My travels to Afghanistan

Afghanistan: Rebuilding the Central Bank after 9/11 — My Travels to Kabul

By Warren Coats

Kindle and paperback versions available at:  “Afghanistan-Rebuilding the Central Bank after 9/11”

Watching the collapse of the twin Trade Towers in New York on September 11, 2001 on the TV in my hotel room in Bratislava, I never imagined that I would be in Kabul several months later and spend 212 days there spread over 19 trips from January 2002 to December 2013 to help modernize Afghanistan’s central bank–Da Afghanistan Bank (DAB). I learned more than I taught and share the highlights in this book. I became friends with many wonderful Afghan people, and bonded with my IMF team members. DAB was almost completely rebuilt. Watching its eager young staff mature into effective managers was a joy. Whether it will last in Afghanistan’s uncertain political and cultural environment is an open question.

I learned as much as I could about Islam and its internal struggle to denounce Islamism (radical Islamic fundamentalism). I share details of the collapse of Kabulbank, Afghanistan’s largest bank, and the corruption surrounding it and its resolution. The IMF’s presence and work in Afghanistan was not without tragedy. The IMF’s resident representative, in whose guest facilities we stayed, was killed in a terrorist attack. And I learned much about walls.

Previous Books

One Currency for Bosnia: Creating the Central Bank of Bosnia and Herzegovina

by Warren Coats (2007)   Hard cover: One Currency for Bosnia

Zimbabwe: Challenges and Policy Options after Hyperinflation

by Warren L. Coats (Author), Geneviève Verdier (Author)  Format: Kindle Edition

Zimbabwe-Challenges and Policy Options after Hyperinflation-ebook

Money and Monetary Policy in Less Developed Countries: A Survey of Issues and Evidence

by Warren L. Coats (Author, Editor), Deena R. Khatkhate (Author, Editor)  Format: Kindle Edition

Money and Monetary Policy in LDCs-ebook

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Buy American

Buy American is un-American. Much if not most of what we already buy is American, meaning made in America. Though it would be rather challenging to identify products (leaving aside services) that are 100 percent made in American, i.e. that do not have at least some components produced abroad, 85% of U.S. GDP is domestically produced. So why is the slogan “buy American” un-American?

Buy American has several understandings. There are laws, such as the Buy American Act of 1933, that require the U.S. government to give preference to American goods and services over others in its purchases. To the extent such laws have any effect, they require the purchase of goods and services that would not otherwise be chosen–that would not otherwise meet the test of the best value for the taxpayers’ dollars. This law aims to protect American jobs. This, of course, is a misunderstanding of the reality. Buy American, when it changes behavior at all, protects some undeserving jobs at the expense of other jobs that are worth keeping.  It protects jobs producing goods and services that would not otherwise be profitable. In short, it keeps American workers employed in activities that are less productive than would otherwise be the case. In the long run, it does not increase employment but rather reallocates workers to less productive tasks. In short, buy American lowers our standard of living. Thus, we can be thankful that it only requires 51% domestic content to qualify as “American.”

So why does our current government adopt such policies? For the same reason we have slapped a tariff on Canadian steel. It is not to make the American economy more productive or to keep it fully employed (which it already was when President Trump imposed such a tariff for “national security” reasons (I kid you not).  Rather, like other “protectionist” measures, it is to protect the jobs of particular, favored industries or workers, or what you might call political corruption.  Such favored industries are not competitive without such protection or why bother.

Beyond the legal requirement for government to Buy American, the plea to the general public is voluntary.  But why should we purchase products that we otherwise would not have (because they were more expensive or inferior)?  As with government buying American, the effect is to draw workers into activities at which they are less productive than they would have been otherwise. So “Buy American” is un-American because, if taken seriously, it would lower our standard of living and is contrary to the free market and entrepreneurial spirit that has made America the prosperous society that it is.

