Power & Market
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.
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?
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.”
Listen to the Audio Mises Wire version of this article.
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.
The CDC Slashed the COVID-19 Fatality Rate to a Fraction of Earlier Estimate Used to Justify Lockdowns
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.
The present COVID-19 pandemic has left public schools scrambling to find ways to dampen the impact on students. Some public schools have switched to virtual instruction, while others have simply sent students home with passing grades.
For many public schools, the transition to virtual instruction—if ever initiated—took weeks. Others have been lukewarm in their implementation of virtual instruction. In April, the New York City Department of Education made a sudden default on its initiative to have instructors use Zoom remotely, leaving many teachers with no efficient alternative.
Fairfax County public schools continuously failed at delivering stable virtual instruction. The list could go on and on. What do all these cases have in common?
They demonstrate a lack of accountability from public school policymakers—both county and state superintendents, and city and state-level executives.
Compare the previous examples to how charter and private schools, such as Thales Academy, are handling the transition. Thales’s campus in Franklin, Tennessee is offering free virtual instruction for local K–5 students. No prior or future commitments are required for families to receive remote instruction. According to Thales administrator Rachael Bradley, all other Thales campuses transitioned such that “students did not miss a day of learning.” Additionally, Bradley notes that students and teachers were already used to the technology used in virtual instruction.
Thales is not the only example of school choice and private sector solutions remedying public school policy failures. In San Diego County, charter schools, equipped with virtual instruction far in advance, transitioned to virtual learning in days, as opposed to weeks. In Tallahassee, Florida, one private school started virtual instruction right at the end of spring break.
There is a sharp contrast between how private and charter schools have handled the pandemic compared to public schools. Overall, the former has been far more effective. The burden put on parents by schools simply handing out worksheet packets is great, as parents must take time out of their work schedules to play the role of teachers. Insufficient instruction is particularly detrimental to primary students, who are in the foundational stage of their academic careers.
The crisis underscores lack of accountability from policymakers in nonpandemic times as well. Why would it be unreasonable to foresee the prospect of needing to switch to virtual learning for other reasons, e.g., natural disasters?
With a similar degree of unaccountability, public schools have gotten so used to churning out graduates, regardless of merit, that the decision to “pass” everyone, as aforementioned, becomes easy.
Imagine if private or charter schools waited for weeks to transition to virtual instruction. Imagine if they sent students off with “passing” grades. They would be severely reprimanded by parents. Why are we not holding public schools to this same standard?
Policymakers can exempt themselves from responsibility with hubris like, “What we do is not easy,” or “We’re under a lot of pressure.” But this certainly wouldn’t fly for private school administrators. If crises are the ultimate test of effective leadership, then this pandemic has much to tell us.
Even more telling is how policymakers respond to parents’ search for alternatives. In Kentucky, for example, the GOP-dominated general assembly blocked the possibility of tax-credit scholarships for low-income families. Why are parents looking for alternatives greeted with such hostility from public servants?
Truthfully, teachers and students like engagement. They don’t like being given vague promises like “online instruction will be available in the coming days ” Public schools have become so factory-esque, that they lack the capacity to come up with creative solutions in times like these. But the root of this goes back far before the pandemic.
Public schools have made the metric, i.e., graduation rates, the target. It is a classic case of Goodhart’s Law. Hence the reason it is easier to “pass” students than to implement real learning. The time to rethink the place of the colorless public school is imminent.
Donald Trump today announced that "we are not closing our country" if a second wave of COVID-19 hits the country later this year.
Given that Trump is not the one who decides whether or not state governments attempt to impose forced social-distancing measures, we can nonetheless interpret his statement as an announcement that he plans to use his position to oppose efforts to impose lockdowns in the in the future.
But this raises a larger question: how tolerant will the public be toward additional lockdowns in the future as the economy sinks and the effects of unemployment and economic deprivations sink in?
In some places, the answer might be "very tolerant." But in many states and areas, politicians may find that the answer is "no way in hell."
The First Lockdown Was a Sucker Punch
It's understandable why so many Americans were tolerant of the first wave of shutdowns. Fed a steady diet of panicky declarations of an impending viral apocalypse through social media and mainstream media, a majority of Americans—possibly a lopsided majority—became frightened. It is likely that even those who are disinclined to believe lurid media stories of death and destruction took a "wait and see" attitude. People simply didn't know what was going to happen.
Technocrats and politicians were quick to take advantage of this temporary paralysis. Lifelong power-obsessed government bureaucrats like Anthony Fauci and his state-level counterparts demanded that the government suspend the rule of law and impose emergency measures unparalleled in scope in American history. Businesses were forcibly closed. Governors, mayors, and police threatened arrest, imprisonment, fines, and revocation of business licenses for those who remained "disobedient."
