Economics

TGIF: Beware the Government-“Science” Complex

The government-“science” complex ostensibly promotes the search for facts about our world, but it actually promotes and enforces orthodoxy, protects resulting paradigms, and manufactures apparent consensuses that are questioned only at one’s reputational peril. That’s why I put the word science in quotation marks. I could have called it pseudoscience or junk science.

In contrast to real science, “science” is little more than the broadcast of evidence-free alarms that politicians and bureaucrats, advised by anointed government-financed “scientists,” use to justify political action and expansion of government intrusion into our lives. The price is liberty.

The procedure starts with a politically amenable conclusion and then moves to a search for confirmation, regardless of whatever violations of good science and statistical analysis are required. Those who voice doubts about any of this, despite their credentials and previous standing, will be subjected to attacks, even on their character. The official slogan of establishment “science” might as well be, “Orthodoxy first! Protect the paradigm!”

Someone of note saw this coming. In 1961 President Dwight Eisenhower gave his televised farewell address, which has become famous for its warning “against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex.” Eisenhower went on to say, “We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted only an alert and knowledgeable citizenry can compel the proper meshing of huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.”

It makes one want to cheer! Far less known, but equally important in his eyes, was Eisenhower’s warning against the government’s centralization of scientific research, which became a real concern after World War II and with the onset of the Cold War with the Soviet Union. As he put it:

Akin to, and largely responsible for the sweeping changes in our industrial-military posture, has been the technological revolution during recent decades.

In this revolution, research has become central; it also becomes more formalized, complex, and costly. A steadily increasing share is conducted for, by, or at the direction of, the Federal government….

Partly because of the huge costs involved, a government contract becomes virtually a substitute for intellectual curiosity….

The prospect of domination of the nation’s scholars by Federal employment, project allocations, and the power of money is ever present and is gravely to be regarded.

Yet, in holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientific-technological elite.

This is truly remarkable, not to mention prescient. But I don’t know if Eisenhower was quite right. Has public policy become a captive of a scientific-technological elite? Or is it the other way around? It’s probably a combination of both. But we can readily understand how politicians and government grant-managers would naturally be attracted to research that supports their wish for more, not less, power. Some scientists, who after all are human beings too, would then be tempted to cater to this demand, which can create its own supply. If the government shows no interest in financing research that proclaims X, Y, or Z is not a problem justifying a political solution, wouldn’t you expect the number of researchers inclined that way to dwindle?

For decades scientists (and their universities) have prospered through government cash by spreading fear, either real but exaggerated or invented. This has gone far beyond research on weapons and other narrow wartime missions. Three prominent examples since World War II are the fear of dietary animal fat and cholesterol, the fear of carbon dioxide (which all life depends on), and the fear of other people, specifically, of catching COVID-19 from them. (This isn’t to says that pre-vaccine COVID-19 was not a serious danger to identifiably vulnerable people, only that it has been exaggerated beyond all reason.)

The point here is that this would have been far less likely, maybe even impossible, if scientific research funding were not concentrated in the government’s hands, largely through universities, which are hooked on taxpayer money.

Many people believe that the taxpayers must bear the biggest burden of scientific research because no one else has an interest in doing so. This is in essence a public-goods (or externality) argument for government finance. According to this argument, if the cost of doing something would fall mostly on the doer, but the benefits would fall mostly on others and charging free-riders would be unfeasible, then no doer would have a business interest in the project. That is said to be a market failure because everyone would miss out on a benefit. Thus most economists have thought that the government with its exclusive power to tax had to come to the rescue for the good of society.

But that theory, like the theories used to justify the fears mentioned above, doesn’t mirror the historical record. The insistence that basic research won’t be done by private firms sounds like the fictional scientist who insisted that the bumblebee was aerodynamically incapable of flying: he needed only to look out the window. It turns out that private investment in research has been profitable (when the government stayed out).

