This caught my eye: [Arindrajit] Dube responds that “one has to be honest about not knowing what would be the impact in every place.” But he points to 2019 research by Anna Godoey and Michael Reich of the University of California at Berkeley, who found that increases in state minimums didn’t hurt employment even in low-wage counties where the new floor equaled 82% of the prevailing median wage. And even if a high minimum wage does kill some jobs—as many studies, though not Dube’s, show it would—it can still be worthwhile if it raises incomes of low-wage families overall, he says. Some experts say that as with free trade, which helps more people than it hurts, any losers could be made whole with government assistance. Yes, free trade is an excellent analogy for labor market policy, but not for the reasons cited by Peter Coy in this Bloomberg article. Economists typically evaluate issues from both an equity and efficiency perspective.  Many economists favor policies that maximize efficiency (making the pie as large as possible), combined with some redistribution to compensate the losers.  Thus they favor free trade, combined with a program to help workers that lose their jobs due to import competition. Oddly, Peter Coy seems to think this analogy points in the direction of boosting the minimum wage.  Exactly the opposite is true.  If we wanted to match the standard economic approach to international trade, we’d abolish the minimum wage and replace it with some sort of subsidy for low wage workers.  Even if that were politically impossible, you would definitely not want a $15 minimum wage.  A much superior policy would be a $10 minimum wage combined with a $5/hour wage subsidy, where the subsidy phases out at the rate of 50 cents/hour for each $1/hour pay raise, ending entirely when pay reaches $20/hour. (Teenagers could be excluded from the subsidy, if they are not living independently.) I’m not saying this would be ideal (I’d prefer no legal minimum), but it would be much more in the spirit of the “free trade plus compensating the losers” analogy that Coy uses to justify a higher minimum wage. It would be aimed at making the pie as large as possible, while compensating the less fortunate. (0 COMMENTS)

“I am convinced that if it were the result of deliberate human design, and if the people guided by the price changes understood that their decisions have significance far beyond their immediate aim, this mechanism would have been acclaimed as one of the greatest triumphs of the human mind.” ~ FA Hayek, The Use of Knowledge in Society   The price system is one of the greatest, and most understood, elements of society. Prices drive market exchange. They tell us who wants what and how much of it they want it, and they give others a reason to supply it. The ways in which prices and markets guide human interaction are endless and fascinating. Anyone who has taken Econ 101 knows – or should know – that market exchanges are based on mutual benefits. If I want a cup of coffee more than I want $2, and you want $2 more than a cup of coffee, an exchange takes place and we’re both better off. The purchase of a coffee is an example we’re all familiar with. But an interesting feature of markets is that it’s not always clear who should pay whom. How much is the old couch in you garage worth? Maybe you could get $50 for it. Maybe it would be taken if you left it by the curb with a “FREE” sign. Maybe you’d have to pay for two guys with a truck to come and haul it to the dump. Which brings us to the Super Bowl halftime show. The NFL needs a big musical artist to perform. Viewers have come to expect a big show, and many of them aren’t actually that interested in the football game. A promising up-and-comer with a niche following just won’t do. The big game needs a big star. The performer who takes the stage at halftime is guaranteed a massive audience –more than 100 million– plus lots of media coverage. Even globally known artists like Jennifer Lopez, Shakira, and Maroon 5 have seen increased sales and streams following a Super Bowl performance, enough to put millions of dollars into their pockets. So should the NFL pay an artist to perform? The singers and bands who are offered this opportunity typically earn hundreds of thousands for every show they do. Or perhaps the artist values the opportunity enough that they should pay the NFL? A 30-second advertisement during the Super Bowl goes for upwards of $5 million. At that rate a 15-minute show provides exposure worth over $150 million! In recent years the solution has been that the musical artists play for free and the NFL and its sponsors pay for the costs of producing the show – estimated to be upwards of $10 million. It’s a simple solution that avoids haggling over fees and writing checks. Some performers do turn down the opportunity, but there doesn’t seem to be a shortage of rock, pop, and rap stars for whom “nothing” is the right price. But what