Costco Joins the COVID Fight

There has been a lot of debate during this pandemic about the effectiveness of mask wearing, the risks involved with social contact and school reopenings, whether or not Vitamin D helps with COVID, and how much of this is all President Trump’s fault.  However, everyone seems to agree that more testing, particularly more available at-home testing, would be a huge step forward.  The problem, of course, is that the government hasn’t been able to provide the necessary testing capacity on a nationwide basis.


What the government is unable or unwilling to do, Costco will happily do.  You might remember early on during the pandemic that Costco was one of the first businesses to require indoor mask wearing at its stores.  Now they are taking another bold step – Costco is now offering at home COVID tests on their webpage.  They aren’t cheap – 129.99 – but neither were the first flat screen televisions 20 years ago.  Costco sells more wine than anyone in America, and I wouldn’t be stunned if they became our biggest seller of COVID tests pretty soon.


Read More

Open the Schools and the Playgrounds

A group of researchers, spearheaded by Brown University Professor Emily Oster, have created and made available the most comprehensive databaseon schools and Covid case rates for students and staff since the pandemic started. Her data—covering almost 200,000 kids across 47 states from the last two weeks of September—showed a Covid-19 case rate of 0.13% among students and 0.24% among staff. That’s a shockingly and wonderfully low number. By comparison, the current overall U.S. case rate is 2.6%, an order of magnitude higher.

Other research has shown that hospitalization and fatality rates for school-age children are also extremely low. People 19 and younger account for only 1.2% of Covid-19 hospitalizations in the U.S. during the peak of the pandemic. The Centers for Disease Control and Prevention report that of all Covid-19 deaths up to Oct. 10, only 74 were of children under age 15. During the 2019-20 flu season, the CDC estimates, 434 children under 18 died of the flu. Yet we don’t shut down schools over the flu.

This is from David R. Henderson and Ryan Sullivan, “End the School Shutdown,” Wall Street Journal, October 20 (print edition: October 21).

30 days from now, which is November 20 (the day before my 70th birthday),  I’ll post the whole thing.

A friend on Facebook asked me about the issue of compulsory schooling. He knows I oppose compulsion. I don’t know my co-author’s view on that and I wanted to stick with issues we agree on. So I didn’t raise it. But my view is that any parents who want to keep their children out of school should be able to do so. I predict that this will be under 10 percent of parents.


Read More

Is Cowen Right about the Great Barrington Declaration? Part 2


Yesterday, I reviewed the first half of Tyler Cowen’s critique of the Great Barrington Declaration. This is the last half. As before, quotes from him are highlighted and my responses are not.

Here are the key words of the Great Barrington Declaration on herd immunity:

The most compassionate approach that balances the risks and benefits of reaching herd immunity, is to allow those who are at minimal risk of death to live their lives normally to build up immunity to the virus through natural infection, while better protecting those who are at highest risk. We call this Focused Protection.

And then:

What exactly does the word “allow” mean in this context? Again the passivity is evident, as if humans should just line up in the proper order of virus exposure and submit to nature’s will. How about instead we channel our inner Ayn Rand and stress the role of human agency? Something like: “Herd immunity will come from a combination of exposure to the virus through natural infection and the widespread use of vaccines. Here are some ways to maximize the role of vaccines in that process.”

It means, as the document says, “allow those who are at minimal risk of death to live their lives normally.” I’m not sure why Cowen has trouble understanding. Allowing people to live their lives has nothing to do with passivity. It certainly is consistent with the idea of human agency, even if you don’t go all Ayn Rand on it. When people are allowed to do something, that doesn’t mean they have to do it. There’s necessarily human agency.

He’s right about how herd immunity will come about. But then he says, “Here are some ways to maximize the role of vaccines in that process.” The problem here is, as former Obama economist Austan Goolsbee pointed out in a related context, that this is like the old economics joke where the punch line is “assume a can opener.” We don’t yet have a vaccine, so right now maximizing the role of vaccines gets you to a maximum of zero.

In practical terms, the most problematic paragraph in the declaration is this one:

Those who are not vulnerable should immediately be allowed to resume life as normal. Simple hygiene measures, such as hand washing and staying home when sick should be practiced by everyone to reduce the herd immunity threshold. Schools and universities should be open for in-person teaching. Extracurricular activities, such as sports, should be resumed. Young low-risk adults should work normally, rather than from home. Restaurants and other businesses should open. Arts, music, sport and other cultural activities should resume. People who are more at risk may participate if they wish, while society as a whole enjoys the protection conferred upon the vulnerable by those who have built up herd immunity.

In most parts of the Western world, normal openings for restaurants, sporting events and workplaces are likely to lead to spiraling caseloads and overloaded hospitals, as is already a risk in some of the harder-hit parts of Europe. Reopenings, to the extent they work, rely on a government that so scares people that attendance remains low even with reopening.

The middle paragraph is from the Great Barrington Declaration. The paragraphs that bookend it are from Cowen.

I’m not familiar with Europe but Georgia (in the United States) opened without overloaded hospitals. As for spiraling caseloads, that’s part of how you reach herd immunity. And if you follow his link to a Bloomberg article, you’ll see that it says not a word about overloaded hospitals.

Cowen is right that governments have reacted by scaring people. That’s one reason the Great Barrington Declaration is important. It seeks to tell people not to be so afraid unless they’re particularly vulnerable. Notice the statement in the Declaration that “Young low-risk adults should work normally, rather than from home.” The authors are not saying that they should be forced to; they’re saying they should. As I understand the Declaration, they’re trying to talk to young people as well as others and say, in effect, “Come in, the water’s fine.” Does Cowen object? If so, he doesn’t make clear and he doesn’t say why.

