I’ll try to keep this one short. I was starting a post on another topic when Donald Trump distracted me… again. This time it was the $2,000 per person “tariff dividend” he’s proposed. This would be paid to all low- and middle-income Americans starting in mid-2026. As if the federal government was a profitable enterprise. Obviously that’s the wrong model! This is either sheer stupidity or willful government failure. Sure, the Fed can just print money, so why not? Who knew Trump was a closet modern monetary theorist?
It’s such a bad idea…. Tariffs themselves are bad enough. They are taxes, of course, a truth about which Trump and his central trade planners have denied since the beginning of the escapade. Tariffs hurt consumers and businesses who import inputs. Tariffs retard growth by increasing input costs, disrupting supply chains, and raising the prices of not only imports, but also domestically-produced goods that compete with imports. Surely Trump knows all this and the implications for his political capital: he’s already backtracking on tariffs for certain food items.
The tariff dividend is a transparent attempt to compensate consumers for the harms of taxation. It’s also a transparent attempt to buy or keep votes, much as he’s already sought to buy-off farmers harmed by tariffs. The income limit for the dividend hasn’t been announced, but make no mistake: this represents another form of redistribution.
It’s also striking that the tariffs won’t generate nearly as much revenue as will be required to begin paying the dividend by mid-2026. In fact, it could be short by as much as $300 million! Will the Treasury borrow the rest? More pressure on the bond market and interest rates.
Furthermore, the so-called dividend would be inflationary if the Federal Reserve fails to neutralize it. It would amount to another “helicopter drop” of cash, similar to the cash dump from Covid relief payments: money printing under the guise of fiscal policy.
To the extent that tariff revenue flows, it should be used to reduce the federal deficit or to pay down the gigantic government debt already outstanding ($38 trillion today not including the impending cost of funding entitlement programs). Instead, Trump is proudly following in the footsteps of generations of spendthrift politicians.
Keep in mind that the dividend is a promise Trump might not be able to keep. The Supreme Court will soon announce its decision on presidential power to impose tariffs. This decision will bear on the president’s authority under the International Emergency Economic Powers Act (IEEPA) — if and when an actual emergency is at hand, which it clearly is not. More broadly, the decision hinges on whether a “foreign facing” tax falls within the president’s Article II powers under the Constitution.
The proposed tariff dividend undermines the Administration’s argument before the Court that tariffs are primarily regulatory tools, and that any revenue from tariffs is merely incidental. Thank God the dividend would have to be authorized by Congress! I truly hope there are enough sensible legislators on the Hill to beat back this idiocy.
I’ve noted a number of policy moves by Donald Trump that I find aggravating (scroll my home page), but I still applaud his administration’s agenda to downsize government, promote operational efficiency, and deregulate the private economy. It’s just too bad that Trump demonstrates a penchant for expanding government authority in significant ways, which makes it harder to celebrate successes of the former variety. Beyond that, there have been huge obstacles to rationalizing the administrative state. We’ve seen progress in some areas, but the budgetary impact has been disappointing.
Grinding On
The Department of Government Efficiency (DOGE) was to play a large role in the effort to reduce fraud and inefficiency at the federal level. On the surface, it’s easy to surmise that DOGE has failed in its mission to root out government waste. After seven months, DOGE touts that it has saved taxpayers $205 billion thus far. That is well short of the original $2 trillion objective (subsequently talked down by Elon Musk), but it was expected to take 18 months to reach that goal. Still, the momentum has slowed considerably.
Moreover, the $205 billion figure does not represent recurring budgetary savings. Some of it is one-time proceeds from property sales or grant cancellations. Some of it ($30 billion) seems to represent savings in regulatory compliance costs to Americans, but that’s not clear as the DOGE website is lightly documented, to put it charitably. A recent analysis reached the conclusion that DOGE had exaggerated the savings it has claimed for taxpayers, which seems plausible.
But DOGE is still plugging away, reviewing federal contracts, programs, regulations, payments, grants, workforce deployment, and accounting systems. The work is desperately needed given the fraud that’s been exposed among the agency workforce, which seemed to escalate following the advent of massive Covid benefit payments during the pandemic. Some details of an investigation by the Senate DOGE Caucus, discussed at this link, are truly astonishing. Employees at multiple state and federal agencies have been collecting food stamps, survivor benefits, and even unemployment benefits while employed by government. Apparently, this was made possible by the lack of list de-duplication by the federal agencies that dole out these benefits. This might be a pretty good explanation for the lawsuits filed by federal employee unions attempting to prevent DOGE from accessing agency records. Congratulations to Senator Joni Ernst, Chairman of the Caucus, for her leadership in exposing this graft.
False Aspersions
Shortly after DOGE was constituted, most of its employees were assigned to individual agencies to identify opportunities to reduce waste and promote efficiency. This has led to confusion about the extent to which DOGE should take credit for certain savings maneuvers. However, contrary to some allegations, no DOGE employees have been “embedded” as career civil servants.
Since almost the start of Trump’s second term, DOGE has been blamed for workforce reductions that some deemed reckless and arbitrary. There were indeed some early mistakes, most notably at HHS, but a number of those key workers were rehired. Many of the force reductions were instigated by individual agencies themselves, and many of those were voluntary separations with generous severance packages.
As to the “arbitrary” nature of the force reductions, one former DOGE staffer described the difficulty of making sensible cuts at the Veterans Administration under agency rules:
“Then came a reality check about RIF rules, which turned out to be brutally deterministic:
Tenure matters most—new hires were cut first
Veterans’ preference comes next; vets are protected over non-vets
Length of service trumps performance—seniority beats skill
Performance ratings break any remaining ties
“These reduction-in-force rules–which stem from the Veterans’ Preference Act of 1944–surprised me and many others. Unlike private industry layoffs that target middle management bloat and low performers, the government cuts its newest people first, regardless of performance. Anyone promoted within the last two years was also considered probationary—first in line to go.“
It would be hard to be less arbitrary than these rules. Other agencies are subject to similar strictures on reductions in force. No wonder the Administration relied heavily on a buyout offer (“deferred resignation”) with broad eligibility in its attempt to downsize government. Furthermore, the elimination of positions was largely targeted functions that were wasteful of taxpayer resources, such as promoting DEI objectives and administering grants to NGOs driven by ideological motives.
Of course, the buyouts come with a cost to taxpayers. In fact, one report asserted that DOGE’s efforts themselves cost taxpayers $135 billion or more. Of course, buyouts carry a one-time cost. However, that figure also includes a questionable estimate of lost productivity caused by turmoil at federal agencies. I’m just a little skeptical when it comes to claims about the productivity of the federal workforce.
Obstacles
DOGE has had to grapple with other severe limitations, as Dan Mitchell has commented. These are primarily rooted in the spending authority of Congress. Only one rescission bill reflecting DOGE cuts, totaling just $9 billion, has made it to Trump’s desk. Another “untouchable” for DOGE is interest on the federal debt, which has become a huge portion of the federal budget.
Furthermore, DOGE is guilty of one self-imposed obstacle: the main driver of ongoing deficits is entitlement spending, While the Big Beautiful Bill included Medicaid reforms, the Trump Administration and Congress have shown little interest in shoring up Social Security and Medicare, both of which are technically insolvent. While DOGE would seem to have limited authority over entitlements, as opposed to the discretionary budget, some charge that DOGE made a critical error in failing to address entitlement fraud. According to Veronique de Rugy:
“It is insane not to have started there. Given DOGE’s comparative advantage in data analytics and [information technology], this is where it can have the greatest impact… Cracking down on this waste isn’t just about saving money; it’s about restoring integrity to safety-net programs and protecting taxpayers. And if fixing this problem is not quintessential ‘efficiency,’ what is?“
On the Bright Side
Michael Reitz offered a different perspective. He cited the difficulty of reforming an entrenched bureaucracy. He also noted the following, however, as a kind of hidden success of DOGE and Elon Musk:
“But others I spoke with thought Musk’s four months in government were both substantive and symbolic. He changed the conversation about waste and grift. Musk made cuts cool again, especially for Republican politicians who have forgotten fiscal restraint. He highlighted the need to follow the data and oppose bureaucrats who impede reform by controlling the flow of information.“
Of course, DOGE has been instrumental in identifying absurdly wasteful federal contracts, even if they are “small change” relative to the size of the federal budget. This includes grants to NGOs that appear to have functioned primarily as partisan slush funds. DOGE has also helped identify deregulatory actions to eliminate duplicative or contradictory agency rules on industry, reducing costly economic burdens on the private sector. The DOGE website claims (preliminarily) that it has deleted 1.9 million words of regulation, but doesn’t provide a total number of rules eliminated.
An important part of DOGE’s mission was to modernize technology, software, and accounting systems at federal agencies. This included centralization of these systems with improved tracking of payments and a written justification for each payment. These efforts were met with hostility from some quarters, including lawsuits to limit or prevent DOGE personnel from accessing agency data. Nevertheless, DOGE has pushed ahead with the initiative. This is a laudable attempt to not only modernize systems, but to encourage transparency, accountability, and efficiency.
In a related development, this week DOGE was blamed by a whistleblower for uploading a file from Social Security containing sensitive information to an unsecured cloud environment. However, a spokesperson for the Social Security Administration stated that the data was secure and that the SSA had no indication that it had been breached. We shall see.
AI Scrutiny
Now, DOGE is recommending the use of an AI tool to cut federal regulations. According to Newsweek:
“The ‘DOGE AI Deregulation Decision Tool,’ developed by engineers brought into government under Elon Musk’s DOGE initiative, is programmed to scan about 200,000 existing federal rules and flag those that are either outdated or not legally required.“
Critics are concerned about accuracy and legal complexities, but the regulations flagged by the AI tool will be reviewed by attorneys and other agency personnel, and there will be an opportunity for public comment. The process could make deregulatory progress well beyond what would be possible under purely human review. DOGE believes that up to 100,000 rules could be eliminated, saving trillions of dollars in compliance costs. If successful, this might well turn out to be DOGE’s signal accomplishment.
