William L. Anderson – March 27, 2020
Many of us have experienced the empty grocery shelves, the mad run on toilet paper (Calling Mr. Bidet?), and the ubiquitous face of Anthony Fauci of the National Institutes for Health on television broadcasts. Federal and local authorities are stretching their constitutional limits well beyond anything our ancestors would have recognized in their attempts to keep people away from each other and prevent social contact. (I am currently in Sacramento, California, which just has enacted a de facto version of local martial law.)
Almost everyone affected by this cascade of government orders—which pretty much means all of us—has an opinion ranging from that this is not a serious health threat (compared even to the common flu) to the possible need for martial law (from California governor Gavin Newsome). Military terms such as “shelter in place” now are part of ordinary language as governments at every level issue orders, with governors competing to see how they can be perceived as being “in charge” as they bark out increasingly draconian commands, threatening deadly force if necessary.
The New York Times, perhaps not surprisingly, has declared that “The sky is falling” and calls for near-total government takeover of everything. Likewise, Rod Dreher of the American Conservative demands that government arrest and imprison so-called price gougers. (The irony is that much of what Dreher writes in his TAC column condemns the political atmosphere that former totalitarian communist governments of Eastern Europe and the USSR created. He now is calling for the imposition of “economic crimes” that were absolutely central to governance in those societies.) Sojourners blames Ronald Reagan and Billy Graham for the current crisis, claiming they didn’t love government enough.
What we are seeing is how many people want governments to respond to a situation characterized by uncertainty. In such circumstances, they demand “solutions” that only can make things worse, and there is no better way to make the masses vulnerable to disease than to impoverish them. Furthermore, theNew York Times and the American Conservative‘s one-two punch demanding total subjectivity to the whims of government makes it very difficult for there to be even a smidgen of rational discussion as to what is taking place no matter what one’s ideological stance might be.
There are some things we do know. We know that this is not 1918, contra Fauci, and that COVID-19 is not the Spanish flu, which ravaged the globe for more than a year, killing more than a half million people in the USA alone. In 1918, the world was at war, and even without war, life expectancy in the United States was about fifty-three years (compared to near eighty today). Epidemics from measles, polio, whooping cough, yellow fever, cholera, and even malaria were a way of life for Americans, not to mention those in other parts of the globe that were poorer.
World War I brought malnourishment to Europe and belligerents elsewhere; medical care was vastly inferior to what exists today; military authorities regularly crowded people together on troopships; and political authorities held bond rallies in which the vast crowds help quickly spread disease. Hospitals used the ward system, which meant that sick people were warehoused together, many of them just waiting to die.
According to reports from that era, the Spanish flu claimed its victims quickly, sometimes within hours. Its mortality rate was about 2.5 percent (compared with about 0.1 percent or less with the common flu), and despite Fauci’s false assertion that the mortality rate of COVID-19 is “ten times” that of the regular flu, even those extreme numbers don’t come close to matching 1918.
Yet, that has not stopped politicians from making wild claims, including Elizabeth Warren’s declaration that up to 2.2 million Americans will die from this newest threat and that the worldwide death toll could be more than 10 million. Not surprisingly, Warren calls for a huge and immediate expansion of the welfare state—and for the government to print lots and lots of money—and near-dictatorial economic controls.
As noted earlier, all of this is a response to the uncertainty of just how much this virus will spread and what its actual effect will be on the health of Americans. What we do know (at least at this point), however, does not exactly raise our confidence in American politicians and the media, especially the elite media.
If the New York Times claims that “the sky is falling,” one would like to see some proof. We do know that up to this point—several weeks into this health situation—about 220 people have died (at this writing, although that number likely will rise today). Furthermore, as the link demonstrates, the vast majority of recorded COVID-19 cases in the USA are classified as “mild.” Were the threat from this virus like what was seen in 1918–19, the dead among us would be much greater.
Indeed, we are hearing so many conflicting views. The New York Times proclaims itself to be the “newspaper of record,” yet most of us doubt that the paper will give us anything but the most extreme versions or outright disinformation, and only those versions that will call for the imposition of unlimited government power and for Americans to surrender the few liberties they have left. The NYT, after all, is a “progressive” newspaper, and for more than a century, progressives have been declaring that ours should primarily be a government led by “experts,” not elected officials, as this recent NYT editorial column declares.
Unintended Consequences or Intended Results?
I recently spoke to the economist David Henderson, who lives in Monterey, California, where residents were ordered by local authorities to “shelter in place” even before Governor Newsome locked down the entire state. He told me that one of the local government officials who voted for virtual home confinement justified his actions by stating what we already know about politicians who are making decisions about things with uncertain outcomes: that the default position is to assume the worst-case scenario and act accordingly.
The official’s decision was entirely logical given the incentives he faced. If anyone in Monterey were to die of COVID-19, he and other officials would be blamed. However, if the economy were to tank as a result of governmental actions, he would not be blamed. For that matter, officials and the media would blame capitalism, an explanation that almost certainly would sell with most of the population.