Don’t get me wrong: The Great Barrington strategy is a tempting one. Coming out of a libertarian think tank, it tries to procure maximum liberty for commerce and daily life. It is a seductive idea. Yet consistency of message is not an unalloyed good, even when the subject is liberty. And when there is a pandemic, one of the government’s most vital roles is to secure public goods, such as vaccines.

Notice how he jumps from the idea that the message is tempting and seductive (I agree) to government’s role in vaccines. Little problem: WE DON’T HAVE A VACCINE. The Great Barrington Declaration makes clear that it’s addressed to what to do while we’re waiting for a vaccine. Insert can opener joke.

The declaration is disappointing because it is looking for an easy way out — first by taking the best alternatives for fighting Covid off the table, then by pretending a normal state of affairs is also an optimum state of affairs.

Does he care to tell us what “the best alternatives for fighting Covid” are? It strikes me that he has two in mind: (1) vaccines, which haven’t yet been approved, in part thanks to the FDA, which Cowen has earlier said should not approve one from Russia, and (2) lockdowns, which Cowen says aren’t that important and, by the way, we should tighten them.

My worldview is both more hopeful and more tragic. There is no normal here, but we can do better — with vigorous actions to combat Covid-19, including government actions. The conception of human nature evident in the Great Barrington Declaration is so passive, it raises the question of whether it even qualifies as a defense of natural liberty.

I missed the hopeful part. OK, so what are the vigorous actions that include government actions? Blank out, as the aforementioned Ayn Rand loved to say. And how does he know that the authors of the Great Barrington Declaration would not favor those actions? Cowen is fixated on the idea that three non-libertarians produced a libertarian statement. As I mentioned in Part 1, that sends him down a rabbit hole from which he doesn’t emerge.






Read More

Is Cowen Right about the Great Barrington Declaration? Part 1


In an article yesterday, “A Dangerous Libertarian Strategy for Herd Immunity,” Bloomberg, October 15, George Mason University economist Tyler Cowen criticizes the now-famous Great Barrington Declaration.

This response is in two parts. Part 2 will follow tomorrow.

I’ll consider Cowen’s arguments one by one. The highlighted sections are his and the non-highlighted sections are mine.

But first I’ll point out two things.

First, Cowen starts with a category error. He seems to think that when three non-libertarian medical professionals write a statement at a facility staff largely by libertarians, the result must be libertarian. It isn’t. Many libertarians will like it; some will not. But it’s not libertarian. In our book, Making Great Decisions in Business and Life, Charley Hooper and I point that in any project, the biggest mistakes are made the first day. That’s because everything follows from decisions made that day. Similarly, by misidentifying the strategy as libertarian, he goes down a rabbit hole from which he doesn’t emerge. (Note: I know that editors often assign titles and Cowen might not have chosen this one. If he disagrees with the title, then ignore this criticism.)

Second, Cowen’s big-picture criticism of freedom is less like Strauss (one of his favorite words) and more like Schrodinger’s Cat. He claims, in the last few paragraphs of his article, that the declaration “tries to procure maximum liberty for commerce and daily life” and that its conception of human nature “raises the question of whether it even qualifies as a defense of natural liberty.”

Which is it? Is it trying to procure maximum liberty, which, in this context, certainly seems like defending it, or is not a defense? I’m not asking whether it’s a good defense. I’m simply pointing out that Cowen seems to want to have it both ways.

Now to the other specifics.

Debate over the declaration has centered on the concept of “herd immunity,” but that discussion has become so emotional that it is better to focus first on the concrete. The declaration stresses the notion of protecting the vulnerable, such as the elderly, and giving everyone else maximum possible freedom. That sounds good, but the declaration fails to deliver on the details.

True. It doesn’t deliver on details. I don’t think that was the intent. It’s 514 words long, only slightly longer than those short USA Today op/eds. Cowen’s piece, by contrast, is 1,399 words long, almost 3 times as long. And yet in some places, the Great Barrington Declaration gives more details than his.

First and foremost, the declaration does not present the most important point right now, which is to say October 2020: By the middle of next year, and quite possibly sooner, the world will be in a much better position to combat Covid-19.

Probably right, but it’s a guess. Moreover the middle of next year is 8 to 9 months from now.

The arrival of some mix of vaccines and therapeutics will improve the situation, so it makes sense to shift cases and infection risks into the future while being somewhat protective now.

The first clause is probably right, but the conclusion doesn’t follow. What is the cost of shifting cases into the future? Cowen doesn’t say.

To allow large numbers of people today to die of Covid, in wealthy countries, is akin to charging the hill and taking casualties two days before the end of World War I.

What does he mean by “allow?” Is he saying that people shouldn’t be allowed to take those risks? I don’t know.

Notice also how he biases the discussion with “two days.” I would bet that the authors wouldn’t have bothered with the statement if they thought we would have a vaccine in 2 days, 4 days, or even 14 days.

Not only does the declaration fail to make that point, but if anything the rhetoric conveys a sense of “letting things take their course” — after the most vulnerable are segregated from society, of course. It strikes exactly the wrong tone and stresses exactly the wrong points.

Either he thinks this is self-evident or this is a lead-in to the next few paragraphs. If the former, he’s wrong; if the latter, let’s look at the next few paragraphs.

The declaration also sets up a false dichotomy by comparing its policy proposals to lockdowns. The claim is this: “Current lockdown policies are producing devastating effects on short and long-term public health.” The health problems are very real, but in most of the U.S., the lockdowns are not severe. In my home state of Virginia, there are relatively few commercial activities I cannot partake in, were I so inclined. I even can go see a live bluegrass concert in a nightclub (I won’t, not yet).

