Biden Plan “Lurches Into” the “Quagmire” of Government Picking Tech Winners and Losers

(p. A23) The Biden administration has put forward the biggest, boldest, most expensive expansion of government in at least a half-century.

. . .

The Biden plan doesn’t just tiptoe around the quagmire of the government picking winners and losers, or what has been termed “industrial policy” — it lurches into it. Hundreds of billions of dollars will be invested by government agencies, whose record of success with direct involvement in the commercial world is, at best, mixed.

A recent case in point: the 2009 American Recovery and Reinvestment Act, which, at $787 billion, was much, much smaller than the more than $4 trillion sum of the two Biden plans put forward thus far. While the 2009 stimulus did put much-needed dollars into the economy without fraud or abuse (as Mr. Biden likes to remind us), it didn’t achieve another of its goals: a swifter transition to clean energy.

As a 2015 Congressional Research Service report reviewing stimulus projects further noted, “Solyndra declared bankruptcy in late 2011 and defaulted on its $535 million loan, Abound Solar received about $70 million of its $400 million loan before shuttering its solar panel operation and filing for bankruptcy in 2012, and SoloPower never met the requirements to initiate its $197 million loan guarantee.”

None of this should be too surprising. Going all the way back to the creation of the Synthetic Fuels Corporation in 1980, which I covered as a New York Times correspondent, the federal government’s recurring efforts at directing energy transitions have mostly struggled.

. . .

No one should want the Biden plan to fall short. But given its vast sweep — I conservatively counted more than five dozen initiatives — the administration should increase its chances of success by leaning more heavily on private models for help and using tax incentives to a greater extent for efficiency.

For the full commentary, see:

Steven Rattner. “Handle Big Government With Care.” The New York Times (Tuesday, April 13, 2021): A23.

(Note: ellipses added.)

(Note: the online version of the commentary has the date April 9, 2021, and has the title “Biden’s Big Government Should Be Handled With Care.”)

Cuomo-Endorsed Closure of Indian Point Nuclear Reactors Increases New York’s Use of Fossil Fuels

(p. B6) For most of his long political career, Gov. Andrew M. Cuomo railed against the dangers of having a nuclear power plant operating just 25 miles away from New York City, saying its proximity to such a densely populated metropolis defied “basic sanity.’’

But now, the plant is preparing to shut down, and New York is grappling with the adverse effect the closing will have on another of Mr. Cuomo’s ambitious goals: sharply reducing the state’s reliance on fossil fuels.

So far, most of the electricity produced by the nuclear plant, known as Indian Point, has been replaced by power generated by plants that burn natural gas and emit more pollution. And that trade-off will become more pronounced once Indian Point’s last reactor shuts down on April 30 [2021].

“It’s topsy-turvy,” said Isuru Seneviratne, a clean-energy investor who is a member of the steering committee of Nuclear New York, which has lobbied to keep Indian Point running. The pronuclear group calculated that each of Indian Point’s reactors had been producing more power than all of the wind turbines and solar panels in the state combined.

For the full story, see:

Patrick McGeehan. “Nuclear Plant’s Shutdown Means More Fossil Fuel in New York.” The New York Times (Tuesday, April 13, 2021): A15.

(Note: bracketed year added.)

(Note: the online version of the story was updated April 13, 2021, and has the title “Indian Point Is Shutting Down. That Means More Fossil Fuel.”)

Zoning Regulations Restrict Building Affordable Homes

(p. A25) Although zoning may seem like a technical, bureaucratic and decidedly local question, in reality the issue relates directly to three grand themes that Joe Biden ran on in the 2020 campaign: racial justice, respect for working-class people and national unity. Perhaps no single step would do more to advance those goals than tearing down the government-sponsored walls that keep Americans of different races and classes from living in the same communities, sharing the same public schools and getting a chance to know one another across racial, economic and political lines.

Economically discriminatory zoning policies — which say that you are not welcome in a community unless you can afford a single-family home, sometimes on a large plot of land — are not part of a distant, disgraceful past. In most American cities, zoning laws prohibit the construction of relatively affordable homes — duplexes, triplexes, quads and larger multifamily units — on three-quarters of residential land.

For the full commentary, see:

Richard D. Kahlenberg. “Zoning Is a Social Justice Matter.” The New York Times (Tuesday, April 20, 2021): A25.

(Note: the online version of the commentary has the date April 19, 2021, and has the title “The ‘New Redlining’ Is Deciding Who Lives in Your Neighborhood.”)

