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Hurricane Maria and Puerto Rico 5 Years Later

Now seems a useful time to re-assess some of the pronouncements made in the wake of the tragic disaster that struck Puerto Rico in September 2017. First,…

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Now seems a useful time to re-assess some of the pronouncements made in the wake of the tragic disaster that struck Puerto Rico in September 2017. First, fatalities of Americans (contra Mr. Trump’s seeming assertion these were not American) were much higher than some commentators claimed. Second, arguments that economic policies undertaken in 2016 and 2017 (i.e., the austerity measures associated with PROMESA) caused more deaths than Hurricane Maria are incorrect. Finally, the economic challenges that existed before the hurricane struck — including insufficient tax revenues — remain, even as the economy has rebounded.

The Impact on Excess Mortality

First, let’s recall that some commentators argued in the wake of the Hurricane that no more than 200-400 deaths occurred. Even after being tutored in terms of what the data meant, some continued to provide unrealistically low estimates.

From Sandberg, et al. (July 2019) in Epidemiology:

Now compare against shoot-from-the-hip comments on Econbrowser, such as this from Steven Kopits on 5/31/2018:

Excess deaths in PR through year end, those recorded by the Statistics Office, numbered only 654. Most of these occurred in the last ten days of September and the whole of October. While the power outages there were exacerbated by the state ownership of PR’s utility, a large portion of the excess deaths would likely have occurred regardless, given the terrain and the strength of the hurricane. Thus, perhaps 300-400 of the excess deaths would have occurred regardless of steps anyone could have made to fix the power supply. The remainder can be attributed essentially to the state ownership of the power utility.

I would note that excess deaths fell by half in December. Thus, the data suggests that the hurricane accelerated the deaths of ill and dying people, rather than killing them outright. I would expect the excess deaths at a year horizon (through, say, Oct. 1, 2018) to total perhaps 200-400. Still a notable number, but certainly not 4,600. [emphasis added-MDC]

Mr. Kopits’ updated (6/4) analysis concludes, even with updated data:

Thus, the year-end excess death toll of 1,400 may be treated as a firm number in practice.

I think “firm” is an adjective to be avoided in these situations. Here is a graph presenting selected estimates, from this April 2019 post, which includes some of the earlier estimates.

Figure 1: Cumulative excess deaths from September 2017, for simple time dummies OLS model (blue), OLS model adjusting for population (green), and Quantile Regression model adjusting for population (red), Milken Institute point estimate (black square) and 95% confidence interval (gray +), Santos-Lozada, Howard letter (chartreuse triangle), Cruz-Cano and Mead (pink squares), Kopits (teal triangle). Not pictured: Kopits estimate of 300-400 for October 2018. Source: author’s calculations, Milken Institute (2018)Santos-Lozada and Howard (2018)Cruz-Cano and Mead (2019), and Kopits (2018).

Austerity Killed More than the Hurricane?

What about arguments that austerity measures associated with PROMESA caused more excess mortality than the hurricane [extensive argument here] . In order to assess this argument, first consider mortality data through February 2018.


Figure 2: Mortality per month (blue). Gray denotes in-sample period; orange shading denotes Hurricane Maria and post-hurricane period; dashed line at PROMESA legislation. Source: Santos-Lozada and Howard, 2017, June release of Vital Statistics data.

Second, now consider constructing the counterfactual not incorporating austerity measures both before and after PROMESA implementation (legislation passed as of in July 2016, control in effect as of October 2016). I accomplish this by estimating two equations: (1) a simple averaging over the 2010-2015 period, and (2) a log-log OLS regression specification incorporating population estimates (as well as a dummy for October 2014). 2016 seems an appropriate break point for austerity given Brad Setser’s discussion of Puerto Rican finances. These specifications are discussed in this post. I show in Figure 3 the implied excess mortality figures.


Figure 3: Excess mortality per month calculated using averages 2010-15 (blue), and population adjusted using 2010-15 sample (red), population is cubic interpolation from IMF World Economic Outlook database data. Gray denotes in-sample period; orange shading denotes Hurricane Maria and post-hurricane period; dashed line at PROMESA legislation. Source: Santos-Lozada and Howard, 2017, June release of Vital Statistics data, IMF WEO April 2018 database, and author’s calculations.