It’s not a false dichotomy. There are real lockdowns in place. And notice that he uses the word “commercial.” K-12 schools, even ones that charge tuition, are typically not lumped under “commercial.” This doesn’t affect Cowen. It does affect a number of my neighbors’ and friends’ kids, devastatingly so. And while Cowen can go to a bluegrass concert, I bet he can’t go to a gym. In most of California, we can’t yet go to gyms. My wife’s and my Pilates instructor is facing economic devastation.

The problem is that most people don’t want to go out to such concerts, and indeed probably should not. It is this self-enforced isolation, not a government order, which screws us up, sometimes creating mental and other health problems.

Why is it a problem if people don’t want to go out to such events? And if that’s the main reason they don’t, why are governments around the country, certainly in large states like California, New York, and Illinois, banning such events?

He does get it right, though, about mental and other health problems. But some of these are due to lockdowns.

Whatever you think of the stricter policies of last spring, they are now behind us, and the emphasis on “lockdowns” is not helpful. The more useful question is whether the list of prohibited activities should be expanded or contracted. In some cases, surely, it should be expanded. Indoor restaurant dining and drinking, for example, is probably not a good idea in most parts of the U.S. right now.

Yes, many of the Covid cases spread by such activity would be among the lower-risk young, rather than the higher-risk elderly. Still, practically speaking, given America’s current response capabilities, those cases will further paralyze schools and workplaces and entertainment venues. It just doesn’t seem worth it.

The first sentence of the second paragraph is key. Finally, he’s getting to details. He doesn’t make a case, though, that those cases will further paralyze schools and workplaces. What’s his evidence? Emily Oster at Brown University differs with Cowen on this. And unlike Cowen, she actually has evidence. Moreover, to whom does it not seem worth it? Not to the people who want to do it. Cowen seems to be substituting his own values for those of others.

Even if you disagree with that judgment, the critics who emphasize lockdowns are setting up a straw man. What they’re trying to do is talk us into something more dangerous than what we ought to accept. The truth is that lockdowns are extremely unpopular, and while they may have to be reimposed in extreme circumstances, they are not the main alternative on the table in the U.S. right now.

Wait a minute. We have lockdowns. Some of them are severe. Cowen has just told us that he wants to make them more severe. But arguing against lockdowns is arguing against a straw man? Huh?

The declaration also notes the value of reopening schools. It is an inarguable point, and Sweden seems to have made it work. But schools cannot and should not be reopened unconditionally. Amid high levels of Covid-19, a successful reopening very often will require social distancing, masks and a good system for testing and tracing. It would be better to focus on what needs to be done to make school reopenings work. Reopened schools in Israel, for instance, seem to have contributed to a significant second wave of Covid-19.

Actually, I think every point is arguable. What he really means is that he comes down on the side of reopening schools. Good. On that we agree. But for someone who thinks we should look at data, Cowen really should look at Oster’s data. And notice how close Cowen comes to the Great Barrington view on this. I don’t know what the three authors would say about what needs to be done to make school reopenings work. Neither does Cowen.

A broader worry about the declaration is that, for all the talk of science, it fails to emphasize data. The declaration is a series of static recommendations, yet the situation on the ground is evolving all the time. The best policies today are not the same as the best policies two months ago, and won’t necessarily be the best policies two months from now. This reader is also struck by the document’s frequent use of the passive voice — as if there is no choice but to let a series of inevitable events slowly unfold, albeit in a minimally painless way, and to allow the pandemic to finish its work.

Cowen accuses the authors of failing to emphasize data? That’s rich. He has hardly any data. Here’s a statement from the Declaration:

We know that vulnerability to death from COVID-19 is more than a thousand-fold higher in the old and infirm than the young.

That’s data, and pretty relevant data.

Cowen points out correctly that the best policies of today are [probably] not the best policies two months from now. But the big advantage of the focus the Declaration proposes is that it allows for that.

What about the passive voice? I think Cowen needs to consult a grammar textbook. There’s not a whole lot of passive voice in the Declaration. It’s mainly active. And letting people do things has nothing to do with the passive voice.

Part 2 will be tomorrow. Stay tuned.




Read More

The FDA’s Differing Approval Standards For Sleeping Pills and Covid Vaccines

Sam Peltzman, a University of Chicago emeritus professor, could easily win this year’s Nobel Prize in Economics for his pioneering work on the economics of regulations. Peltzman’s odds of winning have probably improved because of his work nearly a half century ago on the impact of the FDA’s efficacy requirement for drug approval, which was imposed in 1962. Before that year, drugs only had to pass the FDA’s safety standards.

Peltzman found that the added approval standard substantially increased drug development costs, which caused a serious drop-off in new drugs developed and multiyear delays in the introduction of approved drugs. Peltzman and other economists following his lead have found that the added development costs caused hundreds of thousands of deaths from drugs never making it to market or being introduced after long delays. A Nobel for Peltzman is long overdue.

Peltzman’s impact can be heard today from a variety of sources, including the Trump Administration, calling for a speed-up in the FDA’s approval of Covid-19 vaccines. Delays in approval can only increase Covid cases and deaths. Peltzman’s findings remain applicable, critics insist.

The rigor of approval standards for sleeping pills (or beta-blockers and many other drugs) need not, and cannot, be the same as those for Covid vaccines, a point Peltzman would likely accept. Sleeping pills are largely for the users’ benefit—more sleep—with the effects on others nil or inconsequential. The death-reduction case for reducing such drugs’ development costs remains as strong as ever.