Employment collapsed. Livelihoods were destroyed. Since hospitals and medical facilities were largely closed to all but suspected COVID-19 patients, many went without medical care and diagnoses for deadly conditions.
One might say that the enthusiasm and speed with which the government abolished human rights could be described as a "sucker punch." The voters and taxpayers didn't know what hit them.
And for a period of two to four weeks, there was barely any resistance at all. Many were still unsure if half their neighborhood would die of the new disease. Or maybe there really would be corpses piled up in the streets nationwide, since Americans were told that what had happened in Iran or Wuhan would soon happen in the US.
But then it didn't happen. This isn't to say that there wasn't an increase in total mortality. There was, and much of it—but certainly not all of it—was due to COVID-19.
But it soon became clear that human society was not going to descend into plague-induced wreckage. Outside of a few hard-hit cities, hospitals never got even close to the dystopian people-dying-in-the-halls scenario that people were assured would happen. Now, of course, as some states begin to scale back their lockdowns, there's still no sign of corpses piling up in the streets. Yes, death by disease continues, just as it does every day of every year. And there is more death now than there was last year. This includes the "lockdown" states, after all, since there is no evidence that lockdowns actually work.
But this is what always happens with pandemics. It happened in 1958. It happened in 1969. But back then, Americans didn't destroy wholesale the rule of law and human rights out of fear.
The "New Normal" May Just Be a World with Higher Mortality
But for many that fear may be wearing off. After all, people come to terms with risk fairly quickly. There was once a time, after all, that human beings found the speed of a locomotive or a motorcar terrifying. Yet, within a matter of years, many Americans were happy to ride trains and drive cars. And cars didn't even usually have seat belts until the 1960s!
The "new normal" became a world of widespread auto accidents, and auto deaths per million in the early days of automobiles were double what they are today.
And many Americans may soon decide that the "new normal" is a world with more risk of dying of COVID-19. But for many it's a risk that they have decided must be faced, especially when there are many other risks to balance against. After all, It is now becoming clear that efforts to "fight" COVID-19 through lockdowns will lead to more deaths from cancer, from suicide, and from drug overdoses. Just as many Americans decided to face the risk of a deadly car crash for the sake of avoiding the inconvenience of a horse and buggy, so many Americans will decide to "risk it" in a world with COVID-19.
Moreover, the longer lockdowns remain relaxed, the more routine it will become to have lunch with a friend at a restaurant, go to the dentist, or get a haircut. Once people do it a few times without becoming deathly ill, they'll want to keep doing it.
Certainly, there will be no shortage of lockdown advocates who will demand more government coercion, more shutdowns, and more state violence to enforce them, complete with arrests, fines, and more. Many—including people who have no problem with death in the form of abortion and euthanasia—will wrap themselves in the claim "all life is precious" and attempt to shout down and shame those who advocate for human rights and and end to government by decree.
But will that be enough? In some places it may not be enough to gain obedience to a second lockdown.
So the question comes down to this: will Americans fall for the sucker punch twice? Patrick Buchanan doesn't know, although he asks the question, and suggests:
If there is a sudden resurgence of the coronavirus, a second wave, and the media elite and blue state governors demand a new shutdown, a new closure of beaches, parks, shops, restaurants and churches, will the people of this republic comply with those demands or defy them?
Will the nation answer back to the elites: We did that. We sheltered in place. We wore the masks. We socially distanced. We stayed in our homes. We stayed home from work. We have done all we were told to do to contain the virus. But, now, with the shutdown having put 36 million Americans on unemployment and sunk our GDP to Depression-era levels, we're going back to work.
The political divide has already begun to appear.
Indeed, looking at the issue through "the political divide" may be the most instructive. Americans are choosing sides. And passions run high. Asking your neighbor or colleague about his views on COVID-19 is now about as likely to lead to an argument as asking your neighbor for his views on slavery in 1859.
Attempts at another round of lockdowns will only make things worse.
One of the most powerful men in the world, Chairman of the Federal Reserve Jerome Powell, appeared on 60 Minutes over the weekend. The interview did not mention Austrian economics, a return to the gold standard, or a new laissez-faire stance by the Fed. But there are some thought-provoking sound bites.
When asked if the Fed had simply flooded the system with money, Powell responded, “Yes. We did.” When asked where the money came from, he replied:
We print it digitally. So as a central bank, we have the ability to create money digitally. And we do that by buying Treasury bills or bonds for other government-guaranteed securities. And that actually increases the money supply.