if someone is leaving money on the table? If 15-minutes during one of the most-watched events of the year is really worth $150 million, then musicians and their labels should be shelling out for the opportunity. But perhaps the rules of marketing soft drinks and cars don’t apply to music. The NFL spends tens of millions of dollars organizing the Super Bowl. Shouldn’t they be willing to pay a million-dollar performance fee to have just the right entertainment at halftime, rather than insisting on someone who will play for free? Wouldn’t the most popular artists in the world demand such a fee if they believed they could get it? Well, it turns out that The Weeknd paid $7 million to perform at Super Bowl LV. The singer “spent almost $7 million of his own money beyond the already generous budgets to make this halftime show be what he envisioned,” his publicist told the New York Post. Perhaps The Weeknd is just an uncompromising artist with a specific vision for what his turn on one of the world’s biggest stages should look like. But perhaps he knew that compared to the immense value of the air time he was receiving, $7 million was a relative bargain and a shrewd investment in his brand. It will be interesting to see what happens in future years. Some candidates for next year’s show might be willing to work with the NFL for free, but the ones who really want it may have to show them the money.   Matt Bufton co-founded the Institute for Liberal Studies in 2006 and has served as the Executive Director since 2010. (0 COMMENTS)

Jeff Bezos stepping down from being CEO of Amazon (or stepping up, as he remains President) has been the object of many articles. I have particularly enjoyed this piece from the Wall Street Journal, by Lauren Weber. Weber highlights a few fascinating points in Bezos’ management style. Mr. Bezos says he goes to bed early, rises early and schedules “high IQ” meetings before lunch, all in the service of making a few clear, smart decisions each day, he told an audience at the Economic Club of Washington in 2018. “If I have three good decisions a day, that’s enough,” he said. “They should just be as high quality as I can make them.” Mr. Bezos frequently attributes Amazon’s success to the company’s obsession with giving customers what they want. From Amazon’s early days, he would place an empty chair in meetings to prod executives into thinking about how their decisions would affect customers, he recounted in the Economic Club of Washington interview. And when Mr. Bezos considered expanding the business beyond books and music, he emailed a random group of 1,000 customers, asking what they wanted to buy on the site. From their responses, he concluded he could sell just about anything on the internet—which is exactly what he’s done. … The company abandons patent applications at a higher rate than others, a sign of its commitment to move past obsolete technology. Mr. Bezos himself is named on dozens of Amazon patents. “If you get it right, a few years after a surprising invention, the new thing has become normal. People yawn. And that yawn is the greatest compliment an inventor can receive,” Mr. Bezos wrote to employees on Tuesday, referring to Amazon innovations such as customer reviews, Alexa and one-click shopping. … Mr. Bezos is well-known for his insistence that meetings be productive. To facilitate that, he requires presenters to write a memo, no longer than six pages, that is circulated and silently read at the start of a meeting by everyone present. … Employees have said they spend weeks perfecting their memos, a process that sharpens ideas and improves decision-making and discussion. This is not a comprehensive analysis of Bezos’ management genius, but these are still interesting bits that make you think. In any organization, it is very easy to become complacent and let inertia run things. Bezos knew that and confronted it, at a variety of levels. I am sure his success has been imperfect. Still, I can see his story and tips like this inspiring entrepreneurs all around the world. (0 COMMENTS)

  A few weeks ago, Virginian Audrey Redford, an assistant professor of economics at Western Carolina University, learned that the Virginia House of Delegates solicited open comments on a bill to end qualified immunity in Virginia. The comments would be read aloud to the delegation. So she wrote a comment.  