Writers such as Terence Kealey, Patrick Michaels, and Matt Ridley have shown in recent books that the countries that led the way in the Industrial Revolution were precisely those–Great Britain and the United States–that had almost no government support for basic scientific research until rather late in the game. In other words, private business people found the required research profitable and changed the world. Kealey and Michaels show, moreover, that postwar U.S. government spending on basic science and R&D has not increased economic growth over the previous period. Those writers also point out that revolutionary inventions by nonscientists have sometimes preceded–and even stimulated interest in–basic scientific research, the steam engine being a case in point. Moreover, the assertion that competitors will merely copy other firms’ products–that is, free-ride on others’ research–is more myth than fact because, among other reasons, much knowledge is tacit and not freely attainable through reverse engineering. (That certainly blunts the utilitarian case for patents.)

On the other hand, government finance crowds out private finance and shifts research efforts from the profit-motivated private sector to largely government-supported nonprofit universities. There are only so many really good scientists to go around. The resulting propagation of orthodoxy almost resembles the medieval guilds.

Government centralization may seem like a good idea, but it is not. The profit motive in a free market is good for society, as Adam Smith demonstrated in The Wealth of Nations. It wasn’t competition and decentralization that gave us pernicious peer review in academic publication, hiring, and promotion–a practice properly maligned as “pal review.” (Real peer review should begin after publication.) If you need evidence of such antiscience misbehavior, refresh your memory of the “Climategate” scandals.

(On all of this, see Kealey and Michaels’s Scientocracy: The Tangled Web of Public Science and Public Policy. Ridley demonstrates the benefits of decentralized competition and cooperation in The Rational Optimist: How Prosperity EvolvesThe Evolution of Everything: How New Ideas Emerge; and most recently, How Innovation Works: And Why It Flourishes in Freedom.)

We shouldn’t be surprised that decentralization, intellectual competition, and–above all–freedom from government restriction foster human well-being. The harm from coerced, that is, from government-fostered, monopoly, is well-known. The harm is just as bad in the production of knowledge as it is in the production of goods. And it’s a triple whammy for the taxpayers: they get robbed; they get regimented; and they get fear-mongering junk science for their trouble.

The Fed Is Planning For More Inflation

In late August, Fed chairman Jerome Powell suggested that the Federal Reserve would begin tapering before the end of the year, an admission that price inflation was rising above the 2 percent target. Nonetheless, the Fed took no immediate action in the following month. This week, Powell again suggested a taper would begin soon, stating it would begin soon enough that the process could “conclud[e] around the middle of next year,” and maybe could begin in November. This, of course, was highly conditional, with Powell noting this taper would only happen if “the economic recovery remains on track.”

Some interpreted this as a hawkish turn for Powell, but again, we should expect no immediate action on this. Lackluster economic growth remains a concern and Powell’s qualifier on the “recovery” remaining on track will be key. Last week, Goldman downgraded the US economic growth forecast, and the Beige Book—which always casts economic growth in a rosy glow—also reduced its description of the economy during July and August to “moderate.” Meanwhile, the Bank of England today signaled a worsening global situation with its own downgrade of growth expectations. In other words, if the economy isn’t improving enough—according to the Fed—then it can simply abandon plans to taper.

The Fed may be talking taper, but fears of low growth among doves will fuel ongoing calls for continued stimulus. In fact, we’re already seeing some calls for abandoning the 2 percent inflation target in favor of even higher targets. This, it is believed, will allow for longer and more aggressive periods of stimulus.

A Weak Recovery

The root of this drive for more inflation lies partly in the fact that many inflation doves believe that the Fed was too timid with stimulus after the Great Recession. Indeed, growth was remarkably slow in those days, producing “the slowest economic expansion” in many decades.1Brendan Brown, The Case Against 2 Per Cent Inflation: From Negative Interest Rates to a 21st Century Gold Standard, (Cham, Switzerland: Palgrave Macmillan, 2018), p. 8. This was in spite immense amounts of monetary stimulus. Nonetheless, the Fed repeatedly spoke of an “improving economy,” and repeatedly hinted at tapering. But it was only in 2016 that the Fed finally dared to allow the target interest rate to inch upward. This was largely done out of fear the Fed would have no room to maneuver in case of another crisis. Price inflation, after all, remained low in the official measures.

