Over the past year, the US has been hit by a pretty severe labor supply shock. Employment is sharply depressed, but wages are rising fast and companies are having trouble finding workers. At this point the question is not whether a labor supply shock exists, rather the issue is what is causing labor supply to be so depressed. I’ve seen at least three theories: 1. A supplemental unemployment insurance program that pays lower wage workers more than they earned on their previous jobs. 2. Lack of childcare, partly due to school closures. 3. Fear of the health risk associated with working. In order to evaluate those theories, let’s look at some employment data. Unfortunately, while I found employment/population ratios for three age groups, for 20-24 year olds I had to rely on total employment data. Let’s start with teenagers: Teen employment is at the highest level since the Great Recession, even higher than the extremely strong labor market of 2019.  Given the current state of the labor market, that’s actually pretty amazing.  (Yes, the employment ratio is far below the levels of the 20th century, but teens were far more likely to work in the old days.) So there’s little evidence of a negative labor supply shock for teens.  To be sure, the supply curve for teens may have shifted slightly to the left, and that effect could have been offset by moving up and to the right along the curve due to higher wage rates.  Even so, the teen data really stands out when compared to other age groups. Unfortunately, the high teen rate of employment is consistent with all three theories discussed above.  They typically have not been receiving UI, they typically don’t have child care issues, and they are at relatively low risk from Covid.  So let’s look at three other age groups: My first reaction is that fear of getting Covid is not the whole story.  The difference between employment levels for teens vs. 20-24 year olds is pretty shocking.  Teen employment is higher than during the 2019 boom, whereas employment of workers just a few years older is still severely depressed.  Obviously there is very little difference between the health risk for teens and young adults.  In both cases, the risk is pretty low.   That means the very strong employment ratio for teens is likely due to either the fact that they typically do not received UI or the fact that they don’t need child care. All three of the adult age groups show significant declines in employment.  In percentage terms (not percentage points terms) the decline is largest for old people, somewhat less for young workers, and even less for middle age people.  And yet unless I’m mistaken, childcare issues are most important for middle age people. I am especially struck by the fact that employment for 20-24 year olds seems to have declined more sharply than for 25-54 year olds.  They experience less health risk than 25-54 year olds, and they probably have less need for childcare.  On the other hand, 20-24 year olds tend to be lower wage workers, the group most likely to earn more on unemployment insurance than on their former jobs. While I suspect that all three factors are depressing labor supply, the strongest evidence seems to be for the effect of the supplemental UI program. Labor supply shocks make things difficult for policymakers, especially policymakers that focus on the employment part of the Fed’s dual mandate.  In 1974, the US experienced a negative labor supply shock, and this contributed heavily to a “supply-shock” recession.  The longer this supply shock lasts, the more likely that it will trigger an outcome similar to 1974. To be sure, the 1974 labor supply shock had completely different causes—the removal of the Nixon wage controls: Nonetheless, a labor supply shock has a contractionary impact on the economy, regardless of the cause.  Thus far, the effect is not to cause a recession, rather it is merely slowing the recovery from a recession.  But there is a risk that this problem could confuse monetary policymakers and lead to an overshoot of inflation.  Yes, the Fed wants to see a mild overshoot of inflation, but a major overshoot would lead to subsequent tightening (as the Fed needs to hit its 2% average inflation target.) As always, the Fed needs to avoid targeting real variables such as employment.  That’s where they got in trouble during the late 1960s and 1970s.  Phillips Curve thinking also contributed to the inflation undershoot during the late 2010s.  Stick to nominal targets. (0 COMMENTS)

Last month, one of my favorite Hoover colleagues, Harvard professor Paul E. Peterson, interviewed me about Charley Hooper’s and my Wall Street Journal article on the lockdown-induced losses to young people. This is part of his Education Exchange series. Here are the approximate times and topics: 1:20 to 9:00: The elderly. 9:10: Young people. 10:05: Young people and schools; Bryan Caplan’s research on signaling; WWII data. 14:50: FDA. 18:00: Asian flu. 20:30: CDC as a political animal. 22:20: Why Florida governor Ron DeSantis deserves at most 2 cheers. 24:00: My proposed $50 offer to potential vaccination recipients (which, admittedly, I have done nothing about in the intervening 2 weeks). 24:30: Why I don’t cheer Biden. 26:00: What to do next time. By the way, at the end of the recording, I told his technician, who hadn’t heard the story, about how Paul, as a teenager in a Minnesota government school, got totally into history because a teacher used the whole class period to leave the classroom to smoke. Paul was impressed that I remembered that story. I tend to remember people’s stories about incidents that made a huge impact, especially a positive one, in their lives.   (0 COMMENTS)