Conclusion
I’m disappointed at the flagging momentum of DOGE’s quest to eliminate inefficiencies in the executive branch. I’m also frustrated by the limited progress in translating DOGE’s work into ongoing deficit reduction. In addition, it was a mistake to leave aside any scrutiny of improper entitlement payments. Nevertheless, DOGE has has some significant wins and the effort continues. Also, it must be acknowledged that DOGE has faced tremendous obstacles. For too long, government itself has metastasized along with bureaucratic inefficiencies and graft. That is the rotten fruit of the symbiosis between rent seeking behavior and a bloated public sector. We should applaud the spirit motivating DOGE and encourage greater progress.
Supporters of President Trump’s hard line on trade make so many false assertions that it’s hard to keep up. I’ve addressed several of these in earlier posts and I’ll address two more fallacies here: 1) that the U.S. manufacturing sector is in a state of crisis; and 2) that tariffs played a key role in promoting economic growth in the U.S. during the so-called gilded age of the late 19th and early 20th centuries.
Security
First, let’s revisit one tenet of protectionism: national security demands self-sufficiency. This undergirds the story that we must produce physical “things”, in addition to often higher-valued services, to be a great nation, or even to survive!
Of course, protecting industries critical to national security might seems like a natural concession to make, even for those supportive of liberalized trade. Ross Douthat says this:
“I think trying to reshore some manufacturing and decouple more from China makes sense from a national security standpoint, even if it costs something to G.D.P. and the stock market.“
Unfortunately, this kind of rationale is far too malleable. There is never a clearly defined limiting principle. Someone decides which goods are “critical” to national security, and this deliberation becomes the subject of much political jockeying and favor-seeking. But wait! Economic security is also cited as an adequate excuse for trade protections! And how about data security? Health security? Job security? Always there is insistence that “security” of one sort or another demands that we provide for our own needs. For definitive proof, take a look at this nonsense! Give them an inch and they’ll take a mile.
Pretty soon you “protect” such a wide swath of industries in a quest for self-sufficiency that the entire economy is unmoored from opportunity costs, comparative advantages, and the information about scarcities provided by market prices. Absolute “security” comes at the cost of transforming the economy’s productive machinery into a complacent hulk rivaling the inefficiency of Soviet industrial planning. Competition is the solution, but not limited to firms under the same set of protective trade barriers.
Manufacturing Is Mostly Fine
Trade warriors, including members of Trump’s team, insist that our decline as a nation is being hastened by a crisis in manufacturing. However, value added in U.S. manufacturing is at an all-time high.
There has been a long-term decline in manufacturing employment, but not manufacturing output. In fact, manufacturing output has doubled since 1980. As Jeff Jacoby notes, “the purpose of manufacturing is to make things, not jobs.” If our overarching social goal was job security, we’d have revolted long ago against the tremendous reduction in agricultural employment experienced over the past century. We’d rely on switchboard operators to load web pages, and we’d dig trenches and tunnels with spoons (to paraphrase Milton Friedman).
The secular decline in manufacturing employment is a consequence of growth in manufacturing productivity. Economy-wide, this phenomenon allows real income and our standard of living to grow.
Take That Job and …
It’s also significant that few Americans have much interest in factory work. It’s typically less dangerous than in times past, but many of today’s factory jobs are still physically challenging and relatively risky. Perhaps that helps explain why nearly half-a-million jobs in manufacturing are unfilled.
Jacoby describes the transition that has changed the face of American manufacturing:
“… US plants have largely turned away from making many of the low-tech, labor-intensive consumer items they once specialized in — sneakers, T-shirts, small appliances, toys. Those jobs have mostly gone overseas, and trying to bring them back by means of a trade war would be ruinous. Yet America remains a global manufacturing powerhouse — highly skilled, highly innovative, and highly efficient.“
And yet, even as wages in manufacturing have grown, many factory jobs do not pay as well as positions requiring far less strenuous toil in the services sector. It’s also true that the best manufacturing jobs in the U.S. today require high-level skills, which are in short supply. These factors help explain why manufacturers believe finding qualified workers is one of their biggest challenges.
Isolating Weak Sectors
There are specific sectors within manufacturing that have fared poorly, including textiles, furniture, metals, and low-end electronics. The loss of competitiveness that drove those sectoral declines is not a new development. It has, however, devastated communities in the U.S. that were heavily dependent on these industries. These misfortunes are regrettable, but trade barriers are not an effective prescription for revitalizing depressed areas.
Meanwhile, other manufacturing sectors have enjoyed growth, such as computers, aerospace, and EVs. While we’ve seen a decline in the number of manufacturing firms, theperformance of U.S. manufacturing in the 21st century can be described as mixed at the very worst.
The author of this piece seems to accept the false notion that U.S. manufacturing is moribund, but he knows tariffs aren’t an effective way to strengthen domestic goods production. He has a number of better suggestions, including a commitment to infrastructure investment, reforms to education and health, and reconfiguring certain corporate income tax policies. Unfortunately, his ideas on tariffs are sometimes as mistaken as Trump’s,
The Gilded Age
Finally, the other false assertion noted in the opening paragraph is that tariffs somehow spurred economic growth in the late 19th and early 20th centuries. Brian Albrecht corrects this protectionist fallacy, which lies at the root of many defenses of Trump’s tariffs. Albrecht cites favorable conditions for growth that were sufficient to overwhelm the negative effects of tariffs, including:
“… explosive population growth, mass European immigration, rapid technological innovation, westward expansion, abundant natural resources, high literacy rates, and stable property rights.”
While cross-country comparisons indicate a positive correlation between tariffs and growth during the 1870 – 1920 period, those differences were caused by other forces that dominated tariffs. Cross-industry research discussed by Albrecht indicates that tariffs on manufactured goods during the gilded era reduced labor productivity and stimulated the entry of smaller, less productive firms. Likewise, natural experiments find that tariffs allowed inefficient firms to survive and discouraged innovation.
Conclusion
The U.S. manufacturing sector is not in any sort of crisis, and its future growth won’t be powered by attempts to restore the sort of low-value production offshored over the past several decades. What protectionists interpret as failure is the natural progression of a technically advanced market-based civilization, where high-value services account for greater shares of growing total output. Of course, low-value production is sometimes “crowded out” in this process, depending on its trade-ability and comparative advantages. The logic of the process is encapsulated by Veronique de Rugy’s recent discussion of iPhone production (HT: Don Boudreaux):
“Then there’s [Commerce Secretary Howard] Lutnick, pining for a world where Americans flood back into massive factories to assemble iPhones. This is nostalgic industrial cosplay masquerading as economic strategy. Yes, iPhones aren’t assembled by Americans. But this isn’t a failure; it’s a feature of smart economic specialization. We design the iPhone here. That’s the high-value, high-margin part. The sophisticated chips, software, architecture, and intellectual property are all created in the U.S. The marketing is done here, too. That’s most of the value of the iPhone. The lower-value labor-intensive assembly work is done abroad because those tasks are more efficiently performed abroad.“
There is certainly no crisis in U.S. manufacturing. That narrative is driven by a combination of politics, rent seeking, and misplaced nostalgia.
The table above is from Eric Boehm at Reason.com. It shows a variety of negative economic projections based on the likely imposition of tariffs by the incoming Trump Administration. Donald Trump’s protectionist agenda is motivated in large part by the notion that imports of foreign goods and services harm the U.S. economy. This misapprehension is common on both the populist left and the nationalist right, but it is also fueled by special interests averse to competition. Especially puzzling are those who extol the virtues of capitalism and free markets while claiming that free markets across borders are inimical to our nation’s economic interests.
Imports and Domestic Spending
Many assume that imports directly reduce GDP. In fact, on this point, some might be led astray by a superficial exposure to macroeconomics. As Noah Smith has noted, they might think back to the simple spending definition of GDP they learned as college freshmen:
GDP = C + I + G + (X – M),
where C is consumer spending on final goods and services, I is investment spending, G is government spending, X is foreign spending on U.S. exports, and M is U.S. spending on imports from abroad. So imports are subtracted! Doesn’t that mean imports directly reduce GDP?
The key here is to recognize that C, I, and G already include spending on imported goods. Therefore, imports must be subtracted from the spending totals to find the value spent on domestically-produced final goods and services. No, imports are not a direct, net subtraction from GDP.
Your Loathsome Foreign Car
Of course the domestic impact of imports goes deeper than this simple accounting framework. If someone decides to purchase an imported good instead of a close substitute produced domestically, what happens to GDP? If the decision has an immediate impact on production, then U.S. GDP declines. Otherwise, the domestic good is new inventory investment (part of I above), and there is no change. But if the import decision is repeated, the result is permanently lower U.S. GDP relative to the alternative, as producers won’t want to add to inventories indefinitely. The same is true if a domestic producer decides to purchase a component or raw material produced overseas rather than one produced at home.
The import decision causes a domestic producer to lose a sale along with the profit that sale would have earned. That puts pressure on the firm’s workers and wages as well. The firm still has the value of the unit in inventory, but if the import decision is repeated there will be more substantial follow-on effects on production, employment, spending, and saving.
Not So Fast
There is still more to the story, of course. By purchasing the foreign good,,which in the buyer’s estimation delivers greater value at that point in time, there is a gain in consumer surplus that is very real. To the buyer, that gain is perhaps equivalent to dollars in the bank. Their real wealth has increased relative to the surplus value of the foregone domestic purchase. This, too, will likely have follow-on effects in terms of spending and saving, but positive effects.
Therefore, to a first approximation, the immediate effects of an import purchase on total domestic welfare are ambiguous. Consumers of imports gain value; producers of import-competing goods lose value.
As to the loss of the domestic sale, competition is tough, but it greatly contributes to the efficiency of the free market system and to the well being of consumers. Let’s face it: ultimately, the whole point of economic activity is to enable consumption. Production has no other purpose. So producers must react to competition and strive to improve value for buyers along any margins they can. That, in turn, is unequivocally positive for potential buyers both here and abroad.
