Today's Average Hourly Wage Has about the Same Purchasing Power it Did in 1978

Today's Average Hourly Wage Has about the Same Purchasing Power it Did in 1978

09/11/2018Doug French

“The Labor Department reported Friday that worker payrolls expanded by 201,000 in August and private-sector hourly wages grew 2.9% from a year earlier,” last Friday's Wall Street Journal reported.

Meanwhile, Ryan McMaken reports that the Fed has a new inflation gauge that’s reflecting “the highest rate recorded in 158 months, or more than 13 years. The last time the UIG [underlying inflation gauge] measure was as high was in April 2005, when it was at 3.36 percent.”


The UIG comprises,

data from the following two broad categories: (1) consumer, producer, and import prices for goods and services and (2) nonprice variables such as labor market measures, money aggregates, producer surveys, and financial variables (short- and long-term government interest rates, corporate and high-yield bonds, consumer credit volumes and real estate loans, stocks, and commodity prices).

So prices are rising, and wages, as always, aren’t keeping up. According to Pew Research,

After adjusting for inflation, however, today’s average hourly wage has just about the same purchasing power it did in 1978, following a long slide in the 1980s and early 1990s and bumpy, inconsistent growth since then. In fact, in real terms average hourly earnings peaked more than 45 years ago: The $4.03-an-hour rate recorded in January 1973 had the same purchasing power that $23.68 would today.

So how is everyone, seemingly, buying all those new gadgets? Consumer lending is setting records. That’s how. In the August 24th edition of the WSJ, AnnaMaria Andriotis and Peter Rudegeair write,

Lenders extended $81.9 billion in personal loans to U.S. consumers in the first half of the year, up about 13% from a year prior, according to credit-reporting firm Experian PLC. That compares with a 9% rise in auto loans and leases and a 5% boost in spending limits issued on new general-purpose credit cards over the same period.

Personal loans are unsecured, so are much riskier than lending on cars and homes. However, lenders want to get money out the door so they,

pitch the loans as a way for consumers to pay for projects or activities that might have otherwise taken months to save for. “Take a trip,” says an offer from Barclays PLC. “Add a new deck, patio or pool,” says one from Citizens Financial Group Inc.

All of this debt is on top of $1.04 trllion in credit card debt and $1.5 trillion in student loan debt.

U.S. Consumers and their lenders are seeing the world through Trump’s rose colored glasses. So much to buy and not enough time to save for it! Plus, the Fed’s inflation will chip away at their debts. For poor working stiffs who save, Ludwig von Mises wrote ,

These victims, by and large, are the same kind of people ”roughly, the middle classes” who are injured as creditors through the depreciation of their bank savings, insurance policies, pensions, etc. The salaries of teachers and ministers, the fees of doctors, go up only slowly as compared to the tempo with which prices of food, rent, clothing, and so on, go up. There is always a considerable time lag between the increase in the money income of the white-collar workers and professional people and the increase in costs of food, clothing, and other necessities.

One wonders what could go wrong as we near the 10th anniversary of the Lehman Brothers bankruptcy filing.

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"Pent-Up Demand" Won't Save Us from Economic Destruction

06/03/2020Harley Dalton

In responding to the coronavirus threat, governments around the world have committed themselves to a series of harmful and largely unnecessary policies which are likely to plunge the world into a prolonged economic depression. In the UK, the effect of our lockdown has been severe, with thousands of businesses, millions of jobs, and billions in GDP simply wiped out of existence. The consequences of these outcomes will be profound and, in some cases, fatal.

Yet it is often said that the destruction of our economy and the present misery of millions is a worthy price to pay for saving lives. Conceptualizing the economy as a smoky boardroom filled with men in top hats, many argue that the lockdown is a choice between Lives versus the Economy, and that therefore lives are more important than money—people lost cannot be reborn, but money can be remade. The economy will recover, they claim, and things will once more be as they were.

Such claims are a failure of perspective, born predictably out of a failure to educate the vast majority on simple economic principles. In reality, the economy will not just recover in some kind of Groundhog Day reset when the lockdown is lifted; rather, we have every reason to suppose that our current turmoil will be protracted, will likely intensify, and is by no means immune to a total collapse given the huge amounts of public and private debt and fresh-printed currency accruing currently.

In the first instance, it is self-evident that we will never be as rich as we might have been without the lockdown. Consider Frederic Bastiat’s parable of the broken window: a brick through the window of the baker’s shop is hailed for generating business for the glazier, ignoring that the baker had intended to buy a new suit, which will now not be made and added to the sum of wealth. Since March, a great many individuals and businesses have been subjected to a veritable hailstorm of bricks through loss of income and revenue, continuing overheads on rent and maintenance, the collapse of vital supply chain links, and other such disruptions, while at the same time neither producing nor demanding that things be produced.

Detractors may argue that the result of this break in production and consumption will be an explosion of pent-up demand—but excepting the great rush back to pubs, restaurants, and hairdressers when the barriers are lifted, it will not fully account for the total sum of demands that would’ve been realised if the economy has been left undisrupted, nor is it assured that the closure of many otherwise viable businesses will be answered by the emergence of equally efficient and productive replacement suppliers.

