The Coming “Stimulant Crisis?”

Earlier this month the Centers for Disease Control and Prevention, in the Morbidity and Mortality Weekly Report (MMWR), reported that from 2015-2016 deaths from cocaine and psychostimulants (such as methamphetamine, Ritalin, dextroamphetamine) increased 52.4 percent and 33.3 percent respectively. In 2017, the CDC reported a total overdose rate of 70,237, and cocaine was involved in 19.8 percent of those deaths while other psychostimulants were involved in 14.7 percent. Opioids, primarily synthetic (fentanyl and fentanyl analogs), were found in 72.7 percent of the cocaine deaths and 50.4 percent of the other psychostimulant deaths. The report mentioned that provisional 2018 data indicate deaths involving cocaine and other psychostimulants are continuing to increase.

As I have written here and here, deaths related to cocaine, methamphetamine, and other psychostimulants have been on the rise for several years now, despite legislation in 2005 that was supposed to address the problem, and recently fentanyl has replaced heroin as the drug with which they are combined to make a “speedball”—a mixture aimed at reducing the negative “come-down” effects after the rush from the stimulant.

The most important sentence in the CDC report was this: “Increases in stimulant-involved deaths are part of a growing polysubstance landscape.” This should be viewed in the context of a recent study from the University of Pittsburgh that concluded:

The U.S. drug overdose epidemic has been inexorably tracking along an exponential growth curve since at least 1979. Although there have been transient periods of minor acceleration or deceleration, the overall drug overdose mortality rate has regularly returned to the exponential growth curve. This historical pattern of predictable growth for at least 38 years suggests that the current opioid epidemic may be a more recent manifestation of an ongoing longer-term process. This process may continue along this path for several more years into the future…Indeed, it is possible that a future overdose epidemic may be driven by a new or obscure drug that is not among the leading causes of drug overdose death today. Understanding the forces that are holding multiple sub epidemics together onto a smooth exponential trajectory may be important in revealing, and effectively dealing with, the root causes of the epidemic.

Should Cities Spend More on Transit?

Transit ridership is plummeting almost everywhere, yet officials in many cities are still devising hugely expensive plans for transit projects. One such city is Austin, whose leaders are talking about spending between $6 billion and $10.5 billion on new transit lines (and the final cost always ends up being more than the projections).

The need for these plans is contradicted by the rapid decline in transit ridership in Austin. Census data show that, despite a 59 percent increase in the number of workers in the last decade, the number of Austin-area employees who rely on transit to get to work has declined by more than 10 percent.

This post will take a close look at these census data and show how you can find similar data for your region. This is the first of two posts on this subject; the next one will look at Department of Transportation data.

Since 2005, the Census Bureau has sent an annual questionnaire to about 3.5 million households a year asking, among other things, how those who have jobs in those households get to work. Known as the American Community Survey, these data can be downloaded for just about any geographic area – state, county, city, metropolitan area, urban area, congressional district, or zip code, though the Census Bureau doesn’t post data for smaller areas since they may not be statistically accurate.

Data from every year from 2005 to 2017 can be downloaded from the American FactFinder web site. However, starting in July, the agency is transitioning to a new web site called I’ve already downloaded all of the tables that will be mentioned in this post and posted them, with some enhancements such as calculations of percentages, for you to use.

Transit’s Share of Commuting

The first question is how many people in the Austin urban area commute to work by transit and whether that number is growing or shrinking. This can be answered with table B08103, “means of transportation to work.” I’ve downloaded these data for the nation, states, counties, cities (or, in Census Bureau nomenclature, “places”), and urbanized areas and put them in one file for 2017 and, for comparison, a second file for 2007.

Between 2007 and 2017, transit’s share of commuting decline by more than 40 percent, and the number of commuters using transit fell by more than 11 percent.

New Study on Fiscal Federalism

The federal government spends $750 billion a year on 1,386 different subsidy programs for state and local governments. The number of aid programs has tripled since the 1980s as shown in the chart below.

My new Cato study describes 18 harmful effects of the federal aid system. The system undermines responsible and efficient governance. It encourages excessive and misallocated spending. And it reduces accountability for failures while generating costly bureaucracy and regulations.

The federal aid system stifles healthy policy diversity and undermines democratic control. And by imposing one-size-fits-all policies when there is no national consensus, the aid system divides society and increases political conflict.


