The Big Lesson of 2020

The year 2020 gave us a huge amount of evidence about the relative merits of government intervention and free markets. The bottom line is that government failed massively and free markets triumphed spectacularly (with one major exception) within the constraints that government placed on them. The one apparent exception to government failure is Operation Warp Speed but, as we shall see, that apparent exception may not be an exception at all.

This is the opening paragraph of David R. Henderson, “Markets Work, Government Doesn’t,” Defining Ideas, January 7, 2021.

An excerpt:

Yet a look at the evidence as of January 4 gives little basis for the view that lockdowns reduced deaths. It’s true that the COVID-19 death rate for locked-down California, at 675 per million residents, is well below the 988 and 1,029 for, respectively, Texas and Florida, which are relatively open. But the death rates for locked-down Michigan, New York, and New Jersey, at 1,341, 1,980, and 2,180 respectively, are well above the rates for Texas and Florida. To be sure, a more careful analysis that sifts through the data and accounts for factors other than lockdown—maybe climate matters—is needed. But on their face, the data give cold comfort.

Moreover, what if a more careful analysis did show that lockdowns prevented COVID-19 deaths? That’s not a slam-dunk case for lockdowns because the costs of lockdowns are huge. They are shattering the careers and livelihoods of hundreds of thousands of restaurant workers, haircutters, gymnasium workers, and others. One might argue that the sacrifice is worth it, but isn’t it easier for vulnerable people, most of whom are old and have co-morbidities, to stay home? They would have to stay home anyway, so why insist that others who are younger and have fewer co-morbidities also stay home? Interestingly, California’s Secretary of Health and Human Services, Mark Ghaly, let the mask (pun intended) slip on December 9 when he admitted that the newly imposed ban on outdoor dining was “not a comment on the relative safety of outdoor dining.” You read that right. What, then, was his and Newsom’s purpose in putting tens of thousands of restaurant livelihoods at risk? Ghaly ’fessed up that the measure had to do “with the goal of keeping people at home.” But wouldn’t he and the other officials need to know what people prevented from dining out would do? What if a number of them instead went to other people’s houses and dined in? We were told again and again that policy decisions must be based on science, only to learn that many such decisions were made by politicians and bureaucrats who had no scientific basis for their decisions.

Another excerpt:

Consider, by contrast, the private sector. One reason that millions of people have been able to stay at home is that companies like Zoom have made our work from home possible. Note also that one reason we have Zoom is that years ago the US government allowed the founder of Zoom, Eric Yuan, to immigrate from China. If you want to count that as a success of government, you should note that the US government denied his visa applications eight times. The ninth time was the charm. And one reason we have been able to buy items when stores are closed is that Amazon has heroically stepped up to sell us items over the web and, although deliveries are slower than they were, presumably because of volume, they are still relatively quick. In case you’re worried that Yuan and Amazon pioneer Jeff Bezos are getting rich off us, they are. But our wealth from them is forty-five times their wealth from us. In 2004, Yale University economist and Nobel Prize winner William D. Nordhaus found that innovators keep for themselves approximately 2.2 percent of the value they create and that the rest goes to consumers.

Read the whole thing.

The list of government failures and market successes in the article is not nearly complete. Both areas are target-rich.

 

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890 Thousand Excess Deaths Due to Covid and Lockdowns

We find that shocks to unemployment are followed by statistically significant increases in mortality rates and declines in life expectancy. We use our results to assess the long-run effects of the COVID-19 economic recession on mortality and life expectancy. We estimate the size of the COVID-19-related unemployment to be between 2 and 5 times larger than the typical unemployment shock, depending on race/gender, resulting in a 3.0% increase in mortality rate and a 0.5% drop in life expectancy over the next 15 years for the overall American population. We also predict that the shock will disproportionately affect African-Americans and women, over a short horizon, while white men might suffer large consequences over longer horizons. These figures translate in [to] a staggering 0.89 million additional deaths over the next 15 years.

This is from Francesco Bianchi, Giada Bianchi, and Dongho Song, “The Long-Term Impact of the COVID-19 Unemployment Shock on Life Expectancy and Mortality Rates,” NBER Working Paper No. 28304, December 2020.