However, vaccines are different in one critical respect: Vaccines benefits those vaccinated and many others through the development of “herd immunity” (the point at which the spread of a disease is throttled by the prevalence of inoculation).

Herd immunity can reduce cases and deaths of those vaccinated as well as others not vaccinated. However, herd immunity depends on a substantial portion of the population (many epidemiologists say 60 or more percent, while one recent study from two European universities has found 43 percent is adequate) willingly getting vaccinated (with a working rule, the greater the spread in immunity, up to a point, the greater the decline in disease spread). This means that, barring forced vaccinations, herd immunity is not only dependent upon the science of testing, but also on people’s perception of the safety and efficacy of the testing processes.

Cutbacks in testing rigor (or just the amount of time devoted to testing) can have a two-pronged effect: They can reduce earlier than otherwise Covid deaths among early vaccinated people, but the cuts in rigor can also cause many people to resist vaccination (or even join the ranks of “anti-vaxxers”), delaying the development of herd immunity and extending spread of the disease, which, in turn, can cause more Covid deaths in the long run than are saved in the short run.

Ironically, the greater people’s resistance to vaccination, the more rigorous the testing may have to be just to assuage their safety and efficacy fears and induce them to get vaccinated, so that they contribute to the spread of herd immunity and add to derivative economic gains (more jobs and incomes).

By seeking to speed up the FDA approval process, Republican officials could have sewn doubts on the net value of vaccines and slowed the development of herd immunity. Similarly, many Democrats could have compounded the problem by suggesting that Trump has pressed the FDA to compromise its testing rigor for his reelection ends. Media hostility toward Trump, including emphasis on his efforts to press for vaccine development at “warp speed,” has probably compounded political pressures for vaccine resistance.

Peltzman’s line of argument suggests that greater resistance to vaccination can increase the needed payments to spread vaccinations and, again, to achieve herd immunity. The testing rigor for vaccines may also need to be greater than for sleeping pills because the last thing wanted during a pandemic is a vaccine-prescription requirement, which can slow the development of herd immunity by raising the costs of vaccinations.

The politics of vaccines could be having the unintended effect of elevating resistance to Covid vaccinations. In May, the Pew Research Center reported that 72 percent of polled Americans said that they would “definitely” or “probably” be vaccinated for Covid, while 27 percent said they would not. Earlier this month, the percentage of Americans willing to get vaccinated was down by almost a third, to 51 percent. Those unwilling to get vaccinated was up by more than two-thirds, to 49 percent.

These findings portend a new form of the well-known “tragedy of the commons,” a wider and longer spread of Covid and more unintended deaths, given that a check on vaccine politics will unlikely be driven by concern for the common good. Now, as reported by Wall Street Journal editors, officials from the CDC, FDA, NIH, and drug companies are having to work overtime to assure Americans that drug-testing protocols continue to be follow with the upmost rigor.






Richard McKenzie is an emeritus professor of economics in the Merage Business School at the University of California, Irvine. His latest book under development is The Human Brain on Economics.



Read More

Mazzucato and “Climate Lockdowns”

“In the near future, the world may need to resort to lockdowns again — this time to tackle a climate emergency.” Certainly, Mariana Mazzucato has a taste for striking words. In her latest column for Project Syndicate, Mazzucato argues that

Shifting Arctic ice, raging wildfires in western US states and elsewhere, and methane leaks in the North Sea are all warning signs that we are approaching a tipping point on climate change when protecting the future of civilization will require dramatic interventions.


This is the scenario Mazzucato works with. What are the odds it will come by? When could that happen? What are the events that may trigger it? Mazzucato seems to assume that this is almost inevitable if things “go on” as they did in the past, namely if we continue to have economic growth dependent on fossil fuel. Still, more than a scenario this looks like the background story of the movie “Interstellar”: in that movie, a team of scientists was (treacherously) contriving to send some humans up in space in order to perpetuate humanity. Here we have Mazzucato suggesting governments should work to “limit private-vehicle use, ban consumption of red meat, and impose extreme energy-saving measures, while fossil-fuel companies would have to stop drilling.”

That the private sector can cope with such a challenge is a hypothesis Mazzucato does not even consider. Such a sad scenario cannot possibly be affected by human ingenuity, at least if supported by private shareholders.

Mazzucato’s piece is simply an exercise in “never letting a good crisis go waste”. She maintains that Covid-19 is “itself a consequence of environmental degradation: one recent study dubbed it the disease of the Anthropocene.” Moreover, she says, “climate change will exacerbate the social and economic problems highlighted by the pandemic. These include governments’ diminishing capacity to address public-health crises, the private sector’s limited ability to withstand sustained economic disruption, and pervasive social inequality.”

The key sentence in the article is: “These shortcomings reflect the distorted values underlying our priorities.”

Virtually all problems, in Mazzucato’s worldview, reflect the fact the priorities in the world of production are attuned to people’s demands. In a capitalist system, there are no other “values underlying our priorities” than the perceived necessities of people which become demand for goods and services.

This is the essence of Mazzucato’s view:

Addressing this triple crisis requires reorienting corporate governance, finance, policy, and energy systems toward a green economic transformation. To achieve this, three obstacles must be removed: business that is shareholder-driven instead of stakeholder-driven, finance that is used in inadequate and inappropriate ways, and government that is based on outdated economic thinking and faulty assumptions. Corporate governance must now reflect stakeholders’ needs instead of shareholders’ whims. Building an inclusive, sustainable economy depends on productive cooperation among the public and private sectors and civil society.