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Replacing Social Security with a Universal Basic Income

The idea of a Universal Basic Income (UBI) in place of existing entitlement programs (Social Security, Medicare, Medicaid, food stamps, unemployment insurance, etc.) that is financed by a flat rate income or consumption tax calls for a deeper discussion of its financing. “Our-social-safety-net”

For purposes of illustration, lets assume a UBI of 18,000 dollars per year for adults and half that for children (under 20 years old). This is somewhat above the current average Social Security benefit for someone retiring at age 65.  The current American population of 330 million consists of about 82 million children and 248 million adults. Thus, the total cost of such a UBI would be about 5.2 trillion dollars. This would exceed total expenditures in 2019 of 4.4 trillion dollars, of which 2.7 was for the social safety net (entitlements–social security and welfare). Total Federal tax revenue in 2019 was 3.5 trillion dollars of which 36% or 1.26 trillion dollars was from payroll taxes (social security and Medicaid and Medicare). This left a staggering deficit in 2019 of almost one trillion dollars that had to be borrowed from China and others when our economy was at full employment and should have been in surplus. And now look at our shocking deficit in this pandemic year! But that is another story.

The goal of this note is to illustrate the significant progressivity that would exist with a flat rate consumption tax in place of the corporate and personal income taxes and the payroll tax when replacing existing safety net expenditures with a UBI.

The original rational for the regressive payroll tax to pay for social security pensions was that social security was a traditional retirement program funded from the savings of each pensioner. The assumption was that the pension it paid reflected the money that each worker paid into the so called but misnamed social security trust fund. In short it was characterized as what we call a defined contribution system (you get what you saved) when it was in fact structured as a defined benefit system (you get a defined amount no matter what you actually paid in). In fact, as Americans lived longer and longer, thus enjoying more and more retirement years, the system collapsed into a basically pay as you go system (today’s workers were paying for today’s retirees’ pensions). The trust fund has very little savings in it. So instead of the payroll tax funding the worker’s future pension it became a regressive tax funding current retiree pensions. The payroll tax should be abolished. “Saving Social Security”  

A flat tax (whether on income or consumption) has many economic virtues, with simplicity at the top of the list.  But a flat rate rubs some people the wrong way who think that the wealthier should pay more tax than implied by a flat rate. My sense of fairness calls for someone with twice the income (if we are focusing on an income tax) to pay twice the tax. That is exactly what a flat rate tax (the same tax rate for everyone whatever their income level is) provides.  Whether we go for an income tax or a consumption tax we should forget about the corporate income tax. It is more trouble than it is worth in a world in which many if not most companies operate globally (i.e. in many different tax jurisdictions). It only contributed 7% of total Federal tax revenue in 2019 and unfairly taxes the company incomes of company owners twice. “Principles of Tax Reform

A flat personal consumption tax that would raise the same revenue as raised by all Federal taxes in the U.S. in 2019 (3.5 trillion dollars) would require a 24% rate. But that revenue did not cover all of the government’s expenditure as noted above. In addition, replacing existing safety net expenditures of 2.7 trillion dollars with a UBI of 18,000 dollars per adult and 9,000 dollars per child (5.2 trillion dollars) would result in total Federal government expenditures in 2019 of 6.9 trillion dollars or 2.5 trillion dollars higher (5.2 – 2.7). A flat consumption tax rate of 47% would be needed to raise 6.9 trillion dollars. This seems very high for two important reasons. First it assumes a balanced budget for the actual level of defense and other non-entitlement expenditures in 2019, i.e. it raises almost one trillion dollars more than the government actually collect in 2019.  Secondly it is financing the additional 2.5 trillion dollars for the UBI from which the higher tax would be paid, i.e. the net tax would be lower.

Though the marginal tax rate would be flat (the same for everyone), the resulting tax burden would actually be quite progressive. To provide a rough idea of the net progressivity of the UBI with a 47% consumption tax, assume that all income is consumed (this would overstate consumption some for higher income families). The poorest families, those who have no income other than the UBI, and assuming a family of two adults and two children, would pay no net tax and receive a net income subsidy of $28,620 or $2,385 per month. For the median family in 2019 (50% income level) the average income was $63,030. But including their UBI their total tax payments would be $55,004 or an excess of $1,004 over their UBI for a tax rate on their (pre UBI) income of 1.6%. For the family at the 80% income level, the average income was $130,000 and their total tax payments would be $86,480 or an excess over their UBI of $32,480 for a tax rate on their earned income of 25%.  This is a significantly progressive outcome while preserving the flat marginal rate.

