The Government Response to Corona: A Childlike Inability To Consider Tradeoffs
The Terrible Economic Ignorance Behind Covid Tradeoffs: My Speech to the Ron Paul Institute
September 8, 2021
This article is excerpted from a talk delivered at the Ron Paul Institute conference on 4 September 2021.
Introduction
Some of you may know the name Alex Berenson, the former New York Times journalist who comes from a left-liberal background. He has been absolutely fearless and tireless on Twitter over the past 18 months, documenting the overreach and folly of Covid policy– and the mixed reality behind official assurances on everything from social distancing to masks to vaccine efficacy. He became a one-man army against the prevailing Covid narratives.
Mr. Berenson is famous for creating a viral (no pun intended) phrase which swept across Twitter last year: Virus gonna virus.
Which means: whether one is in Sweden or Australia, whether in New York or Florida, whether you have mask mandates or lockdowns or close schools or require vaccine passports—or do NONE of these things—Virus gonna virus. Covid hospitalizations and deaths will be concentrated among the obese and elderly. In almost any community, 2/3rds or more of deaths are over age 70, but even among the elderly more than 90% of those infected survive Covid. And among all Covid deaths, only about 7% are “Covid only” without other serious contributing factors.
What we won’t ever know, unfortunately—because we don’t have a control group, at least in the West—is what would have happened in a society which simply did nothing in response to the virus. What if a country simply had encouraged citizens to build up their natural immunity through a healthy diet, exercise, vitamins, and natural sunlight? What if it had taken precautions for elderly and immune-compromised populations, while allowing younger and healthier people to live normally? Would such a country have reached a degree of natural immunity faster, with overall better outcomes for the physical and mental health of its citizens? And with far less economic damage?
All of this is the Unseen. And no, it wasn’t “worth it” to shut down the world.
Back to Mr. Berenson. Last week Twitter decided it had enough, and permanently suspended his account. This is no small thing for independent journalists–and God knows we need them—who reach a lot of people via Twitter and rely on it to make a living.
Search for his Twitter profile and you’ll find something spooky. His name is still there, but with a quietly menacing “Account Suspended” warning. All other traces of his existence are erased: his header photo is gone, his profile photo is blank, and the descriptive bio is missing. Just blank. It’s eerie, and reminds me of that famous old photo of Stalin by the Moscow Canal. He’s standing next to Nikolai Yezhov (I had to look him up), who fell out of favor with Stalin and was executed–then erased from the photo by Soviet censors.
Alex Berenson has been similarly un-personed, removed, erased. But even if he ends up a casualty of this war1—and whether you agree with him or not—people like him have managed to challenge the Official Narrative in ways unimaginable even 20 years ago. The financial journalist John Tamny made an interesting point last week: complain about social media all you want, but Facebook and Twitter have been great sources of information during this Covid mess. And after thinking about it I had to agree. Most of the alternative information about Covid I’ve consumed via social media. But of course Mr. Berenson no longer has this luxury.
The Covid Economy and Tradeoffs
Speaking of narratives, we have especially lacked clear and sober thinking about the injuries to the US economy created by Covid policies. We profoundly fail to understand the economics behind Covid, because we so desperately want to kid ourselves that the economy will be “normal” soon.
Governments are good at two things, namely bossing us around and spending money. They do both in spades whenever a supposed crisis arises, and both Congress and the Fed went into hyperdrive beginning in March 2020. The Fed pumped more than $9 trillion to its primary dealers; estimates are that more than 20% of all US dollars ever issued were issued in 2020 alone. On the fiscal side, more than 40 federal agencies have spent $3.2 trillion in Covid stimulus spending. So that is $12 trillion of inflationary pressure introduced to our economy.
What the economy wants and needs during crises is of course deflation. When uncertainly rises, and it certainly did for millions of Americans worried about their jobs in 2020, people naturally and inevitably hold larger cash balances. They spend less. Meanwhile they were staying home, driving less, dining out less, traveling less, working less. All of this is naturally deflationary, so of course Congress and the Fed embarked on an effort to fight this tooth and nail with intentional inflation. So now were in a wrestling match between two opposing forces, one natural and one artificial.
Dr. Hans-Hermann Hoppe has a famous dictum: markets produce goods, which are the things we want and willingly buy or consume. Government produces bads, which is to say things we don’t want at all. Things like wars and inflation. They do this with our own money, reducing what we have to spend on actual goods and thus reducing production of those goods.