Further, this theory of pent-up demand proposes a false notion that the economy is merely incubated in some kind of suspended animation, as though all the people currently confined to their homes were effectively frozen in time, ready to resume hammering nails or typing emails with a click of the government’s magic pocket watch. But the economy is essentially a living entity, every beat of its heart and wave of its invisible hand the actions we take to foster and sustain it; and it lives now as an increasingly pitiable creature, shackled, starved of food and air by government shutdowns, and thus dwindling rapidly in health.

As with the person who leaves unchecked bodily discomforts to develop into serious medical concerns, the failure to treat the ongoing cardiac arrest of the economy will surely lead to a series of complications which belie any suggestion of a simple economic recovery, or of the conceit that lives and the economy are somehow disconnected, mutually exclusive phenomena.

At least for the period that our basic economic metrics like GDP remain lower than they were, individuals will clearly suffer in their quality of life, and this is especially true for the poorest and most disadvantaged in our society. An economy which immediately produces less than it did will inevitably be forced to sacrifice the availability of all kinds of privileges we might once have enjoyed. Reduced access to suitable facilities for the old, to recreation for the poor, to purpose for the unemployed will make life miserable, in some cases intolerable, leading to increased suicides. Deficient funding sources for the state will mean rationing of frontline public provisions like welfare and healthcare, as well as the policing of air and water quality regulations, meaning greater levels of deprivation and death.

Anyone who thinks that this period, marked by joblessness, bankruptcy, debt accumulation, and collateral deaths will be a simple recovery, in that predictably casual manner with which they say such things, is not really thinking. The length of the lockdown and its eventually quantifiable consequence on the general economy will ultimately determine the longevity and severity of the suffering we are bound to endure over the coming years. That suffering will neither be trivial nor necessarily temporary in the short to midterm.

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The Moral Authority of the Lockdown Fetishists Is Gone. Thank the Protestors and Rioters.

06/02/2020Ryan McMaken

Six weeks ago, when thousands around the nation took to state capitols to protest the human rights abuses inflicted by coerced "stay-at-home orders," lockdown supporters reacted with sanctimonious outrage.

Declaring the protestors to be "covidiots" who failed to appreciate the virtue and necessity of police-enforced lockdowns, news outlets and lockdown advocates on social media declared that the protests would cause outbreaks of disease, and nurses declared that the protests were "a slap in the face" to those trying to treat the disease. One political cartoon featured an image of an emergency room nurse saying "see you soon" to antilockdown protestors.

Now, with far larger numbers of protestors amassing in larger groups, we hear none of the lofty moralism coming from the media or lockdown enthusiasts on social media. Yes, there are still some token attempts to express worry over how the riots and protests of recent days might spread the disease. But the tone is quite different. Concerns over COVID-19 are now phrased along the blueprint of "if you protest—and we would never dream of telling you not to protest—please take these measures to minimize risk." It's all very polite and deferential to the protestors. Politicians like Kamala Harris have even joined the protestors in the streets, doing what she demanded others avoid just a few weeks earlier. Where are the nurses denouncing these protests as a "slap in the face"? Where are the social media COVID warriors telling us that standing next to a person without a mask is tantamount to homicide? They're very hard to find, nowadays.

Of course, those who support the current protests, but oppose last month's protests, claim that there is no equivalence. Many would likely say, "We're now protesting against people being killed in the streets!" followed by "Those other protestors just wanted haircut.

The reality, of course, was far different. Most of those who oppose the COVID lockdowns are well aware that the lockdowns kill. They lead to severe child abuse, to more suicide, and to more drug overdoses. They lead to denial of medical care, because lockdown edicts have ridiculously labeled many necessary medical procedures as "elective." Lockdowns have rendered tens of millions of Americans unemployed while robbing people of their social support from family and community groups. Lockdowns increased police abuse and harassment of innocent people who were guilty of no crime but leaving their homes or trying to earn a living.

Lockdown advocates, however, declared all of this to be "worth it" and demanded that their ideological opponents just shut up and "#stayhome."

Lockdowns for Thee, but Not for Me

But now the current spate of protests and riots have made it clear that lockdowns and social distancing are all very optional so long as the protestors are favored by a left-wing narrative.

While the prolockdown-antilockdown conflict can't be defined by any neat left-right divide, it is nonetheless largely true that the most enthusiastic advocates of COVID lockdowns are found on the left side of the spectrum.

And that's why things have now gotten so interesting. It was easy for the prolockdown left to oppose protests when those protests were seen as a right-wing phenomenon. But now that the protests are favored by the Left, then it's all perfectly fine beyond a handful of politely expressed "concerns" that protests might spread disease.

The Left's about-face on the sacredness of social distancing will have significant effects on the future enforcement of stay-at-home orders and social distancing laws.

After all, on what grounds will governors, mayors, and law enforcement officers justify continued attacks on religious groups who seek to assemble in the usual fashion? If one group of people is allowed to gather by the hundreds to express one set of beliefs, why are other groups not allowed the same basic human right?