It’s also true that the purchase of foreign goods means that dollars must be sold in exchange for foreign currency. That weakens the dollar, but those “excess dollars” are generally used to purchase U.S. assets, including physical capital. That direct investment promotes economic growth.
Open Economy, Open Mind
No matter what you believe about the net benefits or costs of a single import transaction like the one described above, it is misleading to draw conclusions about the benefits of foreign trade based on a single transaction, or even a series of repeated transactions.
First, consumer sovereignty is based on freedom of choice, including the freedom to purchase from any seller, domestic or foreign. Consumers greatly benefit from that broad freedom. Add to that the benefit of producers who are free to purchase inputs from any source they believe to offer the greatest value (a benefit that ultimately flows through to consumers). These freedoms ultimately enhance productivity and well being.
Trade across borders leverages the same economic advantages as trade within borders. People tend to accept the latter as truth without giving it a thought, yet the former is often rejected reflexively. The question is inappropriately bound up in issues like patriotism and, over time, an excessive focus on high-visibility job losses in traditional industries.
Trade allows people and their countries to specialize in producing things at which they are comparatively efficient, i.e., in which they are lower-cost producers. This is at the very heart of mutually beneficial exchange: no party to a voluntary transaction expects to suffer a loss. And in trade, when an external, domestic party sustains a lost sale, for example, they have the opportunity to improve or reallocate their resources to endeavors to which they are better suited. So there are direct gains from trade and there are indirect gains via the discipline of competition, including the benefits of reallocating scarce resources from inefficient to efficient uses.
Tariff Gains
Now we shift gears to tariffs: interventions having benefits that are more concentrated than costs, and which tend to be more ephemeral:
— Domestic producers who compete with imports gain through the grant of additional market power, given the tax on foreign goods and services. These producers now have more pricing flexibility, and what is often more pertinent, survivability.
— Workers at domestic firms will benefit to the extent that their employers face reduced foreign competition. Some combination of employment, hours, and wages may rise.
— Some firms have mixed gains and losses, with more pricing power over final product but elevated costs due to the use of taxed foreign components.
Tariff Losses
Who pays when government succumbs to irrational protectionist pressure and attempts to restrict imports via tariffs?
— Domestic consumers suffer a loss of freedom and bear a large part of the burden of the tariff tax.
— Higher prices for imports lead to higher prices for competing domestic goods, causing consumers to experience a loss of purchasing power.
— Domestic businesses suffer a loss of control over input decisions. Those already utilizing foreign inputs (and their buyers downstream) bear some of the burden of the tariff tax. For example, tariffs could be quite damaging to the U.S. AI industry, a result that would run strongly contrary to Trump’s promise to promote American AI.
— The U.S. suffers a loss of foreign investment, which could engender higher interest rates, lower productivity growth, and lower real wages.
— As Tyler Cowen puts it in a review of this paper, “… lobbying, logrolling and political horse-trading were essential features of the shift toward higher US tariffs. A lot of the tariffs of the time [1870 -1909] depended on which party controlled Congress, rather than economic rationality.“
— Tariffs tend to reduce economic growth due to diminished productivity in tariff-protected industries, which also erodes real wages. Less productive firms capture a significant share of the benefits of tariffs, so that economic growth falls due to a compositional effect. Higher prices for imports and import-competing goods undermine the real gains of import-protected workers.
— Finally, tariffs invariably beget retaliatory tariffs by erstwhile friendly trading partners. Export industries and their employees take a direct hit. This retaliation damages the prospects of the most productive exporters, while weaker exporting firms might be forced to close shop unnecessarily.
One other note: the discussion of gains and losses above is essentially the same for policies that reward the use of American labor via tax breaks. This not only penalizes imports of final and intermediate foreign goods, it subsidizes high-cost domestic labor. Obviously, the upshot is a less competitive U.S. economy.
Tariff-Threat Policy
To be fair, Donald Trump has said he’d use the threat of tariffs strategically to achieve a variety of objectives, not all of which are directly related to trade. We can hope that many of those threats won’t be acted upon. On one hand, that’s more appealing than general tariffs, with potential foreign policy gains and less in the way of general damage to the economy. On the other hand, the discretionary application of tariffs could invite political favoritism and foster a corrupt rent-seeking environment.
Conclusion
Trade protectionism protects weak and strong producers alike. The weak should not be given artificial incentives to produce goods inefficiently. That’s simply a waste of resources. Protecting the strong is unnecessary and discourages the drive for efficiency as well as real value creation. It lends market power to already powerful firms, leading to higher prices and penalizing domestic consumers.
One last aside: tariffs cannot raise anywhere close to the revenue necessary to replace the income tax, an absurd claim made by Trump on the campaign trail.
Only free trade is consistent with the values of a free society. It enhances choice, makes markets more competitive, creates incentives for efficiency, and cultivates opportunities for economic growth, That would serve Trump and the nation much better than the fixation on tariffs.
Industrial policy allows government planners to select favored and disfavored industries or sectors. It thereby bypasses and distorts impersonal market signals that would otherwise direct scarce resources to the uses most valued by market participants. Instead, various forms of aid and penalties are imposed on different sectors in order to accomplish the planners’ objectives, This includes interventions in foreign trade and attempts to steer technological development. Industrial policy often comes under the guise of enhanced national security. Of course, it can also be used to reward cronies. And it has a poor record of accomplishing its objectives and avoiding unintended consequences.
The Sausage Factory
The executive and legislative branches of the U.S. government are loaded with economic interventionists, regardless of party affiliation. In an age of (Chevron) judicial deference to “experts” within the administrative state, it is not uncommon for legislative language to give abundant leeway to those who implement policy within the executive branch (though a couple of upcoming Supreme Court decisions might change that balance). Increasingly, bills are stuffed so full of provisions that lawmakers find it all but impossible to read them in full, let alone make an accurate assessment of their virtues, drawbacks, and internal contradictions.
Even worse is the fact that bills are, in great part, written by relatively youthful legislative staffers with little real world experience in industry, and who harbor the naive belief that whatever is wished, government can make it so. But their work also proceeds under guidance from lawmakers, administration officials, consultants, and lobbyists who have their own agendas and axes to grind. This is how industrial policy is promulgated in the U.S., and it is through this ugly prism that we must view environmental policy.
The Left dictates environmental and energy policy in several states, especially California, where energy costs have soared under renewable energy initiatives. California households now pay almost triple the rate per kilowatt-hour paid in Washington, and more than double what’s paid in Oregon. Something similar may happen in New York, which has highly ambitious goals for renewable energy even as the costs of the state’s offshore wind projects are out of control. These and other state-level “laboratories” are demonstrating that a renewable energy agenda can carry very high costs to the populace. The same is true of the painful experience in Germany with its much-heralded Energiewende.
Net Zero
The Left is also pulling the strings within the federal bureaucracy and the Biden Administration. The objective is an industrial policy to achieve “net zero” CO2 emissions, a practical impossibility for at least several decades (unless it’s faked, of course). Nevertheless, that policy calls for phasing out the use of fossil fuels. Under this agenda, mandates and subsidies are bestowed upon the use of renewable electric power sources, while restrictions and penalties are imposed on the production and use of fossil fuels. A subsequent post on the subject of power generation will address this prototypical failure of central planning.
Electrification
Here, I discuss another key objective of our industrial planners: electrify whatever is not electrified in order to advance the net zero agenda. Of course, for some time to come, more than half of electric power will be generated using fossil fuels (currently about 60%, with another 18% nuclear), so the policy is largely a sham on its face, but we’ll return to that point below. The EV tailpipe is very long, as they say.
Electrification means, among other things, the forced adoption of electronic vehicles (EVs). President Biden’s EPA has issued rules on auto emissions that are expected to require, by 2032, that 60% or more of cars and light trucks sold will be EVs. The USA Today article at the link offers this rich aside:
“…the original proposal — which was always technology-neutral in theory, meaning automakers could sell any cars and light-duty trucks they wanted as long as they hit the fleetwide reductions….”
Technology neutral? Hahaha! We aren’t forcing you to choose technologies as long as you meet our technological requirements!
EV Doldrums
Anyway, the EPA’s targets are completely impractical, partly because the value for drivers is lacking. Not coincidentally, the market for EVs seems to have chilled of late. Hertz has soured on heavy use of EVs in its fleet, and Ford has announced reductions in EV production. The new UAW agreements will make it difficult for some domestic producers to turn a profit on EVs. Fisker is just about broke. Apple has cancelled development of its EV, and several other automakers have reduced their production plans. Toyota was the first producer to raise the red flag on the breakneck transition to EVs in favor of a measured reliance on hybrids. Of course, there are other prominent voices cautioning against rapid attempts at electrification in general.
To be fair, some EVs are marvelous machines, but they and their supporting infrastructure are not yet well-suited to the mass market.
A Tangled Web
Here are some drawbacks of EVs that have yet to be adequately addressed:
They are expensive, even with the rich-man’s subsidy to buyers paid by the government and carbon credit subsidies granted to producers.
Costly battery replacement is an eventuality that looms over the wallets of EV owners.
EVs have limited range given the state of battery technology, especially when the weather is cold.
There presently exist far too few charging stations to make EVs workable for many people. In any case, charging away from home can be extremely time consuming and the charges vary widely.
The purchase and installation of EV chargers at home is a separate matter, and can cost $4,000 or more if an upgrade to the service panel is necessary. Installed costs commonly range from $1,175 to $3,300, depending on the type of charger and the region.
EVs are much heavier than vehicles powered by internal combustion engines. As a result, EV tire wear can be a surprising cost causer and pollutant.
Battery fires in EVs are extremely difficult to extinguish, creating a new challenge for emergency responders.
Reliance on EVs for local emergency services would be dangerous without duplicative investment by local jurisdictions to offset the down-time required for charging.