The bill failed by a considerable margin, but she got some satisfaction from knowing that someone read her statement to the delegates. Here it is. Qualified immunity completely alters the incentive structure for law enforcement officers. It presents a significant moral hazard problem to the community. The inability to punish an officer who misbehaves and harms members of the public creates significant distrust in the community. In no other occupation is an individual protected for “doing their job” when they wantonly step outside of what is permissible. If policymakers are at all concerned with “weeding out the bad apples” in policing organizations, this is the way to do it. The claim that policing is so dangerous that it requires officers to sometimes act in egregious ways is false. The BLS and other non-partisan organizations consistently show that many occupations are significantly more dangerous than policing, including garbage collecting. [DRH note: also farming.] Yet the same immunity is not offered to them. In reality, policymakers afford law enforcement officers such an exception because they are a powerful interest group. They lobby effectively and raise significant funds for their preferred elected officials. To the many delegates who claim to not be in the pocket of any interest group, I implore you to examine the true motivations of why you might be opposed to passing such a bill that protects villains with badges in the community. Law enforcement officials ask ordinary citizens all the time, “if you’re not breaking the law, what do you have to worry about?” Now is the time to hold them to the same standard. Who, if not you, will guard the guardians? I suspect that if legitimate means to resolve this imminent issue are not taken, the community will step in and find a way to solve it for themselves. However, delegates, that may mean they find alternatives outside of the political sphere to stand up for themselves, and we know the government doesn’t like competition.     (0 COMMENTS)

In much of San Francisco, you can’t walk 20 feet without seeing a multicolored sign declaring that Black lives matter, kindness is everything and no human being is illegal. Those signs sit in yards zoned for single families, in communities that organize against efforts to add the new homes that would bring those values closer to reality. Poorer families — disproportionately nonwhite and immigrant — are pushed into long commutes, overcrowded housing and homelessness. Those inequalities have turned deadly during the pandemic. This is from Ezra Klein, “California Is Making Liberals Squirm,” New York Times, February 11, 2021. I like large parts of this Klein article, which is unusual for me. One thing I’m seeing is that there seems to be an alliance among libertarians, liberals like Ezra, and a few others to reduce government restrictions on housing. Last month I finished a review of Conor Dougherty’s excellent book Golden Gates: Fighting for Housing in America. It will come out next month in the Spring edition of Regulation. Dougherty delves nicely into some of the somewhat hopeful signs for housing in America. I don’t endorse everything Klein says in the op/ed, especially on the Central Valley’s middle-speed rail, euphemistically called high-speed rail. But there’s a lot of good stuff in the piece. By the way, in Pacific Grove, where I live, you can walk 20 feet without seeing the sign he sees, but it’s hard to walk 200 feet without seeing such a sign. HT2 Glenn Reynolds.   (0 COMMENTS)

Co-blogger Bryan Caplan’s post this morning on collective guilt and the subsequent discussion in the comment section reminded me of something that happened my first day of a microeconomics class in 2001. At the end of the opening class, a number of people came up to ask questions. One was a young black woman who said, “Professor, what do you think of reparations for slavery?” I answered, “I promise I’ll answer but first I want to know what you think.” She said, “I favor them.” “And those reparations would be paid for by white people?” “Yes,” she answered. I turned to a white guy who was waiting to ask a question, and I took a risk. “Where are your grandparents from?” I asked. “The Netherlands,” he answered. I then turned back to the woman who had asked and said, “I’m ready to answer you. His grandparents came to this country well after slavery had ended. I think it’s wrong for the government to tax people who didn’t even inherit wealth from slavery to give to the great, great grandchildren of former slaves.” Note: Of course it’s possible that his grandparents inherited wealth from their predecessors having had slaves in the Netherlands. I don’t know the history of slavery in the Netherlands. But the odds that they gained big time and came to the United States as wealthy people were probably pretty low. (0 COMMENTS)