An excerpt:

For the overall population, the increase in the death rate following the COVID-19 pandemic implies a staggering 0.89 and 1.37 million excess deaths over the next 15 and 20 years, respectively. These numbers correspond to 0.24% and 0.37% of the projected US population at the 15- and 20-year horizons, respectively. For African- Americans, we estimate 180 thousand and 270 thousand excess deaths over the next 15 and 20 years, respectively. These numbers correspond to 0.34% and 0.49% of the projected African- American population at the 15- and 20-year horizons, respectively. For Whites, we estimate 0.82 and 1.21 million excess deaths over the next 15 and 20 years, respectively. These numbers correspond to 0.30% and 0.44% of the projected White population at the 15- and 20-year horizons, respectively. These numbers are roughly equally split between men and women.

Francesco Bianchi is an economist at Duke University, Giada Bianchi is an MD in the Division of Hematology, Department of Medicine, Brigham and Women’s Hospital Harvard Medical School, and Dongho Song is an economist at the Johns Hopkins University’s Carey Business School.

The authors write:

We interpret these results as a strong indication that policymakers should take into consideration the severe, long-run implications of such a large economic recession on people’s lives when deliberating on COVID-19 recovery and containment measures. Without any doubt, lockdowns save lives, but they also contribute to the decline in real activity that can have severe consequences on health.

I’m not sure why they are confident that there is zero doubt that lockdowns save lives. They admit in the last quoted sentence above that lockdowns “contribute to the decline in real activity that can have severe consequences on health.” What if lockdowns are responsible for half of the bad unemployment consequences, and voluntary actions in response to the fear of getting the virus are responsible for the other half? Then, assuming a linear relationship between unemployment and fatalities, the lockdowns would be responsible for half of 0.89 million to 1.37 million deaths, which translates to between 450,000 deaths and 685,000 deaths. Can they really be confident that lockdowns saved at least 450,000 lives?

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Does Letting People Work Constitute Assault on Workers?

Dr. Sunetra Gupta and Dr. Martin Kulldorff, two of the three authors of the Great Barrington Declaration, write:

The Canadian COVID-19 lockdown strategy is the worst assault on the working class in many decades. Low-risk college students and young professionals are protected; such as lawyers, government employees, journalists, and scientists who can work from home; while older high-risk working-class people must work, risking their lives generating the population immunity that will eventually help protect everyone. This is backwards, leading to many unnecessary deaths from both COVID-19 and other diseases.

This is from their recent article titled “Canada’s COVID-19 Strategy is an Assault on the Working Class,” AIER, December 4, 2020.

When I read the first sentence in the paragraph above, I thought the authors would go in the direction I’ve been speaking and writing about since April. I thought they would make the point that while many professionals can work from home and, therefore, don’t suffer much of an income loss, many working class people have been put out of work by government lockdowns. Think bars, restaurants, hair salons, nail salons, etc.

But that’s not the direction they go in. They write:

older high-risk working-class people must work, risking their lives generating the population immunity that will eventually help protect everyone.

I run into these people a fair amount at Lucky, Safeway, Trader Joe’s etc. To the extent they express themselves on the issue, a substantial majority of the ones I’ve talked to are thrilled that they are allowed to work. The working class people who I’ve noticed are most upset are those whom the government has prohibited from working.

Forcibly preventing people from working = assault on the working class.

Allowing people to work and take risks does not = assault on the working class.

 

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Trump supported lockdowns

President Trump is such an unusual politician that people (myself included) have trouble seeing him clearly. For instance, Trump is often seen as an opponent of lockdowns. But while he did often speak out against lockdowns during the waning days of the campaign, he actually supported them during the period they were most restrictive.  Here’s a NYT headline from April 22:

Trump Criticizes Georgia Governor for Decision to Reopen State

“I think it’s too soon,” said the president, who joined several mayors in questioning Gov. Brian Kemp, a Republican, who had said some businesses could resume on Friday.

And here’s a tweet from April 30:

And it’s not just lockdowns.  I could easily dredge up Trump quotes for and against masks, for and against testing, or for and against any of a number of other policies.

Trump needed substantial votes from two groups that had very different views on Covid-19.  One group, mostly made up of his “base”, included small businesses worried about the economic effects of lockdowns, libertarians opposed to mask mandates, and Hispanic workers who lost jobs due to lockdowns.  Another group included moderate Republicans in the suburbs with professional jobs, who were economically insulated from the crisis but worried about the effects on their health.

It seems to me that early on he sensed that there was a risk of going too far “right” on the issue, losing those swing suburban voters.  Later in the year, it became clear that the problem wasn’t going away and indeed was picking up again.  At that time, he decided to go down the final stretch by appealing to his base with an anti-lockdown message.

