GDP and productivity levels were exaggerated during the pandemic as many goods were unavailable or low in quality in ways the GDP data didn’t capture. Even though public-school teachers stayed home, for instance, national accountants assumed that they were as productive as ever merely because they continued to be paid. As they get back to traditional teaching, this won’t be officially recognized as economic progress for the same reason the pandemic regress was never acknowledged.
In normal years, workers’ productivity rises by about 1%. That alone is a strong economic tailwind causing GDP growth, making recession by the reduced GDP definition less likely than otherwise. Unfortunately, Mr. Biden’s economic policies will likely cause productivity growth to fall. A 2020 analysis by one of us (Mr. Mulligan) and three co-authors concluded that Mr. Biden’s economic agenda would cause full-time equivalent employment per capita to be 3.1% lower than otherwise and real GDP per capita to be 8.5% lower than otherwise. If that effect were spread over five years, the reductions relative to the baseline growth would be 0.6% and 1.7% a year, respectively. That by itself makes a recession likely in one of those five years.
This Facebook post by Chris Freiman is insightful:
I fail to see a principled moral distinction between vouchers that can be used for private religious school and other forms of public spending. Even something like publicly supplied water can be used for religious purposes—someone might use it for a baptism. Granted it’s easier to regulate the use of vouchers than water, but the ease of regulation isn’t morally relevant. Even if the state *could* easily prevent people from using publicly supplied water for a baptism, it would be wrong to do so. Citizens should be free to use their state-supplied resources to pursue their own good in their own way, whether their good is religious or not.
Also insightful is this follow-up Facebook post by Freiman:
It’s strange to see so many folks on the left reject public support for private religious education when it comes to school choice but support student loan forgiveness for all, including those who attended BYU, Liberty, Oral Roberts…
A key theme of Lin Ostrom’s work was polycentricity. A monocentric system is one in which all the problems faced by a community or organization are addressed in a top-down fashion by a single authority, such as the federal government. Such a unit determines the one best solution and then imposes it on everyone else. By contrast, a polycentric approach gets people and groups working together to devise a means of solving problems, embodying the view that those best qualified to do so are usually those who live with them day to day. A central government may have the power to impose a solution and even punish those who do not abide by its dictates, but such approaches are often poorly tailored to local conditions and deprive people of the opportunity to work it out for themselves, thereby stunting their development as citizens.
The lack of new U.S. refinery investment isn’t exactly breaking news: According to the EIA, for example, the last major refinery to be built in the United States was in 1977, while there hasn’t been a significant refinery expansion in several years. But, still, the recent decline in national refining capacity remains quite stark when you compare it to pre-pandemic trends dating back decades.
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The study’s author finds that this heightened climate policy uncertainty is associated with lower CO2 emissions and suggests future research on how it affects firm-level investment in climate-sensitive industries like energy. But it would seem obvious (to me, at least) that uncertainty plays a role in refinery investment over the longer term too: If it takes 15-20 years to recoup a refinery investment and there’s a big-but-unclear risk that climate regulation will make said investment unprofitable in only a decade or sooner (see, e.g., California), then you’re probably not making that investment.
Gary Galles decries the deep confusion surrounding international trade and trade policy. A slice:
Few Presidents have wrapped their protectionism in the American flag to the extent Donald Trump did. But all recent Presidents have continued a long line of protectionist policies, and Joe Biden is clearly on that list.
Such policies are based at least in part on the idea that “good” American producers should be given special treatment over “bad” foreign producers for the good of our country. But that leaves an important group out of the political equation–American consumers. And our joint interests as consumers is what we have most in common. Consequently, as Leonard Read put it, “Consumer interest is the premise from which all economic reasoning should proceed,” and since “my interest is progressively served by an increase of goods and services obtainable in willing exchange for my offerings … As a consumer, I choose freedom.”
John Stossel applauds the Babylon Bee.
Then, you have the money dispensed to corporations. In one way or another, that spending made up a huge share of the COVID-19 relief. Indeed, whether through the airline bailouts or the Payroll Protection Program, shareholders collected trillions of dollars in government handouts they didn’t need. Most of the PPP funding, for example, went to companies whose workers were never at risk of losing their jobs since they were well-suited to work from home.
The lockdowners even claimed that Covid had allowed a breakthrough in economic engineering: officials had worked out how to put free market economies into hibernation, to pause activity at will. It was the economics of Sleeping Beauty: the private sector would rebound as soon as Dishy Rishi chose to kiss it back to life again. Hayekians who believed capitalism was a complex, fragile spontaneous order that couldn’t be disrupted with impunity had finally been proved wrong. Even if the economy did find it difficult to continue exactly where it left off, we could simply unleash more QE or Joe-Biden style public spending to fix everything.
It was dangerous, delusional nonsense. Everything that could go wrong went wrong, starting with surging inflation and myriad other unintended consequences. The insane amounts of cash pumped into the economy by zero rates, money printing, furlough, test and trace and subsidised loans chased too few goods, services, homes, shares and cryptocurrencies, pushing prices drastically higher and annihilating central bankers’ credibility.
Alex Gutentag tweets (HT Jay Bhattacharya):
Many parts of the US kept schools closed long after they reopened in Europe. We were one of the only countries to mask toddlers and are the only country vaccinating infants. This isn’t something to be proud of. Our treatment of children is uniquely irrational and unscientific.