Two pieces of bad news for economic freedom came out of Texas this week. Elizabeth Nolan Brown at Reason writes about the more recent one: In a performative bid against “human trafficking,” Texas has raised the legal age for working at a strip club from 18 to 21 years old, putting many employees out of work and putting clubs that hire them—even inadvertently—in risk of serious legal penalties, including up to 20 years in prison and a $10,000 fine. The state also updated part of its penal code to define “child” as anyone under age 21. This is from Elizabeth Nolan Brown, “Barely Legal Strippers Now Fully Illegal in Texas,” Reason, June 3, 2021. Brown also notes: Texas is also following a regrettable trend toward infantilizing young adults in America, carving out ages 18 to 20 as a liminal period between being a child and full adulthood. Not only is this cohort unable to consume alcohol legally, but the legal age for purchasing cigarettes, e-cigarettes, and tobacco products is now 21. Alaska considers anyone who “causes or induces” an 18- to 20-year-old to be paid for sex to be a criminal sex trafficker, even if no force, fraud, or coercion is used. The FBI lumps 18- to 20-year-olds in with children for purposes of missing kids statistics. And so on. On Tuesday, Governor Abbott announced a new restriction on day care facilities. Robert T. Garrett and Dianne Solis of the Dallas Morning News write: Escalating his showdown with President Joe Biden, Gov. Greg Abbott on Tuesday ordered state child-care regulators to yank licenses from facilities that house minors who crossed the state’s southern border without papers and were detained. Currently, 52 state-licensed general residential operations and child placing agencies in Texas have contracts with the federal Office of Refugee Resettlement to care for undocumented immigrant children. ORR contracts with about 200 facilities in 22 states. I had had some hope for Texas because of the governor’s and many legislators’ recognition that it was well past time to end the lockdowns. I have less hope now.   (0 COMMENTS)

This is the full article that Charley Hooper and I had published in the Wall Street Journal 30 days ago.   Youth Pay a High Price for Covid Protection Leaders’ greatest failure was not focusing on the elderly, who had lower costs and far greater benefits. By Charles L. Hooper and David R. Henderson Now that the Covid-19 pandemic seems to be abating, it’s a good time to look at lessons that observers have, or should have, learned. The list of mistakes is long, but the most glaring was the failure to understand and act on the virus’s propensity to attack the old and vulnerable. Policy makers failed, in other words, to understand the enemy. Some clear thinking based on data that were available last spring would have led to two insights. First, the benefits of protecting the old and vulnerable exceed the costs. For our purposes we are combining voluntary and coercive (e.g., government lockdown) nonpharmaceutical precautions—mask-wearing, hand-washing, quarantining, distancing and isolation of infected people—under the umbrella of protection. The benefits of protection include reducing the potential for death, pain, suffering and healthcare costs, along with reducing the chance of infecting others. But the main benefit of protection is that fewer people die from Covid-19. The infection fatality rate is the probability that a person will die once becoming infected, whether that person has symptoms or is unaware of the infection. The global average infection fatality rate of SARS-CoV-2, the virus that causes Covid-19, is roughly 0.23%. The average U.S. fatality rate is higher, probably 0.3% or 0.4%, because Americans are older and less healthy than those in most other countries. Underneath this average, the infection fatality rate increases exponentially with age. For an 85-year-old it may be 2,000 times as high as for an 18-year-old. This increase in the death rate by age is partly due to comorbidities, which increase with age. The primary risk from SARS-CoV-2 is infection leading to death. Those who die lose years based on statistical life expectancy. A person’s expected years lost is equal to the infection fatality rate times life expectancy times probability of infection. Had the Moderna, Pfizer /BioNTech, and Johnson & Johnson vaccines never been developed, the pandemic would have continued until natural herd immunity was reached. That’s the point in the life cycle of an infectious disease when enough of the population has immunity that the average number of people to whom a newly infected person passes the disease drops below one. In effect, those who are immune protect those who are still vulnerable, and the disease largely disappears. Herd immunity for SARS-CoV-2 would be reached after perhaps 70% of the population has been infected. While perfect protection would eliminate the risk of infection, few people can practice it. Based on data analyzed by economists at the University of California, Berkeley, we assume that actual protection reduced the risk of infection by roughly half. Therefore, imperfect protection reduced the risk of infection for the average American from 70% to 35%. We find that the benefits of protection are disproportionately higher for older people. Consider two extremes: the 18-year-old and the 85-year-old. If the 18-year-old dies, he loses 61.2 years of expected life. That’s a lot. But the probability of the 18-year-old dying, if infected, is tiny, about 0.004%. So the expected years of life lost are only 0.004% times 35% times 61.2 years, which is 0.0009 year. That’s only 7.5 hours. Everything this younger person has been through over the past year was to prevent, on average, the loss of 7.5 hours of his life. Now consider the 85-year-old. If he dies, he will lose 6.4 years of expected life. The probability of dying, if infected, is much higher for him, about 8%. So the expected years of life lost are 8% times 35% times 6.4 years, which is 0.179 year—65 days. The benefits of protection, measured in life expectancy, are 210 times as high for the older person. The costs of protection include reduced schooling, reduced economic activity, increased substance abuse, more suicides, more loneliness, reduced contact with loved ones, delayed cancer diagnoses, delayed childhood vaccinations, increased anxiety, lower wage growth, travel restrictions, reduced entertainment choices, and fewer opportunities for socializing and building friendships. In a 2020 study for the Organization for Economic Cooperation and Development, Eric Hanushek and Ludger Woessmann estimate the loss to lifetime income for individual students to be 6% (assuming schools were closed or reduced for the equivalent of 67% of a year). Given U.S. median lifetime earnings of $1.7 million, that 6% translates into $102,000 per student. This loss of income from