Even More Valuable than Her Coffee Cake Recipe

I suppose there are people who might be surprised to find themselves getting solid economic analysis from a food blogger. I am not one of them. I’ve actually been waiting for this moment since March.

 

Deb Perelman is one of my favorite food bloggers. Her blog, Smitten Kitchen, details her adventures cooking for her growing family in an impossibly tiny kitchen in New York City. She has a great reputation for funny writing, great photos, and reliable and delicious recipes. (I am NOT kidding about the coffee cake.)

 

But last week, she did something a little different. In the business section of today’s New York Times, Perelman has a great piece titled, “In the Covid-19 Economy, You Can Have a Kid or a Job. You Can’t Have Both.” The article is a testament from a working mom with two young children and a husband who has been laid off, who is trying to hold everything together through the pandemic. And she’s just been told that the coming school year–the promise of which has been a beacon of sanity for parents everywhere–will, in her area, have her children attending physical school one week out of every three.

 

Perelman’s article, which you should read immediately, is not the kind of anguished, inchoate cry we have been led to expect by articles that focus on parental burnout, exhaustion, and stress. Certainly, that frustration is in her article as well. But the article is about the economic costs of her school district’s choice, analyzed by someone who is in the middle of experiencing them. She writes:

my family, as a social and economic unit, cannot operate forever in the framework authorities envision for the fall. There are so many ways that the situation we’ve been thrust into, in which businesses are planning to reopen without any conversation about the repercussions on families with school-age children, is even more untenable for others.

 

As I said, I’ve been waiting for this moment. I have a history of fascination with economic thinking as expressed in non economic works–and particularly with the economic thinking of people who are in the daily grit of working blue collar jobs and doing household work. I think their diaries and letters and interviews and books of advice tell us at least as much about the economic circumstances under which they were written as do articles by economists–probably more. 

 

This is why I spend a lot of time with books like Round About a Pound a Week, All Our Kin, Working, and How to Run Your Home Without Help. All of these works give us direct access to the lived experience of people managing daunting economic circumstances. They let us SEE people thinking economically, rather than leaving us to surmise from a distance.

 

I think Perelman is right about the unsustainable nature of the burdens–financial, educational, social, and psychological–that working parents are being asked to carry right now. I think she is right that New York City’s plan for schoolchildren to have one week on/two weeks off is an absolute disaster. More important than that, though, I think her voice, and the voices of countless other bloggers, diarists, and letter writers like her, are vital economic data that can help us think more clearly about policy now, and will help us have a better understanding of the tribulations of 2020 when it is a matter of economic history. 

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Economic Affairs on COVID19

In the new issue of Economic Affairs there is a section on Coronavirus. Besides an article by Nicola Rossi and me on the Italian predicament (we are not very optimistic), it includes articles by Steve Davies, Julian Jessop (on the costs and benefits of the UK lockdown), and Brian Williamson. For a social science scholarly journal, to publish papers on the matter is quite a challenge, as the pandemic is unfolding before our very eyes. But it is a challenge worth taking on, particularly for those of us of a classical liberal persuasion, whose views are regularly questioned as impracticable in times of such an emergency or, even worse, as somewhat “responsible” for it, due to our support and defense of globalization.

In his essay, Steve Davies does an admirable job in highlighting the exceptionality of COVID9 vis-à-vis the previous 20 pandemics which happened in the modern era and helped in shaping the modern state. An epidemic is a complex biological phenomenon and governments and health authorities operate with limited visibility and limited knowledge, though our world is faster in producing and spreading information than it ever was. This in part explains a response to COVID19 that, though not equally effective everywhere, is certainly extraordinary by historical standards:

In 1918–19 local controls,often sweeping, were imposed, but there were nothing like the national responses seen in 2020. Policies of lockdown initially and testing, tracing and isolating (TTI) subsequently may smother the smouldering phase and prevent a second wave or third phase this time, holding the line until a vaccine is developed. (Countries that were able to put a programme of TTI in place early on, such as South Korea, have avoided the need for a strict lockdown.)

