Of Hydroxychloroquine and Sex With Demons

I know as little about biology and medicine as the typical public health expert knows about economics and the scientific study of society. I don’t know if hydroxychloroquine is effective against Covid-19 or under which conditions. However, I believe I know something about, or I have the analytical tools to understand, a social system where politicians or public health pontiffs decide what is good or not for individuals and forces it upon them.

Frequent readings about Covid-19 and a cursory perusal of recent articles in medical journals on the efficacy of hydroxychloroquine led me to believe either that the drug was detrimental or else that it had no beneficial effect. My opinion was not moved by the crowd pushing the drug, from Peter Navarro and Donald Trump to Stella Immanuel, a Texas doctor who also thinks that sex with demons in dreams causes some gynecological diseases.

Even if I lack experience in sex with demons (like, I suppose, most of my readers), I replied to a Facebook friend who did not seem to think that Immanuel is a charlatan:

I respectfully suggest that you should try to recognize a wacko when you see one.

I would add that it is difficult to believe anything from somebody who thinks that “trade wars are good, and easy to win” (a field that I know a bit) when he declares that hydroxychloroquine can cure Covid-19. Quickly recognizing a charlatan when you see one allows you to economize on information, a costly resource. It is not impossible, of course, that a given wacko be right per mere happenstance.

Then, economics professor Steve Ambler (Université du Québec à Montréal) brought my attention to a Newsweek article (“The Key to Defeating COVID-19 Already Exists. We Need to Start Using It,” Newsweek, July 23, 2020) where a respected professor of epidemiology at Yale University, Harvey Risch, summarizes the results of the research he published in a major epidemiology journal. He claims rather persuasively that the administration of hydroxychloroquine, together with other drugs, has shown its efficacy when administered early in the treatment of Covid-19 (as opposed to later phases of the disease as reported in other studies).

Whatever the results of the scientific debate turn out to be, Professor Risch’s study is useful for at least two reasons related to economics. First, it confirms the main advantage of free speech. It allows mainstream science and whatever else we know, or think we know, to be challenged. Knowledge that survives free-speech challenges can be given the benefit of the doubt, as John Stuart Mill argued in immortal terms  (On Liberty, 1859):

If even the Newtonian philosophy were not permitted to be questioned, mankind could not feel as complete assurance of its truth as they now do. The beliefs which we have most warrant for, have no safeguard to rest on, but a standing invitation to the whole world to prove them unfounded. If the challenge is not accepted, or is accepted and the attempt fails, we are far enough from certainty still; but we have done the best that the existing state of human reason admits of. … This is the amount of certainty attainable by a fallible being, and this the sole way of attaining it.

In the same vein, I wish the White House would now recognize that the “enemy of the people”—in this case, Newsweek—is helping a minority idea that it itself promotes to receive a wide exposure from the pen of a credible scientist.

Second, Risch’s contrarian claim also helps make an important distinction, on which he himself does not pronounce and which is generally anathema to the public health movement. Whatever “the science” says, it should be left to each individual adult to make his own choices and trade-offs between different benefits and costs and risks as he evaluates them. This applies to which medication and treatment to choose or not to choose. Such freedom, if it were really implemented, might lead to (more) great personal tragedies in the case of individuals who would make these choices without consulting people who know how to think about medical consequences—like medical doctors. But then, tyranny also brings a lot of personal tragedies. Historically, there is no doubt that tyranny maimed and killed many more people than individual medical choice. And in a system of free choice, perhaps individuals would learn or re-learn how to be responsible for their own welfare.

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Tullock’s COVID Spike

There is perhaps no greater goal than promoting safe behavior during a pandemic.  Policy makers need to know the correct proscriptive policy to encourage, or perhaps force, citizens to act in safer ways.  For citizens themselves, the calculus is different.  Safe behavior can fall on a continuum of greater or lesser risk, but that typically corresponds with costs.  Some behavior that is very safe can be costly.  Gordon Tullock famously explored this trade off with his thought experiment “Tullock’s Spike”.

