The Dismal Science

hallway-1245845_1280

Economics is the Dismal Science. Scarcity is the usual reason given for it being so. Personally, I find the most dismal aspect of it to be how many people don’t understand economics. It’s enough to make a man take off his hat, throw it on the ground, and stomp on it.

Does Winnie the Flu kill people? Yes. It does. However, you know what else kills people? A faltering, let alone crashed, economy. The thing is this is exactly the kind of thing you get with Bastiat’s “seen and unseen”. Those directly (or slightly indirectly through opportunistic infections) killed by Winnie are seen. Those who die because a treatment was delayed, or their heat was turned off because they were laid off and couldn’t afford it, or any of a host of other little things of people “at the margins” where the difference between “good economy” and “economy in the toilet” made the difference. Those are the “unseen.” Oh, sure, individually someone sees folk dying but mostly they’re the kind of folk who might well have died anyway. We just get more of the “might” turning into “did”.

They go unnoticed in the general scheme of things. There isn’t a single cause that people can point to saying “see, that’s killing people.” It’s a thousand little things where if things had been just a bit better they would not have died. People don’t make the connection to the the faltering economy, not until it gets truly awful (as in third-world poverty levels). But the connection remains. Hurt the economy and people die who would not have died otherwise.

However, attempt to raise this issue, to explain it to people, and sure as taxes, someone will tell you what a horrible person you are for putting money above people’s lives. They can’t seem to grasp that the money (or rather, the goods and services, and the economy that produces those goods and services) is people’s lives.

And that is pretty damn dismal.

Still Trying to Get my Daughter a Service Dog

First off, let me once again thank everyone who has helped with this fundraiser. We continue to make progress toward the goal. Every little bit helps.

Athena continues to work on the issues left behind by a life of trauma. She also, is making progress. Some of these things, however, will take years. And some will probably be hiding in the wings, waiting for an opportunity to pounce if she’s not careful, for the rest of her life. But we cope and she works hard at it.

Above are some pictures she asked me to post that she drew of Dango. On that note, one of the things Athena is trying to do, in the effort to both be self-supporting and also to use her considerable artistic talent, is to become a tattoo artist. We found a shop owner that is willing to take her on when she turns 16–just a few days away now–but the problem is that apprenticeships are not cheap. Most of the money is just to set her up with her initial equipment and supplies and only a modest amount for the actual training. That’s separate from this fundraiser. We’ll work something out. And, really, we can’t do anything about it until the current pandemic “crisis” dies down.

So, once again, I ask folk to help however you can, whether it’s donating or even simply spreading the word. Any help at all will be greatly appreciated.

 

 

 

Why the Coronavirus Hype is Overblown

baron-munchausen-74043_1280

Previously, I pointed out why I thought the Wuhan Coronavirus (AKA Winnie the Flu, oh, all right CoViD19) would not prove anywhere near as much of a crisis as people are portraying.  And yet, people keep talking about it in terms that make it to be the plague of the 21st century.  The question immediately arises is where all these claims come from.  Well, they come from several places.

First thing you need to understand is that China lies. They lie to “save face”. They lie to influence foreign and domestic policy. They lie just because they can. They lie when the truth would serve. To say that what China says about the early progress and spread cannot be trusted is to say that Helium Three is “a little chilly.”

The rise in number of cases follows amount of testing done. You test ten times as many people and you get ten times as many positives. That doesn’t mean that the amount in the population has grown ten times as much. Basic statistics.

Then we have cases like the Grand Princess Cruise Liner (other people have cited Diamond Princess–when I went searching, only remembering “something princess” I came up with Grand Princess…so I used that in the previous post and continue to use it here), To say that there attempted isolation once they realized they had infected folk on board was porous was really overstating the reality. While passengers were confined to cabins (mostly), crew dined together and interacted with the passengers. Basically, everybody on that ship was exposed. 290 were tested. Others declined the test believing that if they agreed to be tested they’d have to wait even longer to be released from quarantine. 290 tests. 21 positive. One died. Now, I could count all the folk who weren’t tested who did not get sick, but let’s be strict. That means that out of 290 people exposed to the virus less than 10% (7.2% to be relatively precise) were infected. The one who died could lead one to infer a 5% mortality rate except that runs into the problem of small numbers in statistics. Since you don’t get fractional deaths, the jump is from “0” to “5%” with nothing in between.