In the 21st century, macroeconomics is entering a new Dark Ages. We seem to be forgetting much of what we learned in the last half of the 20th century. That judgment may be harsh, but if I’m wrong then you should no longer read anything I write (including the book I have coming out this year), because in that case I wouldn’t actually know anything useful about macroeconomics. Perhaps the most firmly established proposition in late 20th century macroeconomics is that the Great Inflation of 1966-81 was caused by central banks printing too much money. If that proposition is wrong, then I might just as well give up. Everything else I believe about macro hinges on that being true. If the Great Inflation wasn’t caused by too much money, then what can macroeconomics tell us about the world? 1. Hockey sticks, wherever you look People often talk about “hockey stick” graphs.  Deirdre McCloskey using that metaphor for the explosion in real incomes in recent centuries.  Demographers use it for the Earth’s population.  Environmentalists use it for carbon emissions.  Tech people for gigabits of information.  And there’s also a hockey stick graph for the US price level, as well as the price level of many other developed countries.  The US price level was fairly flat during the first 150 years of US history, and then exploded upward 20-fold after 1933. Back in 1752, this was all explained by David Hume.  Out-of-sample forecasting is the gold standard of model success, and by that standard Hume might be the greatest macroeconomist of all time.  Of course he didn’t use modern terminology like “nominal GDP”, but if you translate his core argument into modern lingo, it goes something like this (my words): A large exogenous increase in the money supply will cause a roughly proportional increase in NGDP.  There would not be a precise correlation, as velocity moves around as well.  Because real growth is caused by non-monetary factors, excessive growth in money will simply lead to inflation, as NGDP growth outpaces RGDP growth. During the first 150 years of US history, the monetary system was commodity based (bimetallic and then a gold standard.)  That kept money growth close to the rate of growth in RGDP, and hence there was almost no long run inflation (although prices moved up and down erratically around a near-zero inflation trend line.) Then we tried Hume’s experiment.  After many decades of fixing the price of gold at $20.67/ounce, we let it rise sharply.  Today it’s over $1800/oz.  We used that freedom to print lots of money, and as the monetary base began rising much faster than RGDP, inflation also took off.  The numbers were pretty much what Hume would have predicted.  And most of the “anomalies” were explained during the 1950s, 1960s and 1970s by economists doing technical research into what caused shifts in money demand.  The one thing Hume didn’t predict is the advent of interest on bank reserves in 2008, which caused the relationship between the money supply and inflation to weaken.  But that wasn’t a factor during the Great Inflation. 2.  The Great Forgetting Doug Irwin directed me to a recent paper by Itamar Drechsler, Alexi Savov, and Philipp Schnabl on the Great Inflation.  Here’s the abstract: We propose and test a new explanation for the rise and fall of the Great Inflation, a defining event in macroeconomics. We argue that its rise was due to the imposition of binding deposit rate ceilings under the law known as Regulation Q, and that its fall was due to the removal of these ceilings once the law was repealed. Deposits were the dominant form of saving at the time, hence Regulation Q suppressed the return to saving. This drove up aggregate demand, which pushed up inflation and further lowered the real return to saving, setting off an inflation spiral. The repeal of Regulation Q broke the spiral by sending deposit rates sharply higher. We document that the rise and fall of the Great Inflation lines up closely with the imposition and repeal of Regulation Q and the enormous changes in deposit rates and quantities it produced. We further test this explanation in the cross section using detailed data on local deposit markets and inflation. By exploiting four different sources of geographic variation, we show that the degree to which Regulation Q was binding has a large impact on local inflation, consistent with the hypothesis that Regulation Q explains the observed variation in aggregate inflation. We conclude that in the presence of financial frictions the Fed may be unable to control inflation regardless of its policy rule. I’m going to annoy almost everyone here, so let me apologize in advance.  I realize that these authors are now in the mainstream and that I’m a hopeless dinosaur.  It’s a perfectly fine paper by conventional standards. Nonetheless, I can’t get past the very first sentence of the abstract.  Why do economists think it’s a good idea to propose a new explanation for the Great Inflation?  Imagine a physics paper that began by noting that while Isaac Newton had already proposed a theory for why feathers and steel balls fall at the same rate in a vacuum tube, the authors were about to provide a “new explanation”.  Why? As I got into the paper, my frustration only increased.  I expected them to push back on what I thought was the standard theory, the idea that the Great Inflation was caused by the Fed aggressively increasing the money supply.  