 

Automobiles have become a lot safer over the past 30 years, and much of that is the result of innovation in safety technology.  One of the biggest advances has been anti-lock brakes.  These prevent cars from skidding during braking and allow for more mistakes by drivers.  In theory, they should make us safer.

 

But researchers found something odd – a lot of these innovations did not seem to be promoting safer driving.  Instead, empowered by a feeling of safety, individuals decided to drive less safely assured that the advances in auto safety would allow them to travel more quickly (lowering their costs) while not incurring the risks.  Anti-lock brakes, airbags, seat-belt laws, crumple zones, all lower the costs of accidents to individuals.

 

How then to “encourage” safety?  Tullock said, let’s put a sharp metal spike in the middle of the steering wheel.  That would have the practical effect of keeping the costs directed, literally, at the driver who would adopt safer practices.

 

Why is this relevant today other than to remember Tullock’s unconventional way of thinking?  Public health officials face the exact same dilemma.  COVID-19 cases are rising, particularly among the young.  Despite shaming, nagging, and pleading, the young are not heeding the pleas of our public officials to act “safely,” and are going to bars, having meals, and otherwise leading relatively normal lives.  They are doing this because there is no spike on the steering wheel.  The young and healthy are largely unaffected by COVID and understand this.  After having been deprived of many things over the past six months, they are, understandably, reluctant to continue to live in semi-isolation.

 

It seems to me policy makers have a stark choice.  Closing bars and forcing public mask wearing won’t solve the problem.  Young people will move to private homes and parties.  They will continue to meet and talk and flirt and do what young people do.  The only way to change their actions is to force them to pay the costs for the COVID increase.  I would suggest we need to think more in terms of a tax.  Anyone under the age of 30 who tests positive for COVID and through contact tracing can be shown to have engaged in risky behavior should pay a tax or penalty.  It may not be perfect, but it will change the calculus for those who right now are driving very safe Ferraris and putting other members of society in direct risk of infection.

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Herd Immunity: Saving Lives and Saving the Economy at the Same Time

Absent a highly effective vaccine or some other cure, only two policy questions are relevant: how quickly should we reach herd immunity and whom should we protect during that period? The answers are obvious. We should achieve herd immunity as quickly as is prudent, while protecting the vulnerable, including the elderly, sick, and frail. Let the young and healthy become infected in the natural course of their lives to help create a protective layer around the old and sick. The first step is reopening schools and businesses.

No one wants to become infected with the novel coronavirus. But those who do can know that their private cost confers a public benefit, moving us one step closer to herd immunity. The good news is that we might already be close to herd immunity.

This is from David R. Henderson and Charles L. Hooper, “Herd Immunity: Saving Lives and Saving the Economy at the Same Time,” Brief Analysis No. 138, Goodman Institute for Public Policy Research, July 20.

Read the whole thing: it’s only 2 pages long.

Charley and I finished the piece about 10 days ago. Would I write it somewhat differently today? I would. I found this post by EconLog co-blogger Scott Sumner, published 2 days ago, persuasive.

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Herd immunity is not a number (it’s a function)

There’s a lot of talk about what sort of percentage of the population must be infected before you have “herd immunity”. For instance, Tyler Cowen has a post discussing the fact that new Covid-19 infection rates are down sharply in places that have previously been hit hard, such as Sweden, Lombardy and New York. I do agree with Tyler’s claim that it is plausible that this might reflect, in part, the role of herd immunity.

At the same time, I fear that the implications of this might be misunderstood. Herd immunity is not a specific number, like 20% or 70%; it’s a function of “R0”, the rate at which the virus spreads. And that reflects human behavior. Sweden certainly does not have enough herd immunity to go back to life as normal, but they may have enough for a partial return to life as normal. Thus they don’t want to go back to behavior that would normally lead to a R0 of 3 in an unexposed population, but 1.4 might be good enough, given those precautions.