protection disproportionately affects younger Americans. Those who are retired are largely unaffected. Assuming that reduced lifetime earnings are the only costs and reduced life-expectancy losses are the only benefits, the 18-year-old faces a cost of protection of approximately $102,000 and a benefit of 31% of a day. Would you pay $102,000 to live an extra 7.5 hours? What 18-year-old values his time at $13,600 an hour? The costs for the 85-year-old are close to zero (remember, this person is probably retired) and the benefit is 65 days. To be sure, there are other costs for both groups. For the 18-year-olds, that makes protection even less of a good deal. The 85-year-old, by contrast, may be willing to endure more risk for the sake of time with loved ones. In hindsight, the 18-year-old should have invested only minimally in protection; the costs exceeded the benefits. Work, school, sports and socializing should have continued, perhaps with some minor precautions. But the 85-year-old should have worked hard to protect himself—the benefits exceeded the costs. SARS-CoV-2 is highly discriminatory and views the old as easy targets. Had policy makers understood the enemy, they would have adopted different protocols for young and old. Politicians would have practiced focused protection, narrowing their efforts to the most vulnerable 11% of the population and freeing the remaining 89% of Americans from wasteful burdens. Mr. Hooper is president of Objective Insights, a firm that consults with pharmaceutical clients. Mr. Henderson, a research fellow with the Hoover Institution, was senior health economist with President Reagan’s Council of Economic Advisers.   (0 COMMENTS)

Capla-Con, my annual festival of nerdity, is in Austin this year, June 12-13, and I’m humbled by how many friends are making the trek.  By the power of Steve Kuhn, we’ll be gathering at Dreamland, noon-midnight both days.  All EconLog readers welcome! As a result, I’m tweaking the Book Club schedule for Huemer’s Knowledge, Reality, and Value.  New plan: June 7 – My reply to readers on Part 1 June 8 – My commentary on Part 2 Later that Week – Huemer replies on Part 2 June 16 – My reply to readers on Part 2 June 21 – My commentary on Part 3 Later that Week – Huemer’s and my replies on Part 3 June 28 – My commentary on Part 4 Later that Week – Huemer’s and my replies on Part 4 (0 COMMENTS)

About Bryan’s Comments Thanks to Bryan for his fair and helpful comments on part 1. There isn’t much that we disagree about. But here are some thoughts about Bryan’s comments. 1. Philosophical progress: It’s fair to say that philosophy makes slower and less impressive progress than the natural sciences, or even economics. (But not less than the other humanities and social sciences.) And there are at least some 2,000-year-old issues that are still being discussed, such as the problem of universals. Consequentialism vs. deontology isn’t one of them, though. I don’t see any discussion of that in the ancient philosophers. You can maybe trace the consequentialist/deontological debate to Hume and Kant, but they are not clear about the issue. Anyway, there is important progress on that issue, as hopefully will emerge from chs. 14-15 later: Most of the arguments I discuss there (which I consider the most important arguments) about consequentialism and deontology are of recent provenance, from the last century at most. Bryan wants to suggest, I think, that some of the philosophical progress we’ve seen is based more on social conformity than arguments. He then mentions that one could readily construct arguments for the wrongness of homosexuality. However, it remains plausible (to me) that these would be bad arguments, and that the poor quality of the arguments helps to explain why they are not popular. Social conformity can explain any given individual’s beliefs, but it doesn’t explain why the attitudes of society change in a particular direction. I don’t claim that all philosophical progress is due to evaluation of arguments, though. Much of it is about progressively overcoming biases that previously distorted our intuitions or caused us to look for arguments to rationalize those biases. 2. The terms “valid” and “sound”: A better terminology was suggested by my logic professor at Berkeley (Ernest Adams). He used “factually sound” for arguments that have true premises, “logically sound” for arguments that have premises that entail their conclusions, and “sound” (without a qualifier) for arguments that are both logically and factually sound. These terms make the right distinctions and sound like what they mean. 3. The instrumental value of truth Bryan is correct that at least some false beliefs can be useful for attaining your goals and getting along with other people. But I think there are many cases where false philosophical beliefs prevent you from attaining your goals. They can also cause you to act imprudently or immorally (whether or not you are attaining your goals). For instance, if you falsely believe in God, then you might waste your life serving a non-existent God. Or, less extremely, you might just give up a bunch of good stuff in life because of your religion. About getting along with other people: If you form false philosophical beliefs, then in some cases you may have conflicts and ruin relationships with people who are actually right (which I assume you don’t want). E.g., suppose you believe (i) racism is the most horrific, unforgiveable evil, and (ii) anyone who says that all lives matter is a racist. (I guess those are philosophical beliefs.) Then you’ll have a hard time getting along with people who say that all lives matter. Now, if beliefs (i) and (ii) are actually true, then I suppose it’s good that you’re getting those people out of your life. But if they are false, then it’s probably bad. On one level, the person who has those beliefs would “satisfy their goals” – e.g., the goal of expressing blind loyalty to their chosen social faction. But that’s sort of an unconscious goal. On a more conscious level, they don’t want to be being an asshole who makes a mockery of the concept of justice by condemning those who are honest and just. Yet their false philosophical beliefs lead them to do that. 4. Being objective I agree that there’s a distinction between the strongest arguments for opposing views and the most popular arguments. I didn’t make that clear in the text. I also agree that one should generally try to address both of these things. 