Individual states may well choose to provide assistance for individual specific purposes, as they do now, for example, for education at various levels. But at the Federal level every effort should be made to prevent such add-ons to our social safety net. If as we become richer as a whole, we choose to be more generous, the amount of the UBI can be raised (or lowered) but only for everyone equally. This would prevent individual interest groups from tacking on special assistance for themselves. The ability of such special interests to gain special favor is a major reason for the slippery slope of the creeping welfare state we now enjoy.

It is important that policies, whatever their good intentions might be, also provide good incentives for outcomes that are desirable for society as a whole. A danger with progressive marginal tax rates, is that the majority of taxpayers have an incentive to raise the rate on those with incomes greater than their own. Or at best there is no incentive for them to resist such a temptation. Soaking the rich is not only an unfair treatment of those who have prospered inventing and delivery goods and services we liked enough to buy, but it will drive them away to tax jurisdictions that better respect their property rights. One of the many virtues of a UBI financed with a flat rate consumption (or income) tax is that the only way to increase the average tax rate on the wealthy is to increase the UBI for everyone.

A UBI would fulfill our desire to help those in real need but would return the responsibility of individual decisions of how that assistance is to be used to the individuals involved. It would simplify and depoliticize the determination of who gets help and how much and would remove the burden of determining our proper tax obligation for most of us. It would thus greatly simplify the administration of such a combined program. It would better align the political incentives for the level of assistance with the preferences of society as a whole. While most people work for more than the income it generates–the self-esteem of being a useful member of society is also important–a UBI would remove the economic disincentive of many current welfare programs of working resulting from the loss of benefits when income reaches a modest level.

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Our Social Safety Net

Virtually every country provides assistance to their poorest citizens–to those who fall for one reason or another from normal employment. Approaches to fulfill this objective differ widely. The Federal safety net spending in in the United States in 2019 was 2,600 billion dollars. Total government (Federal, State, and local) entitlement spending was 2,900 billion dollars. Of this, about one third was for Social Security and one third for Medicare and Medicaid.

“The federal government funds 126 separate programs targeted towards low‐​income people, 72 of which provide either cash or in‐​kind benefits to individuals. (The rest fund community‐​wide programs for low‐​income neighborhoods, with no direct benefits to individuals.) State and local governments operate more welfare programs.”[1] This year, in response to the Covid-19 pandemic, the Federal Government has added about $3 trillion dollars ($3,000,000,000,000) for temporary one-time assistance for the impact of the forced interruption of production, and is likely to add more.

The goal of these programs is, or should be, to adequately support those needing it without creating disincentives to work and with minimal abuse (corruption). The CARES Act and other pandemic assistance programs were quickly created in an emergency. It is thus understandable that mistakes were made. As time goes on charges of corruption (politically motivated expenditures) are multiplying. The administrative challenges of suddenly making millions of individual payments quickly and correctly were and are huge.

There is a dramatically better way to do this. We might characterize our existing approach of government directed assistance (e.g. food stamps) as the Socialist Model. It is top down and dictates how the assistance is to be used. Replacing all of these programs with a Universal Basic Income (UBI) leaves the decisions on how its recipients use it with each individual. This might be characterized as the Individualist Model. It has many advantages over our existing approach.

A UBI would eliminate all government discretion over who receives assistance and how much they receive.  Every adult citizen would receive that same amount monthly (and every legal child would receive the same smaller amount). The government could not favor one group over another on any bases other than age. This removes political considerations from defining and administering the payments. Every birth and death in the country is recorded in a county hall of records and every legal immigration is recorded with the United States Citizenship and Immigration Service (USCIS). Thus, the records upon which payments would be based already exist. Using them would remove my need every year to submit a certified document to my pension plan stating that I am still alive. No special measures or supplements would have been needed to address the personal income shocks of covid-19.

One carveout would be required for medical insurance. Every person or family should be required to use part of its monthly UBI to buy a health insurance policy that at a minimum includes catastrophic care coverage. At the launch of UBI and this insurance mandate, insurers would not be allowed to refuse coverage to people with preexisting conditions and the government would cover the actuarial estimate of the extra cost of such conditions.