But in 2017 and 2018, when CPI inflation began to push above 2 percent, the expectation arose that the Fed would begin to meaningfully taper to keep inflation near the stated 2 percent target. This alarmed some inflation doves who were concerned—with good reason—that any reining in of the Fed’s easy money policies would end the very fragile and lackluster recovery then underway. They wanted to keep the asset-price inflation going—to reap the benefits of the so-called “wealth effect.” These fears were partially borne out when, in spite of the timidity of the Fed’s tapering efforts after 2018, the repo crisis of 2019 suggested trouble was indeed brewing. And it’s not surprising. Economic “growth” rested largely on a mountain of zombie companies and a financialized economy addicted to artificially cheap credit.

How that would have played out in the absence of the covid panic is unknown. In any case, efforts at reining in monetary inflation evaporated with the covid crisis and the target interest rate was quickly returned to 0.25 percent. Additional asset purchases resumed at breakneck speed, with the Fed’s portfolio soon topping $8 trillion.

Pushing Inflation Targets Upward

The covid crisis gave doves an opportunity to press for a more “flexible” inflation target. In August of 2020—with central bankers looking for new ways to justify continued stimulus—the Fed adopted a new policy in which it would pursue an average 2 percent inflation goal. In other words, the Fed could now pursue a price inflation goal above 2 percent for some periods so long as it all averaged out to 2 percent over time.

But even that hasn’t been enough for the advocates of ever more price inflation. We’re now seeing calls for ending the 2 percent target altogether—and raising it.

For example, writing at the Wall Street Journal earlier this month, Greg Ip noted that Powell appears to be banking on the inflation rate soon returning to 2 percent. But what if it doesn’t? Ip says if inflation remains above targets, the Fed should just raise the targets. He writes:

One strategy [Powell]—or his successor—should consider in that eventuality is to simply raise the target.

And why pursue higher inflation? Ip takes the popular view of the “mythical trade-off between higher employment and inflation,” as Brendan Brown describes it. For Ip, higher inflation is the way to ensure an employment-fueled expansion, and he writes:

Why would higher inflation ever be a good thing? Economic theory says modestly higher, stable inflation should mean fewer and less severe recessions, and less need for exotic tools such as central-bank bond buying, which may inflate asset bubbles. More practically, if inflation ends up closer to 3% than 2% next year, raising the target would relieve the Fed of jacking up interest rates to get inflation down, destroying jobs in the process.

According to Ip, the too-low 2 percent target places the Fed in an intolerable bind. The Fed needs more room to breathe. Rather than feel the pressure to taper just because price inflation has risen above the 2 percent target, Ip wants to make sure the Fed can just keep on with the stimulus until price inflation exceeds 3 percent, or maybe even 4 percent. And who knows? After that, maybe “economic theory” will tell us that 5 percent inflation is an even better target. Certainly, that would be no less arbitrary a number than 4 percent or 2 percent.

How Inflation Fears Put Political Limits on Easy-Money Policies

The need to raise the target rate is essentially political. Presumably, the longer inflation persists above the target rate, the more the Fed will feel pressure to bring inflation back down through some sort of tapering. After all, the adoption of a 2 percent target implies 2 percent is the “correct” inflation rate. Anything higher than that is presumably “too much.” With the Fed moving toward the 2 percent target since the 1996—and having formally adopted it in 2012—the Fed’s credibility is on the line if the Fed simply ignores the target.

But it’s a safe bet that if the accepted inflation target were increased to 4 percent, we’d be hearing little to nothing right now about tapering, normalization, or any other effort to cut price inflation. The Fed would then be more free to keep the easy money spigot open longer without having to hear complaints that the Fed has “lost control” of price inflation. That would be great for stock prices and real estate prices. Ordinary people, on the other hand, might fare less well.

This article was originally featured at the Ludwig von Mises Institute and is republished with permission.

TGIF: Get Rich Quicker!