Politicians will no doubt soon invent new rationales for this inconsistency. Indeed, we already have one case. New York mayor Bill DeBlasio has come right out and said that people who protest racism are allowed to assemble. DeBlasio likes them. But how about religious gatherings? DeBlasio doesn't like those, so they're still prohibited.

The Moral Authority of the Lockdown Advocates Is Gone

The current riots and protests have accelerated this sort of disregard for coerced social distancing, although things were already headed in this direction anyway.

The lockdowns initially were imposed with so little resistance, because the legacy media and government bureaucrats managed to convince a sizable portion of the public that virtually everyone was in grave danger of death or serious disability from COVID-19. Many people believe these experts.

[RELATED: "What the Failed 55-MPH Speed Limit Law Tells Us about COVID Lockdowns" by Ryan McMaken]

By May, however, it had become clear that the doomsday scenarios predicted by the official technocrats had greatly overstated the reality. Certainly there were many vulnerable groups, and many died of complications from disease, just as many died during the pandemics of 1958 and 1969. But there's a difference between a spike in total deaths and a civilization-stopping plague. The experts promised the latter. We got the former. And we would have gotten the former even without lockdowns. Those jurisdictions that imposed no general lockdowns—such as Sweden—never experienced the sort of apocalyptic death predicted by lockdown advocates. Yes, they had excess deaths, but Sweden's hospitals never even went into "emergency mode." In the US, those states that imposed limited lockdowns for only a short period never experienced overloaded hospitals and overflowing morgues as was claimed would happen.

Could this yet happen in the future from some other disease or from a different wave of this one? It's certainly possible, but there's no reason to assume the CDC and its defenders will have any idea what's going on ahead of time. The lockdown advocates have already been so wrong about masks, about fatality rates, about the models, and about so much more that we have no way of knowing if we should believe them the next time they show up and swear that "this time, the situation is truly dire!"

But we're not out of the lockdown woods yet. This fall, politicians and other lockdown advocates are likely to start up again with demands that new laws be passed requiring people to stay home, shut down their businesses, and otherwise put life on hold in the name of stopping COVID-19.

But it's unlikely that the public will fall for the same routine twice in a row. At least not to the same extent. The reaction of many will likely be "we've heard this song and dance before. Besides, social distancing didn't matter to these experts back during the riots. Why should we believe them now?"

It's a good question.

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The Good, the Bad, and the Ugly Credit Crisis

06/02/2020Robert Aro

June begins and we are now two months past the dark days of the Great Lockdown, when the Dow closed at 18,592 points on March 23. Despite having no duty to protect the stock market, investor’s prayers were answered when the Fed announced one of the greatest anticapitalist interventions the nation has ever seen. The extensive new measures to support the economy promised a vast array of credit facilities to “support households and businesses” by supporting “the flow of credit” in times of crisis.

Let’s see how the central bankers have saved the economy since:

The Fed now has $106.9 billion in loans (assets) on its balance sheet, a number that was only $1 million, or virtually nil for a central bank as of March 1. Of this $106 billion, $49.2 billion is from the Paycheck Protection Program (PPP) Liquid Facility and $34.9 billion from the Corporate Credit Facility LLC (CCF LLC) used to buy corporate bonds and exchange-traded funds (ETFs).

The remaining loans on the balance are for other expensive anti–free market facilities, but they are lesser known, because “Main Street” doesn’t directly partake in them (i.e., Primary Credit, Primary Dealer Credit Facility, Money Market Mutual Fund Liquid Facility, and the Commercial Paper Funding Facility II LLC).

Also recall that the Main Street Lending Program, the Municipal Lending Facility, and the Term Asset-Backed Securities Loan programs still have yet to open. The Financial Times cited a calculation made by TD Securities regarding the lending facilities:

That is still less than 4 per cent of the at least $2.6tn the central bank has said it would make available across an unprecedented range of asset classes.

So despite the small uptake of Fed loan programs, the balance sheet has nearly doubled over the last two months reaching a new high of $7.097 trillion. This is due to the Fed’s near doubling of Treasury holdings since March, currently at $4.110 trillion and an increase in mortgage-backed securities (MBS) purchases by approximately $500 billion, currently at $1.835 trillion.

The numbers are so large that they become difficult to fathom. However, we can try to predict what the Fed will say at the conclusion of next week’s committee meeting. Keep in mind that we don’t have many “good outcomes” to hope for so much as less painful ones.

Starting with the good: maybe the Fed calls the crisis over and it begins to curtail or even stop making loans and asset purchases. If the economy is reopening, consumers are feeling confident, and liquidity concerns have been met, then perhaps there will be little need to keep expanding the balance sheet.

The bad: the Fed could say the crisis is nearing an end and may choose to keep providing stimulus until it maxes out its trillion-dollar facilities. In order to do this, they will need to convince us that the crisis is not yet over but that it will be if only a little more liquidity is injected into the economy.

The ugly: This would be the worst of all scenarios. It’s possible that regardless of whether the crisis is over or not the Fed will find reasons to continually make Treasury and MBS purchases, and even extend the loan programs into perpetuity, justifying it using nothing more than fear tactics and Fedspeak.