6. Subjective claims The advice to avoid subjective claims (and anecdotal claims, and the advice to use weak and widely shared premises) is only a rule of thumb. Other things being equal, it’s better if you use more objective premises, rather than more subjective ones. So that’s compatible with saying that some subjective premises are acceptable. Is the rule of thumb about subjective claims redundant? I don’t think so. Consider Caplan’s two examples: (Subjective)        Being mean to children is worse than being mean to adults. (Objective)        Communist governments murdered millions of people. The second one is a better premise for an argument than the first one, right? It looks to me like that is best explained by the fact that the latter is more objective. 7. Relativism & skepticism I think skepticism is more popular than relativism among philosophers, probably because skepticism is less incoherent. However, neither is a popular view among philosophers. The great majority of epistemologists who talk about skepticism think that the goal is to explain what’s wrong with it. Only a few recent philosophers are known for defending skepticism. That includes Keith Lehrer at one point in his career, Barry Stroud (who was at UC Berkeley when Bryan and I were there), and … almost no one else. Moral anti-realists, however, are quite common. It appears that non-cognitivism (or “expressivism”) is the most popular view in metaethics. Caveat: My knowledge is mainly of the dominant culture in academic philosophy, which is that of philosophy departments at R1 universities. Here, Richard Rorty is hardly ever discussed. However, I am under the impression that lower-ranked universities have many more Continental philosophers, which would include more relativists and subjectivists. About Comments from Readers Here are some things said by readers in the comment thread, and my responses to them. (1) I was taught that an argument being valid meant something more like “If the premises are true, then it’s impossible for the conclusion to be false.” That [is], the definition of validity depended on the idea that the conclusion must follow from the premises. Both of those are also commonly stated in logic classes and textbooks. That is, three definitions are commonly given: An argument is valid iff: the conclusion follows from the premises. An argument is valid iff: if the premises are true, then the conclusion must be true. An argument is valid iff: it’s impossible that all the premises be true and the conclusion be false. Often, all three of these appear in rapid succession in the same book, and they are always treated as synonymous. #2 is supposed to be an explanation of #1, and #3 is supposed to be an explanation of #2. Later in the logic class, students will be told (as another commenter noted) that if-then statements can be analyzed as follows: If A then B = (~A v B) = ~(A & ~B) So that makes sense of how definition 3 could be equivalent to definition 2. The only problem with this is that most philosophers think the above definition of the conditional is wrong. There are many examples that seem to show this, and logic professors are well aware of that fact. That’s why, in both my undergraduate and graduate logic classes, the professor expressly acknowledged that the above was a poor account of the meaning of “if-then”. In spite of this, they go ahead and assume it when talking about the definition of “validity”. Pretty annoying, eh? Btw, there were a couple of logic mistakes in the comments … (2) That means we can restate your definition (“If the premises are true, then it’s impossible for the conclusion to be false”) as this disjunction: “Either it is impossible for the conclusion to be false, or the premises are false.” That’s a mistake; the modal operator has to take wide scope (over the whole rest of the proposition). So it should be: “Necessarily, [the conclusion is true, or at least one of the premises is false].” (3) To make the definition “better,” you need to replace if/then with if and only if … This doesn’t make the definition better. Suppose we say: An argument is valid iff: necessarily, the premises are true if and only if the conclusion is true. Then you get arguments like the following being valid: “7=7; therefore, the shortest path between two points is a straight line”, and the following would be invalid: “The sky is blue; therefore, the sky is colored.” If you take out the “necessarily”, then you get the following being valid: “The sky is blue; therefore, kittens are furry.” (4) In common English, saying “this begs the question” sounds a lot like “this makes me want to ask such and such,” which is how it is often used. But in this case, instead of dunking on the philosophical term, you dunk on the common usage. What’s different in this case? Philosophers invented the expression “beg the question”. It derives from a practice in ancient and medieval philosophy, in which you would try to prove a proposition by the Socratic method. You would ask another person questions, then try to derive the desired conclusion from the other person’s answers. The other person was supposed to answer according to their actual beliefs. In this game, there was a rule that you could not just straight out ask the person what they thought of your intended conclusion. E.g., if you’re trying to prove that the soul is immortal, you could not just say, “Is the soul immortal?” In medieval philosophy, that was known as the error of petitio principii, asking for the initial thing (i.e., asking the other person for the thing you initially set out to prove). “Begging the question” then arose as poor translation of “petitio principii”. Now, the more recent usage of the term arose due to people who had heard the phrase “beg the question” without knowing what it meant, so they apparently just assumed that it meant “raise the question” (even though this assumption made no sense given the context in which they’d heard the phrase). Then they apparently decided that they would start saying “beg the question” instead of “raise the question” because they thought they were being more sophisticated by using a less common phrase, when actually they were just being ignorant. (5) Fashionable discourse about racism often commits the fallacy of affirming the consequent. ‘If an institution is racist, it has negative disparate impact on Blacks. Institution A has negative disparate impact on Blacks. Therefore, A is racist.’ I think the people you are talking to are not saying that. A more charitable reading is that the first premise is supposed to be “If an institution has a negative disparate impact on blacks, then it is racist.” The SJW’s would also claim that you’re mistakenly thinking only of personal racism and not considering “institutional racism” or “systemic racism”. (6) Huemer seems to distrust the media for even direct observations. […] [F]or every direct observation by the media, what they say is probably true. I would be shocked if Huemer denies this, and it appears he did. I’m not sure what the commenter meant by “direct observations”. News media people rarely directly observe what they’re reporting on. Anyway, I don’t think that they commonly completely invent stories. I think there is generally a real event that resembles what they’re talking about. However, I think that the general, politically relevant impression that you take away from the story is just about completely unrelated to the impression that you’d get if you had direct, personal knowledge of the story. E.g., if two people have a dispute, the media might report a bunch of things about the dispute that are true, but the impression you get from the story about who is in the right will have no relation to the conclusion you’d draw if you knew all the facts. In the NPR case: They didn’t exactly lie, but they gave an extreme spin. Saying that a witness “recanted his testimony”, when the witness changed his claims about some incidental details of the case, is not exactly a lie. It’s just incredibly misleading, since, in the context, it suggests that what the witness recanted was the claim that the defendant was guilty, or something closely related to that. That’s my impression of how the media work. They don’t usually outright lie or fabricate factual details. But they don’t mind spinning the story so severely that you’d draw conclusions 180 degrees from the truth about the things you actually care about. (7) At least to me, it is not clear that changes in philosophical arguments against slavery and homophobia, have brought about societal changes. It might very well be the other way round. I’m confident that slavery was abolished due to the actions of abolitionists, and the abolitionists were driven by their belief that slavery was unjust. And they thought it was unjust due to good arguments (albeit perhaps pretty simple arguments). What’s the alternative view? Would it be that the abolitionist movement was impotent? Or that the abolitionists had some non-moral motive? Or that their beliefs were unfounded? Or maybe they were just intuitive, not based on arguments? Another question is whether professional philosophers were the source of the arguments. Of course, you don’t have to be a professional philosopher to be moved by philosophical arguments or to contribute to social progress, and most of the people who did those things were not professional philosophers. I expect that professional philosophers have had a relatively small role there. But here is an example involving a professional philosopher: The contemporary animal welfare movement was started mostly by philosopher Peter Singer, the author of Animal Liberation. Now, what is actually going to end factory farming is the development of synthetic meat and plant-based meat substitutes. But the development of those products is motivated by philosophical arguments – the founders of organizations like Beyond Meat, Impossible Foods, and the Good Food Institute are animal welfare and environmental advocates, and that’s what drove them to found their organizations. So that’s an example of how philosophy has a big impact on society. (8) Maybe it is plausible that there is an objective humor, but it is always directly sensed rather than a consequence of constructing a chain of arguments from intuitions. My main problem is that I just have no idea what this objective humor is supposed to be. I have no idea what funniness is, if it doesn’t have something to do with amusement, and I have no idea what amusement is if it’s not a reaction in observers. (9) ‘Covid is a deadly disease. B is an uncertain treatment for preventing Covid. If you believe in Treatment B, then you must not believe Covid is a deadly disease.’ Would that be an example of Denying the Antecedent? I don’t see how. Denying the antecedent should have the form: “If A then B; ~A; therefore, ~B.” The above has the form, “A. B. If C then you don’t believe A.” (10) Any ‘best practices’ tips  for analyzing an argument? I guess I would suggest looking at books on mistakes that people make (including my own book, and maybe some of the psychology literature on heuristics and biases), and just getting more experience reading arguments, people’s objections to them, and people’s replies to objections. (11) here is another story, from roughly 20,000 years ago. It involves 2 tribes, the Pushovers and the Pigheads. They each had their Creative Genius. One time, the Genius from the Pushover tribe comes into the cave with a burning log and says “Look, we can control fire! We can use it to cook our food, have light to work inside our cave, and stay warm during winter!” The others objected. If this was a tribe of Pushovers, why wouldn’t they all say, “Okay, sure, whatever.”? And wouldn’t the tribe of Pigheads refuse to ever try the fire? Then the story would have the opposite of your ending: the Pushovers would prosper and the Pigheads would fail. Anyway, here’s another story: The Pighead Foragers tribe decides to go look for food. They see a valley that looks auspicious, so they quickly form the belief that there will be lots of food there. They go into the valley but can’t find any food. Because they are Pigheads, they refuse to admit that they were wrong, and they keep searching in that valley until they all starve to death. The end. That’s an illustration of how dogmatism is bad for you. (0 COMMENTS)

