Russell Roberts's Blog, page 326

Does the Theory of Externalities Justify the Reaction to SARS-CoV-2?

(Don Boudreaux)

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Here’s a long response to someone who is “convinced” that my opposition to the reaction to Covid “proves that [I am] incompetently trained as an economist.”

Mr. W___:

Thanks for your e-mail.

For a variety of reasons, I disagree that Covid-19’s contagiousness is sufficient reason to demand that the public – the overwhelming number of whom are healthy – change their behaviors or, even worse, be locked down or locked out. Your phrase “covid presents an externality” is not an incantation the use of which automatically implies that behaviors should change.

First, we humans are constantly spreading dangerous microorganisms to each other. We’ve done so for hundreds of thousands of years, and literally on each and every day of our existence as a species. On this front, SARS-CoV-2 is hardly unique. So to justify calls to change behavior requires something more – say, perhaps this virus being unusually dangerous, which brings me to my second point.

Second, the differential danger of Covid-19 for the very elderly is indeed quite high, but less and less so for people younger and younger. (A recent attempt in the pages of the New York Times to frighten young adults into believing they are at grave risk from Covid-19 is a mix of half-truths and statistical illusion.) And for children, Covid-19 is less dangerous than is the seasonal flu. (According to the CDC, “The risk of complications for healthy children is higher for flu compared to COVID-19.”)

If the contagiousness of a pathogen justifies shaming or forcing people into the likes of staying home, wearing masks, and remaining “socially distant,” why did we wait for the arrival of Covid-19? And do you propose that every flu season we lockdown, wear masks, and socially distance in order to protect children from what for them is the relatively more dangerous seasonal flu?

Third, as is explained in the single most important analysis of externalities ever written – Ronald Coase’s “The Problem of Social Cost” – externalities are bilateral. You can’t harm me unless I’m in a position to be harmed by you. This reality implies that there’s more than one way to reduce people’s chances of coming into contact with the coronavirus: You can take steps to reduce your risk of infecting me, or I can take steps to reduce my risk of being infected by you.

This reality, however, is ignored by those who call for the general population to lockdown and drastically change their behavior. Yet why presume that corrective action must be taken by what we can call “the spreaders” (nearly all of whom are in fact perfectly healthy) rather than only by those who are at especially high risk of suffering seriously from Covid (and by those who are especially fearful of it)? I can think of no good reason.

It’s possible that the optimal response is a combination of corrective actions by both groups. But given that Covid reserves its horrors overwhelmingly for an easily identified group – the very old and ill – it’s far more plausible that the best course is, and would have been from the start, what the co-authors of the Great Barrington Declaration call “Focused Protection.” This thoughtful approach explicitly recognizes Covid’s contagiousness while implicitly recognizing also Coase’s insight that externalities are always bilateral.

But the responses that humanity has actually gotten are the opposite of thoughtful. Instead we’ve gotten hysteria fueled by the absurd Imperial College model, and unwarranted fear spread virally through social and mainstream media and fed further by opportunistic government officials. (Why aren’t you complaining about this externality?) To grant to the panicked reaction a presumption of thoughtfulness, as if it’s a policy reasonably crafted to minimize the costs of an externality, is preposterous.

Fourth and finally, human interaction creates not only some risks for fellow human beings but also many benefits. When you dine at restaurants you help waiters and cooks earn their livings. You might even, simply by being a smiling face, enliven the restaurants’ atmosphere for other diners. When you go to work you help your co-workers earn their livings as you increase the supply of goods or services available to consumers. When you venture out, unmasked, for walks in the park you often run into friends and neighbors – and sometimes even strangers – who benefit from stopping to chat with you. By going downtown to dine or shop or hear live music you contribute to the city’s vibrancy – itself of great value to countless strangers.

If you’re going to analyze Covid and the response through the lens of externality theory, the positive externalities – in addition to other positive consequences – of human interaction (and of human freedom) cannot be ignored.

The above four points do not exhaust my reasons for disagreeing with those who insist that Covid’s contagiousness justifies the draconian response. But this letter is already too long, so I’ll leave matters there.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

On Richard Epstein on Regulating Big Tech

(Don Boudreaux)

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My latest column for AIER was inspired by Tunku Varadarajan’s fascinating report, in the Wall Street Journal, of Richard Epstein’s reaction to tech companies deplatforming certain conservative and populist voices. A slice:

At the core of Epstein’s analysis is his identification of conditions under which so-called “big tech” firms might be prevented by the common law from deplatforming, or refusing to platform, customers. Specifically, the law sometimes holds that firms that are monopolists have obligations to the public that are more extensive than those firms would have were they not monopolists.