As the UBI would replace Social Security pensions, another modification would be for the unlikely case that the UBI would be less than ones current Social Security pension (which in 2017 was $13,824 for someone who retired at age 65). So, for such a person who has already retired or is, say, within five years of retirement, their UBI should not be less than their existing Social Security pension. But a UBI of $1,500 per month ($18,000 per annum) for everyone seems reasonable, which would make this case mute.

Those with a welfare state mentality argue that people can’t be trusted to spend such income wisely (from their perspective). I reject such thinking. There are among us, of course, those individuals with addictions and mental illnesses who are indeed not capable of making their own decisions and thus caring for themselves. Our laws and practices already provide for such special cases and would continue to supersede the rights of such individuals to make their own decisions about the uses of their UBIs.

But can we afford it? Today’s American population is about 330 million, of which about 80 million are under the age of 20. To get a rough sense of what is possible, if we replaced today’s safety net expenditures of 2.9 trillion with a UBI to the 33% poorest (110 million people, of whom 25% or 26 million are under 20 years old) in the U.S. in 2019 each person could received about $26,000 per year or about $2,200 per month. If children (those under 20) are paid half what is paid to adults, existing safety net expenditures could finance about $15,000 per child per year and $30,000 per adult if a UBI is given to the lowest third of the population in terms of income. For a family of four this would be an annual income of $90,000, which is above the median household income of about $64,000 in 2019, and is clearly excessive.

But a UBI must be universal. It must be paid to everyone for several simple reasons. Most importantly, it would eliminate the disincentive to work in the existing programs, which end if a person’s income rises above a specified level. With a UBI, every additional dollar of income joins an irreducible UBI. Every additional dollar earned make the recipient that much better off (the UBI amount plus the earned income). This is a very important feature. In addition, it would remove any political question over the level of income at which it should be withdrawn. It would be paid to everyone regardless of their income.

But paying the UBI to everyone, not just the lowest one third, would triple its cost. Can we afford it? Clearly those who pay taxes will have to pay more to cover this additional cost. But as the additional cost is to cover payments to these taxpayers, they would not pay more on net (depending on the nature and structure of our tax systems).  For reasons of equity and tax efficiency I have long advocated a flat tax, meaning the same marginal tax rate for everyone paying taxes. “My-political-platform-for-the-nation-2017” I would go even further and replace income taxation (both corporate and personal) with a flat rate, comprehensive consumption tax.  When a flat rate tax, whether income or consumption, is combined with a UBI, the net result is mildly progressive. Low income people pay no tax on net and in fact receive net income via the UBI (what Milton Friedman called a negative income tax). Middle income families might break even (receive a UBI sufficient to pay for their extra taxes) and for higher income families their extra taxes would be greater than their UBI, hence a progressive average tax rate system even with flat marginal rates.

A UBI with a flat rate consumption tax would enormously simplify our tax and welfare system while improving the financial incentives to work and returning more control over our lives to individuals from the state. Covid-19 dramatically demonstrates that the time has come to replace existing welfare systems with a Universal Basic Income (UBI).


[1] Michael Tanner, “When Welfare Pays Better than Work” CATO Institute, August 19, 2013.

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Supply Chains

When politicians and pundit refer to trade or supply chains, they invariable mean cross border trade or supply chains.  This is a mistake. President Trump recently provided a particularly nonsensical example:

“In Washington, President Trump lambasted corporate America for “these stupid supply chains” and said the pandemic had proven him right on the need to bring factories home.

“We have a supply chain where they’re made in all different parts of the world. And one little piece of the world goes bad and the whole thing is messed up,” he told Fox Business in May. “I said we shouldn’t have supply chains. We should have them all in the United States.” “Coronavirus-globalization-manufacturing”

Trade occurs whenever you sell your labor or whatever you produce and buy what you need from others. Trade starts at your doorstep and without it you would starve to death. Supply chains exist whenever you purchase inputs to whatever you (or the firm you work for) are making from someone else rather than making every component yourself. If you are a carpenter, you buy your tools from someone else.