If this is the case, and we hope it’s not, then the March 23 announcement may have started a new era of central banking for developed economies—one in which the balance sheet and money supply become set on a parabolic trajectory with no chance of ever coming down. Some may say it’s a crisis due to the virus, liquidity, solvency, consumer confidence, or consumer spending, but does it really make a difference?

No matter the crisis, we could bet the answer will always be the same and that perpetual quantitative easing was always on the agenda. Maybe this isn’t anything terribly new after all? Perhaps it was nothing but the natural progression of a “central plan” that advances whenever the next crisis appears? If the last crisis was mortgages, this one is loans and bonds. When the next one is stocks, will anyone be surprised?

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Pandemic Wagering: Tesla or Table Tennis?

05/30/2020Doug French

In a 60 Minutes interview in 2011, gambler Billy Walters said he was swindled by Wall Street, losing big on Enron, Worldcom, and Tyco shares. Walters made his fortune betting on football and basketball games. Professional gamblers have little to bet on these days with most sports shut down due to the COVID-19 outbreak.

They've had to start betting on stocks according to the Financial Times. The FT reports that in March and April, with Wall Street and 401(k)s being rocked by negative economic news, Charles Schwab, ETrade, and Interactive Brokers opened a record number of accounts, "adding a collective 780,000 new customers. March, the high point, amounted to three times the monthly average of the past two years."


If one were looking for clues as to why the stock market has rebounded while daily economic news grows worse, besides the Federal Reserve's Jerome Powell's "flooding of the market" with liquidity, another reason could be the flood of new punters betting on stocks, from high-flying tech shares to dead-in-the-water leisure stocks.

The FT’s Richard Henderson writes,

But brokerages that connect everyday investors to the stock market have seen a surge in account openings, as punters seek thrills in unfamiliar places. This has brought new investors to the market, helping to propel a one-third rise in US stocks from the depths of the pandemic sell-off in March.

Henderson provides Adrian Mallett as an example. Mallett is a business student and works as a greenskeeper at a golf course on Prince Edward Island. The enterprising Mr. Mallett used the CAD 3,000 stimulus he received from the Canadian government to open an account and begin trading.

The twenty-year-old piled into Lyft and Tesla shares. “I’m a little bit up,” he told the FT. "I cut grass at a golf course. I’m on a lawnmower refreshing the app every few seconds—it’s great."


Only five stocks now make up 20 percent of the S&P 500 index: Facebook, Google (Alphabet), Amazon, Microsoft, and Apple. This narrowing breadth is a negative sign according to David Kosten at Goldman Sachs.

"For example, in addition to the Tech Bubble, breadth narrowed ahead of the recessions in 1990 and 2008 and the economic slowdowns of 2011 and 2016," the Kosten’s Goldman team told Business Insider. "Historically, sharply narrowing breadth has signaled below-average one month, 3 month, 6 month S&P 500 returns as well as larger than average prospective drawdowns."

For bettors who can’t bring themselves to play the stock market, there is Russian table tennis. Betting on table tennis matches from halfway around the world is keeping bookmakers’ lights on. Jim Barnes writes for the Las Vegas Review-Journal, "William Hill sportsbook director Nick Bogdanovich has said table tennis has consistently been the No. 1 sport for his book during the pandemic, taking close to $1 million in daily wagers."

There are over a hundred matches a day, with three matches taking place at the same time. A match only lasts ten to fifteen minutes. It goes on for up to twenty hours a day, according to Shawn Harnish, who told the R-J, "It’s like the first Thursday of March Madness over and over again every day on repeat. I call it the keno of sports betting."

Some have questioned the integrity of the matches. Forget about finding table tennis on TV; you must go to to watch matches online.

Tesla or table tennis, both provide the opportunity to be swindled.

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Notes on Trump's Executive Order for Tech Companies

05/29/2020Jeff Deist

Donald Trump's executive order issued earlier this week purports to prevent online censorship by effectively instructing federal agencies to reinterpret the Communications Decency Act of 1996 (CDA). In particular, Trump has a well-founded complaint with the infamous section 230 of the CDA, which grants tech companies a certain level of immunity from various civil lawsuits, including defamation lawsuits. By doing so, section 230 not only attempts to preempt state law to the contrary—federal preemption is almost always bad— but also creates a class of actors that enjoys the status of a neutral platform or common carrier but exercises editorial discretion.

Remember, in 1996 social media did not exist. Search engines like Alta Vista and Netscape were rudimentary; most people still typed site addresses into their browsers. The CDA was aimed primarily at internet service providers such as AOL, which Congress ostensibly wanted to shield from any liability for the actions, communications, or content of users. After all, when two individuals engage in a criminal conspiracy by phone prosecutors don't indict the cellular network provider. The CDA made sense in an era when the internet was in its infancy.

But fast-forward twenty-five years, and social media companies have been thrust into the role of "community standards" police. Search engines, particularly Google, are the gatekeepers and curators of the information we consume. These tech companies now appoint themselves arbiters of truth and propriety, and not only with regard to politics and campaigns. Hate speech and harassment, both ambiguous and ever shifting, are grounds for removal or suspension from platforms. Unorthodox or politically incorrect views on scientific issues surrounding global warming, vaccines, and COVID-19 are regulated by invisible algorithms or unaccountable employees of tech companies. "Bad" websites and blogs disappear from search results, or are buried so deep as to become invisible. 