In 2010, there was an growing problem of people abusing painkillers such as OxyContin.  Unfortunately, the steps taken to address the crisis may have made things even worse.  A 2018 NBER study by William N. Evans, Ethan Lieber, and Patrick Power showed that when the pills were reformulated to reduce drug abuse, people switched to other drugs such as heroin, which were even more dangerous: We attribute the recent quadrupling of heroin death rates to the August, 2010 reformulation of an oft-abused prescription opioid, OxyContin. The new abuse-deterrent formulation led many consumers to substitute to an inexpensive alternative, heroin. Using structural break techniques and variation in substitution risk, we find that opioid consumption stops rising in August, 2010, heroin deaths begin climbing the following month, and growth in heroin deaths was greater in areas with greater pre-reformulation access to heroin and opioids. The reformulation did not generate a reduction in combined heroin and opioid mortality—each prevented opioid death was replaced with a heroin death. In addition, the government has begun pressuring doctors not to prescribe opioid painkillers. The Economist has a graph showing that since this study, thing have gotten even worse: Notice that fentanyl deaths are now far higher than before the government began cracking down on painkiller use.  That’s because fentanyl is far more dangerous: The drug’s potency makes it easy to misjudge dosage, especially for new users without a tolerance. Increasingly, counterfeit prescription pills, resembling oxycodone tablets or benzodiazepines such as Xanax, contain fentanyl. Brad Finegood, an adviser to the public-health department for Seattle and King County, says he has seen lots of unsuspecting people casually take a fentanyl-laced pill and die. It sounds “responsible” to crack down on the abuse of addictive painkillers, but the unintended side effects may well be even worse than the original problem.  Politico has an excellent piece on the effects of cutting off pain medication to those with severe chronic pain: Last August, Jon Fowlkes told his wife he planned to kill himself. The former law enforcement officer was in constant pain after his doctor had abruptly cut off the twice-a-day OxyContin that had helped him endure excruciating back pain from a motorcycle crash almost two decades ago that had left him nearly paralyzed despite multiple surgeries. “I came into the office one day and he said, ‘You have to find another doctor. You can’t come here anymore,’” Fowlkes, 58, recalled. The doctor gave him one last prescription and sent him away. Like many Americans with chronic, disabling pain, Fowlkes felt angry and betrayed as state and federal regulators, starting in the Obama years and intensifying under President Donald Trump, cracked down on opioid prescribing to reduce the toll of overdose deaths. Hundreds of patients responding to a POLITICO reader survey told similar stories of being suddenly refused prescriptions for medications they’d relied on for years — sometimes just to get out of bed in the morning — and left to suffer untreated pain on top of withdrawal symptoms like vomiting and insomnia. More recently, the Washington Post has an article with lots of similar stories: Hank, 79, has had seven shoulder surgeries, lung cancer, open-heart surgery, a blown-out knee and lifelong complications from a clubfoot. He has a fentanyl patch on his belly to treat his chronic shoulder pain. He replaces the patch every three days, supplementing the slow-release fentanyl with pills containing hydrocodone. But to the Skinners’ dismay, Hank is now going through what is known as a forced taper. That’s when a chronic pain patient has to switch to a lower dosage of medication. His doctor, Hank says, has cut his fentanyl dosage by 50 percent — and Hank’s not happy about it. He already struggles to sleep through the night, as Carol can attest. “He’s moaning, he’s groaning, he’s yelling out in pain,” Carol says. “Why am I being singled out? I took it as prescribed. I didn’t abuse it,” Hank says. He is part of a sweeping change in chronic pain management — the tapering of millions of patients who have been relying, in many case for years, on high doses of opioids. I’m not even in favor of treating a 29-year old this way, although I can sort of follow the logic.  But let’s face it, a 79-year old who’s had lung cancer and heart disease is on his last legs.  Why can’t he live out his brief time remaining without being tortured by pain? The argument for drug regulation is that people might abuse drugs if they weren’t required to get a prescription from a doctor.  I don’t believe that the benefits of drug regulation outweigh the costs, but it’s at least a plausible argument.  But now we are saying that we don’t even trust doctors to act in the best interest of their patients. Instead, we seem to believe that DEA agents who have never met the patient should make the decision.  Here’s Politico: “I will no longer treat chronic pain. Period,” said Sue Lewis, a primary care doctor who works in an urgent care clinic in Portland, Oregon. “There is too much risk involved,” she said, adding that if a patient doesn’t take the medications as she prescribes them, they could jeopardize her license. Steven Henson, an emergency room doctor in Wichita, Kansas, described how his license was suspended after six patients illegally sold the medications he prescribed, without his knowledge. “The DEA should be working with doctors when this happens,” as opposed to punishing them, Henson said. There will never be a perfect solution to the problem of addictive drugs (including alcohol.)  We should be focusing on minimizing the damage.     In most cases, the least bad outcomes will occur when the decision making process is decentralized, with those closest to the issue making their choices.  When it comes to federal regulation, we should never lose sight of the Hippocratic oath: First, do no harm.  When I look at the soaring rate of fentanyl deaths, I suspect that our regulatory regime hasn’t even met that minimal threshold, and that’s not even counting the cost of pain that is no longer being managed. PS.  I wonder if the attempt to demonize drugmakers has contributed to our policy overreaction.  The same issue of The Economist has a review of a new book that critiques the role of the Sackler family, which controls the drugmaker that introduced and promoted OxyContin: Shiftless third-generation types are rendered with evident loathing, skilfully skewered by their own words in court or by Mr Keefe’s (anonymous) sources. One aspiring fashionista wishes an obstreperous journalist would focus less on her last name and more on the hoodies she designs. Really?  Is it unreasonable to want people to judge you on your career and not on your last name?  During the Chinese Cultural Revolution, people were punished because their parents had been capitalists.  I thought we were beyond that sort of guilt by association. (0 COMMENTS)