And so if companies such as Twitter and Facebook have monopoly power, they are subject to the Anglo-American common-law rule that (as described by Epstein) “no private monopoly has the right to turn away customers.” Such monopolists must serve all customers on terms that are “fair, reasonable and nondiscriminatory.” A useful acronym for this requirement is “FRAND.”

This legal doctrine is real, yet note that it supplies no answer to the question of whether or not private monopolists are subject, as is government, to challenges under the First Amendment. The common-law requirement that private monopolists take customers according to the FRAND standard is completely different from the Constitution’s requirement that government not obstruct private people’s peaceful expressions.

It’s true that application of the FRAND standard to social media companies would cause these companies to behave in ways very similar to how they’d behave if they instead were held to be subject to First Amendment challenges. But this fact doesn’t mean that we should be indifferent between these two approaches. To apply to private parties a constitutional provision explicitly meant to prevent only government from superintending and obstructing speech and the press is to stretch the meaning of the First Amendment absurdly. History instructs us to be exceptionally wary of interpreting the Constitution’s words so elastically.

Even worse, applying the First Amendment to private parties would turn that amendment against itself. It would become a tool for use by an arm of government – the courts – to achieve precisely what the amendment is meant to prevent, namely, government superintendence and control of private citizens’ peaceful decisions about how to express themselves using their own property.

Fortunately, as mentioned above, Epstein never actually makes the case that private companies should be subject to the First Amendment. Any action that he would endorse against tech companies, it seems, is grounded exclusively in the common-law’s imposition on private monopolists of certain obligations – namely, the FRAND standard – that the law does not impose on competitive firms.

Some Covid Links

(Don Boudreaux)

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Daniel Hannan nicely summarizes the reason why pessimism about humanity’s future – now that most of us have been infected with Covid Derangement Syndrome – is justified. Two slices:

Will coronavirus deaths be treated like stroke or cancer deaths – an ugly reality in an imperfect world? Or will they become the medical equivalent of terrorist fatalities, blamed on state policy? Early signs point to the latter.

For a year, now, the world’s media have exaggerated the impact of human agency on the virus. Every international disparity in infection or death rates is presented as a result of policy, rather than of differences in demographics, population density, pre-existing immunity, climate or, indeed, luck.

With most diseases, we take for granted that prevalence varies geographically; but, when it comes to the coronavirus, we pretend otherwise.

It is possible that we will eventually treat Covid as an endemic seasonal illness – as we do with, say, Spanish flu, whose virulence has declined over the years. But it is equally possible the reverse will happen, that other diseases will be treated like Covid, that every lethal virus will trigger demands for a lockdown.

…..

“You can’t put a value on human life” is a good slogan, but a bad policy. The one thing worse than putting a value on life is refusing to do so.

Lionel Shriver is correct: “From Trumpism to lockdown, people believe in the craziest things“. Here’s her conclusion:

Nevertheless, 85 per cent of Britons endorse lockdowns to suppress Covid-19, and the stricter the better. Yet liberal democracies have never before responded to contagious disease by rescinding civil rights, repressing family and social life and stifling their economies. Just as conspicuously, lockdowns, and the UK’s equivalent high-tier restrictions, demonstrably have not worked. Turn on the news: lockdown is not working now. The coronavirus is ‘out of control’ because it’s never been in control. Biology does not respond to government fiat, much less to absurd micromanaging like having to order a ‘substantial meal’ with a pint or classifying a coffee as a ‘picnic’. Joining some two dozen similar international studies, yet another peer-reviewed paper from Stanford University documented last week that while mild interventions like social distancing and appeals to the public have some epidemiological effect, lockdowns do not: ‘We fail to find an additional benefit of stay-at-home orders and business closures.’

Yet so imperviously certain is the fact-proof popular belief in lockdown that anything I might write to debunk the policy will fall overwhelmingly on deaf ears. For many readers, I’ve merely revealed once more that I live in the same sort of dangerously deranged, even murderous, alternative universe as the ‘stop the steal’ camp that ransacked the US Capitol. Lockdown advocates have the numbers. But crowds are known for both wisdom and madness. And people believe what they want to believe. No one wants to imagine that they’ve made often drastic personal sacrifices and helped ravage their country into the bargain to no purpose. How can you be sure which of us is living in a delusional, self-reinforcing bubble?

Fraser Myers explains that lockdowns were never truly the only option. Here’s his conclusion:

More alarmingly, there are still calls from fanatical voices demanding a continuation of lockdown even when the most clinically vulnerable have been vaccinated, by which point the death rate will have collapsed. There is also a very real danger that lockdown will be deployed as the tool for dealing with the next pandemic, or even other threats such as climate change. What is perhaps most tragic about lockdown is that it has demobilised society by shutting everyone indoors, when we should have mobilised the country to the task of protecting the vulnerable.