The mortality rate is highly inflated for several reasons. One is selection bias. Folk generally weren’t tested unless seriously ill. Folk with mild or no symptoms (Norway recently did widespread testing and found that half of the folk with active infections had no symptoms) weren’t counted. Also, tests so far have only been for active infections. Folk who had a mild case (as most are) and recovered back in December or January (remember a “cold” characterized by a persistent cough that could last for a couple of weeks running around back then? I do.) won’t be counted. Another one is what’s counted as a “Coronavirus death.” All too often (the Italy results that get bandied about so much are guilty of this) if someone has Winnie the Flu and dies for. any. reason. that’s counted as a “coronavirus death.” Heart attack while ill (with pre-existing heart condition)? Coronavirus. Liver failure (cirrosis from years of drinking your meals)? Coronavirus death. Get hit by a bus while infected with Coronavirus? Coronavirus death. (Okay, maybe not that last one, but I’m not so sure.)

In addition, it’s becoming unavoidably clear that the current Coronavirus strain emerged months before China admitted it existed, let alone took any steps to contain it. It has been out “in the wild” for months.

We didn’t even notice–just a somewhat worse than typical, but far from unprecedented, flu season.

To that point, there have been some folk reporting persistent coughs and cold/flu symptoms that weren’t flu and lasted a couple of weeks (I had one and my doctor said, “yeah, that’s going around.”) And, yes, there were anecdotally some deaths, as there always are (people die; it’s part of life). What there wasn’t was any “oh, no,” concern that we were having a lot more seriously sick people than otherwise. The 2019-2020 flu season has been a bit more serious than most, although not as big as some (including the 2017-2018 season).   There was no “this is bad; what’s going on?”

Wash your hands (which you should do anyway). If you’re sick or think you’re sick, stay home to avoid infecting other people (which you should do anyway). That’s really all that’s justified by the actual risk. But to certain people “never let a crisis (even if you have to invent one) go to waste.”

The simple fact is, the mortality numbers are being inflated. They’re being deliberately inflated in order to create just the kind of crisis the Left (and entirely too many on the Right) use to ram through more of their favored restrictions on individual liberty.

And entirely too many people are swallowing it hook, line, sinker, bobber, pole, and reel.

Power and Government: A Blast from the Very Recent Past

Back to Back “Blasts from the Past” again, and again a very recent one because this is so very topical.  Indiana just shut down with a “stay at home” order except for “essential businesses.” Well, my office is an “essential business” so I continue to go to work every day but, still, it’s hitting a lot of people.  The problem is, where is the government getting the authority to do this?  They have the “power” in that they have folk who will cheerfully use sufficient force to make people comply, but from where do they get the authority to put people on the next thing to house arrest?  And so this Blast from the Past:


militarized police

This one’s a bit of a ramble.

When people talk about the government having the power to do something there are two things they could mean.  The first, which can also be worded as “the right” (governments do not have rights–people have rights–governments have power and authority) to do something, is that they have the legitimate authority to do it.  The second, is the have the main strength, the “force majeure” to impose their will on the populace.  Unfortunately, entirely too many people confuse the latter for the former.

A quote attributed to George Washington (probably erroneously) is “Government is not reason.  It is not eloquence — It is force.  Like fire it is a dangerous servant and a terrible master.” Whether Washington ever said that, or anything like it, it remains true.  Indeed, “the license to initiate force to achieve certain ends” is a pretty good definition of government.  What makes government different from other forms of organization is that it has some presumed legitimacy in using and initiating coercive force to accomplish at least some ends.  Government can use the threat of force to take money to pay for things like police, defense (and, yes, roads) and have that considered legitimate.  Private individuals or groups cannot.  To accomplish that, government has power in the second sense above–the main strength to impose upon others and force them to behave in certain ways (pay taxes, obey traffic laws, fight in wars, whatever).