For decades to come, the power grid will be unable to handle the load required for widespread adoption of EVs. A rapid conversion would be impossible without a great expansion in generating and transmission capacity, including transformer availability.
Domestically we lack the natural resources to produce the batteries required by EVs in a quantity that would satisfy the Administration’s goals. This forces dependence on China, our chief foreign adversary.
The mining of those resources is destructive to the environment. Much of it is done in China due to the country’s abundance of rare earth minerals, but wherever the mining occurs, it relies heavily on diesel power.
Joel Kotkin points out that China now hosts the world’s largest EV producer, BYD. Biden’s mandates might very well allow China to dominate the U.S. auto market, even as its own CO2 emissions are soaring,,
Producers of EVs earn carbon credits for each vehicle sold, which they can sell to other auto producers who fall short of their required mix of EVs in total production. Tesla, for example, earned revenue of $1.8 billion from carbon credit sales in 2022. But note again that these so-called zero-emission vehicles use electricity generated with an average of 60% fossil fuels. Thus, the scheme is largely a sham.
The push for EVs has been hampered by the botched rollout of (non-Tesla) charging stations under a huge Biden initiative in the Infrastructure Investment and Jobs Act. Progress has been bogged down by sheer complexity and expense, including the cost of bringing adequate power supplies to the chargers as well as the difficulty of meeting contracting requirements and operating standards. This is exemplary of the failures that usually await government efforts to engineer outcomes contrary to market forces.
Electric Everything?
Like EVs, electric stoves have drawbacks that limit their popularity, including price and the nature of the heat needed for quality food preparation. In addition to autos and stoves, wholesale electrification would require the replacement or costly reconfiguration of a huge stock of business and household capital that is now powered by fossil fuels, like gas furnaces, tractors, chain saws, and many other tools and appliances. This set of legacy investment choices was guided by market prices that reflect the scarcity and efficiency of the resources, yet government industrial planners propose to lay much of it to waste.
Central Planning: a False Conceit
John Mozena quotes Adam Smith on the social and economic hazards of rejecting the market mechanism and instead accepting governmental authority over the allocation of resources:
“All governments which thwart this natural course, which force things into another channel, or which endeavour to arrest the progress of society at a particular point, are unnatural, and to support themselves are obliged to be oppressive and tyrannical.”
“As Ludwig von Mises and Friedrich Hayek pointed out during the socialist calculation debate, central planners lack the information that is produced by markets. By over-riding market prices and substituting their own judgment, regulators incur the same loss of information.”
Advocates of EV industrial policy have failed to appreciate the large gaps between the technology they are determined to dictate and basic consumer requirements. These gaps are along such margins as range, charging time, tire and battery wear, and perhaps most importantly, affordability. The planners have failed to foresee the massive demands on the power grid of a forced replacement of the internal combustion auto stock with EVs. The planners elide the true nature of EV-driven emissions, which are never zero carbon but instead depend on the mix of power sources used to charge EV batteries. Finally, EV mandates show that the industrial planners are oblivious to other environmental burdens inherent in EVs, whatever their true carbon footprint might be.
First, a preliminary issue: many resources qualify as commons in the very broadest sense, yet free societies have learned over time that many resources are used much more productively when property rights are assigned to individuals. For example, modern agriculture owes much to defining exclusive property rights to land so that conflicting interests don’t have to compete (e.g,, the farmer and the cowman). Federal land is treated as a commons, however. There is a rich history on the establishment of property rights, but within limits, the legal framework in place can define whether a resource is treated as a commons, a club good, or private property. The point here is that there are substantial economic advantages to preserving strong property rights, rather than treating all resources as communal.
The authors of the planetary commons (PC) paper present a rough sketch for governance over use of the planet’s resources, given their belief that a planetary crisis is unfolding before our eyes. The paper has two main thrusts as I see it. One is to broadly redefine virtually all physical resources as common pool interests because their use, in the authors’ view, may entail some degree of external cost involving degradation of the biosphere. The second is to propose centralized, “planetary” rule-making over the amounts and ways in which those resources are used.
It’s an Opinion Piece
The PC paper is billed as the work product of a “collaborative team of 22 leading international researchers”. This group includes four attorneys (one of whom was a lead author) and one philosopher. Climate impact researchers are represented, who undoubtedly helped shape assumptions about climate change and its causes that drive the PC’s theses. (More on those assumptions in a section below.) There are a few social scientists of various stripes among the credited authors, one meteorologist, and a few “sustainability”, “resilience”, and health researchers. It’s quite a collection of signees, er… “research collaborators”.
Grabby Interventionists
The reasoning underlying a “planetary commons” (PC) is that the planet’s biosphere qualifies as a commons. The biosphere must include virtually any public good like air and sunshine, any common good like waterways, or any private good or club good. After all, any object can play host to tiny microbes regardless of ownership status. So the PC authors characterization of the planet’s biosphere as a commons is quite broad in terms of conventional notions of resource attributes.
We usually think of spillover or external costs as arising from some use of a private resource that imposes costs on others, such as air or water pollution. However, mere survival requires that mankind exploit both public and non-public resources, acts that can always be said to impact the biosphere in some way. Efforts to secure shelter, food, and water all impinge on the earth’s resources. To some extent, mankind must use and shape the biosphere to succeed, and it’s our natural prerogative to do so, just like any other creature in the food chain.
Even if we are to accept the PC paper’s premise that the entire biosphere should be treated is a commons, most spillovers are de minimus. From a public policy perspective, it makes little sense to attempt to govern over such minor externalities. Monitoring behavior would be costly, if not impossible, at such an atomistic level. Instead, free and civil societies rely on a high degree of self-governance and informal enforcement of ethical standards to keep small harms to a minimum.
Unfortunately, the identification and quantification of meaningful spillover costs is not always clear-cut. This has led to an increasingly complex regulatory environment, an increasingly litigious business environment, and efforts by policymakers to manage the detailed inputs and outputs of the industrial economy.
All of that is costly in its own right, especially because the activities giving rise to those spillovers often enable large welfare enhancements. Regulators and planners face great difficulties in estimating the costs and benefits of various “correctives”. The very undertaking creates risk that often exceeds the cost of the original spillover. Nevertheless, the PC paper expands on the murkiest aspects of spillover governance by including “… all critical biophysical Earth-regulating systems and their functions, irrespective of where they are located…” as part of a commons requiring “… additional governance arrangements….”
Adoption of the PC framework would authorize global interventions (and ultimately local interventions, including surveillance) on a massive scale based on guesswork by bureaucrats regarding the evolution of the biosphere.
Ostrom Upside Down
Not only would the PC framework represent an expansion of the grounds for intervention by public authorities, it seeks to establish international authority for intervention into public and private affairs within sovereign states. The authors attempt to rationalize such far-reaching intrusions in a rather curious way:
“Drawing on the legacy of Elinor Ostrom’s foundational research, which validated the need for and effectiveness of polycentric approaches to commons governance (e.g., ref. 35, p. 528, ref. 36, p. 1910), we propose that a nested Earth system governance approach be followed, which will entail the creation of additional governance arrangements for those planetary commons that are not yet adequately governed.”
Anyone having a passing familiarity with Elinor Ostrom’s work knows that she focused on the identification of collaborative solutions to common goods problems. She studied voluntary and often strictly private efforts among groups or communities to conserve common pool resources, as opposed to state-imposed solutions. Ostrom accepted assigned rights and pricing solutions to managing common resources, but she counseled against sole reliance on market-based tools.
Surely the PC authors know they aren’t exactly channeling Ostrom:
“An earth system governance approach will require an overarching global institution that is responsible for the entire Earth system, built around high-level principles and broad oversight and reporting provisions. This institution would serve as a universal point of aggregation for the governance of individual planetary commons, where oversight and monitoring of all commons come together, including annual reporting on the state of the planetary commons.”
Polycentricity was used by Ostrom to describe the involvement of different, overlapping “centers of authority”, such as individual consumers and producers, cooperatives formed among consumers and producers, other community organizations, local jurisdictions, and even state or federal regulators. Some of these centers of authority supersede others in various ways. For example, solutions developed by cooperatives or lower centers of authority must align with the legal framework within various government jurisdictions. However, as David Henderson has noted, Ostrom observed that management of pooled resources at lower levels of authority was generally superior to centralized control. Henderson quotes Ostrom and a co-author on this point:
“When users are genuinely engaged in decisions regarding rules affecting their use, the likelihood of them following the rules and monitoring others is much greater than when an authority simply imposes rules.”
The authors of the PC have something else in mind, and they bastardize the spirit of Ostrom’s legacy in the process. For example, the next sentence is critical for understanding the authors’ intent:
“If excessive emissions and harmful activities in some countries affect planetary commons in other areas—for example, the melting of polar ice—strong political and legal restrictions for such localized activities would be needed.”
Of course, there are obvious difficulties in measuring impacts of various actions on polar ice, assigning responsibility, and determining the appropriate “restrictions”. But in essence, the PC paper advocates for a top-down model of governance. Polycentrism is thus reduced to “you do as we say”, which is not in the spirit of Ostrom’s research.
Planetary Governance
Transcending national sovereignty on questions of the biosphere is key to the authors’ ambitions. At a bare minimum, the authors desire legally-binding commitments to international agreements on environmental governance, unlike the unenforceable promises made for the Paris Climate Accords:
“At present, the United Nations General Assembly, or a more specialized body mandated by the Assembly, could be the starting point for such an overarching body, even though the General Assembly, with its state-based approach that grants equal voting rights to both large countries and micronations, represents outdated traditions of an old European political order.”
But the votes of various “micronations” count for zilch when it comes to real “claims” on the resources of other sovereign nations! Otherwise, there is nothing “voluntary” about the regime proposed in the PC paper.
“A challenge for such regimes is to duly adapt and adjust notions of state sovereignty and self-determination, and to define obligations and reciprocal support and compensation schemes to ensure protection of the Earth system, while including comprehensive stewardship obligations and mandates aimed at protecting Earth-regulating systems in a just and inclusive way.”