Notice in neither case are most of the pre-Maria deviations statistically significant at the 10% msl. In other words, one could not typically reject the null hypothesis of no austerity-induced excess mortality, pre-Maria.

Third, it’s instructive to consider excess mortality from 2016M01-2017M08, and how it compares to excess mortality to that 2017M09-2018M02. If one assumes zero population change from 2016-17, then one gets the estimate of cumulative deaths (“avg. ’10-’16”) in red line, which indicates minimal impact of austerity.


Figure 4: Cumulative excess mortality per month using population adjustment specification (blue) using cubic interpolation of IMF World Economic Outlook database data, and using 2010-15 average (red). Orange shading denotes Hurricane Maria and post-hurricane period; dashed line at PROMESA legislation. Source: Santos-Lozada and Howard, 2017, June release of Vital Statistics data, IMF WEO April 2018 database, and author’s calculations.

However, the more realistic assessment relies upon adjusting the counterfactual for population. This leads to the blue line, labeled “log-log”), seemingly verifying the proposition that excess deaths began before the hurricane made landfall. However, interestingly, neither approach directly contradicts the point that most of the excess mortality since 2016M01 is due to the impact of Hurricane Maria.

I conclude that using statistical analysis, the inference that excess deaths due to pre- and post-Maria austerity exceed that of the aftermath of Hurricane Maria is extremely fragile.

Buttressing this view, I also find that, using electricity grid outage data reported in Shermeyer (2018), excess mortality as calculated using a population adjustment matches very closely outage data, derived either from PERPA (the public utility) or from Suomi National Polar-orbiting Partnership Visible Infrared Imaging Radiometer Suite (NPP VIIRS).


Figure 5: Excess mortality per month using population adjustment specification (black) using cubic interpolation of IMF World Economic Outlook database data, and electricity outages as proportion of total, from PREPA (pink) and from VIIRS as reported in Shermeyer (2018). Orange shading denotes Hurricane Maria and post-hurricane period; dashed line at PROMESA legislation. Source: Santos-Lozada and Howard, 2017, June release of Vital Statistics data, IMF WEO April 2018 database, personal communication from Jacob Shermeyer, and author’s calculations.

A regression over the 2007M04-2018M02 period, the slope coefficient on outage is 826 using Puerto Rico Electric Power Authority (PREPA) data, and 950 using VIIRS data, both statistically significant using HAC robust errors, with adjusted R2 = 0.83 and 0.72, respectively. That means 639-690 excess mortality attributable to power outages (and correlates) in October, for instance. (The excess mortality could be due directly to electricity outages, or due to communication outages and water service breakdowns correlated with the electricity outages.)

Exactly how bad was the Federal response to Maria in Puerto Rico?

Skipping the optics of paper towels, several reports (e.g., DHS OIG) have document exactly how poorly FEMA performed. In addition, academic analyses have documented the differential response that occurred in the same period — that is much larger responses to hurricane landfalls in Texas and Florida.

The economic outlook

After the catastrophic disaster response failure, the Puerto Rican economy recovered to pre-hurricane levels, only to be laid low by the Covid pandemic. Figure 6 below shows GDP and the Economic Activity Index.

Figure 6: GDP in mn Ch2012$ (blue bar, left log scale), and Economic Activity Index (EDB-EAI) s.a. (blue, right log scale). NBER defined peak-to-trough recession dates shaded gray. Source:  BEA, Economic Development Bank for Puerto Rico, and NBER.

The broadest measure of activity — GDP — is only reported up through 2020, while the Economic Activity Index –based on employment, electricity generation, gasoline consumption and cement sales — which extends to August 2022 only measures part of the economy. As shown, while there is a rebound, in (measured) economic activity, it’s tailed off in recent months. This pattern shows up in civilian employment (although not in series from the establishment series).

Figure 7: Puerto Rico nonfarm payroll employment (blue), private nonfarm payroll employment (tan), civilian employment (green), all in 000’s, s.a.. NBER defined peak-to-trough recession dates shaded gray. Source:  BLS, and NBER.

Federal assistance associated with the pandemic is ending. This fiscal drag adds to the central long term challenges of an uncompetitive economy (in part due to shipping and other transportation regulations) and a large government debt mired in restructuring (see CRS). See also Gregory Makoff and Brad Setser’s 2017 economic analysis.