The past 16 months we’ve had lots of government bads, to the point where we might call them “worsts,” which are even worse than bads. The Covid and Afghanistan debacles come to mind.
It may be facile and self-serving to compare the federal state’s inability to manage Afghanistan with its inability to manage a virus, but the comparison is just too perfect to resist. So I won’t resist.
Among the bads government produces is misinformation. One analogy between Covid and Afghanistan in the phenomenon known as the fog of war: the uncertainty in situational awareness experienced by participants in military operations.
Paraphrasing Carl von Clausewitz: War is the realm of uncertainty; the factors on which action in war is based are wrapped in a fog of uncertainty. Fog and friction cloud the commander’s judgment—even where the commander wholly shares our interests, which is hardly a given with Covid. When we declared war on a virus, clarity went out the window. And so we’ve lived with 16 months of fog, of Covid misinformation. This happens in tandem with the media, which parrot official pronouncements from sources like the deeply-compromised Fauci and stir up alarmism at every turn.
And we’re still living with it. Consider we still don’t have definitive answers to these simple questions:
Do masks really work?
Do kids really need masks? As an aside, our great friend Richard Rider reports that San Diego County– population 3.3 million– shut down its public schools for a year with one student death!
Is there asymptomatic spread?
Does the virus live on surfaces?
How long does immunity last after having Covid?
How many vaccines will someone need to be “fully” vaccinated? How many boosters? Annual?
Aren’t Delta and other variants simply the predictable evolution of any virus?
How do we define a “case” or infection if someone shows no symptoms and feels fine?
Can Covid really be eradicated like polio? If so, why haven’t we eradicated flu by now?
And so on. We never get clear answers, but only fog.
But perhaps the most shocking thing about 16 months is our childlike inability to consider tradeoffs! I’m not only talking about the tremendous economic consequence of shutting down businesses, and the horrific financial damage it has done and will do to millions of Americans. I’m not only talking about the depression, isolation from friends and loved ones, alcoholism, untreated illness, suicide, weight gain & obesity, stunted child development, and all the rest.
I’m talking about understanding the basic economic tradeoffs of Covid policy: supply chain, food, energy, housing, unemployment. This is bread and butter economics.
I can’t stress this enough: millions of Americans have no conception of economics, and simply don’t believe tradeoffs exist. They think, are are encouraged by the political class to think, that government can simply print money in the form of stimulus bills and pay people enhanced unemployment benefits to stay home. That the CDC, of all cockamamie federal agencies, can simply impose a rent moratorium and effectively vitiate millions of local contracts—it will just work itself out somehow. That Congress can simply issue forgivable PPP loans to closed or hobbled businesses so they can magically make payroll. That the Federal Reserve can simply buy up assets from commercial banks, lend them limitless funds, and command lower interest rates to stimulate housing and consumerism.
Millions of Americans, through sheer ignorance of economics, literally think these actions are costless and wholly beneficial- without downside.
And now we wonder why the economy can’t just flip a switch and get back to normal. But that’s not how an incredibly complex global supply chain, with just in time delivery works. And that’s why thousands of Ford F-150s are sitting unsold, and unsellable, in huge parking lots—there is a global semiconductor chips shortage. Many of them come from a single company in Taiwan. By the way, semiconductor chips are used in everything from iPhones to Xbox consoles to Surface laptops to refrigerators.
There was a remarkable op-ed at CNBC recently about the supply chain interruptions. It gets the cause of inflation wrong, blaming it on the pandemic rather than central banks, but it paints a vivid picture of the serious problems facing a radically overstressed global manufacturing sector. Delays in delivery are said to be the longest in decades. And inflation plus delays is bad news, because it’s so hard for buyers and sellers at all stages of production to know what to charge and what to pay for either capital goods or consumption goods. How many construction projects, for example were blindsided by the 5X rise in lumber prices last year. Ports are clogged awaiting trucks- not enough drivers- so containers sit for weeks rather than days. Empty containers have become scarce. Rail schedules are affected by the ports like dominos, and freight prices are spiking. Will West Coast longshoremen strike in 2022 when their contract is up? Will new emissions regulations which slow ships kill more capacity? Will key Chinese factories shut down again due to Delta?