So there! The way forward is to adopt the broadest possible definition of market failure and global regulation of any and all private activity touching on nature in any way. And note here a similarity to the Paris Accords: achieving commitments would fall to national governments whose elites often demonstrate a preference for top-down solutions.
Ah Yes, Redistribution
It should be apparent by now that the PC paper follows a now well-established tradition in multi-national climate “negotiations” to serve as subterfuge for redistribution (which, incidentally, includes the achievement of interspecies justice):
“For instance, a more equal sharing of the burdens of climate stabilization would require significant multilateral financial and technology transfers in order not to harm the poorest globally (116).”
The authors insist that participation in this governance would be “voluntary”, but the following sentence seems inconsistent with that assurance:
“… considering that any move to strengthen planetary commons governance would likely be voluntarily entered into, the burdens of conservation must be shared fairly (115).”
Wait, what? “Voluntary” at what level? Who defines “fairness”? The authors approvingly offer this paraphrase of the words of Brazilian President Lula da Silva,
“… who affirmed the Amazon rainforest as a collective responsibility which Brazil is committed to protect on behalf of all citizens around the world, and that deserves and justifies compensation from other nations (117).”
Let Them Eat Cake
Furthermore, PC would require de-growth and so-called “sufficiency” for thee (i.e., be happy with less), if not for those who’ll design and administer the regime.
“… new principles that align with novel Anthropocene dynamics and that could reverse the path-dependent course of current governance. These new principles are captured under a new legal paradigm designed for the Anthropocene called earth system law and include, among others, the principles of differentiated degrowth and sufficiency, the principle of interconnectivity, and a new planetary ethic (e.g., principle of ecological sustainability) (134).”
If we’re to take the PC super-regulators at their word, the regulatory regime wouldimpinge on fertility decisions as well. Just who might we trust to govern humanity thusly? If we’re wise enough to applythe Munger Test, we wouldn’t grant that kind of power to our worst enemy!
Global Warmism
The underlying premise of the PC proposal is that a global crisis is now unfolding before our eyes: anthropomorphic global warming (AGW). The authors maintain that emissions of carbon dioxide are the cause of rising temperatures, rapidly rising sea levels, more violent weather, and other imminent disasters.
“It is now well established that human actions have pushed the Earth outside of the window of favorable environmental conditions experienced during the Holocene…”
“Earth system science now shows that there are biophysical limits to what existing organized human political, economic, and other social systems can appropriate from the planet.”
For a variety of reasons, both of these claims are more dubious than one might suppose based on popular narratives. As for the second of these, mankind’s limitless capacity for innovation is a more powerful force for sustainability than the authors would seem to allow. On the first claim, it’s important to note that the PC paper’s forebodings are primarily based on modeled, prospective outcomes, not historical data. The models are drastically oversimplified representations of the earth’s climate dynamics driven by exogenous carbon forcing assumptions. Their outputs have proven to be highly unreliable, overestimating warming trends almost without exception. These models exaggerate climate sensitivity to carbon forcings, and they largely ignore powerful natural forcings such as variations in solar irradiance, geological heating, and even geological carbon forcings. The models are also notorious for their inadequate treatment of feedback effects from cloud cover. Their predictions of key variables like water vapor are wildly in error.
The measurement of the so-called “global temperature” is itself subject to tremendous uncertainty. Weather stations come and go. They are distributed very unevenly across land masses, and measurement at sea is even sketchier. Averaging all these temperatures would be problematic even if there were no other issues… but there are. Individual stations are often sited poorly, including distortions from heat island effects. Aging of equipment creates a systematic upward bias, but correcting for that bias (via so-called homogenization) causes a “cooling the past” bias. It’s also instructive to note that the increase in global temperature from pre-industrial times actually began about 80 years prior to the onset of more intense carbon emissions in the 20th century.
Climate alarmists often speak in terms of temperature anomalies, rather than temperature levels. In other words, to what extent do temperatures differ from long-term averages? The magnitude of these anomalies, using the past several decades as a base, tend to be anywhere from zero degrees to well above one degree Celsius, depending on the year. Relative to temperature levels, the anomalies are a small fraction. Given the uncertainty in temperature levels, the anomalies themselves are dwarfed by the noise in the original series!
Pick Your Own Tipping Point
It seems that“tipping point” scares are heavily in vogue at the moment, and the PC proposal asks us to quaff deeply of these narratives. Everything is said to be at a tipping point into irrecoverable disaster that can be forestalled only by reforms to mankind’s unsustainable ways. To speak of the possibility of other causal forces would be a sacrilege. There are supposed tipping points for the global climate itself as well as tipping points for the polar ice sheets, the world’s forests, sea levels and coastal environments, severe weather, and wildlife populations. But none of this is based on objective science.
For example, the 1.5 degree limit on global warming is a wholly arbitrary figure invented by the IPCC for the Paris Climate Accords, yet the authors of the PC proposal would have us believe that it was some sort of scientific determination. And it does not represent a tipping point. Cliff Mass explains that climate models do not behave as if irreversible tipping points exist.
Likewise, the rise of sea levels has not accelerated from prior trends, so it has nothing to do with carbon forcing.
One thing carbon forcings have accomplished is a significant greening of the planet, which if anything bodes well for the biosphere
What about the disappearance of the polar ice sheets? On this point, Cliff Mass quotes Chapter 3 of the IPCC’s Special Report on the implications of 1.5C or more warming:
“there is little evidence for a tipping point in the transition from perennial to seasonal ice cover. No evidence has been found for irreversibility or tipping points, suggesting that year-round sea ice will return given a suitable climate.”
The PC paper also attempts to connect global warming to increases in forest fires, but that’s incorrect: there has been no increasing trend in forest fires or annual burned acreage. If anything, trends in measures of forest fire activity have been negative over the past 80 years.
Concluding Thoughts
The alarmist propaganda contained in the PC proposal is intended to convince opinion leaders and the public that they’d better get on board with draconian and coercive steps to curtail economic activity. They appeal to the sense of virtue that must always accompany consent to authoritarian action, and that means vouching for sacrifice in the interests of environmental and climate equity. All the while, the authors hide behind a misleading version of Elinor Ostrom’s insights into the voluntary and cooperative husbandry of common pool resources.
One day we’ll be able to produce enough carbon-free energy to accommodate high standards of living worldwide and growth beyond that point. In fact, we already possess the technological know-how to substantially reduce our reliance on fossil fuels, but we lack the political will to avail ourselves of nuclear energy. With any luck, that will soften with installations of modular nuclear units.
Ultimately, we’ll see advances in fusion technology, beamed non-intermittent solar power from orbital collection platforms, advances in geothermal power, and effective carbon capture. Developing these technologies and implementing them at global scales will require massive investments that can be made possible only through economic growth, even if that means additional carbon emissions in the interim. We must unleash the private sector to conduct research and development without the meddling and clumsy efforts at top-down planning that typify governmental efforts (including an end to mandates, subsidies, and taxes). We must also reject ill-advised attempts at geoengineered cooling that are seemingly flying under the regulatory radar. Meanwhile, let’s save ourselves a lot of trouble by dismissing the interventionists in the planetary commons crowd.
Germany’s inter-war descent into genocidal barbarism is perhaps the most horrifying episode of modern times. Seemingly normal, “nice people” in Germany were persuaded to go along with the murderous pogroms of the anti-Semitic National Socialists, giving truth to the “banality of evil”, as the famous expression goes. Of course, there were plenty of true believers, and multitudes bowed to the Nazis under fierce coercion, but many others went along just to “fit in”.
What could life have felt like in Weimar Germany in the late 1920s and early 1930s as the fascists accumulated power? Were normal people afraid? Well before Adolf Hitler’s rise to power he was known for his hatred of Jews, but German political leaders who enabled his ascent did not take his extreme prejudice as seriously as they should have, or they thought they could at least keep him and his followers in check. Surely there were people who foresaw the approaching cataclysm for what it would be.
Current expressions of anti-Semitism might give us a sense of what life was like during the decline and fall of the Weimar Republic. Just ask Jewish students at NYU and Cornell if they’ve sensed a whiff of it in the wake of Hamas’ slaughter of civilians in southern Israel on October 7th. The harassment these students have endured was motivated in part by claims that Israeli retaliation is morally inferior to the barbarities committed by Hamas, which is preposterous.
Of course, unlike late Weimar Germany, when Jews were blamed for economic (and other) problems, the Jew hatred we’re witnessing in the U.S. today has little to do with the immediate state of the economy. Conditions now are nothing like what prevailed in Germany as the Great Depression took hold, despite current inflationary stresses on real household incomes.
And yet some hold Jews in contempt for their relative economic success, a fact that is bound up with the frequency with which Jews are placed at the center of economic conspiracy theories. One would think Jews to be the ultimate “white oppressors”. But it seems that much of the current wave of anti-Semitism comes from fairly elite quarters, ensconced within major institutions where its sympathizers are insulated from day-to-day economic pressures.
And that brings us to a frightening aspect of the current malaise: how heavily institutionalized the hatred for certain groups or “classes” has already become. This owes to the blame directed toward whites, men, Jews, and Asians presumed to have been endowed with an inside track on success at the expense of others. Success of any kind, in the narrative of “critical” social justice, is “oppressive”, as if success is a zero-sum game.
“The ‘social justice’ political analysis is founded on the Marxist conviction that society is divided into two classes: oppressors and victims. The corresponding ‘social justice’ ethic is that victims must be raised up and celebrated and that oppressors must be suppressed and eliminated.”
This thinking has been integrated into the policies, practices and rhetoric taught in schools at all levels, corporations andnonprofits, social and traditional media, and government (including intelligence agencies and the military). This level of integration gives diversity, equity, and inclusivity (DEI) policies coercive force on behalf of so-called “protected groups”, in the parlance of anti-discrimination law. When those practices are enforced by government in various ways, the private gains extracted from “unprotected” groups amount to fascism.