I’m not sure that Trump had any good options politically (once the epidemic was out of control), although it’s intriguing to speculate as to what would have happened if he had followed me in questioning the experts (skeptical) view on masks back in early March.  The actual issue in which Trump questioned the experts (chloroquine) didn’t seem to pan out for him in the end, but by late April, experts throughout the world had basically decided that masks were indeed the way to go.  It might have been a big political win for Trump if he’d been ahead of the experts.  In addition, masks are a more attractive solution for small businesses than lockdowns.  In conservative Mission Viejo, almost everyone wears mask when in stores.  In contrast, very few people in North Dakota wore masks, and now they are paying the price.

When politicians encourage people to voluntarily wear masks, they are actually promoting liberty.  That’s because the more people that wear masks, the less political pressure there will be for lockdowns.

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Tyler Cowen Doubles Down

 

I criticized (here and here) a recent article that Tyler Cowen wrote in Bloomberg about COVID-19 and lockdowns. Last week he doubled down by raising the issue of the elderly. The title fits his theme, is “Yes, Covid-19 Is More Serious for the Elderly. So What?

Cowen starts with an analogy to 9/11. (Everything in the shaded areas is a quote from his article.)

Consider 9/11, when some 3,000 Americans died. The U.S. mounted a very activist response that included new security procedures at airports, crackdowns on money laundering, increased surveillance and two wars. Not all of those choices were prudent, but nonetheless they qualify as a very vigorous response.

All true, but I wonder what point he is making. Then he gets to it.

The point is this: Had 3 Americans been killed rather than 3,000 — if, say, 9/11 was a U.S. holiday the hijackers didn’t know about, so fewer people were working — the optimal response would not have been all that different. There were a lot of casualties, but it is also significant that several airplanes were brazenly hijacked and flown into major iconic buildings, the Pentagon was hit, and Congress itself came under threat.

He says that “the optimal response” with 3 deaths plus the iconic destruction would not have been “all that different.” I gather he means that it would not be all that different from what would have been the optimal response with the actual 3,000 deaths. But he does not tell us what the optimal response to that was. Isn’t that the nub of the debate over lockdowns—what is the proper response?

I count Bush’s war on Iraq as one of the most evil government policies of this century. Even if you don’t agree, it was big. So if we got close to the optimal response, then Cowen is saying that the Iraq war was close to optimal. And, by the way, in case he or you need reminding, that war caused many thousands of deaths of young, old, and in-between. Almost all were relatively innocent.

Polities that do not respond to such attacks [as 9/11] soon find themselves out of business. Not only do they invite further intimidations, but their citizens lose faith in the government’s ability to maintain public order or shape the future of the nation. The entire U.S. system of government may well have been at stake in the decision to respond to 9/11 in a significant way.

Even for things like 9/11, we should reject Cowen’s argument. It would have to apply to every government whose country is attacked. Ethical principles generalize, or they are not principles. There’s nothing special about the United States is that respect. So, for instance, when the U.S. government attacked Iraq, Cowen’s recommendation would have had to be for the Iraqi government to attack the United States. That would likely have cost thousands of lives if they could have pulled it off. They probably couldn’t have, but then we’re stuck with the non-principle that might makes right.

But Covid is not like 9/11—unless Cowen wishes to suggest that the virus was biological warfare perpetrated by a foreign power. I don’t think that’s what he’s saying.

To be sure, the number of U.S. victims is high — 220,000 and counting, plus some number of excess deaths from broader causes. But the event itself is so cataclysmic that “downgrading” those deaths by saying many of the victims were elderly doesn’t make a big difference in terms of formulating an optimal response.

Cowen errs again in likening Covid to a military or terrorist attack. Yes, the murder of an ailing 80 year old is basically like the murder of a 20 year old. But succumbing to an illness does not involve the malicious conduct of a malefactors. That takes the moral and legal question of wrongdoing out of the matter. Now we are left with plain hardship: Succumbing to an illness is much more tragic in the case of an otherwise healthy 20 year old than an ailing 80 year old. Any reasonable ethical reckoning would agree.

The focus on protecting the elderly flows simply from two facts: (1) they’re (we’re–I turn 70 next month and my wife is 71) most at risk and (2) they’re often retired and, therefore, are better able to isolate.

So I think it makes a huge difference in an optimal response. Let the people who are lower risk be out in the world. As they spread the virus, we augment immunity. That doesn’t hurt the elderly. It helps us.