Although true (and completely ludicrous) it’s nothing new, as central bankers seem to have no problem supporting inflationism. However, his follow-up sentence was patently false:
We also print actual currency and we distribute that through the Federal Reserve banks.
It is in fact the US Treasury that prints every Federal Reserve note and gives it to the Fed, which then distributes to banks. Why does the world even need the Federal Reserve? And why doesn’t the US Treasury cut out the middleman and print its own currency? The interview continued with the usual fawning over central bankers. Scott Pelley couldn’t help mention how:
Some of the best economic analysts in the world report to you.
One can only wonder how many Austrian economists work at the Fed and what types of analysis could be provided when analyzing trillions of dollars of “stimulus” required to fight a “liquidity crisis.”
Assurances to the market and hopes for future debtors to the Fed were also included:
I will say that we're not out of ammunition by a long shot. No, there's really no limit to what we can do with these lending programs.
Is this not the most alluring trait of money created out of thin air and backed by nothing? Having no limit on the amount which can be generated? Most of the Fed facilities haven’t even opened up yet, and Congress is already cooking up another trillion-dollar spending bill. We can only guess how much money will be “printed” by the time the crisis is over. If the Fed’s balance sheet doubled by this time next year, would anyone really be surprised?
Oddly enough, the chairman mentioned something that was entirely honest:
We don't have oversight over Congress. Quite the reverse, actually. We're a creature of Congress. And they have oversight over us.
Congress created the Fed. Contrary to what we’ve been told, the it cannot save the world by creating more money. It hasn’t worked before, and it won’t work now. In terms of oversight, if Congress wants more transparency, it can simply demand it, repealing any privacy that the Fed has. America survives not because of the Fed, but despite it. Just as an act of Congress created it, an act of Congress can end the Fed.
In the modern west it is seen as a sign of backwardness if a country does not have universal suffrage for all adults. As a clear stakeholder in the state, why are those below the arbitrary age of eighteen disenfranchised, clearly subjected to the status of second-class citizenship?
That they don’t pay taxes; that they don’t work; that they are dependents—the same can be said for many who currently enjoy the right to vote. In fact, whatever the reason given, it can usually be shown to be empty, for most turn on the question of competency.
That they are insufficiently educated about the issues—it is on this basis that those under the age of eighteen, no matter their knowledge of the pertinent issues, are generally excluded from voting, denied political voice in the maintenance and protection of their rights. And yet, no test or proof of political competency is required for someone over the, again, arbitrary age of eighteen to cast a ballot. In fact, attempts to institute such tests would doubtlessly be struck down immediately as unconstitutional.
As scholars such as Bryan Caplan, Jason Brennan, and Ilya Somin have shown, in study after study the average voter has proven more often than not to be worse than a coin flip in correctly deciding between policy prescriptions on basic questions regarding monetary, tax, or regulatory policy, as well as foreign affairs. For example, in his book The Myth of the Rational Voter: Why Democracies Choose Bad Policies George Mason economist Bryan Caplan shows that the average voter regularly favors mercantilist, protectionist policies—replete with tariffs and subsidies for major industrial and agricultural industries – as opposed to free trade. While in his book Against Democracy, Georgetown political scientist Jason Brennan notes, “I could write an entire book just documenting how little voters know.”
He then proceeds to list the following:
- In the 2010 midterm presidential election…Only 39 percent of voters knew that defense was the largest category of discretionary spending in the federal budget.
- During election years, most citizens cannot identify any congressional candidates in their district.
- Immediately before the 2004 presidential election, almost 70 percent of US citizens were unaware that Congress had added a prescription drug benefit to Medicare, though this was a giant increase to the federal budget and the largest new entitlement program since President Lyndon Johnson began the War on Poverty.
- Americans vastly overestimate how much money is spent on foreign aid, and so many of them mistakenly believe we can significantly reduce the budget deficit by cutting foreign aid.
- In 1964, only a minority of citizens knew that the Soviet Union was not a member of NATO…the organization created to oppose the Soviet Union.
- Forty percent of Americans do not know whom the United States fought in World War II
- During the 2000 US presidential election…[only] slightly more than half of all Americans knew Al Gore was more liberal than Bush….[and] only 37 percent knew that federal spending on the poor had increased or that crime had decreased in the 1990s.
- Over a quarter of Americans don’t even know which country the United States fought in the Revolutionary War.
- Less than a third know that Karl Marx’s communist slogan “To each according to his abilities, from each according to his needs” is not in the Constitution.