One of my pleasures each Memorial Day weekend is watching one or two war movies on the Turner Movie Channel. This last weekend was no exception. I’m weird that way. I hate war and wrote regularly for antiwar.com from 2005 to about 2010 and sporadically after that. Yet I like war movies. It’s similar to my loving to analyze the economics of taxation while hating taxes. The two war movies I watched this weekend were The Great Escape, which I had seen probably 8 times already, and one I hadn’t seen titled The Enemy Below. The Great Escape is my favorite kind of war movie because it’s about escape. It also brings back fond memories. Our family drove an hour from Carman to Winnipeg in 1962 to see the movie and when we returned, my mother, without ever having heard the theme song before that day, played it on the piano. When I put my father’s memorial tape together in June 1997, I put that song on the tape: it was one of my father’s favorites. My second favorite kind of war movie is one in which there are good people on both sides. The Enemy Below filled the bill. Robert Mitchum plays the captain of a U.S. destroyer who is in a deadly cat-and-mouse game with a German U-boat whose captain is played Curt Jurgens. Or maybe it’s cat and cat, since both were trying to destroy the other. The viewer gets to see the crews of both the U-boat and the destroyer and, at least in my case, sympathizes with both. I liked everyone on the U.S. destroyer and liked all but one guy on the U-boat. The guy I disliked was reading Mein Kampf in his spare time. The expression on Jurgens’s face when he sees the crewman reading Mein Kampf is priceless. Because I liked everyone, I wanted both sides to fail. I wanted Mitchum to fail at using depth charges to destroy the U-boat and I wanted Jurgens to fail at torpedoing the destroyer. I won’t tell you what happened. I like the kind of war movie in which I want both sides to make it out alive. I think it’s kind of natural that I would. What grabbed me in my teens about economics was the idea that so much of it is about transactions in which both sides gain. I recommend The Enemy Below. It’s also nicely short, running only one hour and 38 minutes. Two final observations: First, I learned a new term: feather merchant. When Mitchum arrives as the new captain after his merchant marine ship was sunk, many of the crew are skeptical and some call him a feather merchant. That term means a civilian and has the additional meaning of someone with a cushy job or without combat experience. Although Mitchum does not have combat experience, the crew quickly get to see how clearly he thinks about combat. He’s very analytic. Second, many of the U.S. crew refer to the Germans as “Nazis.” But the Nazis were a political party and while many Germans expressed fealty to Nazi views, I would bet that less than a majority of Germans were Nazis and that less than a majority of the German military were Nazis. Calling them Nazis would be like referring to U.S. sailors, soldiers, and airmen during World War II as Democrats. My uncle, who, along with my aunt, was captured by the German Navy in April 1941, referred to his captors as Nazis. I don’t blame him. He had good reasons for his resentment. Nevertheless, the term is inaccurate. (0 COMMENTS)

The Chinese government relaxed to three children per family its former limit of one child after 1979 and two after 2015 (Lyian Oi, “China Delivers Three-Child Policy, but It’s Too Late for Many,” Wall Street Journal, June 1, 2021). Standard economic analysis provides an easy justification for limiting children: a child can be viewed as a negative externality “for society” because a more numerous population imposes costs on taxpayers and, through reduced family resources for education and other factors, on economic growth. This argument has been used, sometimes via environmentalism (example: a World Bank study of 1990). This, however, mainly demonstrates the plasticity and omnipresence of externalities and the uselessness or danger of the concept itself. As I suggested before, the concept is much more ambiguous and slippery than most non-economists and even many economists believe. Externalities can mean anything and everything, from pure transfers between individuals (“pecuniary externalities”) to what some individuals like (positive externalities) or don’t like (negative externalities). If externalities are generated by your children, they may be negative externalities for certain people and positive externalities for others. The capacity to transmute all that, including forecast and discounting over time, into a meaningful “net social cost” or “net social benefit” is an illusion. Invoking the concept of externalities for public-policy purposes (with cost-benefit analysis, for example) gives rise to an even more crucial problem. Even assuming that all the costs and benefits can be calculated correctly, the benefits of a policy typically accrue to other people than to those who are forced to pay the cost. Coercing the latter (including the parents deprived from a rather elementary freedom) to provide benefits to others is not an economic decision, but at best a moral trade-off by the philosopher-king and, in practice, a purely political decision. The original one-child policy was probably based on a faulty intuition of the “net cost” of a child for the government or “for society.” Its reversal comes from a likely correct perception that a larger and younger population constitutes a “national resource,” that is, a resource for the state to plunder—notably for war and other forms of forced services to Leviathan.   (0 COMMENTS)