Instead, they suggest that the standard explanation is that the Fed failed to act aggressively to stop the Great Inflation, which presumably happened for some other unnamed reason: The standard narrative of the Great Inflation places much of the blame on the Federal Reserve. By failing to act aggressively enough, the Fed had allowed inflation to get out of hand and squandered its credibility with the public (Clarida, Gali and Gertler, 1999). The loss of credibility raised inflation expectations, which made inflation accelerate further. Now you might argue that an aggressive rise in interest rates would have reduced money growth, but that just annoys me in two other ways.  First, it confuses cause and effect.  Prior to 2008, the Fed raised interest rates by reducing money growth, not vice versa.  Second, it ignores the income and Fisher effect, and more broadly the NeoFisherian perspective.  The Great Inflation happened partly because the Fed had forgotten Humean economics, the idea that inflation is caused by printing too much money.  Instead, the Fed wrongly thought that the high interest rates of the late 1960s and the 1970s were a tight money policy.  It was not. And it’s not just these three economists.  A week ago I quoted Paul Krugman: The truth is that I’ve always been a bit uneasy about the standard story of inflation in the 1970s, even though it seemed to fit the prediction of clockwise spirals. My uneasiness came from the sense that the economy never seemed to run hot enough to explain such a big rise in inflation. I actually remember the 70s! And while there were years of good job markets, they never felt as good as the 60s, the late 90s, or 2019. Krugman’s “standard story” is not printing money, it’s not an unaggressive Fed, it’s not even Regulation Q.  Rather Krugman suggests that the standard story of the Great Inflation is the Phillips curve model—high inflation is caused by low unemployment (a hot economy).  But while the Phillips curve may have some limited ability to account for negative inflation/unemployment correlations at business cycle frequencies, it tells us precisely nothing about long run inflation dynamics (or, as Lucas (1975) showed, cross sectional differences in inflation.)  And the Great Inflation was a long run phenomenon.  There were four recessions between 1966 and 1982.  The economy certainly ran “hot enough” in NGDP growth terms to fully explain the Great Inflation. More broadly, the Great Inflation is clearly just an extreme event embedded within a much greater Great Inflation of 1933-2020, when the CPI rose 20-fold.  I cannot emphasize enough that this was a monetary event.  Unemployment wasn’t substantially different during the gold standard era than during modern times, indeed it was lower during 1923-29 (a period of roughly zero inflation) than during the 1970s, a period of high inflation.  The price level is 20 times higher in 2020 than 1933 (after essentially no change in the previous 150 years) because we printed a lot of money, not because of anything to do with Phillips curves or Regulation Q. 3.  Cognitive illusions, everywhere you look Since the high inflation on the right side of the price level hockey stick was clearly due to monetary policy, why wouldn’t we have expected a sharp acceleration of money growth in the 1960s to lead to a sharp acceleration of inflation?  Why did we forget the monetary theory of inflation and begin seeking other explanations? I see three explanations, each of which plays a role: 1. Too much focus on Phillips curve models, which should not be used to explain persistent changes in inflation. 2.  Too much focus on interest rates as an indicator of whether money is easy or tight.  This makes it look like monetary policy doesn’t play much of a role, as high interest rates usually occur during periods of high inflation, and vice versa. 3.  Incorrect predictions of inflation by monetarists and others when the Fed adopted quantitative easing, as pointed out by the authors of the Regulation Q study: Scholars of the Great Inflation, such as Allan Meltzer (2009; 2013) and John Taylor (2009), worried that low interest rates and Quantitative Easing would lead to a repeat of the 1970s. Lots of monetarists underestimated the impact of the 2008 decision to begin paying interest on bank reserves, which weakened the link between money growth and inflation.  Hume’s amazing “out-of-sample” success that had lasted for 256 years came to an end in 2008. I can’t really blame younger economists for finding the monetarist view of inflation to be hopelessly outdated.  Even before 2008, the Fed was already targeting interest rates.  Lots of economists don’t even know that (prior to 2008) the monetary base was 98% currency (the stuff in your wallet) and that the Fed moved interest rates by adjusting the quantity of base money, which as a practical matter meant adjusting the supply of currency. Almost every aspect of our monetary system was designed to hide what’s actually happening.  Even though the base was 98% currency in 2007, and even though almost all new base money quickly went out into circulation as currency, the new money did initially enter the system as electronic bank reserves.  