Here’s Jeffrey Tucker on some of Trump’s policy failures. His conclusion:

Counterfactuals are impossible but nonetheless tempting. What if the Trump administration had not alienated virtually the whole of the business community with its attempt to reverse 70 years of progress in global trade? What if it had pursued the path of sincere diplomacy rather than coercive belligerence with China? What if it had pushed legal reforms in immigration rather than executive edicts? And what if in January the White House had consulted traditional public health experts rather than allowing career bureaucrats to talk the president into locking down?

We can never know the answers to these questions. But it is likely the case that the country and world would be a very different place than it is today, perhaps even a greater place. The economic policies of the Trump administration constitute one of the greatest lost opportunities of the postwar period. We’ll be paying the price for decades. The fundamental problem traces most fundamentally to an illiberal philosophy behind the seeming policy chaos. Repairing that problem is essential to laying the necessary groundwork to recover what has been lost.

David Henderson shares an account of a truly dispiriting instance of the inhumanity of lockdowns.

Ontario physician Patrick Phillips is interviewed by Bright Light News:

Quotation of the Day…

(Don Boudreaux)

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… is from page 113 of my late Nobel-laureate James Buchanan’s “Constraints on Political Action,” which is chapter 3.1 in James M. Buchanan and Richard A. Musgrave, Public Finance and Public Choice: Two Contrasting Visions of the State (1999):

As they must operate, government agents can, at best, represent the interests of the members of the coalition whose support placed them in positions of authority. In the absence of nonelectoral constraints [such as those imposed by constitutions], those agents will, naturally, discriminate in favor of their supporters and against those who supported others. Nondiscriminatory action will be dominated by discriminatory action and for whomever makes up the relevant ruling coalition.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 45 of the published version of James Coolidge Carter’s pioneering speech delivered on July 25th, 1889, to the annual meeting of the Virginia State Bar Association – a speech titled The Provinces of the Written and the Unwritten Law (obvious typo corrected):

And who will be found wise enough to draw the line up to which we may go with safety, but beyond which there is peril?

DBx: This bit of wisdom is broad. Who, for example, is to be trusted to extend the application of the First Amendment from its intended target, government (actually, Congress), to private entities without courting unnecessary danger? Who is to be trusted to impose unprecedented hygiene lockdowns without thereby risking the unleashing of an epidemic of tyranny? Who is to be trusted with the power (antiseptically called “industrial policy”) to override ordinary people’s private spending and investment decisions – power allegedly meant to improve overall spending and investment?

It’s child’s play to imagine and describe outcomes that are better than those that actually arise in our always-imperfect and freighted-with-the-necessity-of-tradeoffs reality. And it’s easy to imagine government-as-god bringing about these better outcomes. God, after all, knows all and will never abuse power. But we are not and never will be governed by god or gods. Yet the success of so many policies in which government exercises greater power requires that those persons charged with carrying the policies out be god-like both in mind and in motive.

Far from “following the science,” the science is ignored by giving power that should be trusted only to god to persons who propose to enrich us with industrial policy or to protect us with lockdowns. I’d say that it’s downright medieval, but I refrain out of a wish not to unduly insult our medieval ancestors.

Some Covid Links

(Don Boudreaux)

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Ivor Cummins corrects an attempt to discredit his informative work on Covid-19 and lockdowns. (I do strongly disagree, however, with Cummins’s unfair and inaccurate description of the Institute of Economic Affairs – on whose Academic Advisory Council I proudly serve.)

Rachel Cunliffe documents yet another way in which Covid Derangement Syndrome fuels tyranny.

Candice Holdsworth rightly argues that “[t]he febrile denunciations of lockdown sceptics are a threat to free inquiry and reasoned debate.” A slice:

Of course, scientists who make consistently bad predictions should be challenged. But we should also be very careful not to punish people for getting things wrong. That is how science works. People form hypotheses that are proved or disproved. Epidemiologists like Gupta and Ioannidis use modelling to make predictions. Sometimes they are correct. Sometimes not. Yes, the stakes are high, but we still need room for dissent and heterodox opinions. We need to be able to examine the pandemic from all angles, because not everybody’s experience of what we’re going through is the same.

What’s more, critics of Gupta ignore the key things she has got right. For instance, she was completely correct to warn of lockdown’s disproportionate impact on the poor – particularly in the developing world. This warning has even been echoed by the World Health Organisation, which has advised governments not to use lockdowns as their primary method of controlling the virus. Critics of lockdown have also been right to warn about worsening mental health, damage to children’s education and increases in domestic abuse.