You might think that you should confine trade and/or associated supply chains to your family or your village for some reason, but you would give up the efficiencies of greater specialization when trading more widely (maybe even across national borders). And such restrictions would lower–potentially significantly lower–your income and standard of living as well as the incomes of your trading partners.

This does not mean that there are no risks in relying on others to produce some of what you want. If there is only one source of what you buy, you risk going without if that source stops producing. But that is rarely the case. I briefly thought it might be for toilet paper in March when the supermarket t-paper shelves were empty for a few weeks. But I bought some on line from China and it was delivered to my door.

Manufacturers whose supply chains have only one source are taking a risk for whatever efficiency they enjoy. Having multiple suppliers or supply options is a form of insurance and is generally wise.  But it makes little sense for a Southern California manufacturer who buys some of its inputs from across the border in Mexico to be forced to shift its supply chain to Pennsylvania in order to have it “in the United States.” Transportation costs would be higher and with greater risk of weather or other transportation disruption. On the other hand, relying on the much closer source across a national border has the risk of an unpredictable President imposing a tax (tariff) on imports from Mexico. Our wise constitution prevents him from doing so on interstate commerce.  

The uncertainty of today’s world is causing firms to reevaluate the risks of long supply chains. That is prudent, but insisting that everything be produced and purchased within the United States is nonsensical and harmful for everyone involved.

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Are Venture Capitalists racists?

Shifting sovereignty from Kings to the people, was the beginning of human flourishing. In the United States, in its constitution the people returned only those powers to their government necessary to protect their wellbeing. The right to and protection of ones honestly acquired property is an essential aspect of this arrangement. This includes, of course, the right to invest our property anyway we choose.

Venture capitalists are those wealthy people who choose to take great risks in the prospect of large gains by investing in “startups” that have not yet established their profitability.  Put differently venture capitalists are prepared to finance an unproven idea/product/service that might gain public approval, i.e. might become profitable, though most of them fail.  As consumers we have benefited enormously from goods and services my parents never would have even imagined that a few wealthy investors took a chance on.

So the idea that the government might need to enact laws to insure that a venture capitalist’s investments do not reflect racial bias is shocking at several levels. “In the clubby world of venture capitalists, who spent $130 billion in the United States last year and helped anoint the world’s four most valuable companies and countless other successful start-ups, there is effectively no legal backstop that ensures people of color have an equal opportunity to share in its wealth creation.”   “Black-entrepreneurs-venture-capital”

First of all is the right of these investors to their property. They can give it all to their daughters if they want to.  Marxists and other egalitarians reject such a right but that would throw away the whole basis of the wealth our capitalist system has created that Marxists would like to redistribute.  But I want to focus on why capitalism minimizes the role of bias in our economic decisions.  This was explored long ago by Nobel Lauriat Gary Becker in his famous 1976 book on the Economics of Discrimination.

Becker’s basic point is that if your economic decision is influenced by racial or sexual or any other non-economic bias it will cost you money, i.e. you will make less than you otherwise would have.  If you hire a man when a woman was better qualified, he will contribute less to your company’s income than would have the woman, thus you pay a financial price for your bias. The same is true if you hire a white person when a black one was better qualified, etc.

The purpose of venture capitalist investments is to make a bundle by funding the next great idea. Most will fail but one or two turn into Facebook, or Amazon.  It may well be that a venture capitalist systematically under rates the potential of black entrepreneurs, i.e. that he suffers racial bias.  But in that case he will be less successful in his investments.  Capitalism will punish him for his prejudices and diminish his importance as a venture capitalist because it will diminish his wealth. None the less, an Irish venture capitalist may well bias her investments toward fellow Irishmen and a black venture capitalist may risk an extra break for a fellow black. But the profit motive of capitalism will discourage departures from objective evaluations of investment prospects.

The idea that a law should forbid or discourage racial or sexual bias when venture capitalists decide in what to invest is without merit.  Moreover, it is hard to imagine what such a law would look like and/or on what basis a government bureaucrat would overrule and direct the placement of a private investor’s chose of investments.