And even though the Fed controlled inflation by controlling the monetary base, they did so by moving the base to a position that moved interest rates to a position that was expected to lead to 2% inflation.  In that regime, it’s easy to ignore money entirely, even though it was the money printing that was actually causing the inflation. After 2008, it became even easier to ignore money.  With the payment of interest on reserves the Fed no longer even had to adjust the monetary base in the background in order to move interest rates.  Now they could simply adjust IOR to move rates directly. Like journalists, economists are seduced by power.  Once the powerful central bankers decided to focus on interest rates, macroeconomists decided that interest rates were the appropriate monetary variable for their models.  The more “money-less” your model, the more sophisticated and up to date it seemed.  What sounds more appealing to young economists, Michael Woodford’s futuristic vision of a cashless economy, or my reactionary obsession with the old days when the currency stock was more important? Again, if you can show me that this post is wrong, and that the Great Inflation was not caused by printing money, then I’ll just give up.  I’ll quit my job, I’ll stop blogging, and I’ll publicly apologize to all my former Bentley students, as it would mean that almost everything I taught them for 30 years was wrong.  My entire view of macroeconomics is predicated on monetary policy driving nominal aggregates. In my view, the “money printing caused the Great Inflation” hypothesis is not a theory in the sense that the man on the street uses the term theory (unproven hypothesis), it’s a theory in the sense that scientists use the term when discussing well established models like evolution. (0 COMMENTS)

Here’s an excerpt from my book-in-progress, Poverty: Who To Blame. After “Don’t blame the victim,” the second-most obvious maxim for blame is, “Only blame the perpetrators.”  Precisely who, though, are the “perpetrators”?  Another deep criticism of my approach is that I blame too narrowly.  Instead of concentrating blame on specific wrong-doers, we should blame large swaths of society – or even whole countries.  To my ears, this echoes a blood-curdling passage from Deuteronomy: If you hear it said about one of the towns the Lord your God is giving you to live in that troublemakers have arisen among you and have led the people of their town astray, saying, “Let us go and worship other gods” (gods you have not known), then you must inquire, probe and investigate it thoroughly. And if it is true and it has been proved that this detestable thing has been done among you,  you must certainly put to the sword all who live in that town. You must destroy it completely, both its people and its livestock.[i] While most moderns would deny any affinity, the Deuteronomic mentality is alive and well.  In wartime, citing an offending government’s actions to rationalize collective punishment of its citizens is the default.  Japan attacked Pearl Harbor, so the people of Japan have only themselves to blame when we firebomb Tokyo.  Hamas won’t make peace with Israel, so the inhabitants of the Gaza strip have only themselves to blame for the ongoing blockade.  Israel won’t leave the West Bank, so Israeli citizens have only themselves to blame for terrorist attacks.  Even in peacetime, though, collective blame occasionally surfaces.  Many wish to exclude immigrants because of the crimes of a handful of people from the same country or religion.  And in recent years, collective blame for “structural” or “institutional” racism and sexism has become common in progressive spaces – especially college campuses.  The core idea is that a white male can’t hold himself blameless for racism and sexism merely because he personally is neither racist nor sexist. Can an idea with such broad appeal really be wrong?  What is telling is that barely anyone endorses all or even most appeals to collective blame.  Those who invoke it do so selectively.  Indeed, they normally invoke it nepotistically; when my cause or my group suffers, we are entitled to blame loosely.  Historian Stephen Roberts once quipped: “I contend that we are both atheists. I just believe in one fewer god than you do. When you understand why you dismiss all the other possible gods, you will understand why I dismiss yours.”  Similarly, I contend that those who insist that “We are all guilty” dismiss almost as many forms of collective blame as I do.  I just dismiss their carve-outs too. [i] Deuteronomy 13:12-15.  These are odd injunctions even in the context of fanatical religious intolerance.  At least some adults in an entire town would have remained true to Yahweh; and what about townsfolk too young (or too senile) to detect apostasy?  Later books of the Bible take these questions to heart, firmly switching from collective to individual responsibility: Yet you ask, “Why does the son not share the guilt of his father?” Since the son has done what is just and right and has been careful to keep all my decrees, he will surely live.  The one who sins is the one who will die. The child will not share the guilt of the parent, nor will the parent share the guilt of the child. The righteousness of the righteous will be credited to them, and the wickedness of the wicked will be charged against them. (Ezekiel 18:19-20) (0 COMMENTS)

