Detrended

Trying to ask the right questions.

This is great:

“I want to stress that, despite my feelings about the FDA, I don’t think individual FDA bureaucrats, or even necessarily the FDA director, consistently make stupid mistakes. I think that given their mandate – approve drugs that definitely work, reject ones that are unsafe/ineffective, expect people to freak out and demand your head if any unsafe/ineffective drug gets through, nobody will at all no matter how many lifesaving treatments you delay or stifle outright…

…we’re open to paying limitless costs, as long as it lets us avoid a very specific kind of scandal which the media will turn into 24-7 humiliation of whoever let it happen. If I were a politician operating under these constraints, I’m not sure I could do any better.”

You could apply the same to any bureaucracy. I know from personal experience that the incentive structure within bureaucracies can create perverse outcomes, even in less media-obsessed departments. Individual risk aversion (i.e. self preservation) tends to dominate all else.

The Financial Times ran a good opinion piece on central bank digital currencies (CBDCs) last week, arguing that they “are a solution looking for a problem”.

For those out of the loop, CBDCs have been all the rage since China’s central bank announced it was testing the E-Yuan in the real world, with the aim of having it operational by the Beijing winter Olympics in February 2022. The announcement was met with calls from influential authors such as Niall Ferguson and Martin Wolf for central banks in countries such as the United States to introduce their own CBDCs as soon as possible, or risk the “rise of an alternative financial system that essentially bypasses the Federal Reserve and potentially also the U.S. Treasury”.

However the authors, Stephen Cecchetti and Kim Schoenholtz, argue that such fears are misguided. Their reasoning is threefold —

  • one, “the public and private sectors are already moving to provide cheaper, faster, more reliable, and more accessible systems that operate both within and across borders”;
  • two, CBDCs would risk “disintermediation, currency substitution, and a greater role for the state in credit allocation”; and
  • three, “using CBDC means everything we do becomes traceable”.

Last month the RBA told the committee on Australia as a Technology and Financial Centre that its report on wholesale market use of CBDCs was close to being finalised, and that it was “continuing to closely monitor the case for a retail CBDC and is engaging with some other central banks on possible use cases, including for cross-border payments”.

While RBA governor Philip Lowe has previously said Australia’s central bank “does not consider that a policy case has yet emerged for issuing a CBDC”, if every other central bank jumps off the CBDC bridge, you can be sure the RBA will follow. If that looks like it might happen, the issues highlighted above will warrant serious debate.

There was a key departure from the FTC last week, with former Obama-era antitrust official and University of California-Berkeley economist Carl Shapiro walking away:

“The lead economics expert in the Federal Trade Commission’s antitrust suit against Facebook has parted ways with the agency, two individuals familiar with the case said — adding yet another impediment to the regulator’s largest court fight.

The FTC is now looking for a new expert, just three weeks before the agency must decide whether to file the new version of the Facebook lawsuit after a D.C.-based judge threw it out last month.” … Shapiro has been critical of [FTC Chair] Khan’s approach to antitrust, particularly her view that enforcers focus too heavily on a so-called consumer welfare standard that emphasizes price as the main sign of a lack of competition.”

As I’ve said before, Khan — an unelected political appointee — wants to rewrite the law to one where proving consumer harm is no longer a requirement of antitrust, opening it up to be used as a cudgel to beat down any company not in favour with the administration.

One of the biggest (of many) failures during this pandemic surely has to be public officials — experts, if you will — systematically undermining their own advice to the point where only those with wearing political blinders can take them seriously in anything related to their… expertise. Take Anthony Fauci, chief medical adviser to both Trump and now Biden:

“Additional evidence suggests that… Fauci’s reversal, which came at a time of political polarization, contributed to the evolution of masks from a basic, precautionary mitigation strategy to a badge of political allegiance. … Such high-profile mixed messages in a short time frame, without substantive new data to justify the change, generated confusion and a backlash from politicians, other experts, and the general public.”

In Australia, our government’s ‘expert’ panel of immunisation advisors, ATAGI, has been farcical in its constant shifting of the goalposts to the point where the public’s confidence in a perfectly good vaccine is so low that half of Australia is imprisoned in a lockdown while more than 3 million vaccine doses sit unused.

I’m not optimistic that a reliance on ‘experts’ will wane with the pandemic. Politicians love being able to deflect “to the best available advice”, in an attempt to avoid accountability for their decisions. This isn’t new — many consultancies exist purely to ex post facto justify a political decision by reverse-engineering a report, which the politician can hold up and call “independent, expert advice”.

Then there’s the experts themselves, who clearly love the attention — Fauci will no doubt profit handsomely from this crisis, already capitalising on his newfound fame to publish a short book.

It’s a vicious cycle.

“Shares of Chinese companies listed in the US have seen their biggest two-day fall since the 2008 financial crisis.”