“I have observed that not the man who hopes when others despair, but the man who despairs when others hope, is admired by a large class of persons as a sage.”John Stuart Mill, 1828

We mustn’t let the wrongdoing of politicians and bureaucrats blind us to the good things going on in the world. Outside the political realm, many things are doing pretty darn well. The long-term trends for many indicators have been positive for the last couple of centuries. Short-term disturbances, most often the result of political mischief, are temporary, and the progress resumes when the politicians loosen their grip or people find ways to ignore them. Regardless of the source, the data agree. This is not controversial stuff.

But make no mistake: this is not a recommendation for complacency. On the contrary, an outrageous number of people have been left out of the improvement, and that is a crime. We should want them to catch up. But, it has been wisely said, “You can’t fix what is wrong in the world if you don’t know what’s actually happening.

So what is actually happening? To begin with, wealth, real per capita income, per capita consumption, etc. have been expanding along with the world’s population. Poverty is vanishing. (While more people are a good thing, population growth has slowed, and as people get richer and have fewer kids, the population may well decrease a bit.) As Matt Ridley, “the rational optimist,” says, “Over the last 25 years 137,000 people have been lifted out of extreme poverty every day.” (See his video “Ten Global Trends Every Smart Person Should Know” and the book it draws on.)

According to the Guardian, “Global poverty has seen a spectacular decline since the 1960s – when about 80% of the world’s population lived in extreme poverty. Today that number has been reduced to nearer 10%, with hundreds of millions of people removed from the extremes of hardship.”

In other words, Ridley writes, “The rich get richer, but the poor do even better.”

Most people have no idea this has happened. In fact many think poverty is increasing. Young people are especially prone to this misconception.

Throughout the world, life expectancy is increasing, and infant/child mortality is falling. “Estimates suggest that in a pre-modern, poor world, life expectancy was around 30 years in all regions of the world…, according to Our World in Data. “Since 1900 the global average life expectancy has more than doubled and is now above 70 years. The inequality of life expectancy is still very large across and within countries. In 2019 the country with the lowest life expectancy is the Central African Republic with 53 years, in Japan life expectancy is 30 years longer…. The United Nations estimate a global average life expectancy of 72.6 years for 2019 – the global average today is higher than in any country back in 1950.”

As for kids: “Over the last two centuries all countries in the world have made very rapid progress against child mortality. From 1800 to 1950 global mortality has halved from around 43% to 22.5%. Since 1950 the mortality rate has declined five-fold to 4.5% in 2015. All countries in the world have benefitted from this progress.”

This is all great news, and many other positive trends could be cited, including consumption as compared with the number of hours worked, crop production, planetary greening, health, lessening violence, leisure time, resource abundance, the pace of innovation, and hospitableness of the planet.

Why is this happening? In a word, liberalization. (Of course I mean liberal in the classical Adam-Smith/Mises/Hayek/Rothbard sense.) Liberalism is far from complete anywhere, but in many places, including the developing world, people are freer, if not in political terms, then in earning-a-living terms, than they previously have been. That gives greater scope to entrepreneurship and ingenuity, which Julian Simon called “the ultimate resource.” (So-called natural resources are not natural at all.) The globalization of trade, even when governments tamper with it, is part of this. “The division of labor is limited by the extent of the market,” Adam Smith wrote in The Wealth of Nations. In other words, the more people around the world who, guided by market prices, are free (or freer) to choose their work and trade with others wherever they are, the better. Specialization and the market’s law of comparative advantage, which has been dubbed “the most elusive proposition,” make people better off.

This suggests why too many others have lagged behind. They lack essential liberty. And when people lack liberty, including private property, they will also lack significant and just economic growth, that is, growth without government privilege.

A couple of billion people in the developing world lack modern fuels and electricity. This kills such people prematurely, among other reasons, because they cook and heat their homes with wood and animal excrement, which create deadly indoor air pollution. They lack access to modern cheap, reliable, and potentially clean energy (that is, fossil fuels) because their governments create obstacles and arrogant Western politicians egged on by rich social activists block their access–without justification but much irony–in the name of protecting the planet.