In his article, Steve emphasizes risks specifically related with globalization and economic interconnection, including our dependence on long and complex supply chains that are fantastic at delivering goods in normal times but can be jeopardized by non-pharmaceutical measures to contain the pandemic. My – perhaps wishful – thinking is that adaptation may prove to be faster and swifter than we think. Insofar as politics is concerned, this is Davies’s forecast:

It seems likely that the coronavirus pandemic will therefore lead to a reassessment of the extent, power, and functions of government. In some areas this will result in a growth or extension of powers but in others there will likely be a pulling back or withdrawal as public administration is found to be lacking or self-defeating. A lot of regulations, particularly ones to do with medicines and drugs but also things such as occupational licensure (in the United States in particular) are likely to be cut back or abolished. In contrast, surveillance powers are probably going to become more extensive. One likely change is in the area of health services: in most countries (East Asian ones and Germany are the big exceptions) these have come to be dominated by hospitals and therapeutic medicine at the expense of health maintenance and public health (….) This has been revealed as brittle and highly vulnerable to shocks such as a major epidemic (in 2020 it was panic about the pressure on hospital systems that led to the decision to impose a lockdown, in most cases). One area where there will be much debate is over the relative performance and effectiveness of decentralised and localised systems as compared to centralised or national ones: this is actually an area where the evidence can support both sides, with the correct answer differing according to local circumstances.

I am not so sure about the last point. Healthcare systems are an awfully complex matter that seldom enter the political debate and when it does, it does so in a rather surreal manner, with politicians oversimplifying and never quite dealing with the real issues. When it comes to Italy, I am amazed at how little discussion we had about how to mend the hospital network. Sure, ICU beds were provided for in the emergency and the role of GPs vis-à-vis treatment in hospital was discussed. But that was pretty much it. In some sense, this is a good thing. The jury is still out when it comes to understanding what did and what did not work in the pandemic: decisions taken in a rush, based upon the limited evidence we could draw on for the first phase of the pandemic, may be mistaken. When it comes to centralization vs decentralization, I suspect our assumptions are so ingrained that our reading of the evidence will depend on them rather than the other way around. Generally speaking, I see little evidence to support those who push for more centralization – for instance in public procurement. But my bias certainly inclines in the other direction.

Brian Williamson’s essay is another fascinating piece of writing. He suggests that a “‘Coasean’ social contract could be forged to protect older people and other at-risk groups coupled with freedom from lockdown for everyone else. The social contract could involve a period of support and extra payments to older age groups to commit to home quarantine, but with the possibility of opting out”. He maintains that we should have “an age-specific policy response to COVID-19” but that should involve incentives and not mandates “given large variations in individual trade-offs and private information about such trade-offs”. The hypothesis of an age-targeted response was ruled out in a country like Italy I think because it was at the same time politically expensive (with an aging population, how do you tell the bulk of your prospective voters that you are selectively reducing their liberty vis-à-vis their children’?) and very difficult to organize in a meaningful way (what do we do with nursing homes? How do we transform them?). Williamson’s is an interesting intellectual exercise on the matter.

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Health Professionals Show What Matters. Hint: It’s Not Health

 

Are the signers unaware of their double standard? Their statement above shows that they are quite aware. The standard is not health, which is supposed to be their area of expertise. No. They distinguish between the April 30 anti-lockdown protest of people in Michigan and the late May protests of people about the treatment of black people based on three things: (1) the race of the anti-lockdown protesters, (2) the fact that some of the anti-lockdown protesters in Michigan were carrying guns, and (3) the issue being protested. My own view, by the way, is that both kinds of protests are justified and important.

For about 6 weeks before the Michigan protest, we were told that we should stay home because it was so crucial for defeating the coronavirus. That actually made some sense. So when the Michigan protesters came along, most of the public health community opposed their being near each other and unmasked because that could spread the virus. That made some sense too, which is why, for the May 1 anti-lockdown protest in Monterey that Lawrence Samuels and I organized, we encouraged people to wear masks and/or socially distance. (Sadly, only about half of the protesters did wear masks, although the social distancing was relatively successful.) To their credit, in the rest of the open letter, the health professionals advocate that protesters do so safely, either wearing masks or keeping their distance. But then why didn’t they say the same about the anti-lockdown protests? Why didn’t they just encourage them to protest safely? The answer is obvious. The health professionals sympathized with one cause and not with the other. Which means it’s not about the health; it’s about the cause.