Bari Weiss wrote an article in Tablet last week entitled “End DEI” in which she describes her bemused reaction as a student in the early 2000s to nascent DEI rhetoric. (Also see her recent speech to the Federalist Society here.) It’s more obvious today, but even then she recognized the hate inherent in DEI doctrine. She crystallizes the dangers she saw in DEI ideology:
“What I saw was a worldview that replaced basic ideas of good and evil with a new rubric: the powerless (good) and the powerful (bad). It replaced lots of things. Colorblindness with race-obsession. Ideas with identity. Debate with denunciation. Persuasion with public shaming. The rule of law with the fury of the mob.
“People were to be given authority in this new order not in recognition of their gifts, hard work, accomplishments, or contributions to society, but in inverse proportion to the disadvantages their group had suffered, as defined by radical ideologues. According to them, as Jamie Kirchick concisely put it in these pages: ‘Muslim > gay, Black > female, and everybody > the Jews.’”
Weiss says Jewish leaders told her, at that time, not to be hysterical, that these perverse ideas would ultimately pass like any fad. That sounds so eerily familiar. Instead, we’ve witnessed a widespread ideological takeover.
“If underrepresentation is the inevitable outcome of systemic bias, then overrepresentation—and Jews are 2% of the American population—suggests not talent or hard work, but unearned privilege. This conspiratorial conclusion is not that far removed from the hateful portrait of a small group of Jews divvying up the ill-gotten spoils of an exploited world.
“It isn’t only Jews who suffer from the suggestion that merit and excellence are dirty words. It is strivers of every race, ethnicity, and class. That is why Asian American success, for example, is suspicious. The percentages are off. The scores are too high. From whom did you steal all that success?”
The whole DEI enterprise is corrupt and unethical. It denies the meritorious in favor of those having certain superficial characteristics like the “right” skin color. That is evil and economically demented besides. It also breeds hatred that often flows both ways between classes of people, creating an incendiary environment. That we’re talking about systemic, legalized discrimination against any group is disturbing enough, but when small minorities are “othered” in this way, the potential for violent action against them is magnified. But this is just where the DEI mindset leads its proponents and beneficiaries.
Our slide into this monstrous “social justice” regime mirrors the insanity and anger that was fomented against certain “out groups” when the Nazi’s accumulated power in the latter years of the Weimar Republic. Too many today have succumbed to this zero-sum psychology, young and old alike. Fortunately, they are beginning to face some fierce resistance, but those who extol the supposed righteousness of the class struggle via DEI won’t easily give up. Our institutions are infested with their kind.
As long as influential people preach the virtues of DEI and social justice, the danger of a headlong plunge into genocidal madness is possible. And the sad truth is that normal human beings are subject to social manipulation of the most evil kind.David Foster at Ricochet: quotes an address given by C.S. Lewis in which he emphasizes this point. His words are haunting:
“Of all the passions, the passion for the Inner Ring is most skillful in making a man who is not yet a very bad man do very bad things.”
Elsewhere in Lewis’ address, he says:
“And the prophecy I make is this. To nine out of ten of you the choice which could lead to scoundrelism will come, when it does come, in no very dramatic colours. Obviously bad men, obviously threatening or bribing, will almost certainly not appear. Over a drink, or a cup of coffee, disguised as triviality and sandwiched between two jokes, from the lips of a man, or woman, whom you have recently been getting to know rather better and whom you hope to know better still—just at the moment when you are most anxious not to appear crude, or naïf or a prig—the hint will come. It will be the hint of something which the public, the ignorant, romantic public, would never understand: something which even the outsiders in your own profession are apt to make a fuss about: but something, says your new friend, which ‘we’ — and at the word ‘we’ you try not to blush for mere pleasure—something ‘we’ always do.
“And you will be drawn in, if you are drawn in, not by desire for gain or ease, but simply because at that moment, when the cup was so near your lips, you cannot bear to be thrust back again into the cold outer world. It would be so terrible to see the other man’s face—that genial, confidential, delightfully sophisticated face—turn suddenly cold and contemptuous, to know that you had been tried for the Inner Ring and rejected. And then, if you are drawn in, next week it will be something a little further from the rules, and next year something further still, but all in the jolliest, friendliest spirit. It may end in a crash, a scandal, and penal servitude; it may end in millions, a peerage and giving the prizes at your old school. But you will be a scoundrel.”
There’s justifiable controversy surrounding TikTok, the social media app. I find much to dislike about TikTok but also much to dislike about the solutions some have proposed, such as a complete ban on the app in the United States. Such proposals would grant the federal executive branch powers that most of us wouldn’t grant to our worst enemy (i.e., they fail the “Munger test”).
Congressional Activity
The proposed RESTRICT Act (Restricting the Emergence of Security Threats that Risk Information and Communications Technology) is a bipartisan effort to eliminate the perceived threats to national security posed by technologies like TikTok. That would include a ban on the app. Proponents of a ban go further than national security concerns, arguing that TikTok represents a threat to the health and productivity of users. However, an outright ban on the app would be a drastic abridgment of free speech rights, and it would limit Americans’ access to a popular platform for creativity and entertainment. In addition, the proposed legislation would authorize intrusions into the privacy of Americans and extend new executive authority into the private sphere, such as tampering with trade and commerce in ways that could facilitate protectionist actions. In fact, so intrusive is the RESTRICT Act that it’s been called a “Patriot Act for the digital age.” From Scott Lincicome and several coauthors at CATO:
“… the proposal—at least as currently written—raises troubling and far‐reaching concerns for the First Amendment, international commerce, technology, privacy, and separation of powers.”
Bad Company
TikTok is owned by a Chinese company, ByteDance, and there is understandable concern about the app’s data collection practices and the potential for the Chinese government to access user data for nefarious purposes. The Trump administration cited these concerns when it attempted to ban TikTok in 2020, and while the ban was ultimately blocked by a federal judge, the Biden administration has also expressed concerns about the app’s data security.
TikTok has also been accused of promoting harmful content, including hate speech, misinformation, and sexually explicit material. Critics argue that the app’s algorithm rewards provocative and controversial content, which can lead to the spread of harmful messages and the normalization of inappropriate behavior. Of course, those are largely value judgements, including labels like “provocative”, “inappropriate”, and many interpretations of content as “hate speech”. With narrow exceptions, such content is protected under the First Amendment.
Unlike L. Frank Baum’s Tik-Tok machine in the land of Oz, the TikTok app might not always qualify as a “faithful servant”. There are some well-founded health and performance concerns related to TikTok, however. Some experts have expressed reservations about the effects of the app on attention span. The short-form videos typical of TikTok, and endless scrolling, suggest that the app is designed to be addictive, though I’m not aware of studies that purport to prove its “addictive nature. Of course, it can easily become a time sink for users, but so can almost all social media platforms. Nevertheless, some experts contend that heavy use of TikTok may lead to a decrease in attention span and an increase in distraction, which can have negative implications for productivity, learning, and mental health.
Bad Government
The RESTRICT Act, or a ban on TikTok, would drastically violate free speech rights and limit Americans’ access to a popular platform for creativity and self-expression. TikTok has become a cultural phenomenon, with millions of users creating and sharing content on the app every day. This is particularly true of more youthful individuals, who are less likely to be persuaded by their elders’ claims that the content available on TikTok is “inappropriate”. And they’re right! At the very least, “appropriateness” depends on an individual’s age, and it is generally not an area over which government should have censorship authority, “community standards” arguments notwithstanding. Furthermore, allowing access for children is a responsibility best left in the hands of parents, not government.
Likewise, businesses should be free to operate without undue interference from government. The RESTRICT Act would violate these principles, as it would limit individual choice and potentially harm innovation within the U.S. tech industry.
A less compelling argument against banning TikTok is that it could harm U.S.-China relations and have broader economic consequences. China has already warned that a TikTok ban could prompt retaliation, and such a move could escalate tensions between the two countries. That’s all true to one degree or another, but China has already demonstrated a willingness and intention to harm U.S.-China relations. As for economic repercussions, do business with China at your own risk. According to this piece, U.S. investment in the PRC’s tech industry has fallen by almost 80% since 2018, so the private sector is already taking strong steps to reduce that risk.
Like it or not, however, many software companies are subject to at least partial Chinese jurisdiction. The means the RESTRICT Act would do far more than simply banning TikTok in the U.S. First, it would subject on-line activity to much greater scrutiny. Second, it would threaten users of a variety of information or communications products and services with severe penalties for speech deemed to be “unsafe”. According to Columbia Law Professor Philip Hamburger:
“Under the proposed statute, the commerce secretary could therefore take ‘any mitigation measure to address any risk’ arising from the use of the relevant communications products or services, if the secretary determines there is an ‘undue or unacceptable risk to the national security of the United States or the safety of United States persons.’
We live in an era in which dissenting speech is said to be violence. In recent years, the Federal Bureau of Investigation has classified concerned parents and conservative Catholics as violent extremists. So when the TikTok bill authorizes the commerce secretary to mitigate communications risks to ‘national security’ or ‘safety,’ that means she can demand censorship.”
A Lighter Touch
The RESTRICT Act is unreasonably broad and intrusive and an outright ban of TikTok is unnecessarily extreme. There are less draconian alternatives, though all may involve some degree of intrusion. For example, TikTok could be compelled to allow users to opt out of certain types of data collection, and to allow independent audits of its data handling practices. TikTok could also be required to store user data within the U.S. or in other countries that have strong data privacy laws. While this option would represent stronger regulation of TikTok, it could also be construed as strengthening the property rights of users.
To address concerns about TikTok’s ownership by a Chinese company, its U.S. operations could be required to partner with a U.S. company. Perhaps this could satisfied by allowing a U.S. company to acquire a stake in TikTok, or by having TikTok spin off its U.S. operations into a separate company that is majority-owned by a U.S. entity.