When there is uncertainty, government officials generally will make the safest decision. And who can blame them? I am reminded of the “Baptists and Bootleggers” article that economist Bruce Yandle wrote for Regulation nearly forty years ago. As a young academic economist just coming to work for the Federal Trade Commission, Yandle was full of great ideas on “fixing” damage done by some regulations that seemed to defy common sense. He writes:
Not only does government rarely accomplish its stated goals at lowest cost, but often its regulators seem dedicated to choosing the highest-cost approach they can find. Because of all this, I and others in academia became convinced years ago that a massive program in economic education was needed to save the world from regulation. If we economists could just teach the regulators a little supply and demand, countless billions of dollars would be saved.
Using a term from the Bible, Yandle stated: “The field was white unto the harvest, and I was ready to educate the regulators.” However, he notes, it turned out that the FTC economists understood plenty of things and that the problem was not the ignorance of officials, but rather the structures of costs and incentives. Writes Yandle:
That marked the beginning of a new approach to my research on regulation. First, instead of assuming that regulators really intended to minimize costs but somehow proceeded to make crazy mistakes, I began to assume that they were not trying to minimize costs at all—at least not the costs I had been concerned with. They were trying to minimize their costs, just as most sensible people do.
There are a number of pictures that come to mind in the current situation. One is the picture that people such as Donald Trump and Anthony Fauci would like us to see, which is of experts in charge who are monitoring changes on the ground as they occur and giving orders to fix problems. However, there is another picture out there, one that will not be as well publicized: a herd of politicians careening from one crisis to another, giving conflicting orders and creating chaos and economic ruin.
Reality is much different. It is not that officials are trying to protect Americans from COVID-19 but unintentionally creating an economic train wreck as a consequence of their actions, which is what Heather MacDonald seems to be saying:
the damage to people’s livelihoods through the resulting economic contraction is real and widespread. Its health consequences will be more severe than those of the coronavirus, as Steve Malanga shows in City Journal. The people who can least afford to lose jobs will be the hardest hit by the assault on tourism. Small entrepreneurs, whether in manufacturing or the service sector, will struggle to stay afloat. Such unjustified, unpredicted economic havoc undermines government legitimacy.
No, if they are seen to prevent any deaths from this novel virus (or at least attempting to prevent deaths), then whatever the economic damage that results from imposing a virtual quarantine on working Americans and shutting down their livelihoods will be ignored, since many in the media and elsewhere already have blamed capitalism for the current meltdown. Don’t forget that prominent Democrats already are calling for charging Trump with negligent homicide because, in their opinion, he didn’t act quickly enough against COVID-19. Contrary to popular opinion, a successful economy does not grant government legitimacy; if that were true, then Franklin D. Roosevelt would be as universally derided as Adolph Hitler, given that his New Deal prolonged the Great Depression.
Note that politicians facing uncertain circumstances are going to act very differently than entrepreneurs, who also must act within the bounds of uncertainty. Politicians decide on the basis on what is best for themselves, something the ancients once called self-interest. Entrepreneurs, on the other hand, even when operating in the realm of self-interest, must make decisions they believe will satisfy the needs of their consumers. The entrepreneur does not profit unless consumer choice says so; the politician prospers by ordering resources to be directed in a way that will best enhance the politician’s own public image and gain the most favorable media coverage.
The final irony is that in today’s media-driven world, the entrepreneur is vilified as a greedy capitalist parasite while the politician and government apparatchik are hailed as the savior. More than a decade ago, former Federal Reserve chairman Ben Bernanke engaged in irresponsible monetary behavior that helped trigger a massive financial meltdown and a subsequent recession. Because he turned on the printing presses full blast afterwards, trying to paper over the damage that he had had a major hand in creating, Time magazine put his picture on the cover and called him the man who “saved the world.” It is as though Time were praising an arsonist who burned down his family home—with all his family inside—but who then held the fire hose to help pump water into the building.
MacDonald concludes her article with the following statement:
One might have thought New York governor Andrew Cuomo a voice of reason when, a few days ago, he tried to tamp down the hysteria in a press conference, saying: “This is not Ebola, this is not SARS, this is not some science fiction movie come to life. The hysteria here is way out of line with the actuality and the facts.” And yet since then he called a state of emergency in New York, and he and Mayor Bill de Blasio have all but shut down the New York City economy. They, like most all U.S. politicians nowadays, have shown an overwhelming impulse to be irrationally risk averse.
She is wrong. Politicians are rationally risk averse, and when they shift the costs of their decisions upon the people they ostensibly wish to protect, they are not acting out of character, either of themselves or of the political system. That they wreck the livelihoods of millions of people in the process is of no concern to them and their adoring media. Instead, blame the capitalists.
Originally published at Mises.org. William L. Anderson is a professor of economics at Frostburg State University in Frostburg, Maryland.
Image source: Getty