Read the full study here

Why Section 230 Is Unstable

Everyone interested in social media should read Jeff Kosseff’s The Twenty-Six Words that Created the Internet. It provides an excellent history of Section 230, the legal foundation of social media. That might sound boring, but Kosseff makes it work by mixing stories and analysis without vitiating either. I agree with Kosseff that, problems notwithstanding, the benefits of Section 230 have outweighed its costs.

Given that, I don’t look forward to future editions of his book since they may document the “fall” of Section 230. In other words, the law is likely to be amended to limit the protections offered internet platforms. We have already seen changes meant to combat sex trafficking. Section 230’s most serious persistent vulnerability, however, comes from a mismatch between its statutory language and the larger world the law inhabits.

Our political world is divided between (let’s call them) Progressives and Conservatives. Progressives see society as a struggle between designated oppressor and oppressed groups. No one – not government, not the tech companies – should be neutral between these groups; everyone should favor the oppressed. Since the speech of oppressors is causally essential to the harms experienced by the oppressed, government and the platforms should suppress that speech to help the oppressed. Remember, no one is neutral in this endless struggle.

As it happens, given the extent of Progressive cultural authority, the language of Section 230 favors the Progressive cause. Here’s an edited version of Section 230(c)(2) that clarifies this point:

No provider or user of an interactive computer service shall be held liable on account of any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be…objectionable, whether or not such material is constitutionally protected…[emphasis added]

So if content moderators think speech offending the oppressed is “objectionable,” they can banish it from their service.

Huawei’s Blacklisting a Great Leap Toward Economic Decoupling

Huawei has been in the U.S. government’s crosshairs for over a decade. In 2008, U.S. policymakers convinced the Committee on Foreign Investment in the United States to block the Chinese technology firm’s acquisition of U.S. software company 3-Com on the grounds that the deal would threaten national security. For many years, I have suspected that the U.S. campaign against Huawei was motivated less by concern over specific security threats than by the desire to respond to China’s aggressive, discriminatory industrial policies in the technology space. If Beijing was going to subsidize indigenous innovation, favor companies that registered intellectual property in China, and encourage Chinese companies to “borrow” U.S. technology in a push to challenge American firms at the technological fore, then the U.S. response would be to inhibit the commercial success of the beneficiaries of those industrial policies. Huawei‘s emergence as a global competitor made it an obvious target.

Although it is certainly plausible that Huawei presents a security threat to the United States, that conclusion has never been demonstrated convincingly in any public forum by anyone with access to the information upon which such a conclusion should be based. There have been closed door hearings in which classified information was discussed and generated, which—if declassified and shared with the public—might convincingly corroborate these threat claims and maybe even justify the administration’s decision to put Huawei on the U.S. Commerce Department, Bureau of Industry and Security’s  “Entity List,” a move that could starve Huawei of needed inputs from U.S. companies. But it shouldn’t come as a surprise that policymakers who sit on intelligence committees or who serve in security-oriented federal agencies are probably predisposed to see security threats where others don’t or to discern nefarious intentions where the evidence is benign or even to interpret the absence of evidence as proof of the perpetrators’ craftiness.

Then again, when the standard of proof is the precautionary principle, the evidentiary thresholds aren’t especially rigorous. A threat possibility, however remote, tends to suffice.

Protecting national security is a legitimate function of government. Fulfilling that responsibility sometimes requires that international trade and investment be restricted. Since determinations of threats to national security often are based on classified information, the public has to trust that policymakers have reached the right conclusions and that the prescribed remedies are necessary and appropriate.

It is difficult to trust the Trump administration in this regard, as it has already demonstrated itself an unreliable arbiter of national security threats. President Trump has made a frivolity of the national security rationale for restricting trade. Last year, Trump invoked threats to national security to justify his tariffs on steel and aluminum imports. This year he concluded that U.S. security is threatened by imports of automobiles and auto parts. In those cases, the data and analyses “supporting” the national security threat conclusion were not classified, but publicly available. And you can count on your fingers and toes the number of people convinced that steel, aluminum, and auto imports present such threats.

Based on information that the U.S. public hasn’t seen, the Trump administration has deemed Huawei a national security threat. That may well be the right conclusion, but the U.K., German, and other governments that the administration has been pressuring to purge their networks of Huawei gear, seem unconvinced, and have resisted.

The Trump administration’s latest move to blacklist Huawei escalates already rapidly escalating tensions in the U.S.-China relationship. Putting the company (and 68 affiliates) on the Entity List means that U.S. firms can no longer do business with Huawei without first obtaining a special license, which can only be done after overcoming “a presumption of denial.” Earlier today, Google, Intel, Qualcomm, and other prominent suppliers announced plans to discontinue their current commercial relationships with Huawei. It doesn’t take a creative imagination to foresee worsening troubles ahead for U.S. businesses operating in China and, well, a deepening process of economic disengagement.