To peak briefly at the other–entrepreneurial–side of the equation, the unbiased opportunity provided by capitalism has attracted many foreigner entrepreneurs to our shores.  Steve Jobs (Apple, NeXT, Pixar), who was adopted at birth, was the son of Joanne Schieble who was Swiss-American and Abdulfattah “John” Jandali who was Syrian.  Steve Wozniak, Apple cofounder, was the son of Polish and Swiss-German parents.  Sergey Brin cofounder of Google/Alphabet escaped from the Soviet Union.  The famous architect, I.M. Pei, immigrated from China.  “How-12-immigrant-entrepreneurs-have-made-america-great”

Posted in Discrimination, Economics, immigration, racism, regulation | Tagged , , , , , , , , , , , , | 3 Comments

Independence Day Celebration

As we listen carefully to the current criticisms of America, we should see them in the context of the wonderful features of our nation that continue to attract tens of thousands of the world’s best and brightest to become Americans and thus add to the material and cultural richness of our lives. We should not lose sight of, nor stop defending, the features of our society that have made us the Land of Opportunity even as we confront and strive to deal with our shortcomings. Those motivated by making more money and those motivated by serving and doing good to others enjoy the incentives for both in our free enterprise system. We make money by serving others, by creating better things and services for the benefit of our fellow man.

Our rights to make our own decisions and speak our minds are protected by our Constitution and its Bill of Rights. Our property and commitments (contracts) are protected by the Rule of Law. Indeed, our history is not without sin, far from it.  Slavery was practiced almost from the beginning of time, and our new nation shamefully participated in the practice for almost the first hundred years of its existence. Discriminatory laws and practices replaced slavery for many decades beyond the end of slavery.  Though all Americans now enjoy the equal protection of the law, the uninformed prejudices of some persevere. Our culture of mutual caring that is nurtured by our capitalist economic system and the values taught by all major religions, continue to make progress towards shrinking and isolating bigots. But we have a ways to go.  We have engaged in wars that are not justified by our defense and that are inconsistent with our values. In this area our economic incentives are perverse.

Our freedom to speak out when we see wrong and to praise what is good are critical to preserving what is good and fixing what is not.  The “cancel culture” crowd seem more intent on tearing America down than building it up by fixing its weaknesses.  The current cancerous attacks on our freedom to speak out and debate the important issues of our day in the name of political correctness risks undermining our progress:  “America’s Jacobin moment”.  This is not to say that we should not strive to address our fellow Americans politely “What is wrong with PC?”.  But if we become afraid to express our views and concerns honestly, we lose the ability to understand one another and build mutually satisfactory compromises. “Do we really need free speech?”.

So on this celebration of our Declaration of Independence and the birth of our nation let’s commit ourselves to preserving what has made us great, which includes the ability to freely criticize what is not so great, and to admit and learn from our mistakes and to work at becoming better still: freer, responsible for our own lives, and more compassionate toward others.

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George Floyd, RIP

How should we respond to the horrifying murder of George Floyd by Derek Chauvin, a bad cop with “18 complaints on his official record?” “A Minneapolis-police-chief-promised-change-george-floyd’s-death-shows-hurdles”  Finding a constructive answer is not easy.  While it is difficult to watch the horrible death of George Floyd at the hands of a bad cop as three fellow policemen looked on without becoming enraged, those setting fires, smashing windows, and looting are not looking for constructive answers (or if we are to be extremely generous are not being thoughtful about what measures would actually be constructive) and should be locked up.

For starters, in looking for answers we should acknowledge that the problem (racism–unequal treatment of black Americans as well as other ethnic minorities in the law, then by law enforcement and by many people) has existed in America since its founding. But we should also acknowledge that enormous progress has been made over time, especially in recent years. Slavery has been abolished. Racial minorities are no longer discriminated against in the law (as opposed to law enforcement).  Even policing has improved considerably, though being arrested for “driving while black or DWB” remains too prevalent. And then there remain too many Michael Brown, Jrs, an 18-year-old black man, who was killed by Darren Wilson, a 28-year-old white police officer in Ferguson, Missouri in 2014 and too many George Floyds. Any would be too many.