Two months ago, I voiced one big criticism of Richard Hanania’s excellent piece on the curiously ubiquitous institutional influence of the left: Hanania still fails to explain the sheer uniformity of left-wing cultural dominance.  Competition normally delivers more diversity than we’re getting.  And for that, I stand by my Explanation #5, which I flesh out greater detail here. Explanation #5. Discrimination law covertly stymies the creation of right-wing firms.  Most obviously, any firm that openly and aggressively opposed #MeToo and #BLM would soon be sued into oblivion. Which does raise the question: Since the right runs the government roughly half the time, why don’t they try a lot harder to defang the “discrimination laws” that do so much to cause political discrimination? In his latest piece, Hanania forcefully corrects his earlier oversight.  Indeed, this is my all-time favorite Hanania essay.  Preliminaries: Before proceeding, it is important to clarify what wokeness actually is. I’d argue it has 3 components: 1) A belief that any disparities in outcomes favoring whites over non-whites or men over women are caused by discriminatio… 2) The speech of those who would argue against 1 needs to be restricted in the interest of overcoming such disparities, and the safety and emotional well-being of the victimized group in question. 3) Bureaucracies are needed that reflect the beliefs in 1 and 2, working to overcome disparities and managing speech and social relations. Key thesis: Each of these things can be traced to law. The Civil Rights Act of 1964 banned discrimination based on race and gender. While most at the time thought this would simply remove explicit discrimination, and many of the proponents of the bill made that promise, courts and regulators expanded the concept of “non-discrimination” to mean almost anything that advantages one group over another. How discrimination law unfolded: As the government invented new standards for what counts as “discrimination,” it was forcing more aggressive action on the part of the private sector. Executive Order 11246, signed by President Johnson, required all government contractors and subcontractors who did over $10,000 in government business to “take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex or national origin.” The category of “sex” was added in 1967. In 1969, Richard Nixon signed EO 11478, which forced affirmative action onto the federal government itself. Across the federal government and among contractors, affirmative action assumed that “but for discrimination, statistical parity among racial and ethnic groups would be the norm.” Government interpretation of the Civil Rights Act also invented the concept of the “hostile work environment.” UCLA law professor Eugene Volokh has written about how this has been used to restrict free speech. The blight of HR: The rise of HR departments can be directly traced to the federal government’s race and gender policies, which involve direct control of the federal bureaucracy, the “carrot” of government contracts, and the “sticks” of EEOC enforcement and lawsuit threats. As Harvard sociologist Frank Dobbin wrote in Inventing Equal Opportunity, it was civil rights law that revolutionized the American workplace. Corporations started to hire full time staff in order to keep track of government mandates, which were vague and could change at any moment. There was a sense of “keeping up with the Joneses,” in which every company and institution had to be more anti-racist and anti-sexist than the next one, leading to more and more absurd diversity trainings and other programs. To decide whether an institution had discriminated against a protected group, courts and regulators would often use a “best practices” approach, meaning that if your competitors adopted the latest fad coming out of academia or the HR world, you felt the need to do the same. What is to be done?  Deregulate!  While it’s hardly a full remedy, at least deregulation allows alternatives to the current business orthodoxy to flourish: The punchline of all this is that an anti-wokeness agenda would involve, at the very least, 1) Eliminating disparate impact, making the law require evidence of intentional discrimination. 2) Getting rid of the concept of hostile work environment, or defining it in extremely narrow and explicit terms, making sure that it does not restrict political or religious speech. 3) Repealing the executive orders that created and expanded affirmative action among government contractors and the federal workforce. One reason to be optimistic is that much of this work can be done without having to pass laws, which is almost impossible to do on controversial issues in the current environment, but through the executive branch and the courts. Brilliant: Understanding that wokeness is law may be able to help us get at the question of why conservatives are less motivated to be politically engaged than liberals. It’s not an exaggeration to say that conservative views on race and gender are often of questionable legality in the workplace. Even if conservatives cared as much as liberals, the state is always there with its thumb on the scale, having helped construct bureaucracies inside and outside government that create incentives against expressing certain beliefs or building institutions that are managed in ways that offend left wing officials and activists. The result has been a kind of learned helplessness. Not only do conservatives feel like they can’t influence institutions, but Republican leaders haven’t even made the argument that they can ever actually change things. I’ve repeatedly argued that ADHD makes democratic politics less dysfunctional.  Five years ago, Republicans focused on immigration, the critical issue where they are most wrong.  During Trump’s term, however, they failed to permanently change immigration law.  Yet thanks to ADHD, they’re moving on to a new top issue.  And this time, they’re moving in the right direction.  I doubt Republican strategists will actually follow Hanania’s advice, but hopefully they’ll prove me wrong.   When regulation is out of control, deregulation is the obvious remedy.  And discrimination law really is out of control. (0 COMMENTS)