By any measure, these actions by technology companies—banning, suspending, shadow banning, and demonetizing—are based on the content involved or the identity of the user. In both cases, editorial judgment is applied. This is inescapable. So to the extent that the CDA immunizes editorial decision-makers or their tech company employers against liability for damages from lawsuits otherwise recognized by state law or common law, libertarians have every reason to object. But as with most cases of favoritism in law, the answer is repeal of special privileges rather than more legislation. 

A few additional summary comments:

  • Executive orders are inherently suspect and generally bad, not simply because of (at this point laughable) constitutional concerns, but because they establish another layer of de facto "laws" for which you and I have little legal recourse. If the CDA needs amending, let Congress do it. Better yet, scrap it.
  • Yes, Facebook, Google, Twitter, Amazon et al. are private companies, despite their deep entanglements (including contracts) with the federal government. Virtually every industry and every large company is in bed with Uncle Sam, from subsidies and lobbying to protectionist legislation. If we allow such entanglements to justify even deeper levels of regulation, we only further erode what ought to be a bright-line distinction between private sector and state.
  • Yes, these companies have deeply illiberal biases, and even outright illiberal agendas, from a libertarian perspective.  
  • No, private companies are not required to give you or anyone else access to their platforms.
  • No, the First Amendment does not apply to private companies.
  • "Fact checking" is inherently and inescapably political. Who are the disinterested angels charged with performing  these checks? Which facts are checked, and whose facts are checked? What about half-truths and distortions, as opposed to outright falsehoods? 
  • We are all "media" in an age of instantaneous social sharing platforms and camera phones. The First Amendment did not create or contemplate a special class of institutional press that enjoys enhanced protections from government. Kids on bikes have as much right to "cover" the situation in Minneapolis as CNN, and your Facebook posts deserve the same protections as Wolf Blizter's nightly show.

What to do, then? Peter Klein lays out one path forward:

  • Repeal the CDA. 
  • Enforce contractual agreements between platforms and users.
  • Avoid all attempts at viewpoint neutrality regulation.
  • Remove government-created entry barriers for new entrants (including the CDA). 
  • Don't treat information as property (e.g., don't act as if users "own" "their data" and enforce regulations on portability).
  • Finally, Trump simply should move to Gab or a similar platform. Many of his 85 million followers would follow, and this would do more to "punish" Twitter (and encourage new competitors) than any legal action.
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The Importance of "Fedspeak"

05/28/2020Robert Aro

The Webster's New World College Dictionary defines “Fedspeak” as:

(informal) Impenetrable economic jargon used by the US Federal Reserve.

It’s not a condition that affects the chair of the Federal Reserve only; the wave of Fedspeak has been exhibited by members of its inner circle as well. Just last week, in a speech made to the New York Association for Business Economics, Vice Chair Richard H. Clarida said:

On March 16, we launched a program to purchase Treasury securities and agency mortgage-backed securities in whatever amounts needed to support smooth market functioning, thereby fostering effective transmission of monetary policy to broader financial conditions.

More than $2 trillion were spent on these two asset purchases alone—a figure so large on a subject known to so few. Most will be unable to grasp what this implies for their own lives and future. When the vice chair says that the purchases help “support smooth market function,” who can stand up and ask him to succinctly define this? And further, who will challenge the assertion? How “smoothly” should a market function, and when will they know when it’s smooth enough?

The problem is that this tinkering with the money supply affects the majority of society, i.e., those who are not financially well-to-do central bankers. Ultimately, it’s those on Main Street who will pay for this intervention while buried in an avalanche of debt and stuck at home under government quarantine. Who has time to decode the reflections of a central banker? Thus, it continues. Main Street remains in the dark, guided by those who are equally blind to the principles of economics.

Fedspeak knows no bounds, as its reach has even infiltrated the European Central Bank (ECB), whose latest meeting minutes show a similar use of nebulous ideas when looking at the various risks to economic activity that the virus caused. They noted:

Attention was drawn to the fact that precautionary saving was already increasing and, if consumers did not regain confidence quickly after containment measures were lifted, there was a risk that demand would remain depressed.

The comment alludes to an ideal equilibrium that the virus has thrown off and that therefore requires intervention. Naturally, the central banker sees a problem with savings and demand, he just cannot articulate what the problem is in any discernible way. It is implied that an increase in savings and a decrease in demand, which may be partly due to a lack of confidence, pose a risk to the economy. But how much savings is too much? And how much demand is too little? This remains unknown to all except the central banker.

The Fed’s meeting minutes, also released last week, were no different. Almost as if the Fed and the ECB had had the same meeting, the Fed similarly observed that:

household spending would likely be held down by a decrease in confidence and an increase in precautionary saving.