This power, this ability to use force, can indeed be necessary.  In the case of invasion, one cannot take the time to discuss everything in committee, to hope to gather up sufficient volunteers to form a force sufficient to stave off the invasion, to hope that others will voluntarily pony up enough resources to arm and equip that force, train it (and that everybody will voluntarily go along with the training and not say “this is BS” and walk out), supply it, and get it to where it needs–all quickly enough to minimize the damage done by the invaders.  Well, one could but the results are unlikely to be anything we would want.  So, someone needs to be able to say “you must provide arms and equipment for a body of fighting men, ready to act at once to resist invasion” and when things happen they need to say “you, you, and you, go here.  Fight there” and so on.  And that someone needs to be able to enforce that promptly, and without debate.  This is an extreme example of the principle but it illustrates the point.  A nation needs the force of the second sense in my opening paragraph.

That government has the power to do something–in that it’s able to marshal sufficient force to impose that something on the populace–however, does not mean that it has the legitimate authority to do so–the “power” in the first sense of my opening paragraph.  It needs that as well.  The areas in which that first sense power can legitimately be exercised, and the limits to which it can be exercised, must also be circumscribed.  It is this limitation, this structure, that differentiates a legitimate government from tyrannical strong-man rule (whether by an individual, a committee, or even a majority of the people).

It was this that the Founders of the United States tried to establish first with the Articles of Confederation and when experience showed that those articles did not grant enough power to central authority to handle even the issues they had at the time, with the Constitution and its first ten amendments, “The Bill of Rights”.  These spelled out certain, specific powers granted to government and further certain things that were placed beyond government’s purview.  The “power” of government in the first sense.

Since then, however, the Government of the United States has grown far beyond those circumscribed limits.  That process began at the very beginning of the nation but was slow for a while.  It gained momentum in the Civil War and its aftermath.  Picked up real speed with FDR and his “New Deal” and made the jump to lightspeed in the 60’s.

Government kept accumulating powers to itself to dictate this, restrict that, control that other thing.  All without bothering to limit itself to those legitimate powers delegated in the Constitution, nor bothering to avoid aspects expressly forbidden.

But, the government had the power (second sense) to do this.  Congress would pass the law.  The President would sign it (or simply not veto it) or Congress would override the veto.  Law enforcement would enforce it.  Worse even, administrative agencies were granted power to create “regulations” which had the force of law, without bothering with the entire legislative process.  And the courts would permit it.

It wasn’t all one way, of course.  The courts would sometimes strike down a provision of law or an entire law.  Sometimes.  And sometimes the courts would find entire new “rights” to use as justification for overturning legitimate functions of government.

Still, the limits on the power (first sense) of government have come to be largely ignored in pursuit of power (second sense) of government.

And we, the people, have largely been forced to stand by and let it happen because the government has had the power (second sense) to enforce those laws.  Voters, entirely too many voters, would let their legislator’s behave this way–largely because they benefit from some aspect and don’t really see the extent of the harm, or they’ve been deceived into believing that the government legitimately has the power (first sense) to do what it’s doing and so…why fight it.  Those few who have are simply called “crazy” and, indeed, many are.  Robert Heinlein said “tilting at windmills hurts you more than the windmill.” Even if the “windmill” really is a giant, few “sane” people will rush headlong into when the only result is to be knocked onto ones backside, bruised and perhaps bloody (or worse, dead).