The bottom line is that when U.S. economic policy toward China could be successfully sequestered from the geopolitics, the relationship could be managed. Now our economic problems are viewed and magnified through a geopolitical prism and, for many, the calculations suggest that disengagement and decoupling is the optimum. But that, too, will be enormously costly.

To reiterate a conclusion from a recent op-ed:

By banning Huawei gear and putting pressure on third countries to do the same, the United States is effectively saying that a huge swath of 21st century trade—an estimated $12.3 trillion in sales activity across multiple industries involved in developing 5G infrastructure and producing 5G enabled products by 2035, according to the Congressional Research Service—will not be subject to the disciplines of the global trading system. If that doesn’t consign the WTO to insignificance, the ensuing race to carve up the world into spheres of influence based on competing 5G standards will.

In what will look like a replay of the Cold War, Beijing and Washington will compete for the loyalties of the rest of the world by offering carrots and threatening sticks to countries to adopt their respective 5G standards. Dividing the world into these technology blocs will deprive the technology ecosystem of global economies of scale and open the door to bloc-based tariffs and other forms of protectionism, making the world a poorer place. Creation of the open global trading system induced a steady climb in global exports from 4% of GDP in 1947 to 26% of GDP in 2015. Erecting tariffs and non-tariff barriers through that system would undoubtedly cause a decline in global trade and output.


A Truce In One of the Tariff Wars

On Friday, we had an event that is rare in trade policy these days: Some tariffs were reduced. As the Washington Post reported:

Trump did something unusual on the trade front: He removed a tariff

The United States agreed Friday to lift its tariffs on industrial metals from Mexico and Canada, clearing a major obstacle to congressional passage of President Trump’s new North American trade deal.

During the Trump administration’s time in office, there have been many excuses to raise tariffs, but few reasons to lower them, so this was good news. Of course, the administration’s actions don’t count as actual liberalization, because this wasn’t some long-standing tariff that had been bothersome for decades and we finally got rid of it. Rather, this was a tariff Trump himself had imposed on steel and aluminum imports in 2018 under Section 232 of the Trade Expansion Act of 1962, ostensibly on the basis of “national security,” but without evidence supporting that. Imposition of these tariffs led to retaliation from many of our trading partners, including Canada and Mexico. Rather than being new liberalization, Friday’s actions just get us back to where we started. 

Nevertheless, the decision to remove these tariffs on imports from Canada and Mexico is a welcome one. And the result is better than many people were hoping for. A few weeks ago, my colleague Inu Manak and I worried that the tariffs would be replaced by a formal regime of quotas, which can be worse than tariffs. Instead, the tariffs will disappear completely, although there is the possibility that if a surge of imports of these products occurs, the Trump administration could quickly reapply tariffs on certain products. The agreement is better than expected, but not perfect, and some details about “monitoring” imports still need to be worked out.


Professor Tim Wu Makes The Case Against Antitrust Policy

It is common to hear proponents of antitrust action against big tech firms talk up the potential for future harms to consumers from sustained dominance by Facebook, Google, and Amazon. 

In her influential “Amazon’s Antitrust Paradox,” lawyer Lina Khan argued that “the current market is not always a good indication of competitive harm” and that antitrust authorities should “ask what the future market will look like.” This sentiment was recently echoed by economist Jason Furman in a digital competition review for the UK government.

One of the best cases against such an approach was inadvertently delivered by long-time antitrust champion Professor Tim Wu at a Stigler Center conference on antitrust last week. While critiquing the consumer welfare standard approach in a debate with Tyler Cowen, Wu said:

everyone who is even vaguely honest as an economist will agree that dynamic costs matter more than static costs and dynamic benefits matter more than static benefits. But those are the hardest to measure, so we’ve gotten trapped in a world where the old joke about the economist and the street light has become the soul of the law.

Exactly. Antitrust policy can indeed tend to think of markets too statistically. But antitrust enforcers also have no special insight into the future of markets and available technologies, and hence the change in the balance of costs and benefits to consumers going forwards. Looking at a static market may well lead to mistaken conclusions. But it’s a complete leap of faith to presume that replacing static analysis (more accurate but incomplete) with dynamic analysis (supposedly comprehensive but wildly speculative) will deliver better outcomes for consumers.