Some of these challenges are intractable, while other could be relatively easily remedied. For instance, waiving the Jones Act for Puerto Rico would in some estimates lower prices by $1 billion, which is substantial for an economy measured at about $103 billion in 2020.

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Biden’s Secret Promise To OPEC Backfires: Shellenberger

Biden’s Secret Promise To OPEC Backfires: Shellenberger

Submitted by Michael Shellenberger,

In early September, United States Secretary of…

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Biden's Secret Promise To OPEC Backfires: Shellenberger

Submitted by Michael Shellenberger,

In early September, United States Secretary of Energy, Jennifer Granholm, told Reuters that President Joe Biden was considering extending the release of oil from America’s emergency stockpiles, the Strategic Petroleum Reserve (SPR), through October, and thus beyond the date when the program had been set to end. But then, a few hours later, an official with the Department of Energy called Reuters and contradicted Granholm, saying that the White House was not, in fact, considering more SPR releases. Five days later, the White House said it was considering refilling the SPR, thereby proposing to do the exact opposite of what Granholm had proposed.

The hand of Russia's President Vladimir Putin (right) is now strengthened within the OPEC+ cartel controlled by Saudi Arabia's Crown Prince Mohammed bin Salman (left), which today decided to cut production by 2 million barrels.

The confusion around the Biden administration’s petroleum policy was cleared up yesterday after a senior official revealed that the White House had made a secret offer to buy up to 200 million barrels of OPEC+ oil to replenish the SPR in exchange for OPEC+ not cutting oil production. The official said the White House wanted to reassure OPEC+ that the US “won’t leave them hanging dry.” The fact that this offer was made through the White House, not the Department of Energy, may explain why a representative of the Department called Reuters to take back the remarks of Granholm, who has shown herself to be out-of-the-loop, and at a loss for words, relating to key administration decisions relating to oil and gas production.

The revelation poses political risks for Democrats who, in the spring of 2020, killed a proposal by President Donald Trump to replenish the SPR with oil from American producers, not OPEC+ ones, and at a price of $24 a barrel, not the $80 a barrel that the Biden White House promised to OPEC+. At the time, Trump was seeking to stabilize the American oil industry after the Covid-19 pandemic massively reduced oil demand. Trump and Congressional Republicans proposed spending $3 billion to fill the SPR. Senate Democratic Leader Chuck Schumer successfully defeated the proposal, and later bragged that his party had blocked a “bailout for big oil.”

Even normally strong boosters of the Biden White House viewed the Democrats’ opposition to refilling the SPR as a major blunder. “That decision,” noted Bloomberg, “effectively cost the US billions in potential profits and meant Biden had tens of millions of fewer barrels at his disposal with which to counter price surges.” Moreover, observed Bloomberg, it will take significantly more oil today to fill the SPR than it would have two years ago. In spring 2020, the SPR contained 634 million barrels out of a capacity of 727 million. Now, the reserve is below 442 million barrels, its lowest level in 38 years.

The decision looks even worse in light of the decision by OPEC+ today to cut production, which will increase oil prices. The Biden administration in recent days has been pulling out the stops trying to persuade Saudi Arabia and other OPEC+ members, a group that includes Russia, to maintain today’s levels of oil production. Last Friday, the Biden administration sought a 45-day delay in a civil court proceeding over whether Saudi Arabia’s Crown Prince Mohammed bin Salman should have sovereign immunity for the murder of Washington Post columnist Jamal Khashoggi, for which bin Salman has taken responsibility.

The behavior by the Biden White House displays a willingness to sacrifice America’s commitment to human rights for the president’s short-term political needs. Instead of pleading with OPEC+ to maintain or increase high levels of oil production, the Biden administration could have simply allowed for expanded domestic oil production. Instead, Biden has issued fewer leases for on-shore and off-shore oil production than any president since World War II. As such, the pleadings by Biden and administration officials have backfired. The perception of the U.S. in the minds of OPEC+ members has weakened while the influence of Russian President Vladimir Putin has strengthened.

Why is that? Why did the Biden administration decide to spend so much political capital trying, and failing, to get Saudi Arabia and other OPEC+ members to expand production when it could have simply expanded oil production domestically? What, exactly, is going on?