The problem is, this can only go so far.  Many will be driven to attempt to use existing political mechanisms to try to push things back.  To be honest, I am somewhat skeptical of how likely that is to be for reasons I’m not prepared to go into here.  In addition, there will be other, less acceptable responses. As the power (second sense) outstrips the legitimate power (first sense), more and more people become disturbed by the dichotomy we can expect to see more and more “crazies”. It would not be that there are more crazies, but that the situation has changed so slightly less “crazy” people are driven to act.  Their actions will be horrible, unjustifiable really (through poor target discrimination if for nothing else).  And please note that I am neither endorsing nor encouraging such action.  The prospect, to be honest, terrifies me.  But those “crazies” will serve as a warning of things to come, a “canary in a coal mine” if you will.  And it will come from not just one side.  Resistance, legitimate or otherwise, to the increasing power (second sense) of government will be seen as an attack by those who like the government gaining more power (second sense)–at least when it’s using that power for ends of which they approve.

The problem is, people who like the increasing use of government power (second sense) in causes they favor often don’t recognize that the same increase in power (second sense) will also be used in causes they don’t favor.  And they presume that the problem is the specific causes government power (second sense) is being used for rather than the government exceeding its legitimate power (first sense).  Instead of reducing government to it’s legitimate power (first sense) they try and use its power (second sense) to shut out people who want to use government for things of which they disapprove (while keeping their own use of power (second sense) intact).  That way lies tyranny.

So hang on to your hats, folks.  It’s going to be a bumpy ride.

“How Can you Talk Economics When People are Dying”: A Blast from the Past.

Some people have been “pushing back” against the panic over the Chinese Coronavirus (Winnie the Flu), noting the damage these overreactions are doing, and will continue to do, to the economy.  But you know what else leads to people dying?  A faltering, let alone crashing, economy.  Which brings up this Blast from the (quite recent actually) Past.


It never fails.  When I (or a lot of other people) talk about the economic cost of some policy we always get “how can you think of economics when we’re talking about people’s lives here” or “you can’t put a price on human life” or the big one “if it saves just one life, it’s worth it.”  “If we don’t do this, people will die!”

The problem is that economics translates into lives.  And while whatever folk want to “solve” with their economically unviable proposal might “cost lives” impoverishing people, either as individuals or as the economy as a whole also costs lives.

Consider, that an Earthquake of a severity that might kill a dozen people in California, would kill hundreds, or even thousands, in someplace like Bangladesh.  Wealthier societies are more likely to have buildings built of sufficient strength to withstand earthquakes and, thus avoid crushing their inhabitants.  Wealthier societies are more likely to have networks of roads that allow sick and injured to reach hospitals or aid stations quickly–and the more quickly you can treat, the better the chances for recovery.

Or, never mind Earthquakes.  In wealthier societies more people have shelter from weather that can threaten their health, and not just against storms, but heat is a known killer, as is cold.  Having a draft-free dwelling with adequate heating and cooling for the weather saves lives.  Sure, for a lot of people it’s about comfort but many of the very old and very young, or the sick and injured, are less able to deal with temperature extremes.  Heat waves and cold snaps are invariably accompanied by rising death rates (with cold being by far the worse killer of the two).  Adequate heat and air, and modern, high-tech clothing meant to protect the wearer from temperature extremes make a big difference.

Ordinary illnesses and injuries?  People have accidents, get sick.  Once again, that extensive network of roads–a feature of wealthier societies–allows people to get their sick and injured to doctors and hospitals quickly.  And not just via ambulance.  That might be arranged by some government program which allows people to…

Oh, I can’t do it.  The simple fact is that many times, a person can get a sick or injured loved one to the hospital faster than an ambulance can get to them.  At least they can if they have their own car, which is something that is not common except in wealthy nations.

Look, some economists have tried to study this, to try and figure how many dollars (or whatever monetary unit you care to use) of GDP equates to how many lives saved.  Because of the complexities of such analysis results vary.  After all, there are other things that affect death rates than just the wealth of society.  The basic principle, however, is so universal that it’s not even controversial–people live longer, and better, in wealthier societies.

gdp-life-expectancy
The source for this is a site that does data visualization, but the data is very much real.

The results of all this is that you cannot dismiss economic realities–the cost of doing whatever “good thing” you want to do via government comes at the expense of no longer being able to do something else with those resources.  After all, Economics is the study of cause and effect relationships in the allocation of scarce resources that have alternative uses.  Scarce, meaning you never have enough for everyone that wants it.  And so, use them for one thing and lose the ability to use them for something else.