They use these types of subjective observations, combined with data points, in order to plan the economy. Nearly imperceptibly, they justify their actions with sentences making subjective claims. The importance of Fedspeak cannot be understated. If the general public, academia, and elected officials demanded that the Fed prove how much stimulus, demand, savings, and money supply are needed to save the economy, the very existence of the Fed could be thrown into question. This would be a great thing for society, but very bad for the Fed and the economists it employs.

At the conclusion of the Fed meeting,

Members agreed that the Federal Reserve was committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.

With nine credit facilities already running or soon to be in place, the Fed will print as much money as possible to make sure any crisis will be contained. At that point we can only hope that the public will not be looking to the Fed for answers, partly because the Fed is the cause of the problem, but also because any explanation would amount to nothing more than “impenetrable economic jargon.”

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The Cost of Lockdowns in Human Health and Human Lives Is Becoming Increasingly Clear

05/27/2020Ryan McMaken

The cost of destroying the economy in the name of saving lives from COVID-19 is becoming increasingly apparent, and the details of just how costly the "lockdown" strategy will be for countless human beings continue to emerge.

In the past, we've examined the long-term cost of unemployment on mental health, physical health, and long-term earnings. In short: unemployment kills.

Stay-at-home orders and other sorts of police-enforced social distancing create conditions that lead to more child abuse, domestic abuse, suicide, drug abuse, and even stress-related death through ailments like heart disease.

Consequently, the shortsighted efforts at locking down entire populations by biologists, epidemiologists, and other "experts"—who apparently have little or no knowledge at all about the physical, social, and psychological effects of wealth destruction on human beings—have set the stage for the impoverishment of millions in the United States alone. (The effects in the developing world will be far worse.)

On Monday, for example, physician Scott W. Atlas and economists John R. Birge, Ralph L. Keeney, and Alexander Lipton noted in The Hill that efforts to brand the downside of shutdowns as purely economic problems gravely misinterpret the reality of wealth destruction. The authors write:

The policies have created the greatest global economic disruption in history, with trillions of dollars of lost economic output. These financial losses have been falsely portrayed as purely economic. To the contrary, using numerous National Institutes of Health Public Access publications, Centers for Disease Control and Prevention (CDC) and Bureau of Labor Statistics data, and various actuarial tables, we calculate that these policies will cause devastating non-economic consequences that will total millions of accumulated years of life lost in the United States, far beyond what the virus itself has caused.

Statistically, every $10 million to $24 million lost in U.S. incomes results in one additional death. One portion of this effect is through unemployment, which leads to an average increase in mortality of at least 60 percent. That translates into 7,200 lives lost per month among the 36 million newly unemployed Americans, over 40 percent of whom are not expected to regain their jobs. In addition, many small business owners are near financial collapse, creating lost wealth that results in mortality increases of 50 percent. With an average estimate of one additional lost life per $17 million income loss, that would translate to 65,000 lives lost in the U.S. for each month because of the economic shutdown.

In addition to lives lost because of lost income, lives also are lost due to delayed or foregone health care imposed by the shutdown and the fear it creates among patients. From personal communications with neurosurgery colleagues, about half of their patients have not appeared for treatment of disease which, left untreated, risks brain hemorrhage, paralysis or death.

Similarly, the New York Post reported yesterday that chemist Michael Levitt has concluded that the lockdowns saved no lives at all:

“I think lockdown saved no lives. I think it may have cost lives,” Levitt, who is not an epidemiologist, told the publication.

“There is no doubt that you can stop an epidemic with lockdown, but it’s a very blunt and very medieval weapon and the epidemic could have been stopped just as effectively with other sensible measures (such as masks and other forms of social distancing),” he added.

Levitt attributed the additional lives lost to other dangers from the fallout of the lockdowns, such as domestic abuse and fewer people seeking health care for ailments other than the virus.

“It will have saved a few road accident lives, things like that, but social damage—domestic abuse, divorces, alcoholism—has been extreme. And then you have those who were not treated for other conditions,” Levitt told the newspaper.

Supporters of lockdowns may be quick to claim that these commentators are not epidemiologists. Yet the epidemiologists—at least the ones at the "official" government offices—have shown little insight in recent months. Their models have consistently been wrong. Nor do the epidemiologists appear to have any idea of the lethality of the COVID-19 virus. After insisting for months that the virus was perhaps more than ten times as deadly as the flu, the CDC has now slashed the fatality rate to a mere fraction of previous estimates. The epidemiologists' only tool has been to order healthy people to stay home, even as demand at food banks triples as families queue in order to avoid starvation.

Now, Anthony Fauci, who in April was insisting that it would be impossible to even relax stay-at-home orders until there is a vaccine or until there are "no new cases, no deaths for a period of time," has totally abandoned this position. Fauci now admits that his "lockdown until vaccine" position would cause irreparable damage:

We can't stay locked down for such a considerable period of time that you might do irreparable damage and have unintended consequences including consequences for health. And it's for that reason why the guidelines are being put forth so that the states and the cities can start to reenter and reopen.

Of course, anyone who deals in interacting with the real world (i.e., not lifelong bureaucrats like Fauci, who needs not exhibit any actual competence to collect his $400,000 paycheck) always understands that preserving and augmenting wealth is key in enhancing health and the quality of life.