The US is still a long way from having to avoid taking precautions. In New Jersey, the death rate is 1768 per million. And that rate occurred despite New Jersey residents taking significant precautions. Even worse, lots of people still die each day in New Jersey, so the 1768 figure will likely reach close to 2000.

For the US as a whole, the fatality rate is 424 per million (a tad below Sweden), which is less than 1/4th the New Jersey rate. If the virus is allowed to spread uncontrolled in the US then we can eventually expect to be hit as hard as New Jersey, and probably much harder. The US has already had 140,000 deaths—I don’t think anyone wants 560,000 deaths, or more. We clearly need to avoid ending up like New Jersey, and that means we cannot rely solely on herd immunity.  Almost everyone favors at least some precautions, such as for nursing homes.

Now for the good news. We’ve gotten better at preventing Covid-19, despite all our missteps. So the percentage of the population necessary for herd immunity—when combined with widespread mask wearing and testing—is much lower than when New Jersey was first impacted in March and April. That doesn’t mean we can let down our guard, but it does mean that herd immunity combined with precautions could help the US as a whole to avoid being hit as hard as New Jersey.

There are a lot of moving parts with Covid-19, and it’s important to focus on them all.  Not just one in isolation.

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Four facts about Covid-19

Fact #1  Today, most experts believe that widespread mask wearing and widespread testing are the best ways to control Covid-19.

Fact #2: February and March were the months when the epidemic in America got out of control, when public policy was most decisive.

Fact #3: During February and March, public health officials actively discouraged testing.

Fact #4: During February and March, public health officials actively discouraged mask wearing.

Alaska was down to only 38 cases in mid-May, before exploding upward:

New Zealand was down to 65 cases, and kept falling:

Consider the following two stories from yesterday’s news.  Think about the media sources where these individuals may have gotten their ideas:

 

For a while, the US was doing better than Europe.  Now we have more total deaths despite a far smaller population, a younger population, less dense cities, less public transit, being initially hit less hard, and far more spending on health care.  And the gap is getting bigger—a month from now we’ll be doing much worse than Europe.

HT:  Matt Yglesias

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Could it have been much worse?

Toward the end of a recent podcast, Tyler Cowen remarked that the pandemic could have been much worse, and because we’ve been through this we’ll be much better prepared next time.

At first I agreed with both observations. But while I still believe that we’ll be much better prepared next time, I have doubts as to whether it could have been much worse. This might have been the worst possible epidemic that could possibly have hit the world in 2020. It all depends on what economists call “elasticity”, which means responsiveness of behavior to changes in incentives.

I don’t doubt for a moment that one can imagine viruses that are much more deadly than Covid-19, including SARS, AIDS and Ebola. But just because a virus has a higher case fatality rate (CFR) doesn’t necessarily mean it leads to a higher total death toll, or a longer economic depression. The damage depends on both the CFR and the number of cases. And in general, the number of cases will be inversely related to the CFR, other things equal.

The best way to see my argument is to look at some data. When looking at incentive effects, I am going to use the term “response” rather than “policy”, because I’m interested in the response of both governments and private individuals, not just governments.

Germany has a fatality rate per million that is between 1/4th and 1/6th the rate of other populous countries such as Italy, France Spain and the UK. It seems plausible that the difference in death rates is due to a difference in response (although of course other factors such as genetics and luck may play a role.) If the disease had been 5 times more deadly, then it seems quite possible that the other big European countries would have responded as effectively as did Germany.   They’d still do more poorly than Germany (which would also respond more strongly to a deadlier epidemic), but not more poorly than they actually did with Covid-19.  In a deadlier epidemic, the Italians would respond more like the Germans did in this case, and the Germans would respond more like the Chinese did in this case.

[If you are thinking that Italy had the disadvantage of being hit first, then compare Germany to the UK in this thought experiment.]