Clean-Energy Requires More Transmission Lines Which Requires More Use of Eminent Domain to Seize Private Property

(p. B12) President Biden’s infrastructure plan proposes some tried-and-trusted methods to spur clean-energy development such as a 10-year extension of existing tax credits for solar and wind energy. More interestingly, it introduces an investment tax credit for high-voltage transmission lines.

. . .

The administration is certainly looking in the right direction: To reach President Biden’s net-zero emissions goal by 2050, the U.S. will need to expand electricity transmission systems by 60% by 2030 and may need to triple it by 2050, according to research published by Princeton University in December [2020]. That is because renewable energy-rich places such as the windiest regions aren’t necessarily close to population centers, where electricity demand is.

While the clean-energy industry probably won’t complain about a new subsidy, the tax-credit proposal is a bit of a head scratcher given that the real roadblocks to transmission lines have to do with permitting, much of which is in the hands of state and local authorities.

A shift toward e-commerce should push up productivity by eliminating workers needed in bricks-and-mortar stores, Mr. Gordon said. Videoconferencing should also help, though the public-transit sector could offset some of the gains because buses and rail transit will carry fewer riders, he said.

“For most transmission we need in the country, it’s not a cost issue or an access-to-capital issue, although transmission can be delayed because of cost allocation debates,” said George Bilicic, global head of power, energy and infrastructure at Lazard.

. . .

The proposed plan also calls for a so-called Grid Deployment Authority within the Energy Department to “better leverage existing rights of way” along roads and railways. That would be a good first step, though eminent domain—the power of the government to take private property and convert it for public use—remains largely within state regulators’ hands. While the Federal Energy Regulatory Commission has authority to grant natural-gas pipelines the right of eminent domain under the Natural Gas Act, there is no equivalent authority for electricity transmission under the Federal Power Act and little momentum in Congress to grant that provision.

For the full commentary, see:

Jinjoo Lee. “Productivity Looks Ready to Pick Up.” The Wall Street Journal Tuesday, April 6, 2021): B12.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the commentary has the date April 4, 2021, and has the title “Biden’s Grid Proposal May Be a Square Peg in a Round Hole.”)

The Princeton research mentioned above is:

Larson, Eric, Chris Greig, Jesse Jenkins, Erin Mayfield, Andrew Pascale, Chuan Zhang, Joshua Drossman, Robert Williams, Steve Pacala, Robert Socolowi, Ejeong Baik, Rich Birdsey, Rick Duke, Ryan Jones, Ben Haley, Emily Leslie, Keith Paustian, and Amy Swan. “Net-Zero America: Potential Pathways, Infrastructure, and Impacts, Interim Report.” Princeton, NJ: Princeton University, Dec. 15, 2020.

Chinese Chip Central Planning Creates “Stunning Absurdities That Defy Logic and Common Sense”

(p. B1) Liu Fengfeng had more than a decade under his belt at one of the world’s most prominent technology companies before he realized where the real gold rush in China was taking place.

Computer chips are the brains and souls of all the electronics the country’s factories crank out. Yet they are mostly designed and produced overseas. China’s government is lavishing money upon anyone who can help change that.

. . .

(p. B2) In a way, China is hoping to achieve the same kind of liftoff that helped it progress from making plastic toys to crafting solar panels.

With semiconductors, though, “the model starts to break down a little bit,” said Jay Goldberg, a tech industry consultant and former Qualcomm executive. The technology is eye-wateringly expensive to develop, and established players have spent decades accumulating know-how. Europe, Mr. Goldberg noted, once had many “incredible” chip companies. Japan’s chip makers are leaders in certain specialized products, but few would call them bold innovators.

“My point is, there is a ladder — China’s moving up it,” Mr. Goldberg said. But it’s “unclear which outcome they go to.”

. . .

At a top-level meeting on the economy last week, the Communist Party’s leaders enshrined technological self-reliance as one of the country’s “Five Fundamentals” for economic development.

Complete self-sufficiency in chips, however, would mean recreating every part of the lengthy supply chains for some of the most complex technology on earth — a mission that would seem to lead, if not to madness, at least to waste.

. . .

“Up until very recently — this year — the goal had been: With state backing, move up the value chain, specialize where China has a comparative advantage, but don’t really try and fall down the rabbit hole of trying to build everything yourself,” said Jimmy Goodrich, the vice president for global policy at the Semiconductor Industry Association, a group that represents American chip companies.