Not surprisingly, this has already been seen in the empirical evidence. As M. Harvey Brenner has noted in the International Journal of Epidemiology,

the large and growing literature on unemployment and health is highly consistent in demonstrating elevated morbidity and mortality associated with unemployment and withdrawal from the labour force….Economic growth, cumulatively over at least a decade, is the central factor in mortality rate decline in the US over the 20th century. (emphasis added)

In other words, to reduce mortality, we need to protect the creation and preservation of wealth. Bureaucrats and social democrats may sneer that this puts GDP growth before saving lives, but the reality is that economic growth translates into saving lives. The lockdown advocates may refuse to admit this, but the evidence is abundant.

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In the Lockdown Fight for Local Control, Colorado Counties Begin to Ignore State Edicts

05/27/2020Ryan McMaken

Last month, Weld County, a Republican-dominated county in the northern part of the state, announced it would no longer be enforcing state edicts requiring the closure of businesses for purposes of government-mandated social distancing.

Specifically, the county commissioners released a statement saying that it was up to businesses to determine for themselves whether or not they could safely open:

Weld County Government is not opening any businesses, just as Weld County Government did not close any businesses. That said, each commissioner has received comments from constituents struggling to make ends meet, pay their bills, and take care of their families who have said they are going to open their businesses.

So, Weld County Government took the proactive response of preparing best practices and guidance that could be used as business owners look to reopen—whenever they feel comfortable to do so. An informed public is a strong public.

The same preventative measures need to be heeded—we’ve said that. Expectations need to be managed—we’re doing that. What we aren’t going to do is pick winners and losers as to who gets to restart their livelihoods.

And at the end of the day, everyone has freedoms: freedom to stay home, freedom to go out, and freedom to support whatever business they want to support.

Of course, the real concern is whether or not county or state bureaucrats will show up with armed police officers and shut the business down, as has happened in some cases.

On the county level, at least, it appears the commissioners have instructed county bureaucrats to not intervene. At least according to one business owner. The owner of El Charro restaurant reported earlier this month that

her husband called the Weld County Health Department and was told they would not shut them down or penalize them for re-opening.

“They didn’t say we could open," said the general manager and Kelley's son, Harrison Chagolla. "They just said we’re not going to shut you down, we won’t stop you, which as far as we’re concerned, that’s permission enough."

The restaurant has been open at limited capacity since Wednesday. Because they are seating people at every other table to continue social distancing, the Chagollas said they have had to turn customers away.

Naturally, the governor of Colorado, Jared Polis, condemned the move and threatened to withhold emergency funds from the county. In other words, in order to enforce executive orders that he claims keep people safe, Polis plan to withhold funds designed to help people cope with COVID-19. It's a rather vindictive and capricious position to take, but it may have been the only tool the governor was willing to use.

In response, the county reported that it already has the funds Polis threatened to withhold, and says it doesn't plan to seek any additional funds.

The state maintains that it still has the ability to go in and revoke state-issued business licenses, although it is unclear that this has happened in the month since the controversy first erupted. It may be that the county has called the governor's bluff.

[RELATED: "The Shutdown May Soon Collapse in Pennsylvania Thanks to Local Resistance" by Zachary Yost]

Perhaps emboldened by the Weld County refusal, Elbert County, just east of the Denver metro area, has also announced it will no longer be adhering to the state's social distancing mandates. As reported by Elbert County News:


The Elbert County Board of County Commissioners has voted unanimously to allow graduation ceremonies for Simla, Kiowa and Elizabeth high schools, and to allow houses of worship to resume in-person services without capping attendance.

The move on May 20 came despite county officials not yet having received approval of a partial waiver request the county had submitted to the Colorado Department of Public Health and Environment for exemptions from the state's COVID-19 guidelines.

The commissioners' vote came after repeated attempts to seek a "variance" from the governor's office allowing for greater flexibility from state mandates. The governor's office has encouraged applications of this sort, but the commissioners reported that the governor's office was apparently incapable of processing the request.

So, the county was forced to go out on its own.

In other words, the state government couldn't get its act together, so the county government had to make a judgment call. The governor's office has not threatened any action in response to Elbert County's "disobedience." And none may be coming. After all, sending state troopers to close down church services and small businesses is not necessarily a winning proposition for a governor where statewide offices are still competitive for both parties at election time.

Meanwhile, in El Paso County, home of Colorado Springs with half a million people, the district attorney and county commissioners are decidedly unenthusiastic about bringing charges against those violating state orders.

These local acts of noncooperation serve an important function in applying pressure to the governor's office, and this illustrates the difficulty in maintaining lockdown orders as time goes on. After all, the initial closures benefited from widespread public fear over the COVID-19 virus and the common perception that it could prove to be deadly on a scale similar to the 1918 flu epidemic. Thus compliance was generally voluntary and easy to maintain. It has now become clear that a chaotic and highly deadly pandemic will not play out the way many alarmist media outlets and government experts insisted it would. For example, the CDC has downgraded the disease's fatality rate, and the public has noticed that hospitals never were anywhere near exhausting capacity.