President Joe Biden greets the Saudi Crown Prince on July 15, 2022.

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Tyler Durden Thu, 10/06/2022 - 22:20

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Government

What Really Divides America

What Really Divides America

Authored by Joel Kotkin via UnHerd.com,

The Midterms aren’t a battle between good and evil…

Reading the…

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What Really Divides America

Authored by Joel Kotkin via UnHerd.com,

The Midterms aren't a battle between good and evil...

Reading the mainstream media, one would be forgiven for believing that the upcoming midterms are part of a Manichaean struggle for the soul of democracy, pitting righteous progressives against the authoritarian “ultra-MAGA” hordes. The truth is nothing of the sort. Even today, the vast majority of Americans are moderate and pragmatic, with fewer than 20% combined for those identifying as either “very conservative” or “very liberal”. The apocalyptic ideological struggle envisioned by the country’s elites has little to do with how most Americans actually live and think. For most people, it is not ideology but the powerful forces of class, race, and geography that determine their political allegiances — and how they will vote come November.

Of course, it is the business of both party elites — and their media allies — to make the country seem more divided than it is. To avoid talking about the lousy economy, Democrats have sought to make the election about abortion and the alleged “threat to democracy” posed by “extremist” Republicans. But recent polls suggest that voters are still more concerned with economic issues than abortion. The warnings about extremism, meanwhile, are tough to take seriously, given that Democrats spent some $53 million to boost far-Right candidates in Republican primaries.

Republicans are contributing to the problem in their own way, too. Rather than offering any substantive governing vision of their own, they assume that voters will be repelled by unpopular progressive policies such as defunding the police, encouraging nearly unlimited illegal immigration, and promoting sexual and gender “fluidity” to schoolchildren. They ignore, of course, the fact that their own embrace of fundamentalist morality on abortion is also widely rejected by the populace. And even Right-leaning voters may doubt the sanity of some of the GOP’s eccentric candidates this November.

In short, both major parties stoke polarisation, the primary beneficiaries of which are those parties’ own political machines. But most Americans broadly want the same things: safety, economic security, a post-pandemic return to normalcy, and an end to dependence on China. Their divisions are based not so much on ideology but on the real circumstances of their everyday life.

The most critical, yet least appreciated, of these circumstances is class. America has long been celebrated as the “land of opportunity”, yet for working and middle-class people in particular, opportunity is increasingly to come by. With inflation elevated and a recession seemingly on the horizon, pocketbook issues are likely to become even more important in the coming months. According to a NBC News poll, for instance, nearly two-thirds of Americans say their pay check is falling behind the cost of living, and the Republicans hold a 19-point advantage over the Democrats on the economy.

A downturn could also benefit the Left eventually. As the American Prospect points out, proletarianised members of the middle class are increasingly shopping at the dollar stores that formerly served working and welfare populations. Labour, a critical component of the Democratic coalition, could be on the verge of a generational surge, with unionisation spreading to fast food retailers, Amazon warehouses, and Starbucks.

To take advantage of a resurgent labour movement, however, Democrats will have to move away from what Democratic strategist James Carville scathingly calls  “faculty lounge politics”: namely, their obsession with gender, race, and especially climate. For instance, by demanding “net zero” emissions on a tight deadline, without developing the natural gas and nuclear production needed to meet the country’s energy needs, progressives run the risk of inadvertently undermining the American economy. Ill-advised green policies will be particularly devastating for the once heavily Democratic workers involved in material production sectors like energy, agriculture, manufacturing, warehousing, and logistics.

To win in the coming election and beyond, Democrats need to focus instead on basic economic concerns such as higher wages, affordable housing, and improved education. They also need to address the roughly half of all small businesses reporting that inflation could force them into bankruptcy. Some progressives believe that climate change will doom the Republicans, but this is wishful thinking. According to Gallup, barely 3% of voters name environmental issues as their top concern.

Racial divides are also important — though not in the way that media hysterics about “white supremacy” would lead you to believe. Florida Governor Ron DeSantis’s decision to fly undocumented immigrants to Martha’s Vineyard was undoubtedly a political stunt, and one arguably in poor taste. But it succeeded in its main goal: highlighting the enormous divide between the border states affected by illegal immigration and the bastions of white progressivism who tend to favour it.