This nicely summarizes the evolution of Mazzucato’s views, from her first to her second book. In her first book, she advocates an “entrepreneurial state”. In the second she does call for going beyond capitalism founded upon “shareholder value”. I think this makes sense. If the state is going to fund or sponsor innovative companies, they will nonetheless have to compete in a world of private business seeking positive profits — and that may show either the virtues of government-led capitalism or its weaknesses. So, why not allow both the government and the private sector reject the profit motive, which means the traditional metrics of success and failure too?

Note that in Mazzucato’s piece there are no words of concern for low-income countries, where relatively more “polluting” technologies may be the only ones available, let alone economical, for the time being.

I think this piece is very useful. It perfectly epitomizes an attitude which is spreading in some intellectual quarters: use the Covid19 crisis to make some changes permanent, hoping for a world in which people travel less, trade less, rely more on the government. Those on the other side of the debate should take any available opportunity to emphasize that the quarrel is not between those who want to use government capital to satisfy people’s needs, and those who want to use private capital to satisfy people needs: but between those who want the economy to serve the needs of the people, and those who want the economy to supply those goods and services some rulers believe the people should consume.


Read More

Follow the SOCIAL Science, too.

with Frank Stephenson

Amid the COVID pandemic, we often hear calls to “follow the science.”  Such exhortations are intended to get people to avoid large crowds, wash their hands, wear face coverings, or adopt other practices that are believed to reduce corona virus transmission.

People who want to avoid contracting COVID should certainly take certain precautions that can reduce its spread.  People who want to have stores, schools, houses of worship, and other parts of society to return to normal operations as soon as possible should also support measures that minimize transmission.

Of course, following the science can be more challenging than that pithy statement lets on. What constitutes “the science” has changed quickly as we have learned more about how the virus spreads, what countermeasures are most effective, and which treatments are most efficacious. This constant process of new discoveries is not unique to COVID. This is how science works when faced with the unknown. The constant change we’ve seen in the state of medical and scientific knowledge is a feature not a bug. It reflects the efforts of millions at trying to figure out how to treat and cure the virus. And it’s amplified by the ability of researchers to share their results quickly and publicly through social media. Of course the benefits of that speed do come with a risk of misinterpretation and falsification of data, as we have seen repeatedly. But those risks are worth the speed at which we have learned so much about how to respond to the contagion and treat those who it sickens, and it has also forced us to think critically about what information to rely on and what to dismiss.

Sorting through all of that information in order to “follow the science” can also be challenging when political leaders and government officials send conflicting messages, promote junk science, or dismiss legitimate lines of research.  Early in the pandemic, public health officials discounted the efficacy of face coverings as a means of combating spread only to later flip flop and advocate mask mandates.  The media are replete with photos of politicians going maskless after imposing mask requirements.  In the same vein, many a politician has been seen in a gym or hair salon after ordering such establishments closed to the public. And the President has certainly not helped matters by providing a platform for a variety of questionable claims and “experts.”

One of the lessons of the COVID experience is that determining what “the science” is that we are supposed to follow is never as clear as the simple exhortation to “follow the science” might suggest, especially with a new phenomenon like this virus. The science is always mediated through imperfect human social institutions, whether those associated with science, or politics, or economics.

And that raises a larger problem with “follow the science”—it can forget to take social science into account sufficiently.  In particular, science may suggest that shuttering “non-essential” businesses and conducting school, work, and other activities remotely where possible are the best ways of reducing the spread of the virus, but those recommendations can easily ignore the tradeoffs involved in choosing to shut down wide swaths of society.

The most obvious tradeoff is loss of income for unemployed workers and operators of closed enterprises.  Lost income can lead to harms such as inability to pay rent or make mortgage payments and difficulty providing for families. Too many have dismissed these as merely material concerns, but they have ramifications that go beyond the narrowly financial.

Lockdowns have a variety of other social consequences that cannot be ignored or dismissed. Anecdotes about the “quarantine 15” suggest a society that already had many overweight people may have gotten even heavier and less healthy.  Many routine doctor visits were postponed or canceled, leading some ailments to go undetected or untreated, including cancer screening and chemotherapy.  Likewise, elective surgeries were pushed back or canceled, leading, for example, to prolonged pain and suffering for people scheduled for joint replacements.

Mental health issues are another tradeoff.  Isolation, be it voluntary or government enforced, can deprive people of needed interaction with others.  Just last week, Dallas Cowboys quarterback Dak Prescott spoke about how not being able to work out with, and just be around, his teammates led to bouts of anxiety and depression.  In addition, out of work people may engage in many unhealthy behaviors.  There have been numerous news reports that COVID quarantines brought increases in suicides, drug abuse, and alcohol consumption.  In short, a significant tradeoff associated with following the science in the case of lockdowns is, in the words of economists Anne Case and Angus Deaton, an increase in “deaths of despair.”

Kids are not immune from the tradeoffs associated with following the science.  Remote learning may work well for some children, but abruptly switching from face-to-face instruction to virtual schooling probably doesn’t work well for many.  For example, some kids have poor home situations or no home internet connectivity.  The same children who are mostly likely to have difficulty switching to internet-based instruction are probably the ones who most need the social mobility associated with educational attainment.  More generally, isolation deprives children of much needed interactions with other kids that are a vital part of growing up.  It’s not surprising therefore that the American Academy of Pediatricians came out strongly in favor of having children physically present in school.  Kids are also harmed by financial and mental pressures experienced by their parents. And many of these harms may not appear until much later, making them easy to overlook in an overly zealous attempt to “follow the science.”