- Even though many Americans in 1992 knew that unemployment had risen under George H. W. Bush, the majority of Americans were unable to estimate the unemployment rate within 5 percentage points of the actual figure. When asked to guess what the unemployment rate was, the majority of voters guessed it was twice as high as the actual rate.
Brennan goes on for several pages more, before finally dropping the matter—though not for having exhausted the well of voter ignorance. As Ilya Somin notes in Democracy and Political Ignorance: “The sheer depth of most individual voters’ ignorance is shocking to many observers not familiar with the research.” According to Somin, approximately 35 percent of voters are “know-nothings.”
To make matters worse, there is voluminous and growing literature that shows that voters aren’t just ignorant but are irrational. As the work of social psychologists such as Jonathan Haidt and Sarah Rose Cavanagh has shown, people are naturally “tribalistic” and their moral reasoning is “Mostly just a post hoc search for reasons to justify the judgments…[they have] already made.” Noting such research, Bryan Caplan proposes that voters are being rationally irrational—your vote counting for so little, being educated about issues being so arduous, and it being so much more fun to just cheer for your team and bash the other side, it is rational for voters to be irrational about politics.
Brennan refers to such voters as “Hooligans…the rabid sports fans of politics. They have strong and largely fixed worldviews…They tend to seek out information that confirms their preexisting opinions, but ignore, evade, and reject out of hand evidence that contradicts or disconfirms their preexisting opinions…They tend to despise people who disagree with them, holding that people with alternative worldviews are stupid, evil, selfish, or at best, deeply misguided. Most regular voters, active political participants, activists, registered party members, and politicians are hooligans.”
But minors would perhaps be systemically worse than the average adult – depending on how one defines "worse"—but even if it were true, which doesn’t seem likely given the sheer weight of evidence in the works listed above, it wouldn’t be likely to matter. As Claudio Lopez-Guerra has pointed out, by the time of the election everyone knows that it is only going to be a Republican or a Democrat who wins anyway. So, either the minor casts his or her vote for the Republican or Democrat that everyone else is going to vote for or casts it for someone who cannot win. If we can assume a fairly even distribution of random/ignorant votes allotted to both the Republicans and Democrats—that one side will not systemically receive more random/ignorant votes than the other—then minors can be reasonably argued to have no real impact on an election. Certainly not enough to justify taking away the right of an individual to political participation, particularly as the weight of any single vote is vanishingly small.
For they are, in fact, almost all being taxed without representation to varying degrees. Apart from inheritance, property, or capital gains taxes that can be levied against the estate of a minor, there is the inescapable tax of inflation, which results from careless government policy choices. By the time the average person has turned that magical age of eighteen, all the property they have amassed to that point—most likely taking the form of gifts from parents or relatives over the years—has been greatly depreciated in value by virtue of inflation. Even this seeming triviality can be no small thing to a person just starting off on her own. As anyone who has ever shopped for popular vintage toys from their childhood knows, they can be very expensive. For example, my own all-metal Tonka Trucks, original Fischer Price toys, and Gameboy Color fetched over $500 dollars when I sold them at eighteen—adjusted for inflation since my having received them, I received dollars equivalent to only about half of their 1990 value.
This being the case, that by the standards of universal suffrage minors are being unjustly taxed without representation, at the very least their parent should be granted an additional vote in their stead. In the same way that a minor if they inherited a large trust would see a legal guardian appointed to care for its proper management until they came of age, so too it would seem appropriate that the management of their political estate until the time of their adulthood be granted to a guardian to manage as well. That their elders should speak for them is not an argument I like, as it amounts in most cases to no more than an argument from authority. However, given our present unjust situation it would be preferable.
At a mere seven years old my son kindly informed his younger brother, age four, that it is foolish to wish that candy were free—for if it were then no one would make it and the candy market would collapse—thus making him, I would argue, at least as potentially politically competent as half the American electorate at present.
As predicted by many, April's employment numbers were the worst ever recorded since the US government began making these estimates in 1939.
The US Bureau of Labor Statistics (BLS) released new estimates this morning, and unemployment surged to 14.4 percent. That's below the Great Depression high of 24.9 in 1933, but it's above the early 1980s depression peak of 11.3 percent.
According to the BLS report:
In April, the unemployment rate increased by 10.3 percentage points to 14.7 percent. This is the highest rate and the largest over-the-month increase in the history of the series (seasonally adjusted data are available back to January 1948). The number of unemployed persons rose by 15.9 million to 23.1 million in April. The sharp increases in these measures reflect the effects of the coronavirus pandemic and efforts to contain it.