That is a crime. So as I said at the start, the good things going on should not make us complacent. Today a large number of Westerners in effect tell the developing world: “Too bad for you, but we can’t allow you to reach our standard of living. We like just the way you are.” So they want to pull up the ladder.

Let us hope that the growing libertarian (that is, true liberal) movement will make a special effort to encourage the people of the developing world to tell the Western elites and their own rulers to get the hell out of the way. The people don’t need to get rich quick; they need to get rich quicker!

Abandoning the 1980s: A Strategy for the GOP

In 2022, the Republican Party has an opportunity to not just win back the House of Representatives but for the first time in a hundred years repudiate the constant creep of statism and Marxism eroding our liberties. But the GOP needs to drop its 40-year plus “game plan.” To be blunt, it is time to drop “cutting taxes,” “increasing defense” budgets, and giving lip service to federalism and limited government. The greatest threat to liberty, living standards, and our natural rights has been driven by deficit spending. We expect Democrats to continue with socialism and authoritarianism but Republicans, by essentially feeding the “beast,” have contributed as much to our current mess.

Recently, Paul Ryan, the epitome of the simplistic 1980s playbook, is back in the news. Media pundits are asking what path the GOP should take, a return to Paul Ryan or Kevin McCarthy? The former pushes pseudo “wonkism” and the latter just follows the fickle winds without any true course. Neither have a path that ensures our liberty or prosperity.

What needs to be done isn’t a return to the compassionate conservatism of Jack Kemp, because “supply side” economics had the same impact as “demand side” Keynesianism; large deficits, enrichment of the well-connected, constant growth of “complexes” (military, education, healthcare, financial, and now security), deindustrialization of America, and a profound loss of honesty, integrity, and finally, our liberty.

The objective for true change and a return to freedom must start with cutting, and eliminating deficit spending. Federal tax cuts cannot even be considered until surpluses are obtained.

Why is eliminating deficit spending the key objective?

  1. It destroys our industrial base. Federal deficits are primarily funded by the Federal Reserve printing money out of thin air. This would normally create inflation which impacts the average American’s standard of living. But with China as the off loader of our printed money, the federal government was able to launder the debt to a country which is fine “eating” our inflation as it continues to export trillions of dollars in goods. Flooding our markets with cheap goods devastated much of small-town America as factories closed by the tens of thousands. It was mutually beneficial; the Chinese communist government could round up those pesky rural peasants to factory towns to be well controlled and through currency manipulation provide American with cheap goods that Americans could buy with lots of credit (see Federal Reserve below).  Dollar stores replaced factories in small town America but the federal government enjoyed the Chinese buying just enough federal debt with their dollars to keep things from getting out of control. COVID-19 and the insane amount of money printing and spending has ended this short term pause on inflation. Real free trade is good for America but than means no subsidizes, no tariffs, and no pegging to the dollar.
  2. It allows for perpetual war. If the federal government had to raise taxes to pay for the idiotic wars since 2001, the tax “pain” would have forced their end before trillions were printed and spent and $80 billion in weapons were left for the Taliban.
  3. It subsidizes unprofitable industries and creates higher prices. The military-industrial complex, the educational complex, the healthcare complex, and security state are enriched through government privilege and protection from competition. The results are constantly rising prices and an opportunity cost of real growth benefiting real Americans.
  4. It drives wealth inequality. In a free-market, inequity is a sign of freedom but since 1971 (the year Nixon closed the gold window) the printing of money to fund big government and buy votes has primarily benefited the financial sector along with the other “regulated industries.”
  5. It feeds the growth of “wokism” which turns America into warring tribes.

The second target should be the enabler of all of this. Yes, the one who can’t be named: the Federal Reserve System. It is time to “End the Fed.” No more interest rate manipulation. No more money printing to directly buy federal debt. Credit can only come from savings, not thin air. There is no reason for the Federal Reserve to exist in 2021 (at least based on it’s supposed roles). Blockchain and changes to time and demand deposit rules would replace the need for the Fed.

Do these two things—end deficit spending by cutting government and shut down the central bank—and the Republican Party can turn back the tide of government growth. This is what the GOP stood for under Warren G. Harding, Calvin Coolidge, and even Dwight D. Eisenhower.