Some readers may be thinking, ‘You can’t compare Germany to the other four countries, as Germans are more disciplined in following rules and their government has more state capacity.” If that’s what you are thinking, then you’ve completely missed the point. Those cultural differences are likely real, but they merely explain why Germany did better than the other four when faced with this particular epidemic. It tells us nothing about counterfactuals of how Germany and the other four would have reacted to a much more serious epidemic.

Italy responded to the epidemic in March and April far more effectively than in February. Basic Italian culture did not change in one month—they simply became more aware of the need to try to control the epidemic. Chinese provinces outside of Hubei had death rates that were only a tiny fraction of the death rates in Hubei province. That’s not because the non-Hubei provinces of China had a different culture, rather they responded differently to the epidemic because they knew more about the risks by the time it got there.  The response of the population is hugely important.

So don’t confuse cross sectional comparisons of response for a given epidemic, with counterfactual responses in the same country for a wide range of hypothetical epidemics. Young people would not be having Covid-19 parties if the death rate were 50%, and almost everyone would be wearing masks.  There’d be a sort of WWII mobilization push for test/trace/isolate (which helped keep the German epidemic under control.)

We know that lots of countries controlled the epidemic more effectively than the US or Western Europe. And there are wide variations even within areas like Western Europe. Had the epidemic been far worse, then many more countries would have responded much more strongly. Taiwan had a death rate of 0.3 per million from Covid-19 (so far). Assume their case fatality rate were 100 times worse, making the disease close to 100% fatal. Even in that case, and even in the worst case with no behavior response, the fatality rate in Taiwan would have been only about 30 per million. That’s less than 1/20th the UK rate. So even a highly deadly epidemic doesn’t kill that many people if controlled effectively.  And the UK actually had more time to prepare than Taiwan. My claim is that if Covid-19 had been as deadly as AIDS, then the UK (both public and government) would have taken steps so that the total number of British deaths was no higher than the actual number—roughly 45,000.

So maybe it could not have been much worse; maybe this was the perfect storm. Just deadly enough to shut down the global economy, but not deadly enough to make most countries take Taiwanese-style precautions.

PS.  Australia was recently hit by a second wave.  We know the specific mistakes that led to this happening, and it seems very unlikely these mistakes would have happened if the CFR had been 50%.  (Guards were partying with quarantined airline passengers.)

PPS.  You can think of this in economic terms, where the societal demand for safety is roughly unit elastic.  This is different from individual demand elasticity, as there is a public good aspect to public health.

PPPS.  I have doubts as to whether my argument applies to poor, densely populated countries with low state capacity.  Perhaps in some places there was no feasible level of response that could have prevented disaster if the CFR had been high. (Recall the Black Death.) But we know that’s not true of developed countries, or even many developing countries such as Vietnam.

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Fiscal Policies for a Transformed World

By Vitor Gaspar and Gita Gopinath The ongoing COVID-19 pandemic has already prompted an unprecedented fiscal policy response of close to $11 trillion worldwide. But with confirmed cases and fatalities still rising fast, policymakers will have to keep the public health response their No. 1 priority while retaining supportive and flexible fiscal policies and preparing […]

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Will Italy get the “upside” of COVID?

In many assessments of the changes brought by COVID-19, I notice some classical liberal scholars are putting on the upside a certain degree of deregulation, which apparently governments are accepting in order to cope with the healthcare challenge and to ease the way towards recovery.

I am afraid that won’t happen in Italy. I have an article on the matter in Politico.eu.

As I recall in the piece,

The first time I heard an Italian politician promise to slash red tape, I was 13. It was 1994 and, with great fanfare, Silvio Berlusconi had injected the Reagan-esque language of bureaucratic reform into Italian politics.

It was a theme the four-time prime minister and his successors would return to over and over again. As the economist Nicola Rossi recently noted, over the last 30 years, Italy has introduced 10 much-talked-about “simplification reforms” and “reforms of the public administration” in 1990, 1993, 1997, 1998, 1999, 2000, 2003, 2005, 2009, 2014.