In politics, people tend to make categorical decisions.  We must do this, regardless of the cost.  And doing “this” means we don’t do “that.” Political solutions tend to miss the incremental tradeoffs.  How much of “that” are we willing to give up for how much of “this”?

And when the “that” is something as nebulous to most people’s thinking as a Gross Domestic Product, particularly when a lot of that product is in other people’s hands rather than ones own, the very real effects of trading “that” get lost in the shuffle.

It’s very short-sighted and we need to work hard to not do that.

Unless, of course, you want people to die.

Bailout?

justice-423446_640

One of the most common mistakes people make with regard to economics is confusing money with wealth.  Wealth, real wealth, is the goods and services produced in an economy.  “Money” can be used to obtain wealth.  You can buy stuff with it.  You can hire people to provide services.  But it isn’t “wealth” itself.

Adam Smith’s great insight, which lead really to the explosion of real world wealth in the centuries since his writing, was that the wealth of a society was not, as the merchantilists of his day proclaimed, the amount of specie (gold and silver) in the public treasury.  It was the sum total of the goods and services available to the society.  It includes the things grown and manufactured locally.  It also includes the things traded for.

Where money comes into it is a convenient method for trading.  If I make chairs, I don’t have to find someone who has something I want that’s willing to provide it in exchange for one of my chairs.  I can sell the chair to someone who wants chairs, in exchange for money, and take the money to use it for something I want.  And I can combine the money from multiple chairs to buy something much more valuable than one chair–or even all the chairs one person wants–like, say, a car.  Or I can divide it to buy things where a chair would be really too much.  I may only want a few toothpicks but wouldn’t really want to trade a whole chair for them?  Oh, sure, if I can make chairs I can make toothpicks, but I would probably be better off spending the toothpick making time instead making more chairs.

Money also brings in a time factor.  I can sell the chair today to buy something tomorrow or next week.  And with that, we bring in a whole host of other things:  savings, investment, credit, inflation, deflation, partial reserve banking, and the concept of monetary policy.

In the end, you have money on one side and the “economic output”–the production of goods and services–on the other.

So, in response to fears over the Chinese Coronavirus, Covid-19, Winnie the Flu, we’ve got a whole host of various shutdowns.  Businesses are being shut down or restricted in numerous ways.  People are being urged to stay home and avoid places where they’ll gather with others.  This has–indeed has to–drastically curtailed economic output not just in the US but in the world.  People are losing jobs.  The economy is tanking.

And so we have folk in Washington talking about a “stimulus”.  One suggestion was to simply send checks to people.  Free money.  A figure of $1000 has been batted around.

This would be a bad idea.

Let me reiterate.  Money is not wealth.  Money can be used to buy wealth, but the wealth itself comes from the economic output of society.  If the economic output is reduced then all the money in the world doesn’t make you any richer.  You just have more money chasing the same goods and services.   There’s a term for that:  inflation.

Real economic stimulus cannot come from sending people checks, increasing the money supply, while still keeping the fetters on economic production.  At best you’ll get a short blip while people quickly buy up the available resources before prices rise to accommodate the new balance of money supply to economic output.  And instituting price controls (which I figure is coming next) simply means that the shelves get empty that much sooner with no production to restock them.  The result will be worse than if nothing were done at all.

If one really wants to restimulate the economy, the way to do it is to remove the economic fetters.  If you absolutely must have restrictions to deal with a pandemic which, as I have said before, I don’t think is anywhere near as bad as portrayed, then find other fetters that can be removed so that people can profitably engage in economic activity producing real wealth (goods and services) for the American people.  And maybe, once the Winnie the Flu crisis is over, consider keeping those fetters off anyway.

In short, freedom, economic and otherwise, remains the best “stimulus.”