Now, “it’s very clear that Xi Jinping is calling for a redundant domestic supply chain,” Mr. Goodrich said. “And so the rules of economics, comparative advantage and the supply-chain efficiencies have basically been thrown out the door.”

The government is conscious of the dangers. State-run news outlets have amply covered the recent semiconductor flameouts. The message to other upstarts: Don’t mess it up.

When the state broadcaster China Central Television visited one stalled project in the eastern city of Huai’an recently, it found dozens of giant machines idling on the factory floor, many of them still sheathed in plastic.

“There have been some stunning absurdities that defy logic and common sense,” China Economic Weekly said.

. . .

“There is definitely a bubble in China,” he said. “But you can’t overgeneralize.”

. . .

“Something is bound to accumulate, whether it’s equipment, talent or factories, right?” Mr. Liu said. “If not you or the other guy, then it will be someone else who ends up using it. I think this might be the government’s logic.”

For the full story, see:

Raymond Zhong and Cao Li. “China’s Frenzy to Master Chip Manufacturing.” The New York Times (Monday, December 28, 2020): B1-B2.

(Note: ellipses added.)

(Note: the online version of the story has the date Dec. 24, 2020, and has the title “With Money, and Waste, China Fights for Chip Independence.”)

Differences in Study Results Are Seldom Due to Whether Study Design Is Observational or a Randomized Clinical Trial

(p. A17) The health system would be less burdened if more patients were treated before they require hospitalization, and there are promising therapeutic options that patients can administer themselves at home. This was the subject of a Nov. 19 [2020] hearing before the Senate Homeland Security and Governmental Affairs Committee.

Testimony from the hearing underscored an important issue: Too many doctors have interpreted the term “evidence-based medicine” to mean that the evidence for a treatment must be certain and definitive before it can be given to patients. Because accusing a physician of not being “evidence based” can be a career-damaging allegation, fear of straying from the pack has prevailed, favoring inertia and inaction amid uncertainty about Covid-19 treatments.

For diseases with established treatment options, holding out for certainty may be prudent. But when options are limited and there are safe treatments with evidence for effectiveness, holding out for certainty can be catastrophic. Requiring a high degree of certainty during a crisis may elevate the augustness of medical organizations and appease the sensibilities of medical professionals, but it does nothing for patients who need help.

The penchant for certainty is visible in the frequently updated treatment guidelines for Covid-19 from the National Institutes of Health. These guidelines were developed by scientists around the country, but because of a mentality that is biased toward virtually irrefutable evidence, no distinction is made for treatments with evidence for effectiveness that falls below the mark of certainty. This framework almost certainly has contributed to many avoidable deaths during this pandemic.

. . .

While some health officials dismiss nonrandomized studies, the Cochrane organization, an international leader in evidence-based medicine, published a review of several hundred studies showing that randomized clinical trials and nonrandomized studies of treatments generally yield similar findings. Modern epidemiologic and statistical methods can usually overcome biases inherent in nonrandomized study designs.

For the full commentary, see:

Joseph A. Ladapo. “Too Much Caution Is Killing Covid Patients.” The Wall Street Journal (Wednesday, Nov. 25, 2020): A17.

(Note: ellipsis, and bracketed year, added.)

(Note: the online version of the commentary has the date November 24, 2020, and has the same title as the print version.)

The Cochrane organization review mentioned above is:

Anglemyer, Andrew, Hacsi T. Horvath, and Lisa Bero. “Healthcare Outcomes Assessed with Observational Study Designs Compared with Those Assessed in Randomized Trials.” In Cochrane Database of Systematic Reviews, 2014.

“A Public Choice Analysis of Mandated Randomized Double-Blind Clinical Trials”

My “A Public Choice Analysis of Mandated Randomized Double-Blind Clinical Trials” was presented on April 13, 2021 in the Law & Economics session of the Association of Private Enterprise Education meetings. I am grateful to Ray DeGennaro and Matthew McClanahan for including me in McClanahan’s session and to Lauren Nicole Hughes for recording the session on her smartphone.

To some extent, the presentation was an outgrowth of my book:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.

Pfizer Refused Federal Subsidy so They Could “Liberate” Their “Scientists From Any Bureaucracy”

In September [2020], the CEO of Pfizer, Albert Bourla, appeared on CBS News’s “Face the Nation,” where he was asked about not accepting government funding for development.

“The reason why I did it was because I wanted to liberate our scientists from any bureaucracy,” Bourla explained. “When you get money from someone that always comes with strings. They want to see how we are going to progress, what type of moves you are going to do. They want reports. I didn’t want to have any of that. I wanted them — basically I gave them an open checkbook so that they can worry only about scientific challenges, not anything else.”