Furthermore, it is likely that coronaviruses will return, which is all the more reason to excel in response now. To consider another example, during the 2002-2003 outbreak of SARS-1, 774 people died worldwide, none of them in America. The countries that took that virus seriously — Korea, Taiwan and Canada, to name a few — have performed much better during the current crisis. And many of the best biomedical responses, including vaccines and monoclonal antibodies, have evolved from very serious responses to previous pandemics.

I agree that we should excel. But how? Do you do it with lockdowns, or do you do it with deregulation, including allowing people to try various vaccines whatever stage they’re at, and allowing self-test kits for the virus to be sold, kits that could be available now for less than $10 a pop, but which the Food and Drug Administration won’t let us have?

And now Cowen’s pièce de résistance.

One final (rather outlandish) thought experiment: Imagine that an enemy of the U.S. demanded that 100 90-year-old Americans be handed over each year for execution. Of course America would refuse. The age of the victims would not be a factor in that decision.

Cowen persists in his false analogy of a terrorist or military attack.

As Ryan Sullivan, my co-author on my recent Wall Street Journal op/ed advocating that schools be opened, put it, millions of years of children’s lives are being robbed. Ryan has an autistic son in kindergarten and a daughter in first grade. Both, but especially the son, are losing a lot. Cowen’s policy is more analogous to the terrorist attack on 9/11 than the virus is.

Notice also, what’s missing in Cowen’s paragraph above: the idea of tradeoffs. Of course, we wouldn’t give over 90 to 100 year olds. But he’s willing to sacrifice the well-being of 50 million school-age children. Remember his  casual “It just doesn’t seem worth it” remark about allowing kids to go back to school. He handles the tradeoff by not mentioning it.

Both of Cowen’s pieces resemble the work of a mainstream journalist ignorant of market economics. The essence of economics is tradeoffs. Precious little in his two pieces talks seriously about tradeoffs.

 

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Competition in Indiana Politics Leads to Reduced Regulation

Me: I want to go to there.

INDIANAPOLIS (AP) — Most of Indiana’s coronavirus restrictions on businesses and crowd sizes will be lifted this weekend, but people will still be required to wear masks in public for another three weeks, Gov. Eric Holcomb said Wednesday.

Holcomb, a Republican running for reelection, has faced discontent from some conservatives over coronavirus restrictions. He said he would lift statewide capacity limits for restaurants and bars and crowd limits for social events beginning Saturday because he says the state has made progress in recent weeks in slowing the spread of COVID-19. The mask requirement will be extended until Oct. 17.

This is from Tom Davies, “Indiana governor keeps mask order, drops other virus limits,” Associated Press, September 23, 2020.

Why Holcomb’s sudden change of heart?

Davies writes:

The mask order first took effect July 27 and has drawn ire among conservatives who believe his executive orders in response to the pandemic have gone too far. That has complicated his reelection campaign against Democratic challenger Woody Myers, with some saying they would support Libertarian candidate Donald Rainwater.

So Holcomb appears to be losing support to the Libertarian Party candidate, who, I assume has criticized the lockdowns.

 

 

 

 

 

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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. 

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Ivor Cummins on the Coronavirus

 

I found this video by Ivor Cummins quite informative. Of course, I’m open to being told why he might be, or even is, wrong.

The data on Sweden and “dry tinder” are particularly interesting. Economist Dan Klein, Joakim Book, and Christian Bjornskov have written about this and he quotes it.

One thing I think Cummins brushed by unconvincingly is the difference between the USA Midwest and the USA Northeast, at about the 23:40 point. He says the shape is similar. He and I have a different view of the word “similar.”

One of the most upsetting parts is about how the lockdowns during the summer lengthened the time to herd immunity and therefore might themselves create an increase in the deaths in the fall and winter.

 

 

 

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The Role of Sympathy in Policy

It is no great revelation to say that the policy responses to the COVID pandemic varies considerably between Republicans, liberals, and Democrats.  A charitable interpretation of the differences are that Republicans and (classical) liberals are concerned about government overreach, undermining the rule of law, and that the costs of policies far exceed the benefits.  Democrats may be seen as concerned with saving as many lives as possible even if the costs of the policies exceed the benefits.  A less charitable interpretation is that Republicans and Liberals are simply anti-science and that liberty is the only virtue that matters whereas Democrats are merely trying to sneak in socialism on a fearful public.