A great deal has been done since Michael Brown’s murder to improve police training. The details are impressive. Medaria Arrandondo, Minneapolis’s police Chief, is black and is committed to furthering the work of his predecessor, Janeé Harteau, to expunge racism from the force and to rebuild trust between the police and the communities they exist to keep safe. While considerable progress has been made, why does it remain so difficult to provide black Americans with the equal treatment under the law to which every American is constitutionally entitled?

Evolution has genetically predisposed us to trust family and distrust if not fear others. Civilization, in part, has required that we overcome or at least tame this primitive impulse with moral teachings and laws (“do unto others and you would have them do unto you”) that facilitate our ability to live together and build trading economies to our enormous benefit. We learn what is “right” from our families, schools, churches, and the varied people we hang out with. We learn from the words and behavior of community leaders that we respect (some have made more positive contributions than others!). Institutional structures are also very important. They should provide incentives for behavior to conform to our moral and legal principles. Police Chief Arrandondo, for example, has increased the transparency of the police force (complaint records, webcams, etc.) in efforts to hold officers more accountable for their behavior.

In the area of policing there are two interrelated institutional impediments to good policing that we should address. Policing can be difficult and can be dangerous. “In a series of decisions beginning in 1967, the Supreme Court gutted [the Civil Rights Act of 1871] by permitting police and other government agents to claim they acted in “good faith” when violating citizens’ rights…. The Supreme Court decided government officials deserved ‘qualified immunity.’”  “Cops-kill-because-we-gave-them-the-legal-framework-to-do-it”  This must end.

“‘Sen. Amy Klobuchar, a top contender for Vice President candidacy for Joe Biden, was the chief prosecutor for Hennepin County (including Minneapolis) from 1998 to 2006. Klobuchar, who was nicknamed “KloboCop” by detractors,  “declined to bring charges in more than two dozen cases in which people were killed in encounters with police” while she “aggressively prosecuted smaller offenses” by private citizens, the Washington Post noted. Her record was aptly summarized by a headline early this year from the Twin Cities Pioneer Press: “Klobuchar ramped up prosecutions, except in cases against police.” [see previous link] This must end.

“Since 2012 there have been more than 2,600 complaints filed against Minneapolis police officers by civilians, according to data provided by Dave Bicking, who was part of the city’s Office of Police Conduct Review. Of those, the data showed just 12 resulted in an officer being disciplined. Among those, eight received written warnings. The most severe penalty was a 40-hour suspension.” [see previous link and “My-fellow-brothers-sisters-blue-what-earth-are-you-doing/?”] This must end.

The other institutional impediment to good policing is the understandable but pernicious self interest of police unions in defending their members from charges of misconduct. “Lt. Robert Kroll, [has been] president of the Police Officers Federation of Minneapolis since 2015. Like his union counterparts across the country, Lt. Kroll has been a fierce advocate for greater autonomy for officers…  Lt. Kroll has criticized the Black Lives Matter movement as a terrorist organization.” “Minneapolis-police-chief-promised-change-george-floyds-death-shows-hurdles”

I am reminded of my mother’s complaint (she was a grammar school teacher) that the teachers’ union was the biggest impediment to improving the quality of education in California. Any monopoly (government, unions, monopoly firms) ultimately sacrifices the public interest for their own if allowed to. This must end.

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The Vaccine: Who gets it first?

For context, the common cold is caused by coronaviruses (with rhinoviruses being the most common virus) and there are no vaccines for colds. More seriously, because colds are rarely more than annoying, HIV, the virus that causes AIDS, has no vaccine despite almost 40 years of trying to develop one.  While AIDS was fatal for many years there are now treatments that hold it in check, but the vaccine remains elusive.