The debate over mask wearing is relevant here too. Social science can also help us to understand how mask mandates can backfire by making people feel too safe, what economists call “moral hazard,” or how they can exacerbate other social problems by increasing the power of law enforcement, especially over the poor and people of color. Social science can also illustrate the ways that masks, even when not mandated, make social communication and coordination more difficult. One can still think mask wearing is a good idea while also using social science to understand its costs and the problems with making it mandatory.

When we tally the effects of “following the science,” we have to take account of Bastiat’s famous description of the economic way of thinking as “seeing the unseen.” For example, we cannot just calculate the deaths that lockdowns may have avoided – we also have to consider the deaths and other harms they may have caused. As is also often the case with looking at the world through social scientific eyes, some of that harm and those deaths may not appear until the long run, e.g., the consequences of delayed screening for various ailments or the effects on the education of children. Thinking in terms of trade-offs, the unseen, and the long run are hallmarks of good social science, and engaging in true double-entry moral and social bookkeeping requires that we follow that social science too.

It is indisputable that scientific knowledge is important, and that willfully ignoring and misrepresenting scientific knowledge has caused needless illness and death.  But social science—especially our discipline, economics—is also important in identifying tradeoffs associated with “following the science.”  In a pandemic, heeding social science is necessary too.

Frank Stephenson is the Henry Gund Professor of Economics and Department Chair of Accounting, Economics, and Finance at Berry College.

Steven Horwitz is Distinguished Professor of Free Enterprise in the Department of Economics at Ball State University in Muncie, IN. He is also an Affiliated Senior Scholar at the Mercatus Center in Arlington, VA, and a Senior Fellow at the Fraser Institute of Canada. 


Read More

Two Cheers for Small Business

We live in societies where we see a “near-universal appreciation for the aesthetic benefits of a thriving small business community,” but almost no empathy for small business owners. This is an interesting point made by Will Collins in an article published by The American Conservative and that makes use of James C. Scott’s work.

Collins is thinking of the recent riots in the US which, as you would expect from riots, resulted in physical damages and looting at the expense of restaurants and shops. If many left-leaning commentators typically express enthusiasm for “neighborhood restaurants, locally-sourced produce, and independent bookstores”, “in the wake of the riots, however, condemnations of looting and arson have been strangely muted”.

Though you may detect in the article a hint of nostalgia for a world of smaller shops and a certain antipathy towards big retailers, I think Collins has a point in highlighting that our societies tend to foster “a culture inimical to the character of the independent business owner.” The US is, or at least used to be, different the most European states in that regard, but certainly on my side of the pond there was a good deal of antipathy for shopkeepers. I was always struck by how it was common to refer to Margaret Thatcher with a certain disdain as “the daughter of a grocer”. You would expect that even people who deeply disagree with her would celebrate the upward social mobility and the achievement of somebody who comes out of a “petty bourgeois” environment. Not quite. The petty bourgeoisie is considered rather crass and vulgar, petty, a collection of prudes. The pursuit of money, an utter necessity for somebody who lives out of the oranges or the shirts she manages to sell, is seen as incompatible with higher pursuits.

The great enemy of small business is red tape. It seems to me that those having a strong “appreciation for the aesthetic benefits of a thriving small business community” tend to think of it as a fish tank , which shall be preserved as it is, with exactly those fishes it came with. They take a static view of their community and care about it not changing. They are not sympathetic, instead, with people who are trying to set up a small firm or shop, that is: with more people trying to find meaning in the “zone of personal autonomy” that their shop comes to represent.

Collins also makes a point many are making about the future of cities should Internet commerce take over the world. Will neighbourhoods simply be empty? As “small businesses help keep neighborhoods safe by attracting foot traffic and providing “eyes on the street” to informally monitor public spaces”, are we going to see crime spiking, as shops close? I tend to believe shops will be more resilient than people think. For one thing, somebody may be willing to buy an iPod online, but not necessarily her apparel or her medicines. Niche and highly specialised activities can benefit from personal contacts and handshakes (whenever we’ll go back to shaking hands). But also, for example, immigrants may prefer to go to small groceries run by people in their own community. Foodshops and small restaurants and takeaways can take over from shops that cannot compete with online retail. We will see. Cities are so central in our civilisation because, clearly, they are good at adapting to changing human needs. Still, the pandemic drove many to predict the end of the office as we know it, and thus to people preferring to live in suburban areas, fearing new pandemics and the consequent lockdowns, instead of in city centres. We will see. One interesting feature of crises like Covid19 is that they leave our imagination unbridled, but also, in the midst of an emergency, my impression is that we tend to overestimate changes that will be permanent and underestimate changes that will be transient.


Read More

The Risks of Friendship: A Socratic Dialogue

The scene: Ancient Athens.  Glaucon is standing in the Parthenon, wearing a face mask.  Socrates enters without a mask.

Socrates: Greetings, Glaucon!  How do you fare during this awful pandemic?

Glaucon: [jumps 5 feet]  What the hell are you doing?  Are you trying to kill me?

Socrates: No, why would you think so?

Glaucon: We’re indoors and you’re not wearing your mask!

Socrates: I’m 20 feet away from you.  And the Parthenon is cavernous.

Glaucon: You should be wearing a mask.

Socrates: Very well. [dons mask]  Feel safe enough to talk now?

Glaucon: [unconvincingly] Sure.

Socrates: I suggest we go outside to continue the conversation with greater ease.

[One minute later, outside the Parthenon; Socrates and Glaucon are 25 feet apart.]

Socrates: I must admit, Glaucon, I’m very puzzled.