It’s time to move on from the 1980s playbook. And that time is now.

Mike Fedele is a college graduate with a BS in Chemistry and a Master of Business Administration, and works as a product manager for a medical device company. His personal claim to fame is developing FedEx’s “Hold at Location” service.

TGIF: Bad Sign?

When I see four of those yard signs on my morning walk, I chuckle. If I’m in a mischievous mood I might someday suggest a couple of memes that the owners might add.

I could embrace all of those memes, but not without some qualification and in several cases, a good deal of qualification. But that’s for another day.

Today I want to focus on numbers 5 and 6: “Science Is Real” and “Water Is Life.” I wouldn’t comment on these were it not for their ominous implications for government policy. Some people are ready to spend trillions of other people’s money because of what they suppose those sayings mean.

They are true of course, but they are misleading because they are incomplete. (Would many people actually deny that science per se is real or that water is essential to life?)

My suggestion to the sign owners would be, first, to take a Sharpie and squeeze in these words after “Science Is Real”: “But Scientists Are Human Beings Too.” Not every passerby will get it, but some may interpret it correctly to mean that scientists, despite the white lab coats, are subject to the same imperfections as other people: among them, bias, vanity, greed, insecurity, what Herbert Spencer called “the pressing desire for careers,” and a wish to protect the psychological investment that can result when one spends a good deal of time mastering a subject.

The climate row provides a good example here. If one comes to think of oneself as having mastered climatology, one hardly wants to hear other scientists with impeccable credentials say that “the climate” is too complex a subject to be mastered by anyone. In fact, complex doesn’t even begin to describe it. As the scientists who are climate optimists point out to the alarmists, “the climate” is not a thing but a mind-blowing collection of many moving and interrelated parts, the behavior of which is inherently unpredictable and maybe beyond complete comprehension.

That such a complex phenomenon might boil down–sorry about that–to just the CO2 and (noisy) average-global-temperature records dating back, say, a century is something that even we lay people can balk at. As the climate scientist Patrick Frank of Stanford University–who has demonstrated the error-riddled nature of the IPCC’s computer models, which cannot even predict the past–wrote in Skeptic magazine, “Earth’s climate is warming and no one knows exactly why. But there is no falsifiable scientific basis whatever to assert this warming is caused by human-produced greenhouse gases because current physical theory is too grossly inadequate to establish any cause at all.”

Want to hear it from a physicist who was in Barack Obama’s energy department?  Here’s Steven Koonin, author of the new book Unsettled? What Climate Science Tells Us, What It Doesn’t, and Why It Matters: “[T]he science is insufficient to make useful projections about how the climate will change over the coming decades, much less what effect our actions will have on it.”

Okay, then how about a leftist physicist? Canadian Denis Rancourt: “There are more unknown and unforeseeable CO2 evolution feedback mechanisms [than] there are climate research institutes on the planet.”

This leads to my second proposed addition to the sign. After “Water Is Life” I would suggest adding, “And So Is Carbon Dioxide!” Just as all living things depend on water, so all living things depend on CO2. Plants devour it with gusto, so even we carnivores love CO2 because it feeds the plants that nourish our animal food sources.

To drive the point home: “At the current level of ~400 ppm [parts per million] we still live in a CO2-starved world. Atmospheric levels 15 times greater existed during the Cambrian Period (about 550 million years ago) without known adverse effects.” (Emphasis added. Nongovernmental International Panel on Climate Change “Executive Summary,” Climate Change Reconsidered II: Physical Science, 2013. For details see this chart going back 600 million years for details.)

Moreover, “CO2 is a vital nutrient used by plants in photosynthesis. Increasing CO2 in the atmosphere ‘greens’ the planet and helps feed the growing human population.” (See this world map illustrating the global greening that the increasing CO2 seems to be producing, much of it in the Amazon rainforest.) Everyone knows that operators of greenhouses pump in CO2 (not “carbon”) to get bigger plants because it isn’t a pollutant–it is plant food.