This is from David R. Henderson, “Health Professionals Show What Matters. Hint: It’s Not Health,” antiwar.com, June 11, 2020.

Read the whole thing, which is not long.

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Will COVID-19 kill Europe’s state aid discipline?

My colleague Carlo Stagnaro and I reviewed Thomas Philippon’s The Great Reversal for Law & Liberty.

Philippon’s book is ingenious and thought-provoking. The main thesis is that the EU became, as it were, more pro-competitive than the US. One of the pieces of evidence Philippon produces is the European discipline on state aid. National government subsidies to businesses are disciplined by Brussels and that helped in fostering a more competitive environment European-wide.

Yet is that going to last? Carlo and I are skeptical. COVID-19 is jeopardizing the genuine pro-market elements in European competition policy.

It is not a surprise—and perhaps it may warrant a new chapter in the next edition of The Great Reversal—that member states seized the opportunity of the coronavirus crisis to call for a de facto suspension of the state aid discipline. While the new, more permissive framework is deemed to be “temporary,” only time will tell how long “temporary” measures will last.

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Fontana on Emergency COVID Measures

One day, hopefully, we’ll calmly reason about what our experiences with COVID-19 have brought us. Or maybe not: history’s lessons are sometimes very difficult to learn.

Biancamaria Fontana has a learned and insightful piece on the blog of the Centre Walras Pareto at the University of Lausanne. Fontana, an accomplished historian of ideas, writes on the French Decree of 1793 known as “loi des suspects” which she describes as a “forerunner of the contemporary Patriot Acts”.

She focuses on Merlin de Douai and Cambacérès, two French jurists who had the distinction of working to shape the Revolutionary Tribunal. They were moderate, and yet collaborated with the Jacobins, including in preparing the legal framework of the Terror regime. Was that only a matter of opportunism?

For them the Revolution meant that France should become not a playground for the display of civic virtues, but “the reign of justice”; it must be framed by constitutional rules and governed by well-conceived, just laws, efficiently applied by a well-oiled institutional machine. After Thermidor, when the worst of the Terror phase was over, this is the objective they continued to pursue, as magistrates, ministers, directors or consuls, donning whatever official garments the subsequent regimes would offer them. The regimes would pass, but the solid edifice of codes, rules, procedures and offices they had almost surreptitiously built would remain.’

This technocratic wishful thinking has relevance when it comes to emergency acts.

Writes Fontana:

Emergency legislation is generally the response to a situation of fear and confusion. It is introduced to address some impending threat, but also (and above all) to convince the public that something radical is done to protect them and to secure their acquiescence. The grounds for fear can be real enough, though they are often magnified by propaganda and popular imagination. There were actually hostile agents and counter-revolutionary conspiracies in France in 1793, as there are secret terrorist cells around the world today. The bellicose language adopted by some politicians in response to the pandemics (fighting an invisible enemy, we are at war, together we can win etc.) seemed better suited to an invasion from outer space than to a health crisis, but the risks for the population did exist. But precisely because they are a response to panic, emergency measures must be unaffected by it. They should be clearly formulated (possibly worked out in advance), specific, limited in time and especially placed under transparent political responsibility; otherwise, they might easily become the instruments of arbitrary power, rather than the means to secure collective safety.

What we have seen lately is basically the opposite: measures conceived under pressure, suited to one particular case, defended in the name of pragmatism and, as such, a sure conduit to decreased political accountability. Fontana’s point is that the law should be credible and clear and predictable in its effects, even though it is dealing with an emergency situation.

We’re reaching a point, as the pandemic progresses, in which we should try to coolly assess what happened. Too often, those who fear government intrusions in their life end up denying that a real danger was ever there. Not only does that undermine the credibility of their cause, but is it also a serious intellectual mistake: the fact that a danger exists, that a genuine emergency is happening, cannot mean that anything could be done. Rules and individual rights are not necessarily to be done away with just because we are confronting a serious risk. If they were, the free society would be a very poor thing indeed.

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