Glaucon: About what?

Socrates: About your level of fear.

Glaucon: [with trepidation] Oh, I’m not afraid.

Socrates: Well, what do you think are the odds that I’ve got the plague right now?

Glaucon: Uh, one in a thousand?

Socrates: Reasonable enough; I’m asymptomatic after all.  Now, supposing I was sick, what are the odds that I would have infected you within the Parthenon while wearing a mask?

Glaucon: One in twenty?

Socrates: Plausibly.  And what are the odds I would have infected you in the same scenario without wearing a mask?

Glaucon: One in five?

Socrates: Very well.  Now as we both know, susceptibility to the plague depends heavily on age and underlying conditions.  We’re both fifty.  Do you have any underlying conditions?

Glaucon: Thankfully, no.

Socrates: Then according to a table Plato compiled for me, your odds of death if infected are about 1 in 2000.

Glaucon: It’s not just about the risk of death, Socrates!

Socrates: It never is.  There is also the unpleasantness of the plague’s symptoms, and a small chance of long-run harm.  Still, the same goes for almost all risks.  Those who survive a fall from a horse usually suffer pain for a week or two – and a small fraction are maimed for life.  So we can still fruitfully compare your risk of death from plague to other mortality risks, never losing sight of the fact that death is only one of many possible tragic outcomes.

Glaucon: [nervously] Fine.

Socrates: Very well, let us calculate the risk I imposed on you earlier by not wearing a mask.  We multiply my risk of infection times the change in your infection risk times your mortality risk.  That comes to 1/1000 * (.2-.05)* 1/2000, which rounds to about 1-in-13 million.

Glaucon: And that seems small to you.

Socrates: Wouldn’t it seem small to any sober man?

Glaucon: Well, is it really so awful to wear a mask?

Socrates: I wouldn’t mind if the numbers were more favorable.  If I were endangering a thousand people like you, I’d happily wear the mask.  As it stands, though, your fear seems paranoid and your outrage seems unjust.

Glaucon: Look, why should I have to endure any risk for your comfort?

Socrates: You’re enduring a risk right now.  Surely you don’t imagine that your infection risk magically falls to zero as soon as you exit the Parthenon?

Glaucon: Well, why should I have to endure an unnecessary risk?

Socrates: It is “necessary” that we speak at all?  Hardly.  And we could slash our risk further by separating a hundred feet and shouting at each other.

Glaucon: Now you’re just being difficult.

Socrates: I only wish to understand you, Glaucon.  Is that your horse over there?

Glaucon: Yes, Pegasus is his name.

Socrates: A noble moniker.  Now do you know the annual risk of dying on horseback?

Glaucon: About one in ten thousand?

Socrates: Indeed.  Yet you’ve never fretted over the risk of death by horse?

Glaucon: The daily risk is 365 times lower, or hadn’t you considered that?

Socrates: Quite right.  The daily risk of death by horse is therefore about 1-in-4 million – less than one-third of the risk that terrified you inside the Parthenon.

Glaucon: As long as I’m alone, I’m not exposed to any risk of plague at all.

Socrates: And as long as you’re unhorsed, you’re not exposed to any risk of death on horseback.  Yet during the minutes you’re on horseback, you’re a model of composure.  Why then are you so fearful of plague?

Glaucon: Plague is contagious.  Death on horseback is not.

Socrates: I’ve seen you riding with your son, slightly endangering his life as well as your own.  That’s not precisely “contagion,” but you can hardly claim that you’re endangering no one but yourself when you ride Pegasus.

Glaucon: If I catch plague, though, I could be responsible for the deaths of thousands.

Socrates: Possible, I’ll grant.  If I were returning home from a plague-infested land, I’d understand your scruples.  You wouldn’t want to be the conduit for mass destruction.

Glaucon: Indeed not.

Socrates: By now, however, this plague is already well-advanced.  You’re highly unlikely to make it noticeably worse.  Indeed, by this point the average person infects less than one extra person.

Glaucon: I might not be average.

Socrates: You are right to say so.  Still, shouldn’t our knowledge of averages guide our behavior?  In any case, let us return to the key issue: Why are you so fearful of talking inside the Parthenon without masks when the risk of death is vanishinly low?

Glaucon: Perhaps we should sponsor a raging Bacchanalia, then?

Socrates: I think not.  A drunken festival of a hundred people would probably have a thousand times the plague risk of a two-person conversation.  We should avoid that until the plague subsides.

Glaucon: So you admit the danger?

Socrates: I always did.  I’m not saying that plague is harmless.  I’m saying that you’re reacting to risk qualitatively rather than quantitatively.

Glaucon: Meaning?

Socrates: You’re much more afraid of a tiny plague risk than a larger horseback risk.  Why do you think that is?

Glaucon: Have you ever seen someone die of plague?

Socrates: Have you ever seen someone die on horseback?  Both are terrible tragedies, with a long list of ugly secondary risks.

Glaucon: Look, you’re in denial.  Everyone in Athens is scared of the plague.  Your risk analysis is beside the point.

Socrates: How can risk analysis ever be “beside the point”?

Glaucon: We as a society have decided to fight the plague, and you’re going to have to do your part, like it or not.

Socrates: Glaucon, what is my profession?

Glaucon: What?

Socrates: I said, “Glaucon, what is my profession?”

Glaucon: You’re a philosopher.

Socrates: Indeed.  As as a philosopher, what is my mission?

Glaucon: To defy and aggravate others?

Socrates: Hardly.  As a philosopher, my mission is to improve the thinking of my fellow Athenians, my fellow Greeks, my fellow human beings.