The split, however, can be understood much more cleanly without trying to speculate on people’s virtues and vices.  According to a recent study, vast differences exist between people’s perception of the COVID virus.  In general, people overestimate the risk of the virus on young people and underestimate the risk on older people (see the first chart in the link).  Democrats tend to overestimate its risk to a greater extent than Republicans do.

Perceptions of the virus filter into people’s evaluations of the costs and benefits of a given policy.  Since economic costs are ephemeral, forward-looking, and subjective, our personal perceptions will shape what we consider the costs to be.  Democrats support more stringent policies and slower re-openings because they perceive the costs to be considerably higher than Republicans.  They likewise overestimate the net benefits of the proposed policies.

 

This is where the role of sympathy comes into play.  Sympathy is a 4-step process.  For the sake of example, consider two people Jim and Mary.  Mary is an observer of Jim’s behavior, but she wants to try to sympathize with him:

  1. First, Mary imagines herself in Jim’s situation as best as she can
  2. She imaginatively experiences sentiments arising from the situation
  3. She then compares her sentiments (what she is feeling from the imagined situation) with the sentiment that Jim appears to be experiencing
  4. She comes to a new sentiment about the agreement or disagreement between the two sentiments (hers and Jim’s). If they coincide, there is agreeableness.  If they do not coincide, there is disagreeableness and disapproval of Jim’s sentiment.

 

Disagreeableness, however, is not a good feeling.  Mary, to improve herself, will examine more closely Jim’s situation.  She may endeavor to learn more about his frame of mind, his perceptions- in short, his local knowledge.  In this effort to sympathize more fully with Jim, Mary may learn new key facts, as well as Jim’s perceptions of those facts, which may bring their sentiments closer into alignment.  Mary may still disapprove of Jim’s sentiments, but she will have a clearer understanding of them and could engage with Jim more fruitfully to shift his perceptions, too.

To bring the story of Mary and Jim from the abstract to reality, Mary may observe Jim opposing COVID lockdowns.  In her initial sympathetic process, she may reject Jim’s opposition.  But, upon further reflection, she may see her own sentiments are based on an incorrect perception of the virus.  She, in turn, alters her sentiments, but can now also engage Jim with sympathy to his concerns about the policy.

The late, great James Buchanan described democracy as “government by discussion.”  Discussion, for it to be fruitful and not simply be a tyranny of majority, must involve sympathy.  A government without sympathy, even if it has the trappings of democracy like majority voting and dispersion of powers, cannot be a liberal democracy.  Legislation without sympathy deserves not the august description of “law.”  We must make efforts to understand the positions, the sentiments, and the perceptions of those whom we disagree with.  We just might find it is us who err.

 

 


Jon Murphy is a Ph.D. student at George Mason University, where he specializes in Law & Economics and Smithian Political Economy. He previously was an economic consultant in New Hampshire.

For more articles by Jon Murphy, see the Archive.

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The Lockdowns Definitely Suppressed Economic Activity

 

Pryce Boeye’s Hungry Hobo sandwich shops’ sales on the Iowa side of the Mississippi River have been booming since the state reopened dining rooms in mid-May, while those he owns in still-closed Illinois languish.

The pattern is repeated across the Quad Cities, a river-straddling metro area of around 420,000 that includes Scott and Muscatine counties on the Iowa side, as well as Rock Island and Henry counties in Illinois. The contrasting state reopening policies have created two tracks in what had been a unified economy before the coronavirus pandemic.

The scene is playing out in other border communities around the country where workers and shoppers regularly cross state lines. The relatively stringent lockdown regime in Illinois compared with Iowa has created a clear shift in current spending patterns and potential longer-term consequences.

These are the opening 3 paragraphs of Doug Cameron, “States’ Divergent Virus Rules Create Tale of Two Economies,” Wall Street Journal, June 24 (June 25 print edition).

I often see economists say that the lockdowns didn’t have much effect because a huge percentage of consumers were essentially engaged in their lockdown measures without government regulation.

The evidence in this article, not just anecdotes but 3 graphs of hours worked, businesses open, and employees working, strongly suggests that the lockdowns matter. (There are 3 graphs in the print version and only one in the electronic version.)

To be sure, you have to adjust for the fact that these cities border each other; the effect is therefore exaggerated by the cross-border shopping. So a better test would be Iowa and Illinois cities separated by 50 miles or so. Nevertheless, it’s strong evidence.

 

I’m catching up on Wall Street Journals during my staycation.

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