“And also,” he added, “I wanted to keep Pfizer out of politics, by the way.”

For the full story, see:

Philip Bump. “No, Pfizer’s Apparent Vaccine Success Is Not a Function of Trump’s ‘Operation Warp Speed.” The Washington Post (online posted Monday, November 9, 2020).

(Note: bracketed year added.)

Unintended Consequences of Centralized Lockdown in India Spread Covid-19

(p. A1) SURAT, India — The crowds surged through the gates, fought their way up the stairs of the 160-year-old station, poured across the platforms and engulfed the trains.

It was May 5 [2020], around 10 a.m. Surat was beastly hot, 106 degrees. Thousands of migrant laborers were frantic to leave — loom operators, diamond polishers, mechanics, truck drivers, cooks, cleaners, the backbone of Surat’s economy. Two of them were Rabindra and Prafulla Behera, brothers and textile workers, who had arrived in Surat a decade ago in search of opportunity and were now fleeing disease and death.

. . .

They were among tens of millions of migrant workers stranded without work or food after Prime Minister Narendra Modi imposed a national coronavirus lockdown in March. By spring and summer, these workers were so desperate that the government provided emergency trains to carry them back to their home villages. The trains were called Shramik Specials, because shramik means “laborer” in Hindi.

But they became the virus trains.

India has now reported more coronavirus cases than any country besides the United States. And it has become clear that the special trains operated by the government to ease suffering — and to counteract a disastrous lack of lockdown planning — instead played a significant role in spreading the coronavirus into almost every corner of the country.

The trains became contagion zones: Every passenger was supposed to be screened for Covid-19 before boarding but few if any were tested. Social distancing, if promised, was nonexistent, as men pressed into passenger cars for journeys that could last days. Then the trains disgorged passengers into distant villages, in regions that before had few if any coronavirus cases.

. . .

(p. A12) On March 24 [2020], at 8 p.m., Mr. Modi hit the lockdown switch. In a televised address, he ordered the entire nation to stay inside their homes for three weeks — starting in four hours.

The decision was pure Modi: sudden, dramatic and firm, like when he abruptly wiped out nearly 90 percent of India’s currency bills in 2016, a bolt-from-the-blue measure that he said was necessary to fight corruption but proved economically devastating.

Prafulla and Rabindra Behera had just finished a dinner of rice, lentils and potatoes, their usual fare. They lived in squalid, bare rooms in Surat’s industrial zone, sleeping wall to wall on the floor with a half dozen other laborers. Within minutes of Mr. Modi’s address, they started getting calls.

“Everyone was thinking the same: This will be over soon and somehow we’ll pass the days,” Rabindra said.

At the time, India had fewer than 600 known virus cases.

Many experts have criticized Mr. Modi’s government for overlooking the plight of migrant laborers, who suddenly had no work, no income and no support network in the cities. The government’s Covid-19 task force lacked migrant specialists and was hardly representative of India. Of its 21 members, only two were women and the rest were largely upper-caste men. Many of the migrant laborers came from lower castes and economically underprivileged backgrounds.

. . .

In Surat, the Behera brothers were down to their last bag of rice. They could not work — the factories were closed. But they weren’t allowed to leave the city, where virus cases were beginning to surge.

“We were trapped,” Rabindra said.

On May 1, India’s Labor Day, the railways ministry made a grand announcement: Shramik Specials. Routes were drawn up from Surat, Mumbai, Chennai, New Delhi, Ahmedabad and other cities deep into rural areas.

. . .

The Beheras were told they would quarantine for 21 days at a center and each was given a toothbrush, a slice of soap, a bucket to wash with and a thin sheet to sleep on.

But the next morning, Prafulla awoke with a splitting headache. A doctor didn’t think he had coronavirus but suggested, as a precaution, that he be moved into the courtyard, away from the other men.

The following morning, Prafulla could barely breathe and called his wife on his cellphone.

“Come and bring the girls,” he whispered. “I need to see you.”

An hour later, he was dead. A subsequent test revealed that Prafulla Behera was Ganjam’s first coronavirus death.

For the full story, see:

Jeffrey Gettleman, Suhasini Raj, Sameer Yasir, Karan Deep Singh and Atul Loke. “Rails Spread Virus as Workers Fled India’s Cities.” The New York Times (Wednesday, December 16, 2020): A1 & A12-A13.