There is hope that an effective vaccine will be found soon for SARS-CoV-2, the virus that causes covid-19. In fact, six potential vaccines have entered phase one of human trails (the first of three required testing phases). Once a potential vaccine has been developed it must be tested first for its safety (side effects and who is at greatest risk of these side effects) and then for its effectiveness. On average it takes five to ten years to pass these hurdles and be approved for general use. Coronavirus-vaccine-here-are-the-steps-it-will-need-to-go-through-during-development

But the science has gotten better and the authorities have put great urgency on the development of a vaccine for this virus and seem willing to cut a few corners to speed up the testing and approval, though there are risks in doing so. Still “some of Mr. Trump’s top public health advisers have repeatedly cautioned that an effective vaccine might not be ready for widespread distribution for 18 months, and perhaps even longer. Mr. Trump ordered the creation of the Warp Speed program to try to speed that timeline.” Coronavirus-Trump-operation-warp-speed

Trump says the U.S. will have a vaccine by the end of the year (this year, 2020!!), which would indeed be a miracle. But even with a crash program to produce and administer it, it will take several years from approval before enough can be produced and distributed for everyone to be vaccinated. Thus, one important question is who gets it first. Lets-say-theres-a-covid-19-vaccine-who-gets-it-first

Answering that difficult question can be approached in several ways. One is to ask what would be fair. Is it fair to give everyone an equal chance at being first, second and third….? That would require a lottery and would mean that some who would benefit more and thus have a greater need for the vaccine (health care workers being an obvious example) would often be well down the line from say children less likely to get, or at least suffer from, covid-19 in the first place. So, an ethically more defensible criteria would be to establish medically which hierarchy of priorities would save the most lives in the long run.  Perhaps after healthcare workers and first defenders, children should be next so they can get on with their life-altering educations and avoid infecting their parents and grandparents, etc.

The reality, however, is that whoever owns the vaccine will have the largest say in the determination of the priorities of who gets it. Without that incentive only government labs would be working to develop a vaccine and how dreadful that would be. Private pharmaceutical companies are spending multiple millions of dollars in the race to develop “the” vaccine first. Their profit reward will come not only in initial dollars and cents but in the boost to their reputations, which will also reflect how the public sees their pricing and allocation of their product. We are quite used to the fact that hot new products–think of the first iPhones–are relatively expensive and go to those willing to pay the most. As production expands and demand is more widely met, prices come down. Governments are major funders of the research and development going into the search for a vaccine and they will rightly consider themselves entitled to an owner’s reward (first priority). Coronavirus-vaccine-frontrunners-emerge-rollouts-weighed

Policy is further complicated by whether exclusive ownership or more social collaboration (the equivalent of open source code) will produce the best vaccine the quickest.  Governments might give large financial prizes to the best two or three vaccine ideas to those developing them rather than patents to encourage information sharing.  Moreover, there can be more than one winner. The first vaccine approved will not necessarily be the best in the long run. There is a strong case for going forward with several vaccines. This view is put forth in an article by Larry Corey of the Vaccine and Infectious Disease Division at Fred Hutchinson Cancer Center, John Mascola and Anthony Fauci of the National Institute of Allergy and Infectious Diseases, and Francis Collins, head of the National Institutes of Health. Science mag.org/content/early/2020/05/12/science.abc5312

But who gets it first is an unavoidable and potentially very contentious issue.  “After controversial comments by the CEO of a French pharmaceutical company, French Prime Minister Édouard Philippe took the opportunity on Thursday to say that equal access to any vaccine that is developed is “non-negotiable.” Paul Hudson, the head of Sanofi, told Bloomberg on Wednesday that the United States would get the “largest pre-order” of a successful vaccine because it was the first to fund the firm’s research—a statement he later walked back.” Coronavirus-pandemic-vaccine-Sanofi-France-United-States.  But to say that “equal access” is non-negotiable is both ignorant and meaningless, ignoring the obvious fact that production for hundreds of millions of people will take months if not years to distribute.

It would be best if all countries agreed in advance (in a philosophical veil of ignorance) on the principles that would guide the priority of distributing vaccines. The company and country of the winner(s) should get a significant share of the initial (and subsequent) supply and within all countries those most in need for the protection of the broader society should get first priority.

“Secretary of State Mike Pompeo told an Israeli journalist on Wednesday that, ‘We’ll figure out the model for distribution when the time comes.’” Nations-jockey-to-see-who-gets-coronavirus-vaccine-first  As is so often the case these days Secretary Pompeo is wrong. Or as the Economist magazine put it this week: “For a man acknowledged to be highly intelligent, Mike Pompeo has a long history of talking nonsense.”   Mike-Pompeos-politicisation-of-foreign-policy-is-unworthy-of-him

 

 

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