And yet, none of these resulted in an actual, substantive deregulation effort.

The article is here.

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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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2020 hindsight

James Fallows has a very good article in the Atlantic, documenting the many failures in the US government response to the Covid-19 epidemic. While I don’t contest his specific points, some of which document appalling lapses in intelligence gathering and processing, I do not accept his framing of the problem.  The failure here went well beyond government incompetence—there was a major failure of imagination.

Here’s Fallows:

By the middle of March, Trump had switched to blasting the “Chinese virus,” which he continued doing through much of the month. On March 11, he gave a poorly received national address from the Oval Office, in which he bungled the announcement of an upcoming ban on most (or maybe all; it wasn’t clear) air travel to the U.S. from Europe. Several people who have dealt with past disease outbreaks told me that, in a normal administration, one option for mid-January would have been a temporary, but total, ban on all inbound international flights to the United States. “A serious option in all contingency planning would be total closure of the airspace,” a former senior official with experience in pandemic response told me. “We learned from the bird flu that as long as the airspace was open, we were completely vulnerable as a population. It is a draconian approach that could strand thousands of people. But as we look back—when taking early intelligence into serious consideration from the start—this one option would be an early choice for the president to make. It would be followed immediately by humanitarian support, and then transitioned through hubs to permit a measured flow of people to key locations. Follow-on screening would also take place prior to any further travel.”

Hindsight is 20-20.  It’s very unlikely that a “normal administration” would have imposed a travel ban in mid-January.  The first European travel ban was January 31st, the same day as the US ban.   Fallows underestimates just how deep the failure of imagination actually was.

On January 23rd, 2020, I knew that Covid-19 was a major problem.  I knew that it was transmittable between humans.  I knew that some experts suggested that it could become a worldwide pandemic.  I knew that the Chinese government was so concerned that they took the unprecedented step of locking down an entire province of 60 million people.   The US government also knew this.  The Canadian and European governments knew this.  The media knew this.  The Democrats knew this.  The Taiwanese knew this.

Unfortunately, all of those groups (except the Taiwanese) didn’t take the threat seriously.  We didn’t even ban flights from China until January 31st, and some people even opposed that ban.  A ban on flights from Europe did not occur until mid-March, by which time large numbers of infected people had flown from Europe to the East Coast.

In my view, this was a failure of imagination.  My initial view was that “this is another SARS”.  I’m pretty sure that most other people felt the same way at the time—despite having all the relevant facts that we have today. Only when it began to spread widely in the West did we start taking it seriously, but by that time it was too late to stop.

So yes, in retrospect a total ban on all inbound flights in mid-January would have been ideal.  That might have allowed the US to achieve a much lower death total (albeit only with effective follow-up steps).  But there was almost no support for such a move at the time because Westerners were unable to imagine how bad it would get.  We had the facts (by January 23rd at the latest, but actually earlier); we simply refused to believe the doomsday predictions that were being made by a few epidemiologists.

There is no bureaucratic fix for a failure of imagination, just as there is no bureaucratic fix for the failures of imagination that led to 9/11 or Pearl Harbor.  All we can do is learn from our mistakes.

The next 10 times this occurs we’ll almost certainly overreact, just as we overreacted to later 9/11 and Pearl Harbor type threats.  Most of those next 10 virus outbreaks will be less severe—more like the first SARS epidemic than the Covid-19 epidemic.  But having seen what happened in 2020, we’ll react more like Taiwan did this time, if not even more vigorously.

That’s just how the world works (horse, barn door).  People don’t have enough imagination to take steps to prevent disasters until they’ve seen the effects of a disaster.  After our electrical system gets knocked out for months by a huge solar flare, then we’ll start stocking up on some extra transformers.  We’ll have arms control after the next accidental nuclear war.  It’s not that we don’t understand the risks at an intellectual level, it’s that we can’t really imagine the worst-case outcome.

HT:  David Beckworth, Matt Yglesias

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