Yesterday I watched a debate between Phil Magness and Jeremy Horpedahl on lockdowns and liberty. Phil is a senior research fellow at the American Institute for Economic Research and Jeremy is an assistant professor of economics at the University of Central Arkansas. The debate was sponsored by the University of San Diego’s Center for Ethics, Economics, and Public Policy and the Center for Health Law Policy and Bioethics. The moderator was Dov Fox, Professor of Law and Herzog Endowed Scholar at USD. I had expected a debate about lockdowns, with Phil arguing against and Jeremy arguing in favor, but that’s not what it turned out to be. Phil did argue against, but Jeremy didn’t argue in favor. I tend to take copious notes and here’s what I wrote down from Jeremy’s opening statement. This is not word for word, but it’s close. Lockdowns are general shutdowns of non-essential industries. There are two problems with lockdowns. First, they are very strong restrictions on people’s liberty. Second, all the lockdowns did was delay infections. These restrictions did very little good and a lot of harm. We should shut down where there’s an outbreak. On the last sentence above, Jeremy gave the example of his own University, where 20% of the tests were positive the first week of classes in January and so they shut down for just a week. So the impression I got was that Jeremy believes only in localized shutdowns that last a short time. This is nothing like the lockdowns that we in California have to deal with. In fact, Jeremy stated that most states had abandoned lockdowns within a month of imposing them and it was only rare states like California that sustained them for 10 months. In short, both Phil and Jeremy strongly oppose the extensive lockdowns we have had in California. I was gratified to hear that. I had to leave the debate at 5:12 p.m. and so it’s possible that in Q&A Jeremy made stronger statements in favor of lockdowns but I think I’ve stated the views I heard accurately. Much of the discussion was about masking and there were real differences between the two debaters about mask mandates. I’ll deal with that in a separate post. One thing I liked was the civility of the discussion. Jeremy went first and set the tone by referring to Phil as his friend. Some debaters say this kind of thing and then go on to show that the person isn’t their friend at all, but that’s not what happened. Jeremy seemed genuinely friendly as did Phil in response. I’ll update with a link to the recorded debate once I get one. (0 COMMENTS)

Following up on information that Covid-19 vaccines were available there, I walked into the small Maine pharmacy. I saw nobody inside, not even at the cash register. I continued to the back of the store: nobody manned the two counters of the pharmacist’s hideout. I stood in front of one. After just a few minutes, an employee appeared on the other side. “Could I see the pharmacist?” I asked. The pharmacist came. “I have been told that you have Covid vaccines,” I said. “We have a waiting list,” she replied. I asked to be put on it but she would not, or could not, tell me when they were likely to phone me for an appointment. I recognized something like the Canadian health system, under which I lived for decades. “Is it a matter of days, weeks, months, or years,” I asked. “Days. At least.” That looked good, except for the “at least.” In some of the on-line and mortar-and-brick places, there is not even a queue you can get at the back of. At this stage, the actual vaccines don’t seem to be the problem. In the United States, the manufacturers have delivered twice as many vaccines as have been administered. According to the Wall Street Journal (Jared S. Hopkins and Arian Camp-Flores, “Demand for Covid-19 Vaccines Overwhelms State Health Providers,” February 8, 2021), [a]lthough state officials often cite limited vaccine supply, manufacturers are producing largely on schedule. Pfizer Inc. and Moderna Inc. since December have supplied about 60 million doses, nearly one-third of the 200 million the companies together must deliver by the end of March. State governments are supposed to distribute the vaccines that the federal government, after literally monopolizing the market, makes available to them. The length of the queues varies from place to place, perhaps depending partly on the success of whatever entrepreneurship can creep into what is basically