So which office does CO2 go to to get its reputation back?

Really?

Someday our descendants will laugh with embarrassment at the people today who pore over weather records prepared to proclaim an existential threat from a fraction-of-1-degree rise in the average global temperature over any previous year “on record,” that is, unless the government spends trillions of dollars on a program of virtually totalitarian control of our lives. “On record” actually means “in the last century and a half” because that’s how far back “the record” goes. And that, by the way, roughly coincides with the beginning of the end of the Little Ice Age in 1850, which continues to this day. The earth of course is 4.5 billion years old.

TGIF: Safety Can Be Hazardous to Our Health

Kudos to Glenn Greenwald, a rare leftist voice of sanity on so many issues, for opening his recent article this way:

In virtually every realm of public policy, Americans embrace policies which they know will kill people, sometimes large numbers of people. They do so not because they are psychopaths but because they are rational: they assess that those deaths that will inevitably result from the policies they support are worth it in exchange for the benefits those policies provide. This rational cost-benefit analysis, even when not expressed in such explicit or crude terms, is foundational to public policy debates — except when it comes to COVID, where it has been bizarrely declared off-limits.

He goes on to write that the “quickest and most guaranteed way to save hundreds of thousands of lives with policy changes would be to ban the use of automobiles, or severely restrict their usage to those authorized by the state on the ground of essential need (e.g., ambulances or food-delivery vehicles), or at least lower the nationwide speed limit to 25 mph.” (Watch the video version.)

But no one advocates any of those restrictions, and anyone who did would be dismissed as a fringe character. But why, considering how many lives would surely be saved (1.3 million worldwide)? It’s not because opponents don’t care about human life; it’s because people understand that the costs in so many ways would be far worse the benefits:

It is because we employ a rational framework of cost-benefit analysis, whereby, when making public policy choices, we do not examine only one side of the ledger (number of people who will die if cars are permitted) but also consider the immense costs generated by policies that would prevent those deaths (massive limits on our ability to travel, vastly increased times to get from one place to another, restrictions on what we can experience in our lives, enormous financial costs from returning to the pre-automobile days). So foundational is the use of this cost-benefit analysis that it is embraced and touted by everyone from right-wing economists to the left-wing European environmental policy group CIVITAS….

Exactly so. Once you put safety not just first but above everything else you’re able to come up with the most insane proposals for reshaping society. Heaven help us from those who are concerned only about safety.

Risk is integral to life, social life included. As Thomas Sowell puts it, there are no solutions, only trade-offs–you can’t do only one thing. So each of us does cost-benefit analyses all the time in everyday life. As individuals we could be completely protected from other people simply by living as hermits. But few choose to do so for entirely understandable reasons. Instead we live among others, taking reasonable precautions. Indeed, some of the most admired places to live are the most densely populated places on earth. We accept the costs because the benefits dwarf them–so much so that we don’t normally have to explain it to other people.

But some people forget to apply this common sense in particular matters. Greenwald’s target is draconian COVID-19 policy: “It is now extremely common in Western democracies for large factions of citizens to demand that any measures undertaken to prevent COVID deaths are vital, regardless of the costs imposed by those policies.” Yet, he continues, “It is impossible to overstate the costs imposed on children of all ages from the sustained, enduring and severe disruptions to their lives justified in the name of COVID.

“However, “The latest CDC data reveals that the grand total of children under 18 who have died in the U.S. from COVID since the start of the pandemic sixteen months ago is 361 — in a country of 330 million people, including 74.2 million people under 18.”

Children, of course, are not the only ones who have suffered from lockdowns and lesser restrictions on their activities.

Unfortunately, opponents of these blunt-instrument, liberty-violating approaches, such as the authors and signers of the Great Barrington Declaration, are smeared, if not as uncaring sociopaths, then as blind ideologues or sell-outs.

Greenwald also properly see a class conflict in how the COVID policy has affected people:

The richer you are, the less likely you are to be affected by these harms from COVID restrictions. Wealth allows people to leave their homes, hire private tutors, temporarily live in the countryside or mountains, or enjoy outdoor space at home. It is the poor and the economically deprived who bear the worst of these deprivations, which — along with not having children at all — may be one reason they are assigned little to no weight in mainstream discourse.