Finally, perhaps political or regulatory pressure could persuade TikTok to switch to using open-source software, as Elon Musk has done with Twitter. Then, independent developers would have the ability to audit code and identify security vulnerabilities or suspicious data handling practices. From there, it’s a matter of caveat emptor.
Restrain the Restrictive Impulse
The TikTok debate raises important questions about the role of government in regulating technology and free speech. Rather than impulsively harsh legislation like the RESTRICT Act or an outright ban on TikTok, an enlightened approach would encourage transparency and competition in the tech industry. That, in turn, could help address concerns about data security and promote innovation. Additionally, individuals should take personal responsibility for their use of technology by being mindful of the content they consume and what they reveal about themselves on social media. That includes parental responsibility and supervision of the use of social media by children. Ultimately, the TikTok debate highlights tensions between national security, technological innovation, and individual liberty. and it’s important to find a balance that protects all three.
Note: The first draft of this post was written by ChatGPT, based on an initial prompt and sequential follow-ups. It was intended as an experiment in preparation for a future post on artificial intelligence (AI). While several vestiges of the first draft remain, what appears above bears little resemblance to what ChatGPT produced. There were many deletions, rewrites, and supplements in arriving at the final draft.
My first impression of the ChatGPT output was favorable. It delineated a few of the major issues surrounding a TikTok ban, but later I was struck by its repetition of bland generalities and its lack of information on more recent developments like the RESTRICT Act. The latter shortfall was probably due to my use of ChatGPT 3.5 rather than 4.0. On the whole, the exercise was fascinating, but I will limit my use of AI tools like ChatGPT to investigation of background on certain questions.
The answer to that question, kids, is a resounding no! The Federal Reserve created far too much liquidity during and after the pandemic and waited too long to reverse that policy. That’s a common view among the “monetarazzi”, but far too many analysts, in the next breath, assert that the Fed is going too far in tightening policy. Sorry, but you can’t have it both ways! Thus far, the reductions we’ve seen in the monetary aggregates (M1, M2, M3) represent barely a trickle out of the ocean of liquidity released during the previous two years. The recent slight moderation in the rate of inflation is unlikely to gain momentum without persistence by the Fed.
This Could Be Easier
I humbly concede, however, that a different approach by the Fed might have been less disruptive. A better alternative would have involved more aggressive reductions in the gigantic portfolio of securities it acquired via “quantitative easing” (QE) during the pandemic while avoiding direct intervention to raise short-term interest rates. In fact, allowing interest rates to be determined by the market, rather than via central bank intervention, is more sensible in terms of pricing debt of any duration. It also suggests a more direct and sensible approach to managing the growth of the money supply. Of course, had the Fed unwound QE more aggressively, short-term rates would surely have risen anyway, but to levels appropriate to rationing liquidity more efficiently. Furthermore, those rates could have served as a useful indicator of the market’s ability to digest a particular volume of sales from the Fed’s portfolio.
Getting Tight
The chart below shows the level of the monetary base (bank reserves plus currency) over the past five years from the Trading Economics site. The monetary base is the narrow monetary aggregate supporting growth of the money stock and is under fairly direct control of the Fed.
The base has declined substantially during 2022 largely as a consequence of the Fed’s restrictive policies. However, it has retraced only about a third of the massive expansion engineered by the Fed over the two prior years. Here is the corresponding plot of the M1 money stock (currency plus checking deposits):
So the reductions in the base have yet to translate into much of a reduction in the money stock, though growth in all of the aggregates has certainly declined. No one thinks this will be a walk in the park. Withdrawing liquid capital from markets accustomed to swilling in excesses will have consequences, particularly for investors who’ve grown undisciplined in their approach to evaluating prospective assets. Investors and society at large inevitably pay the price for the malinvestment encouraged by unbridled money growth (not to mention misdirected industrial policies … that’s a different can of worms).
But the squeamish resist! I got a kick out of this tweet by Noah Smith in which he pokes fun at those who insist that the surge in inflation was a mere transitory phenomenon:
“Team Transitory: OMG inflation is just going to go away, you don’t need to raise interest rates.
Fed: *raises interest rates*
Inflation: *goes down a bit*
Team Transitory: SEE, I told you inflation was going away and that you didn’t need to raise interest rates!!”
Well, in fairness, “Team Transitory” has been fixated on supply disruptions that very well should resolve with private efforts over time. Some have resolved already. And again, we’ve yet to feel much impact from the Fed’s tighter policy, but I’m amused by the tweet nevertheless.
In fact, the surge in inflation has been driven by both supply and demand factors, and it’s true the Fed can do very little about the former. But stalling the effort to purge excess liquidity and demand-side inflation risks allowing expectations of inflation to edge higher, creating an environment in which price pressures are more resistant to policy actions.
Inflation And Its Proximate Sources
It is indeed good news that inflation has tapered slightly over the past few months, or at least the “headline” inflation numbers have tapered. Weaker energy prices helped a great deal, though releases from the Strategic Petroleum Reserve aren’t sustainable. Measures of “core” inflation that exclude food and energy prices, and more central measures of inflation within the spectrum of goods and services, have moved sideways or perhaps shown signs of a slight moderation.
Here’s a plot of several measures of CPI inflation taken from the Cleveland Fed’s web site. Note that the median component of the CPI has finally hit a plateau, and a “trimmed” measure that excludes CPI components with extreme changes has dipped slightly. The Core CPI has fluctuated in a range just above 6% for most of the year.
The deflator for personal consumption expenditures (PCE) gets more emphasis from the Fed in its policy deliberations. The latest release at the start of December showed patterns similar to the CPI:
With respect to the PCE deflator, the slight dampening of price pressure we’ve seen recently came primarily from the supply side, with some progress on the demand side as well. Energy was one factor on the supply side, but even the core PCE deflator shows less supply pressure. Adam Shapiro has a decomposition of the PCE deflator into supply-driven and demand-driven components (but the chart only goes through October):
First, without endorsing Shapiro’s construction of this dichotomy, I note that the impact of monetary policy is primarily through the demand side of the economy. Of course, monetary instability isn’t good for producers, and excessive money growth and inflation create uncertainty that inhibits supply. But what we’ve seen recently has more to do with the curing of supply chain bottlenecks that cropped up during the pandemic (or in its wake), and Shapiro attempts to capture that kind of phenomenon here.
Still, many would argue that the November CPI showed sufficient progress for the Fed to pause its tightening campaign. The reductions in the monthly price increases were fairly widespread, as shown by this table from the CPI report:
The next chart from Joe Wiesenthal (via Bloomberg) displays trends in broad CPI categories, but it shows vividly that the reductions were concentrated in energy components and goods prices, while services and food inflation did not really abate. (The legend is so hard to read that I took the liberty of blowing it up a bit below the chart itself):
Playing Catch-Up
While the Fed’s effort to restrain inflation began in earnest in the spring of this year, it lifted the federal funds rate target rapidly. Here’s another chart from Adam Shapiro, via the Wall Street Journal: the Fed’s current tightening cycle is the fastest in 40 years in terms of those rate hikes:
Fast, yes, but they got a late start in the face of a rapid acceleration of inflation, and for what it’s worth, the Fed’s rate target remains below the rate of inflation. Yes, I’m forced to acknowledge here that the Fed’s preference for rate intervention and targeting is just what they do, for now. In any case, top-line inflation and strictly demand-side inflation are still above the Fed’s 2% target.
Fabian Fiscal Expansionists
One “fix” recommended in some circles suggests that the Fed’s inflation target is too low, as if price stability had nothing to do with its mandate! The idea that low-grade inflation is a healthy thing has never been convincingly demonstrated. In fact, the monetary literature leans strongly in the direction of price stability and an optimal rate of inflation of zero! That the Fed should aim for higher inflation seems like a cop-out intended to appease those who still subscribe to the discredited notion that there exists a reliable long-run tradeoff between inflation and unemployment.
In fact, proposals to increase the central bank’s inflation target would enable more deficit spending financed with the “printing press”, which is at the root of the demand-side inflation problem we now face. A major justifications for ballooning levels of federal spending has been so-called Modern Monetary Theory (MMM), which has gained adherents among statists in the years since the Great Recession. MMM holds that “important” initiatives can simply be paid for with new money creation, rather than interest bearing debt, or God forbid, taxes! “Partisan” is probably a better description than “theorist” for any fan of MMM, and they have convinced themselves that money financed deficits are without inflationary consequences. Of course, this represents a complete suspension of the law of resource scarcity, not to mention years of monetary history. Raising the Fed’s inflation target plays well with the same free-lunch advocates who rally behind MMM.
The Fed’s Unfaithful Fiscal Partner
Federal budget control is likely to take another hit this week with passage of the $1.7 omnibus spending bill. It includes spending increases with no immediate offsets as required under the pay-as-you-go budget law. It delays those offsets to 2025 and increases deficits in the interim by hundreds of billions of dollars. It also sets a new, higher baseline for discretionary appropriations in future years. The federal deficit has already risen dramatically compared to a year ago under the fiscal profligacy of Congress and the Administration. Another contributing factor, however, is that the interest cost of servicing the national debt has spiked as interest rates have risen. Needless to say, none this makes the Fed’s job any easier, especially as it seeks to reverse QE.
Say Uncle!?
When will the Fed begin to take its foot off the brake? It “only” raised the Fed funds target by 50 basis points at its meeting last week (after four 75 bps moves in a row. It is expected to raise the target another 50 bps in early February and perhaps another 25 in March. Strong signals of imminent recession would be needed for the Fed to call it off any sooner, and we’re definitely seeing more hints of a weakening economy in the data (and see here, here, here, and here). More definitive declines in inflation would obviously help settle things. Otherwise, the Fed may pause after March in order to gauge progress toward its goal of 2% inflation.