a socialized distribution system. One Missouri hospital has a waiting list of 100,000 names and no vaccine left. Queues are not an efficient way to ration demand. In the former Soviet Union, the government always had an excuse for shortages. The real problem was different: no private property, no market prices to signal scarcities, and no free entrepreneurship to respond to the signals. In America, once the federal government has purchased them, the Covid vaccines are priced at zero, which implies that government allocation is required. At a zero price, demand is much larger than the quantity that bureaucrats can supply. The fee governments pay providers (hospitals, pharmacies, and such) for administering the vaccines may not be higher than the latter’s cost. For example, Medicare pays about $40 for administering the two doses of the currently available vaccines. In a flash of economic realism, Joe Biden has expressed some concern that this fee may not be sufficient. It is no consolation that all governments in the “free” world have adopted similar policies. No “American exceptionalism” here. For Soviet agricultural production, the weather was often the excuse. For Covid vaccines, we are told that “the supply chain” and logistics are the problem. The Wall Street Journal‘s Jennifer Smith reported (“Mass Vaccination Sites Will Mean Scaling Up Logistics Coordination,” January 30, 2021): Other local health departments might need information technology help to cope with overwhelmed appointment systems, or assistance with planning and sourcing the labor, supplies and procedures needed to administer hundreds of shots a day. “People underestimate that this is a massive logistics operation,” Dr. Wen said. “That type of expertise is often missing in state and local public health.” But except for governments—that is, political and bureaucratic processes—that should not be an unsurmountable logistics problem. Private businesses without central coordination produce and deliver the food, in innumerable configurations, for the daily meals of 320 million Americans. Recall the Russian official who, shortly after the collapse of the Soviet Union, asked British economist Paul Seabright, “Who is in charge of the supply of bread to the population of London?” In 2020, Amazon shipped 4.5 billion packages to American consumers—more than 12 million per day. The UPS hub in Louisville, Kentucky has a five-million-square-foot facility for sorting and treating more than 400,000 packages or documents per day. The hub sees 387 inbound or outbound flights daily from the company’s fleet of nearly 600 aircraft. What is more impressive is to think of the millions of individuals around the country and around the world who work in long and diverse supply chains to provide the equipment and inputs necessary for UPS’s operations. We are reminded of Leonard Read 1958 essay I, Pencil, which explains how the manufacture of a simple pencil requires the voluntary cooperation of a multitude of individuals producing, without a mastermind, the zinc, the copper, the graphite, and the equipment to make pencils out of that, and all the equipment for producing that equipment, and so on. Although working under no central direction, these innumerable people who contribute to the production of pencils or UPS’s equipment and supplies are coordinated by markets (supply and demand) and the prices that signal what is needed where. Compare this to the federal government’s “centralized system to order, distribute, and track COVID-19 vaccines” in which “all vaccines will be ordered through the CDC” (see the description by Anthony Fauci’s shop: COVID-19 Vaccine Questions and Answers, accessed February 10, 2021), the price for the final consumer is zero, and providers are paid fees determined by bureaucrats. No wonder the distribution runs into problems. The contrary would be surprising. Note that the vaccine could still be free for the final customer if the federal government had simply subsidized consumers for their vaccine purchases (with vouchers, for example) and had let markets, entrepreneurship, competition, and prices distribute the stuff. And it wouldn’t take ages, luck, and some humility to put one’s hands on the thing—or one’s arm under the syringe. The consumer who wants a vaccine gets a small taste of what French philosopher Raymond Ruyer, in his 1969 book Éloge de la société de consommation (In Praise of the Consumer Society), described as the difference between a market economy, where the consumer is sovereign, and a planned economy, where the producer runs the show (under government’s control): In a market economy, demand gives orders and supply is supplicant . . . In a planned economy, supply give orders and demand is supplicant. « Dans l’économie de marché, la demande est impérieuse, et l’offre suppliante (the supply is supplying). Dans l’économie planifiée, l’offre est impérieuse, et la demande suppliante. » (0 COMMENTS)