Soon, however, the county government's opposition to lockdown orders will become academic. Today, restaurants opened to dine-in service in Colorado for the first time since March. The state can either continue to soften its stance on lockdowns or risk losing credibility with the growing segment of the population which is prepared to face the risk of COVID-19 infection by participating in the regular activities of daily life.

Of course, there is political pressure coming from other corners as well. The state now is looking at the need for a 10 percent cut to spending. And that's just for starters. Much larger cuts are likely coming in the future, since restaurants and retail outlets are producing only a small fraction of former revenues. County and city governments won't be content to continue lockdowns much longer.

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The CDC Slashed the COVID-19 Fatality Rate to a Fraction of Earlier Estimate Used to Justify Lockdowns

05/26/2020Ryan McMaken

Governments throughout the world and across the US justified extreme, draconian, undemocratic, and unconstitutional (in most US states) "lockdown" and stay-at-home orders on the grounds that the COVID-19 virus was exceptionally fatal.

In March, the World Health Organization (WHO) was claiming that the fatality rate was a very high 3.4 percent.

Yet as time went on, it became increasingly clear that such high estimates were essentially meaningless because researchers had no idea how many people were actually infected with the disease. Tests were largely being conducted on those with symptoms serious enough to end up in emergency rooms or doctors' offices.

[RELATED: "The Experts Have No Idea How Many COVID-19 Cases There Are" by Ryan McMaken]

By late April, many researchers were publishing new studies showing that the number of people with the disease was actually much higher than was previously thought. Thus, it became clear that the percentage of people with the disease who died from it suddenly became much smaller.

Now, the Centers for Disease Control and Prevention (CDC) has released new estimates suggesting that the real fatality rate is around 0.26 percent.

Specifically, the report concludes that the "symptomatic case fatality ratio" is 0.4 percent. But that's just symptomatic cases. In the same report, the CDC also claims that 35 percent of all cases are asymptomatic.

Or, as the Washington Post reported this week:

The agency offered a "current best estimate" of 0.4 percent. The agency also gave a best estimate that 35 percent of people infected never develop symptoms. Those numbers when put together would produce an infection fatality rate of 0.26, which is lower than many of the estimates produced by scientists and modelers to date."

Of course, not all scientists have been wrong on this. Back in March, Stanford scientist John Ioannidis was much, much closer to the CDC's estimate than the WHO. The Wall Street Journal noted in April:

In a March article for Stat News, Dr. Ioannidis argued that Covid-19 is far less deadly than modelers were assuming. He considered the experience of the Diamond Princess cruise ship, which was quarantined Feb. 4 in Japan. Nine of 700 infected passengers and crew died. Based on the demographics of the ship’s population, Dr. Ioannidis estimated that the U.S. fatality rate could be as low as 0.025% to 0.625% and put the upper bound at 0.05% to 1%—comparable to that of seasonal flu.

Not that this will settle the matter. Proponents of destroying human rights and the rule of law in order to carry out lockdowns will continue to insist that "we didn't know" what the fatality rate was back in March. The lack of evidence, however, didn't stop proponents of lockdowns from implementing policies that destroyed the ability of families to earn a living, and which also created social conditions that caused child abuse and suicides to spike.

But for more sane people, extraordinary claims require extraordinary evidence. Those who have claimed that lockdowns are "the only option" had virtually no evidence at all to support their position. Indeed, such extreme over-the-top measures as the general lockdowns required an extreme level of high-quality, nearly irrefutable evidence that lockdowns would work and were necessary in the face of a disease with an extremely high fatality rate. But the only "data" the prolockdown people could offer was speculation and hyperbolic predictions of bodies piling up in the streets.  But that became politically unimportant. The people who wanted lockdowns had gained the obeisance of powerful people in government institutions and in the media. So actual data, science, or respect for human rights suddenly became meaningless. All that mattered was getting those lockdowns. So the lockdown crowd destroyed the lives of millions in the developed world—and more than a hundred million in the developing world—to satisfy the hunches of a tiny handful of politicians and technocrats.

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New Donation to the Mises Institute Archives: The Voluntaryist Collection

05/22/2020Mises Institute

We received a new donation from Mr. Carl Watner entitled The Voluntaryist Collection. The highlight of the donation includes the six-volume set: The Collected Works of Lysander Spooner. Within the collection is a series of personal inscriptions that Mr. Watner collected at libertarian conferences over the years, including by Murray Rothbard, George Smith, Leonard Liggio, Joe Peden, Mike Coughlin, Charles Shively (editor of the six volumes), Daniel Siegel (publisher), Wendy McElroy, Chuck Hamilton, John Mueller (cofounder of Laissez Faire Books), and Robert LeFevre.

Mr. Watner's generous gift will be included in the Mises Institute archives, alongside the donations of great libertarian thinkers such as Rothbard, Dr. Robert Higgs, Dr. Ralph Raico, Mr. LeFevre and the Freedom School, and more.

The Mises Institute archives remain one of the world's leading research centers for Austrian economics and libertarian thought, providing a unique resource for research fellows who continue to make their own contributions to the ideas of liberty.



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