Under Biden, the Democrats have essentially embraced “open borders” — illegal crossings are at record levels, and few of the migrants who make it across the border are ever required to leave. This policy reflects a deep-seated belief among elite Democrats that a more diverse, less white population works to their political favour. Whether they are right to think so, however, is far from clear. Black people still overwhelmingly back the Democrats, but Asians (the fastest-growing minority) and Latinos (the largest) are more evenly divided, and have been drifting toward the Republicans in recent years.

Here, too, class is a key factor. Many middle and upper-class minorities are on board with the Democrats’ anti-racist agenda. But many working-class Hispanics and Asians have more basic concerns. After all,  notes former Democratic Strategist Ruy Teixiera, these are the people most affected by inflation, rising crime, poor schools, and threats to their livelihoods posed by draconian green policies.

Culture too plays a role. Immigrants, according to one recent survey, are twice as conservative in their social views than the general public and much more so than second generation populations of their own ethnicity. Like most Americans, they largely reject the identity politics central to the current Democratic belief system. Immigrants and other minorities also tend to be both more religious than whites; new sex education standards have provoked opposition from the Latino, Asian, African American and Muslim communities.

The final dividing line is geography, always a critical factor in American politics. For decades, the country seemed to become dominated by the great metropolitan areas of the coasts, with their tech and finance-led economies. But even before the pandemic, the coastal centres were losing their demographic and economic momentum and seeing their political influence fade. In 1960, for example, New York boasted more electoral votes than Texas and Florida combined. Today, both have more electoral votes than the Empire State. Last year, New York, California, and Illinois lost more people to outmigration than any other states. The greatest gains were in Florida, Texas, Arizona, and North Carolina. These states are high-growth, fertile, and lean toward the GOP.Likewise, regional trends suggest that elections will be decided in lower density areas; suburbs alone are  home to at least 40% of all House seats. Some of these voters may be refugees from blue areas who still favour the Democrats. But lower-density areas, which also tend to have the highest fertility rates, tend to be dominated by family concerns like inflation, public education and safety, issues that for now favour Republicans.

Put the battle between Good and Evil to one side. It is these three factors — class, race, geography — that will shape the outcome of the midterms, whatever the media says. The endless kabuki theatre pitting Trump and his minions against Democrats may delight and enrage America’s elites — but for the American people, it is still material concerns that matter.

Tyler Durden Thu, 10/06/2022 - 21:40

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International

Switzerland, Not USA, Is The ‘Most Innovative’ Country In The World

Switzerland, Not USA, Is The ‘Most Innovative’ Country In The World

The World Intellectual Property Organization (WIPO) has released its 2022…

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Switzerland, Not USA, Is The 'Most Innovative' Country In The World

The World Intellectual Property Organization (WIPO) has released its 2022 Global Innovation Index. It evaluated innovation levels across 132 economies focusing on a long list of criteria such as human capital, institutions, technology and creative output as well as market and business sophistication, among others.

The 2022 index has found that innovation is still blossoming in some sectors despite the global economic slowdown and coronavirus pandemic, especially in industries to do with public health and the environment.

As Statista's Katharina Buchholz reports, Switzerland topped the rankings with a score of 64.6 out of 100, the 12th time it has been named the world leader in innovation. The United States come second while the Sweden rounds off the top three.

You will find more infographics at Statista

One of the biggest winners of the ranking was South Korea, which climbed up from rank 10 in 2020 to rank 6 in 2022.

China is now the world's 11th most innovative nation, up from rank 14 in 2020 and 2019 and rank 17 in 2018.

China was also named the most innovative upper middle-income country ahead of Bulgaria (overall rank 35), while India (overall rank 40) came first for lower middle-income countries, followed by Vietnam (overall rank 48).

Notably, China is now on a par with the United States in terms of the number of top 100 Science & Technology clusters

Finally, WIPO notes that on the one hand, science and innovation investments continued to surge in 2021, performing strongly even at the height of a once in a century pandemic. On the other hand, even as the pandemic recedes, storm clouds remain overhead, with increasing supply-chain, energy, trade and geopolitical stresses.

Tyler Durden Thu, 10/06/2022 - 20:40

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