with another. It is hard to know whether these issues are significant, but how would I get them fixed if they persist?
  • There is no good way to play content on a local network server. Some content can be played from OneDrive, but that is less than ideal. A nice Plex or DLNA client would be welcome.
  • The Blu-Ray played in the Xbox One still has no 3D capability. The means I have to keep a standalone Blu-Ray player.

I hope that the Xbox One team addresses these issues and continues to work on these features. There is a great deal of promise in the Xbox One for home media aficionados.

New Purchase: A USB Second Monitor

I recently purchased the AOC E1649FWU, a 16″ USB powered portable second monitor for less than $90. I bought it with the idea of taking it on vacation so that when I have work to do with the laptop I bring along, I will have the use of a second monitor.

I have every intention of using it that way, but right now it has found a home as a second monitor for our family room PC. It works surprisingly well as a second monitor that can be brought out for occasions when doing substantive work on that PC and put away (so as not to clutter the desk at other times).

The monitor fits into an old 17″ laptop bag along with our new ultrabook and is powered by USB, so no need for a heavy power supply.

Used Games on PS4 and Xbox: Policies Not So Different

After the Sony PlayStation 4 E3 press conference announcing that PS4 games could be resold while the Xbox One places restrictions on transfers of games, the Sony policy is being hailed as more “pro-consumer” than that of Microsoft.

I suspect there is less difference than meets the eye and what difference there is exists because of technical differences in how the two consoles handle the DRM (digital rights management) for game software. Contrary to exaggerated claims, it is not as if the PS4 games have no DRM—after all it will obviously not be possible to make copies of your new PS4 games for your friends.

The difference is that Sony is handling DRM at the level of the disk itself, whereas Microsoft is handling DRM by associating a given game with a users online Xbox Live account (the same as their Microsoft Account).

On either console when a game is transferred to a new user, there must be a mechanism of preventing the transferor from continuing to use that game. In the case of the Xbox One, a game seemingly can’t be played for more than 24 hours after the console has “checked in” online to confirm the the player is still the authorized owner of the game. In the case of the PS4, the disc itself must be in the drive to play the game.

In theory these systems need not accord significantly different rights to their users as long as there is a means of transferring a game from one Xbox Live account to another Xbox Live account. In practice, the MS policy may be more restrictive in the following ways:

The bottom line is that we don’t yet know whether these restrictions will make a big difference between the Xbox One and the PS4.

In addition, there are some significant advantages to the Xbox One system:

  • No need to swap discs to play different games—something I personally dislike and which limits my enjoyment of older titles.
  • In a house with multiple Xbox Ones multiple family members can play the same game simultaneously, e.g. we could play a private game of Halo on our four consoles using just one purchased game.
  • Game distribution need no longer involve expensive retailers.
  • You can have have access to your entire game library from any console.
  • You can enable third party add-on storage (e.g. 3TB hard drive) without worrying about DRM.

Of course Microsoft could have set up a a dual system where certain rights were accorded to digital purchases and copies played from physical discs lacked those rights, but I suspect that would have angered retailers.

What should be obvious now is that (i) there is no pareto-optimal way to move to digital distribution, and (ii) neither system is inherently more “pro-consumer.”