He emphasizes that “this is not an argument in favor of or against any particular policy undertaken in the name of fighting COVID. What it is, instead, is an attempt to highlight the pervasive and deeply misguided refusal to assign any costs to the harms caused by anti-COVID policies themselves.”

Consider the “precautionary principle,” the admonition that nothing should be allowed unless it’s proven to be totally safe. Now think of where mankind would be today had our ancestors had adopted this principle. The human race would be considerably smaller. Has it ever occurred to its advocates that the precautionary principle cannot even pass its own test?

COVID is only the latest example of how the obsession with safety can be hazardous to our health. It is by no means the only one. The other most prominent case relates to fossil fuels and climate change. As I discussed recently, if the economic way of thinking–that is, the cost-benefit trade-off approach–informed the discussion of the environment and our place in it, that discussion would look very different. Why? Because people would realize that the elimination or radical reduction of fossil-fuel use worldwide literally would shorten billions of lives, and make the rest of them miserable. Even a small benefit from oil, gas, and coal would outweigh that cost. But in fact the benefits are immense.

Our Fifty Year Inflationary Legacy

This month marks fifty years since President Richard Nixon closed the “gold window” that had allowed foreign governments to exchange U.S. dollars for gold. Nixon’s action severed the last link between the dollar and gold, transforming the dollar into pure fiat currency.

Since the “Nixon shock” of 1971, the dollar’s value—and the average American’s living standard—has continuously declined, while income inequality and the size, scope, and cost of government have risen.

Since the beginning of this year, price inflation has increased much, and it could continue onward to exceed the 1970s-era price spikes. Understandably, Republicans are trying to blame President Joe Biden for the price increases. However, a major cause of the current price inflation is the unprecedented money creation the Federal Reserve has engaged in since the 2008 market meltdown. This, though, does not mean Biden and most U.S. politicians of both parties do not bear some responsibility for rising prices. Their support for the Fed and massive government spending contributes to the problem.

The main way the Fed pumps money into the economy is by monthly purchases of 120 billion dollars of Treasury and mortgage-backed securities. Even many Keynesian economists agree that rising price inflation means the Fed should stop pumping money into the economy. Yet, this year the Fed is likely, at most, to only slightly reduce its purchases of Treasury securities. It will almost certainly keep interest rates at near-zero levels.

A reason the Fed will not stop or significantly reduce its purchases of Treasuries and allow interest rates to increase is that doing so would increase federal debt payments to unsustainable levels. Even with interest rates at historic lows, interest payments remain a significant portion of federal spending, and recent indications are that the U.S. government is not about to start being frugal. Consider, for example, Congress’ six trillion dollars “Covid relief and economic stimulus” spending spree and the Senate passage of the trillion dollars “traditional infrastructure” bill and a budget “outline” of a 3.5 trillion dollars “human infrastructure” bill.

The “human infrastructure” bill represents an expansion of government along the lines of the Great Society. Among its initiatives are universal pre-kindergarten; two “free” years of community college; increased government control of health care via expansions of Obamacare, Medicare, and Medicaid; and a raft of new government mandates and spending aimed at reshaping the U.S. economy to fight “climate change.”

The need to gain support of “moderate” Democrats will likely mean the final “human infrastructure” bill will costs less than 3.5 trillion dollars. However, no Democrat is objecting to the bill’s programs; the objectors just want cheaper tolls on the road to serfdom. While progressives will likely accept reduced spending levels in order to get their wish list into law, they will then work to increase funding and expand the programs. As the programs become more entrenched, even many “conservatives” will support increasing their funding.

The expansion of government will increase pressure on the Fed to keep the money spigots open. This will lead to a major economic crisis. The good news is the crisis may mark the beginning of the end of the fiat monetary system and the welfare-warfare state, along with the dawn of a new era of free markets, sound money, and limited government.

This article was originally featured at the Ludwig von Mises Institute and is republished with permission.

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