(Note: ellipses added.)

(Note: the online version of the story was updated Feb. [sic] 2, 2021, and has the title “The Virus Trains: How Lockdown Chaos Spread Covid-19 Across India.”)

In the Early Fight Against COVID-19 in China “Front-Line Bureaucrats Were Consumed With Paperwork”

(p. A15) After Chinese leader Xi Jinping ordered rural poverty eliminated by 2020, bureaucrats in the southwestern city of Mianyang got busy—with paperwork.

Instructed to devote 70% of their time to the campaign, they diligently filled out forms certifying compliance, a practice known as “leaving marks,” said Pang Jia, a local judicial clerk who joined the effort. When higher-ups demanded photographic proof of their home visits, some aid workers made up for missing winter photos by posing in cold-weather clothing during summer house calls, Ms. Pang said.

Since taking power in late 2012, Mr. Xi has realigned Chinese politics with his domineering style and a top-down drive to forge a centralized state under the Communist Party. But his efforts are running into an old foe: bureaucracy.

Party observers say the drive for centralization in a sprawling nation too often fosters bureaucratic inertia, duplicity and other(p. A10)unproductive practices that are aimed at satisfying Beijing and protecting careers but threaten to undermine Mr. Xi’s goals.

Indeed, some local officials have become so focused on pleasing Mr. Xi and fulfilling party mandates that they can neglect their basic duties as public servants, sometimes with dire results.

As the new coronavirus spread in Wuhan in late 2019, for instance, local authorities were afraid to share bad news with Beijing. That impeded the national response and contributed to the death toll, according to a Wall Street Journal investigation.

Mr. Xi and other senior officials publicly lamented how front-line bureaucrats were consumed with paperwork instead of fighting the contagion. Officials dedicated hours each day to filling out multiple documents for agencies making overlapping requests for information, including residents’ body temperatures and symptoms.

For the full story, see:

Chun Han Wong. “Xi Jinping’s Eager Minions Snarl His China Plans.” The Wall Street Journal (Monday, March 8, 2021): A15.

(Note: the online version of the story has the date March 7, 2021, and has the title “Xi Jinping’s Eager-to-Please Bureaucrats Snarl His China Plans.”)

Only Very Few of Those Vaccinated Get Covid-19, and When They Do, Symptoms Are Mild or Absent

(p. A8) Nearly 83 million Americans have received at least one dose of a Covid vaccine, and it’s unclear just how many of them will have a “breakthrough” infection, though two new reports suggest the number is very small.

One study found that just four out of 8,121 fully vaccinated employees at the University of Texas Southwestern Medical Center in Dallas became infected. The other found that only seven out of 14,990 workers at UC San Diego Health and the David Geffen School of Medicine at the University of California, Los Angeles tested positive two or more weeks after receiving a second dose of either the Pfizer-BioNTech or Moderna vaccines. Both reports, published on Tuesday [March 23, 2021] in the New England Journal of Medicine, show how well the vaccines work in the real world, and during a period of intense transmission.

. . .

Only some of the virus-positive health workers in the California study showed symptoms, . . ., and they tended to be mild, suggesting that the vaccines were protective. That echoes data from the vaccine trials indicating that breakthrough infections were mild and did not require hospitalizations. Some people had no symptoms at all, and were discovered only through testing in studies or as part of their medical care.

For the full commentary, see:

Denise Grady. “The Vaccinated Can Get Covid, but the Odds are Slim.” The New York Times (Wednesday, March 24, 2021): A8.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the commentary has the date March 23, 2021, and has the title “Vaccinated People Can Get Covid, but It’s Most Likely Very Rare.”)

The study discussed above is:

Sacerdote, Bruce, Ranjan Sehgal, and Molly Cook. “Why Is All Covid-19 News Bad News?” National Bureau of Economic Research, NBER Working Paper #28110, Nov. 2020.

The NEJM articles mentioned above are:

Daniel, William, Marc Nivet, John Warner, and Daniel K. Podolsky. “Early Evidence of the Effect of Sars-Cov-2 Vaccine at One Medical Center.” New England Journal of Medicine (March 23, 2021).

Keehner, Jocelyn, Lucy E. Horton, Michael A. Pfeffer, Christopher A. Longhurst, Robert T. Schooley, Judith S. Currier, Shira R. Abeles, and Francesca J. Torriani. “Sars-Cov-2 Infection after Vaccination in Health Care Workers in California.” New England Journal of Medicine (March 23, 2021).