Glaucon: [sarcastically] Very noble.

Socrates: I take a certain pride in my efforts.  How, though, am I supposed to improve their thinking?

Glaucon: I don’t know.

Socrates: The answer, seemingly, is: By asking questions.

Glaucon: [weary] Yes, yes.

Socrates: Now Glaucon, when you urge me to “do my part,” what do you have in mind?

Glaucon: Wear the mask, Socrates.

Socrates: I’m wearing one now, to put you at ease while we converse.  In more crowded conditions, I’ve worn a mask out of prudence and decency.  But as a philosopher, obediently wearing a mask is woefully inadequate.

Glaucon: Well, what more should we do?

Socrates: I don’t know about non-philosophers.  For we philosophers to “do our part,” however, requires us to challenge popular fallacies and innumeracy.

Glaucon: Isn’t this just an elaborate rationalization for putting your own comfort above the lives of your fellow Athenians?

Socrates: Possibly.  More likely, though, your agitation is an elaborate rationalization for putting conformity above reason.

Glaucon: Your numbers could be wrong, you know.

Socrates: Indeed, I suspect that all of my numbers are wrong.  As we learn more, each of my numbers will be revised.

Glaucon: If you don’t really know the risks, why are you lecturing me?

Socrates: Because, Glaucon, you’re approaching the uncertainty emotionally rather than analytically.  Uncertainty is a poor argument for panic.

Glaucon: I was never “panicked.”

Socrates: Very well, let us take off these masks, enter the Parthenon, and continue the conversation in comfort.

Glaucon: Are you crazy, Socrates?

Socrates: And a corruptor of the youth, from what I hear.  Do you think there will be a trial?

Glaucon: Look who’s panicking now!

Socrates: A fair point, my dear Glaucon.  A fair point.

Glaucon: Look Socrates, it all comes down to this: There’s no reason not to just go along with society’s expectations here.

Socrates: No reason?  What about friendship?

Glaucon: I don’t follow you, Socrates.

Socrates: Since this plague struck, I’ve barely seen you.  Mask or no mask, you avoid me, as you avoid almost all human contact.

Glaucon: Well, what do you expect me to do?

Socrates: Weigh the tiny risks to health against the immense value of friendship.

Glaucon: You’re making too much of this, Socrates.

Socrates: Am I?  The great Epicurus taught us that friendship is one of the highest of goods.  Friendship is essential to human happiness, and a life well-lived.

Glaucon: You speak unjustly me to, Socrates.  I am and ever have been your friend.

Socrates: I know, which is why your panic pains me so.

Glaucon: If you’re really my friend, you will share my concern for my own safety.

Socrates: I do, Glaucon.  If you were in serious danger, and I could save you by shunning you, I would grieve.  Yet shun you I would.

Glaucon: Very gracious of you.

Socrates: I know you would do the same for me.

Glaucon: Again, most gracious.

Socrates: The plain fact, however, is that you are not in serious danger.  By the numbers, you are in the kind of minor danger that you’ve always accepted in the past.

Glaucon: And?

Socrates: And so I say the time is long since past to resume our normal friendly relations.  In troubles times, minor adjustments are often wise.  But abandoning your friends out of fear of minor risks is folly, Glaucon.

Glaucon: [forced] Well, thank you for your candor, Socrates.

Socrates: [resigned] May we meet again in saner times, my friend.

Glaucon: Good day to you, Socrates.  Good day.

[Glaucon and Socrates go their separate ways.]


Read More

Post-Pandemic Optimism from Joel Mokyr

These days optimism is rarer than before. So it is uplifting to read an historian such as Joel Mokyr writing that “at the end of the day, the post-pandemic economy may not be all that different from what we had in 2019, and insofar that it is different, not all changes will necessarily be bad”.

Mokyr’s reasons for optimism are rooted in the fact that modern economic growth is rooted more in advances in science and technology than on the engine of “Smithian growth”, which is, basically: commerce, though the two things are obviously connected (difficult to imagine technology advances to be independent from the knowledge and even the casual opportunities created by increased contact and thus specialization, as Matt Ridley explains in How Innovation Works).

The problem with Smithian growth is that the institutions that sustain it are very fragile. Markets depend on “peaceful politics, trust and cooperative institutions”.

A shock, whether war or a virus, can wipe those out in just days. We have experienced this in our lifetimes: A major terrorist attack or a pandemic can disrupt markets in a matter of weeks and bring the infinitely complicated machinery of international markets to a grinding halt. In August 1914, with the outbreak of hostilities in Europe, the entire system based on the gold standard and the institutions that supported international specialization and exchange collapsed. It took many years for the system to recover, and it could be argued that not until the 1950s did the world return to the kind of proto-globalization that had taken place in the decades before 1914.

For Mokyr, the fact that modern economic growth is  “based on more productive technology and the science that underlies it” makes it more resilient. Different than trust, “knowledge, once acquired, cannot be easily reverse”. And science and technology informs our societies so profoundly that, in the wake of the pandemic, they have been widely mobilised for the fight against COVID19.

Mokyr also points out that a more science-oriented mentality and, more generally, the experience of change should make us better understand flexibility. “Leaders of our business and technology community would be wise to keep sight of the flexibility and adaptability of our economy, as unemployment soars and businesses small and large in the service sector face bankruptcy.” Alas, this wise advice tends to collide with the urges of politics, as leaders in the political world are, particularly as anxiety mounts, in the need of providing impressions of safety, very often regardless of the costs.

This article by Mokyr, which I summarised without giving it justice, is well worth reading.


Read More