What does it take to shake people out of their statist stupor? Evidently, the sweet “logic” of universal confinement is very appealing to the prescriptive mindset of busybodies everywhere, who anxiously wag their fingers at those whom they view as insufficiently frightened. As difficult as it is for these shrieking, authoritarian curs to fathom, measures like lockdowns, restrictions on business activity, school closures, and mandates on behavior have at besta limited impact on the spread of the coronavirus, and they are enormously costly in terms of economic well-being and many dimensions of public health. Yet the storm of propaganda to the contrary continues. Media outlets routinely run scare stories, dwelling on rising case numbers but ignoring them when they fall; they emphasize inflated measures of pandemic severity; certain researchers and so-called health experts can’t learn the lessons that are plain in the data; and too many public officials feel compelled to assert presumed but unconstitutional powers. At least the World Health Organization has managed to see things clearly, but many don’t want to listen.
I’ll be the first to say I thought the federalist approach to COVID policy was commendable: allow states and local governments to craft policies appropriate to local conditions and political preferences, rather than have the federal government dictate a one-size-fits-all policy. I haven’t wavered in that assessment, but let’s just say I expected more variety. What I failed to appreciate was the extent to which state and local leaders are captive to provincial busybodies, mavens of precautionary excess, and fraudulent claims to scientific wisdom.
Of course, it should be obvious that the “knowledge problem” articulated by Friedrich Hayek is just as dangerous at low-levels of government as it is in a central Leviathan. And it’s not just a knowledge problem, but a political problem: officials become panicked because they fear bad outcomes will spell doom for their careers. Politicians are particularly prone to the hazards of “do-somethingism”, especially if they have willing, status-seeking “experts” to back them up. But as Scott Sumner says:
“When issues strongly impact society, the science no longer ‘speaks for itself’.
Well, the science is not quite as clear as the “follow-the-science” crowd would have you believe. And unfortunately, public officials have little interest in sober assessments of the unintended effects of lockdown policy.
In my last post, I presented a simple framework for thinking about the benefits and costs of lockdown measures, or non-pharmaceutical interventions (NPIs). I also emphasized the knowledge problem: even if there is some point at which NPI stringencies are “optimized”, government does not possess the knowledge to find that point. It lacks detailed information on both the costs and benefits of NPIs, but individual actors know their own tolerance for risk, and they surely have some sense of the risks they pose to others in their normal course of affairs. While voluntary precautions might be imperfect, they accomplish much of what interventionists hope will be gained via coercion. But, in an effort to “sell” NPIs to constituents and assert their authority, officials vastly over-estimate benefits of NPIs and under-estimate the costs.
NPI Stringency and COVID Outcomes
Let’s take a look at a measure of the strength of NPIs by state — the University of Oxford Stringency Index — and compare those to CDC all-cause excess deaths in each state. If it’s hard to read, try clicking on the image or turn your phone sideways. This plot covers outcomes through mid-November:
The chart doesn’t suggest any benefit to the imposition of greater restrictions, or more stringent NPIs. In fact, the truth is that people will do most of the work on their own based on perceptions of risk. That’s partly because government restrictions add little risk mitigation to what can be accomplished by voluntary social distancing and other precautions.
Here’s a similar chart with cross-country comparisons, though the data here ended in early October (I apologize for the fuzzy image):
But what about reverse causality? Maybe the imposition of stringency was a response to more severe contagions. Now that the virus has swept most of the U.S and Europe in three distinct waves, and given the variety and timing of NPIs that have been tried, it’s harder to make that argument. States like South Dakota have done fairly well with low stringency, while states like New Jersey with high stringency have fared poorly. The charts above provide multiple pair-wise examples and counter-examples of states or countries having faced hard waves with different results.
But let’s look at a few specific situations.
The countries shown above have converged somewhat over the past month: Sweden’s daily deaths have risen while the others have declined to greater or lesser degrees, but the implications for mask usage are unaltered.
And of course we have this gem, predicated on the mental gymnastics lockdown enthusiasts are fond of performing:
But seriously, it’s been a typical pattern: cases rise to a point at which officials muster the political will to impose restrictions, often well after the “exponential” phase of the wave or even the peak has passed. For the sake of argument, if we were to stipulate that lockdowns save lives, it would take time for these measures to mitigate new infections, time for some of the infected individuals to become symptomatic, and more time for diagnosis. For the lockdown arguments to be persuasive, the implementation of NPIs would have to precede the point at which the growth of cases begins to decline by a few weeks. That’s something we’ve seldom observed, but officials always seem to take credit for the inevitable decline in cases.
More informed lockdown proponents have been hanging their hats on this paper in Nature by Seth Flaxman, et al, published in July. As Philippe LeMoine has shown, however, Flaxman and his coauthors essentially assumed their result. After a fairly exhaustive analysis, Lemoine, a man who understands sophisticated mathematics, offers these damning comments:
“Their paper is a prime example of propaganda masquerading as science that weaponizes complicated mathematics to promote questionable policies. Complicated mathematics always impresses people because theydon’t understand it and it makes the analysis look scientific, but often it’s used to launder totally implausible assumptions, which anyone could recognize as such if they were stated in plain language. I think it’s exactly what happened with Flaxman et al.’s paper, which has been used as a cudgel to defend lockdowns, even though it has no practical relevance whatsoever.”
The Economic Costs of Stringency
So the benefits of stringent lockdowns in terms of averting sickness and death from COVID are speculative at best. What about the costs of lockdowns? We can start with their negative impact on economic activity:
That’s a pretty bad reflection on NPI stringency. In the U.S, a 10% decline in GDP in 2020 amounts to about $2.1 trillion in lost goods and services. That’s just for starters. The many destroyed businesses and livelihoods carry an ongoing cost that could take years to fade, as this graphic on permanent business closures shows:
If you’re wondering about the distributional effects of lockdowns, here’s more bad news:
It’s possible to do many high-paying jobs from home. Not so for blue-collar workers. And distributional effects by size of enterprise are also heavily-skewed in favor of big companies. Within the retail industry, big-box stores are often designated as “essential”, while small shops and restaurants are not. The restaurant industry has been destroyed in many areas, inflicting a huge blow to owners and workers. This despite evidence from contact tracing showing that restaurants and bars account for a very small share of transmission. To add insult to injury, many restaurants invested heavily in safety measures and equipment to facilitate new, safer ways of doing business, only to be double-crossed by officials like Andrew Cuomo and Eric Garcetti, who later shut them down.
Public Health Costs of Stringency
Lives are lost due to lockdowns, but here’s a little exercise for the sake of argument: The life value implied by individual willingness-to-pay for risk reduction comes in at less than $4 million. Even if the supposed 300,000 COVID deaths had all been saved by lockdowns, that would have amounted to a value of $1.2 trillion, about half of the GDP loss indicated above. Of course, it would be outrageously generous to concede that lives saved by NPI’s have approached 300,000, so lockdowns fall far short at the very outset of any cost-benefit comparison, even if we value individual lives at far more than $4 million.
As AJ Kay says, the social and human costs go far beyond economic losses:
I cited specific examples of losses in many of these categories in an earlier post. But for the moment, instead of focusing on causes of death, take a look at this table provided by Justin Hart showing a measure of non-COVID excess deaths by age group in the far right-hand column:
The numbers here are derived by averaging deaths by age group over the previous five years and subtracting COVID deaths in each group. I believe Hart’s numbers go through November. Of greatest interest here is the fact that younger age groups, having far less risk of death from COVID than older age groups, have suffered large numbers of excess deaths NOT attributed to COVID. As Hart notes later in his thread:
These deaths are a tragic consequence of lockdowns.
Educational Costs of Stringency
Many schools have been closed to in-person instruction during the pandemic, leading to severe disruptions to the education f children. This report from the Fairfax County, VA School District is indicative, and it is extremely disheartening. The report includes the following table:
Note the deterioration for disabled students, English learners, and the economically disadvantaged. The surfeit of failing grades is especially damaging to groups already struggling in school relative to their peers, such as blacks and Hispanics. Not only has the disruption to in-person instruction been disastrous to many students and their futures; it has also yielded little benefit in mitigating the contagion. A recent study in The Lancet confirms once again that transmission is low in educational settings. Also see here and here for more evidence on that point.
Conclusion
It’s clear that the “follow-the-science” mantra as a rationale for stringent NPIs was always a fraud, as was the knee-jerk response from those who conflated lockdowns with “leadership”. Such was the wrongheaded and ultimately deadly pressure to “do something”. We can be thankful that pressure was resisted at the federal level by President Trump. The extraordinary damage inflicted by ongoing NPIs was quite foreseeable, but there is one more very ominous implication. I’ll allow J.D. Tucille to sum that up with some of the pointed quotes he provides:
“‘The first global pandemic of the digital age has accelerated the international adoption of surveillance and public security technologies, normalising new forms of widespread, overt state surveillance,’ warned Kelsey Munro and Danielle Cave of the Australian Strategic Policy Institute’s Cyber Policy Centre last month.
‘Numerous governments have used the COVID-pandemic to repress expression in violation of their obligations under human rights law,’ United Nations Special Rapporteur on Freedom of Expression David Kaye noted in July.
‘For authoritarian-minded leaders, the coronavirus crisis is offering a convenient pretext to silence critics and consolidate power,’ Human Rights Watch warned back in April.
There’s widespread agreement, then, that government officials around the world are exploiting the pandemic to expand their power and to suppress opposition. That’s the case not only among the usual suspects where authorities don’t pretend to take elections and civil liberties seriously, but also in countries that are traditionally considered ‘free.’ … It’s wildly optimistic to expect that newly acquired surveillance tools and enforcement powers will simply evaporate once COVID-19 is sent on its way. The post-pandemic new normal is almost certain to be more authoritarian than what went before.”
In advanced civilizations the period loosely called Alexandrian is usually associated with flexible morals, perfunctory religion, populist standards and cosmopolitan tastes, feminism, exotic cults, and the rapid turnover of high and low fads---in short, a falling away (which is all that decadence means) from the strictness of traditional rules, embodied in character and inforced from within. -- Jacques Barzun
Sacred Cow Chips 
