I had the honor of giving the commencement address to this year’s graduating economics majors at the University of Rochester, under circumstances that were trying in several ways.
First, I learned at 10:10 PM on Friday that I was giving this talk on Saturday morning. (It’s a long story. All the communication failures leading up to this were entirely my own fault.) I got to bed rather late that night.
Second, it was so ungodly hot that I chose to shed my cap and gown.
Third, there were, I think, only about 80 students present, spread evenly around a 967 seat auditorium (family and other guests were not allowed). Laughter and applause were therefore pretty sparse (though I suppose they might have been sparse for other reasons) and even what little could be heard was mostly not picked up by the microphones.
Other than that, I thought it was a good day. Those who have seen my 2017 commencement talk will recognize roughly the first quarter and the last tenth of this one, which I recycled. The intervening 65% or so is new.
Or click here.
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A nice 12 1/2 minutes. And, it had more of value for their future than most such speeches three times as long.
Excellent commencement speech.
Hi Steve,
Good talk – just one point I’d like to take up with you.
I agree that in almost all cases the price system is the best way to allocate resources. But I’m not sure this would apply to the vaccine rollout, where the government’s aim was to get it out as quickly and as simplistically as possible to as many people as possible. Yes, they had to trade-off this expediency with the cost of some misallocations that the price system would have redressed – but it’s not obvious to me that they got this part of the trade off wrong.
To introduce a vaccine distribution based on the efficiency of the price system probably would have required a more complex set of planning considerations than the blanket rollout based on the categories they chose (age and other high risk factors).
I’m not saying I can’t be persuaded by your argument – but you haven’t expressed any consideration for the increased complexity and execution time to roll out a vaccine distribution based on the price system, which would involve a more time-consuming process that might have proved to be overall less efficient than the government’s blanket roll out, which focused on more ease and speed, with older people and higher risk people targeted first.
Jim WK (#3): You make a fair point, which I hope (but do not promise) I will find time to respond to at length. But the quick response is that if you’d seen the algorithms that our speaker was trying to peddle as a substitute for using prices, I don’t think you’d believe that those plans were the winners in the complexity dimension.
Excellent address, but how does the price mechanism work inside the family or among friends? Do “time” and “attention” work as a substitute in these contexts?
I said in the post on vaccine pricing that given Govt restrictions due to avoiding deaths, then most rational people would bid for the vulnerable getting vaccinated first. This is because this will lead to the quickest removal of restrictions, once infections are de-coupled from deaths. Assuming the govt actually responds reasonably, of course.
@ Jim WK
One argument in favor of what you said and another (kind of) against:
1.) We’d also need to consider that the misallocation of vaccine was short lived — at least in the United States. Within ~60 days anyone who wanted the vaccine was able to get it.
2.)It’s alarming how many people — especially doctors — consider medicine and health care to be morally above such base considerations as price. The decisions taken with regards to vaccine distribution were encouraged more with classic Marxist principles than with any questions of expediency. And how few had the courage to speak? The status of the price mechanism got its nose blooded here.
I tend to agree with a lot of your sentiments expressed in your speech. A few practical problems though as I see it:
Imagine for a moment a newscaster says on FoxNews said that, when thinking on Memorial Day, we should think also of the British and for that matter all the soldiers who died trying to defeat the Axis forces (including I think the Chinese?) in WW2. I think someone who studied economics in the manner you have would largely agree with this. This shouldn’t be a controversial sentiment. But can you imagine for a moment the furor? Mu bet is many people would be irate at this expression. My point in raising this example is how dang difficult it is to get humans to think globally. We seem to have design issues that make that hard, though we have overcome it too many ways (thankfully). There are also just other practical issues where the dramatically increased trade we experienced in the 2000s with China really made a lot of workers who were affected by this competition angry. It might have made some sort of practical sense to gradually increase this concentrated shock, even if theoretical economics would say “why wait?!”
Another point you made, and I don’t remember the exact wording you used as I watched the video yesterday, was “you have to offer something valuable to expect economic profit in the long run… and you shouldn’t expect this to be easy.” But you’ve also in particular writings spoken about how our grandchildren’s grandchildren will mostly be way wealthier than we are today. And we today are much wealthier than our distant past ancestors. But I suppose if everyone is wealthier then you have competition for mates and respect still, which when everyone has a beautiful massive home and tons of leisure there will still be competition for love and adoration. Anyway, not sure I have a point here but just some stuff in the back of my mind as I watched.
“if you’d seen the algorithms that our speaker was trying to peddle as a substitute for using prices,”
How did USA do the roll-out? In the UK, it was based on vulnerable groups. Everyone got an invitation from their GP, based primarily on age. First over 80’s, then down the ages with other vulnerable groups included. There was no sitting in front of a computer hunting for slots, as Landsburg describes for USA. The socialised healthcare system in UK allows for this. It also facilitated rapid coordination of clinical trials of tentative therapeutics, which was not possible in the USA.
He says that unvaccinated people missed out on weeks of dancing or office productivity, but why is that? If the vulnerable are not protected, then restrictions will likely remain in place or people will die. Are only vaccinated people allowed to go out and go to work? How is that enforced?