Links to Consider, 4/2

Peter Wallison on Bank Regulation; On Haidt, pro and con; A Critique of COVID policy from the left; Inquisitive Bird on the Great Divergence

Peter Wallison writes,

Many years ago, before the 2008 financial crisis, there was active private sector work on a nongovernmental system of bank supervision. The idea was that private sector groups would be formed to supervise banks for a fee, with a continuous right to inspect how the bank was being managed. Compensation for this work would be paid by the banks and would be commensurate with the size of the bank involved. The private supervisory groups would be required to make uninsured deposits in the banks they supervise. That would marry investment to a strong incentive for supervision. Governmental supervisory incentives are simply not strong or effective.

This is counterintuitive, but true. The government has little incentive to regulate banks effectively. When there is a breakdown, public officials just end up with more power.

Government regulators of banks have no skin in the game. No one was fired for the inexcusable mishandling of Silicon Valley Bank.

Designing a financial regulatory system that gives regulators skin in the game is not easy. But many of us have thought about ways to do it. I am working on a longer essay on the topic.

On Jonathan Haidt’s analysis of teen mental health, Zach Rausch writes,

The short answer to Jon’s question is: Teen mental health plummeted across the Western world in the early 2010s, particularly for girls and particularly in the most individualistic nations. The longer answer begins below and will continue in parts 2 and 3.

For Reason, Aaron Brown challenges Haidt. Concerning one study, Brown writes,

if you exclude non–social media users and people who have never felt any sign of depression from the sample, there's no remaining evidence of association, neither in this table nor in any of the other analyses the authors performed. 

…What we want to know is whether depressed people use more social media or if heavy social media users are more depressed. If that were the finding, we'd have something to investigate, which is the sort of clear, strong result that is missing in this entire literature. We'd still want statistical tests to measure the reliability of the effect, and we'd like to see it replicated independently in different populations using different methodologies, with controls for plausible confounding variables. But without any examples of depressed heavy social media users, statistical analyses and replications are useless window dressing.

The problem is that it is difficult to show causality if the main finding is that non-users are less depressed. It could easily be that less-depressed people are less likely to use social media.

James Allan reviews The COVID Consensus, by Toby Green and Thomas Fazi.

There is a chapter on how much harder these lockdown policies were on the young and the poor. There is one on the economic effects. All these are completely devastating to the standard pro-lockdown position. My guess is that in a decade, you will be hard-pressed to find anyone who admits to having been in favour of lockdowns. That is how much of a fiasco this has been in terms of public policy. One real question is whether there will be any actual and serious accountability for this woeful decision-making, suppressing of dissent, modeling that was off by orders of magnitude, and complete failure by the press to do its job.

Inquisitive Bird writes,

West Europe experienced a major transformation between 1000 and 1500. Their incomes increased, they established institutions of higher learning across the continent, they became more urbanized, more technologically developed, produced vastly more books, literacy and numeracy increased, violence greatly decreased, and they produced many more notable scientists, mathematicians, philosophers, inventors, and engineers. In terms of overall development, West Europe had surpassed that of other big civilizations (China, India, and the Middle East) by 1500. Not only that, the rate of advancement was accelerating. The other major civilizations instead went into cultural stagnation.

Substacks referenced above:

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The Rise of the West

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The Teen Mental Illness Epidemic is International, Part 1: The Anglosphere