Phil Kerpen warns of the dangerous and ignorance-bred hubris of lockdowners. A slice:

SARS-CoV-2 is a serious viral pathogen for people who are very old or medically frail. It wreaks havoc in long-term care facilities — yet the places in the world with the highest death rates (Lombardy, Italy, the United Kingdom, New York, New Jersey, etc.) all implemented some version of deprioritizing residents of those facilities to keep hospital beds available for the general population.

For many people, however — and contrary to frequent misreporting — COVID is a relatively mild infection. For adults ages fifty to seventy, the CDC best estimate for the survival rate is 99.5 percent. From ages twenty to fifty, it is 99.98 percent, and for children and young adults under age twenty, according to the CDC, the survival rate is 99.997 percent — far less dangerous than seasonal influenza.

Janice Davis rightly applauds the good people of Switzerland for resisting lockdown tyranny.

Alan Reynolds busts a myth about CARES Act stimulus.

Phil Magness presents “the Incredible Shrinking IHME Mask Mandate Model!”:

Quotation of the Day…

(Don Boudreaux)

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… is from page 4 of the late, great UCLA economists Armen A. Alchian’s and William R. Allen’s Universal Economics (2018; Jerry L. Jordan, ed.); this volume is an updated version of Alchian’s and Allen’s magnificent and pioneering earlier textbook, University Economics:

Two apparent devils restrict what you can have – the limited amounts of goods and services available, and the rest of us who also want them. It is important to understand that scarcity does not exist because society produces the “wrong” things (e.g., beer, pop-jazz, TV games) instead of the “right” things (e.g., museums, symphony orchestras, art). Scarcity exists because of our boundless desires for limited goods of all kinds and types.

Bonus Quotation of the Day…

(Don Boudreaux)

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… is from page 8 of the late, great UCLA economists Armen Alchian’s and William Allen’s Universal Economics (2018; Jerry L. Jordan, ed.); this volume is an updated version of Alchian’s and Allen’s magnificent and pioneering earlier textbook, University Economics:

We want your study of economics to be interesting and even enjoyable. But we promise one unanticipated result: you’ll be brainwashed – in the “desirable” sense of removing erroneous beliefs. You will begin to suspect that a vast majority of what people popularly believe about economic events is at least misleading and often wrong.

On the Origins of 2020’s Novel Lockdowns

(Don Boudreaux)

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In this video, Kate Wand explains the world’s Covid-19 lockdowns originated in tyranny.

Some Covid Links

(Don Boudreaux)

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James Bovard is rightly furious at what he calls “pandemic security theater.” A slice:

The pointless disruptions have done nothing to damage the prestige of government in this neck of the woods – or in much of the nation. Instead, many Americans feel entitled to denounce anyone not complying with the latest edict as if they had been caught planting a pipe bomb under a school bus. Governments have encouraged people to become vigilantes, setting snitch lines that have been flooded with reports of people failing to obey the latest revised social distancing and “stepping outside your damn house” mandates.

Here’s the opening to Stacy Rudin’s excellent essay “First Goes Law, Then Goes Democracy“:

In his 1948 book, God in the Dock: Essays on Theology, C.S. Lewis wrote:

“Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.”

Righteous moral busybodies flourish in our “COVID-19”-obsessed society. They exert social pressure mandating the sharing of previously sacrosanct private information, such as health status and travel itineraries. This creates a nightmarish world of social flagellation in which we are shamed for celebrating holidays with our families, or going out for exercise within seven days of crossing a state line. Our acquaintances must have this information about our comings and goings to ensure we are not potentially diseased.

In this video, Remy rightly ridicules Covid hypocrites.

Newsweek reports on the new paper by Eran Bendavid, Christopher Oh, Jay Bhattacharya, and John Ioannidis on the relative (in)effectiveness of lockdowns at reducing the spread of Covid.

David Seedhouse calls Boris Johnson and other lockdowners “unforgivably negligent.” (I would use a much harsher description, one that would include some variant of the word “criminal.”)

This paper reveals the grotesque inaccuracy of Neil Ferguson’s criminally reckless Imperial College model predictions. (HT Phil Magness) Here’s Phil’s take, shared on Facebook, on this paper’s conclusion about Ferguson’s Imperial College model:

This is a devastating assessment of how the Imperial College model has performed when compared to other models. As with Neil Ferguson’s work on prior pandemics, Imperial tends to severely exaggerate projected mortality. Out of 6 major models considered, Imperial is the clear outlier in displaying a large upward bias.

Naturally, the Imperial model was also the most influential of the 6 by far in shaping the decision to go into lockdown.