China’s government is coming down hard not just on Big Tech (which has been ongoing for several months) but also Big Education. Xi Jinping is clearly trying to restore some kind of Marxist, anti-profit anti-speculation mantra and he’s doing it by hitting China’s largest companies.

But Marxism isn’t confined to China as Joe Biden clearly has a taste for it too, with his albeit slower push to break up US Big Tech. I bet he wishes he had the authority of Xi Jinping — then he wouldn’t have to mess around appointing antitrust zealots to lead agencies, putting a coherent consumer welfare argument to a judge, and so on.

But when you tear back the institutional protections that exist in the US, there isn’t much difference between Biden and Xi: both are determined to split up their respective country’s most productive firms to score cheap ideological points, consumers be damned.

President Biden has appointed yet another pro-antitrust zealot to a prominent position in the bureaucracy, with Jonathan Kanter nominated to lead the Justice Department’s antitrust division:

Kanter is known as an adversary of giant tech corporations including Google and Apple. He has represented large companies like Microsoft, as well as smaller tech companies like Google critic Yelp. He is a partner at the Kanter Law Group, which describes itself as “an antitrust advocacy boutique.”

“Throughout his career, Kanter has also been a leading advocate and expert in the effort to promote strong and meaningful antitrust enforcement and competition policy,” the White House said in a news release.

The battle over the next few years is shaping up to be economics and legal precedent versus an ideologically-driven administration that has already made up its mind about Big Tech (guilty!), evidence and unintended consequences be damned.

This is an… interesting take by President Biden:

“They’re killing people,” Biden said when asked what his message was to social media platforms like Facebook on the spread of false and misleading claims about the virus and the safety of vaccines that prevent it.

“The only pandemic we have is among the unvaccinated, and that’s — they’re killing people,” he continued.

Does spreading misinformation kill people? No, the virus kills people. If misinformation on social media plus a person’s gullibility or inability to think critically turns them into anti-vaxers then that’s a factor, but not what kills them.

Does Biden also have a problem with household conversations? Phone calls? Advertising for anything that might cause harm (say, alcohol)? Bumper stickers..?

Where does that logic stop, other than with the conclusion that the First Amendment kills people?

Interestingly, Facebook claims it “is helping save lives” with its vaccine finder tool and “authoritative information about COVID-19 and vaccines”.

Biden has had it out for Facebook for some time. I suspect no matter what Facebook was doing, he would find a reason to blame it.

The Australian government wants to empower a bunch of bureaucrats to “step in and take control of a company during a cyber-attack… including compelling them to install government software on their networks”.

I’m sorry, what? 😳

Tech policy in Australia is clearly being written by people who don’t have the first inkling as to how tech works. I’m beginning to suspect they don’t even know how a bureaucracy works in practice.

This really is dystopian fiction-level stuff.

That is, the underhanded tax and subsidy without taxing and subsidising:

“France's antitrust watchdog slapped a 500 million euro ($593 million) fine on Alphabet's Google on Tuesday for failing to comply fully with temporary orders the regulator had given in a row with the country's news publishers.

The U.S. tech group must come up with proposals within the next two months on how it would compensate news agencies and other publishers for the use of their news. If it does not do that, the company would face additional fines of up to 900,000 euros per day.”

Google will do what it did in Australia and strike confidential deals with French publishers to avoid the fines. It’s nothing more than a shakedown, with some of Google France’s revenue to be transferred to a few local media organisations, paid for by the French taxpayer (whatever Google ‘compensates’ news agencies with will be fully tax deductible against its local earnings) and increased barriers to entry for potential media competitors. 👏

Surprise, surprise. Pass a privacy-destroying bill in the name of counter-terrorism but make it vague enough that it can be used for any kind of spying and boom, that’s what happens:

“A major company says it plans to scour workers’ internet history for “adverse online behaviour” in a chilling example of how a proposed new law could apply to Australian workers.

Queensland power company Powerlink presented a number of examples of “online behaviours” it would seek to examine as part of a “digital footprint check” under a proposed amendment to security laws.

Listed in the presentation was the presence of news articles or media profiles featured in an employee’s internet search history that may bring “reputational harm” to Powerlink.

The company, which is owned by the Queensland government, also told union delegates it would search for “indications of poor reliability or trustworthiness, such as flagrant dishonesty” and if the person’s internet activity reveals signs they may “easily succumb to groupthink or other conformity pressures”.

Electrical Trades Union national policy officer Trevor Gauld said “one of the examples Powerlink gave was if an employee shared a political meme about legalised marijuana that might be their political view and that somehow that would be a breach”.”

File this under yet another example of poor policymaking from this government. It’s all secretive with no cost-benefit — at least one is never made available publicly or even referenced — and will have unintended consequences for years to come.