In April, unemployment rates rose sharply among all major worker groups. The rate was 13.0 percent for adult men, 15.5 percent for adult women, 31.9 percent for teenagers,14.2 percent for Whites, 16.7 percent for Blacks, 14.5 percent for Asians, and 18.9 percent for Hispanics. The rates for all of these groups, with the exception of Blacks, represent record highs for their respective series.
Total employment crashed to a near twenty-year low as more than 20 million jobs were lost in the wake of the COVID-19 panic and numerous government-imposed "lockdowns" on the economy, which forced many businesses to close and many workers to lose their jobs as part of statewide "stay-at-home" orders.
Total nonfarm employment has sunk back to 131 million, where it was in early 2000. All the job gains of the past decade have been lost, and for all intents and purposes, the job gains of the post–dot-com bust were lost as well.
The year-over-year change in nonfarm employment cratered at negative 12.8 percent, falling well below the YOY job losses experienced during the trough of the Great Recession.
Meanwhile, the number of Americans who prefer to work full time but can only find part-time work surged to levels above those of the 2009 recession.
The employment to population ratio collapsed to multi-decade lows, falling to 51.3 percent and below the rates seen during the early 1960s, when single-earner households were far more common.
Needless to say, it doesn't require a lot of slicing and dicing of the data to see that this report shows enormous job losses and suggests similarly large losses in total output, income, and demand. We have yet to see the trends that come next: missed rent payments, foreclosures, and auto repossessions. It is possible that some job gains will ensue once fears over COVID-19 somewhat subside and businesses are allowed to open. But we do not yet even know the full extent of the job losses, as they will continue through May, at least.
In the bigger picture, it remains very difficult to guess how much of the collapse in employment is due to government-forced shutdowns and how much is due to consumers abandoning businesses over fears of the COVID-19 disease. We know that the job losses are not 100-percent due to the shutdowns, but we know that the forced shutdowns certainly played a role. After all, we know of many cases where businesses with customers have been forced to shut down, or in which "nonessential" independent contractors were arrested or forced out of business for serving customers.
The relative effects of these two factors will likely never be known, but we do know that the fallout of both has not yet been measured. May's employment report will show sizable job losses as well, and the promised "v-shaped recovery" is by no means a given. Many economists predicted something similar in the wake of the the 2009 job losses and financial crises. That never happened, and following the last recession, the previous peak in employment was not reached again for over six years:
The idea of the V-shaped, fast recovery rally has no precedent in recent decades. Indeed, the time needed to recover lost jobs has gotten longer, not shorter. So, it doesn't take especially revolutionary insight to say what JP Morgan's Bob Michele said the other day, as reported at Mediaite:
J.P. Morgan Chief Investment Officer Bob Michele predicted it will take 10-12 years after the pandemic for U.S. employment to get back to its pre-coronavirus level, insisting it won’t be as simple as turning the economy back on.
“No, it’s not that simple … it’s going to take years, or longer to get back to where we are, or where we were,” Michele said on Bloomberg when asked if reopening would be as simple as “turning on the lights.”
Michele noted that there was a huge error when predicting unemployment numbers, as millions of Americans are losing their jobs amid the pandemic. He then compared unemployment rates during the coronavirus outbreak to the 2008 financial crisis.
“When you look at the congressional budget office forecast for the end of 2021, they have unemployment at 9 percent, so sure, materially better than where we’re going to peak in the high teens, but during the peak of the financial crisis, unemployment hit 10 percent,” he said. “So even looking out a year and a half from now, we’re still going to be roughly where we were at the peak of the financial crisis.”
Is the BLS Underestimating Unemployment? Two Fed Economists Say Yes
In a report for the Chicago Fed released Tuesday, Jason Faberman and Aastha Rajan suggest that the current realities of "unpaid leave" and other categories don't quite fit into the standard BLS measures. They suggest the unemployment rate really could be as high as 34 percent,
In summary, more than 26 million new unemployment claims are already reported between mid-March and mid-April, and job losses could exceed 20 million through April. The official unemployment rate may only capture a fraction of these losses. This is because the unique nature of the Covid-19 crisis has led to the furlough of many workers and has also made it difficult for people to look for new work, even if jobs are available. In this blog, we have proposed an alternative measure of underutilization, the U-Cov rate, which captures a broad range of workers affected by the crisis. This rate reached 12.9% in March, up 2.5 percentage points from its February level. We predict that it could reach between 25.1% and 34.6% in April, an increase of 16 to 21 percentage points, reflecting the breadth of the sharp contraction currently affecting the labor market.