The Wuhan (Chinese) Coronavirus

banner-coronavirus

Yes, I’m going to call it that despite the outcry about using that descriptor.  It has long been common to name diseases after where they were first identified.  The list of examples is long.  German Measles, Spanish Flu, Rocky Mountain Fever, Lyme Disease (named after Lyme Connecticut), Ebola (named after the Ebola river), and on and on and on.  There’s nothing “racist” about it.  But the Chinese Communist Party declared it’s “racist” and their willing collaborators in government and the media go along with it. (I’m kind of partial to “Winnie the Flu” since that is tailor made to annoy Xi Jinping.)

First off, I consider the panic about it overblown.  This is not the disaster that some folk have been painting. (Yes, Italy has been bad but I’ll get to that shortly.) And there’s nothing about it that requires people to grab years supplies of toilet paper.  Really.  Diarrhea isn’t even a symptom.  A couple weeks supply, a month at most, and you’re golden.  Really.

On the other hand, some people have been utterly dismissive of it.  “It’s no worse than the flu” they say.  And now we get to Italy.

First off, let me be clear that Italy is not a good “model” for what results are likely to be in the United States.  Italians tend to keep very close personal space, as in, next to none.  They engage in a lot more casual physical touch than is generally considered comfortable in American society.  this facilitates the spread of diseases like the Wuhan Coronavirus.  However, the real issue can be seen here:

critical care beds

Note that this is “per 100,000” so that the US has just about five times Italy’s population has already been corrected for.  The simple fact is, America has the facilities to care for a larger proportion of its population in need of critical care than is Italy.  The closest anyone comes to the US capacity is Germany.  A large part of the problem in Italy is that their facilities were overwhelmed–more cases needing critical care than they had beds to handle.  What was an overwhelming crisis in Italy will be “a bit busy” in the US.

Now, this is not to say that the situation in Italy is not informative.  To the best of my knowledge, seasonal flu does not generally swamp Italy’s medical systems.  And so, while the fact that it is a crisis in Italy does not mean that it will be such a crisis here, nevertheless, I think it does point to Wuhan Coronavirus being worse than seasonal flu and probably even worse than the 2009 H1N1 strain.

So how much worse?  To consider that, let’s look at the Grand Princess cruise ship.  They had the disease aboard in a fairly closed environment.  Despite the best efforts of the crew, the ship was simply not equipped to fully isolate passengers from each other or from the crew.  Crew still ate in common and still had to interact with passengers if only to deliver food and other necessary goods.  We have 21 confirmed cases of Coronavirus on the Grand Princess.  Most of the passengers who didn’t show obvious symptoms declined testing.  Even with the attempts at isolation, we can pretty much presume that everyone on the ship was exposed.  Still 290 tests, 21 cases.  Given the situation on the ship despite efforts at isolation we can pretty much assume that everybody was exposed, that gives an infection rate of just under 10% and we can go ahead and round up to that  Estimates of death rates from those infected range from 0.5% to upwards of 8%.  Those higher rates, however, tend to be coupled with inadequate medical care (not enough beds to treat more serious cases–see Italy up above) and with older patients with other underlying health issues.  Also, those figures do not count minor cases which are never recognized as Wuhan Coronavirus.  The person thinks they have a cold, or even don’t show symptoms at all, and goes on about their life.  And I am, perhaps, less inclined to dismiss the “older with other underlying health issues”.  After all, I am older (pushing 60) with other underlying health issues (diabetes).  All told, however, that 0.5% is probably closer to an upper bound, in a developed country with adequate facilities for critical care, than the higher numbers.

Still, at worst case then, we’re talking about a total of 30 million cases in the US and 15,000 deaths.  That’s somewhat worse than the 2009 H1N1 epidemic, but not much.

So, yes, some caution and care is justified.  The current panic, not so much.  So wash your hands, people.  You should be doing that anyway.  And if you’re sick, stay home so as not to infect other people.  Beyond that?  You’re good.  Really.

And once you’ve got more than a couple weeks’ supply of toilet paper, you really don’t need to get any more.  Honest.  They’ll make more.