National Review‘s (and GMU Econ alum) Dominic Pino attended the recent gathering of national conservatives and reports on the goings-on – goings-on featuring a great deal of economic ignorance. Three slices:
The dinner session featured keynote speaker Robert Lighthizer, U.S. trade representative under Donald Trump. [Johnny] Burtka introduced him as “one of Washington’s greatest statesmen.” He praised as prophetic a 1997 New York Times op-ed from Lighthizer which said that if China were allowed to join the World Trade Organization, “virtually no manufacturing job in this country will be safe.” (Manufacturing employment in the United States peaked in 1979 and had already been declining, following the same trend as in other highly developed economies. As of 2021, 14.7 million Americans are employed in manufacturing, which is more than in leisure and hospitality or financial activities.)
A panel followed about whether Wall Street is good for the country. National Review Capital Matters’ Andrew Stuttaford opened with a defense of America’s financial sector, acknowledging its imperfections but pointing to its contributions to helping the human flourishing that free markets make possible. Longtime Washington financial-regulatory expert [and GMU Econ alum] Mark Calabria, who was chief economist to Mike Pence, also presented a reasoned defense of Wall Street. Calabria noted that finance allows people to bridge the present and the future through lending and borrowing, but the sector is hampered by government, which creates perverse incentives through subsidies and bailouts.
American Compass executive director Oren Cass responded by saying, “If that was the defense for Wall Street, the prosecution can rest its case.” He said Wall Street is bad for America because it does not allocate capital, talent, or risk well. American Affairs editor Julius Krein dismissed Stuttaford and Calabria’s case as “Adam Smith nonsense.” He and Cass talked about the need to “redirect” people away from finance jobs. Stuttaford had mentioned how regulatory missteps had contributed to the financial crisis that led to the Great Recession. Cass objected, saying, “It’s not that the financial companies did well for themselves. They ran their companies into the ground.” Calabria responded to Cass by explaining how government regulations and the actions of Fannie Mae and Freddie Mac led to the preference for mortgage-backed securities in many financial institutions.
There’s nothing inherently wrong with entertaining new perspectives on economic policy. Conservatives are at their best when they debate among themselves because those debates sharpen our ideas. But the Left’s government-knows-best approach to economics isn’t wrong only because it comes from the Left; it’s wrong because government does not know best.
America needs relief from government planning, not a new conservative flavor of the same failed prescription.
The so-called Inflation Reduction Act will be one of the greatest misallocations of federal resources in American history. The bill has many moving parts, but here’s a simple way to sum up its macroeconomic impact: It would transfer about a quarter of a trillion dollars from America’s pharmaceutical industry, which saves and extends lives, to the climate-change industrial complex, which makes energy more expensive.
Advocates for minimum wages and rent controls justify both as compassionate. But they ignore both logic and the far from compassionate violations of employers’ and landlords’ property rights imposed. Despite those coercive abuses, both also present lower-income individuals and households with fewer options, harming many. And compassion cannot justify hurting those whose interests you are trying to advance.
Heather Mac Donald decries woke medicine. A slice:
At the end of their second year of medical school, students take step one of the U.S. Medical Licensing Exam, which measures knowledge of the body’s anatomical parts, functioning and malfunctioning. Topics include biochemistry, physiology, cell biology, pharmacology and the cardiovascular system. High scores on step one predict success in a residency; highly sought-after residency programs, such as surgery and radiology, use exam scores to help select applicants. But some students complain that the pressure to score well inhibits them from “antiracism” advocacy.
Writing in an online forum, a fourth-year Yale medical student describes how the specter of step one affected his priorities. In his first two years of medical school, he had “immersed” himself in a student-led committee focused on diversity, inclusion and social justice, and he ran a podcast about health disparities. All that political work was made possible by Yale’s pass-fail grading system for classes, which meant that he didn’t feel compelled to put studying ahead of diversity concerns. Then, step one “reared its ugly head.” Getting an actual grade on an exam might prove to “whoever might have thought it before that I didn’t deserve a seat at Yale as a Black medical student.”
The solution was obvious: abolish step-one scores. Since January, the test has been graded on a pass-fail basis. The Yale student won’t have to worry that his studying will cut into his activism. Whether his future patients will appreciate his chosen focus is unclear.
Meanwhile, three US states, including California, have declared states of emergency over the monkeypox outbreak, just as they did for Covid-19, potentially allowing them to enact mask mandates, lockdown orders, and other restrictions. And two weeks ago, a south London school sent reception classes home until the end of term after a child came into contact with a monkeypox case, sparking fears of an outbreak. The school said it was acting on advice of the UK Health Security Agency (UKHSA) and were “obliged to follow these precautionary guidelines”. Authorities also advised parents to avoid hugging their child.
It is simply baffling that anyone would willing to go down this road again — shutting down schools; denying children physical contact — with everything that we now know about the devastating effects of such measures on children’s mental and physical well-being throughout the Covid pandemic. But that doesn’t seem to register. Today, we are seeing the first stirrings of yet another bout of mass hysteria, with politicians, the media and public health officials (including the WHO) all repeating the same mistakes they made with Covid-19: spreading misinformation about the nature of the disease, and sowing unnecessary panic and fear among those who risk little or nothing from it, while denying those who actually are at risk the kind of targeted messaging and protection they deserve.
With two-and-a-half years of hindsight, a tentative evaluation of New Zealand’s lockdown-focused Zero Covid strategy is possible. On the plus side of the ledger is that New Zealand’s strategy delayed the inevitable spread of Covid throughout the population to a time after the development, testing and deployment of a vaccine capable of reducing the burden of severe Covid disease. Despite having experienced more Covid cases per capita throughout the pandemic than the US, New Zealand has a tiny proportion of the US’s Covid-attributable deaths per capita.
On the negative side of the ledger is the tremendous burden on the New Zealand population that has come from being isolated from the rest of the world for such a long time, and from the intermittent lockdowns the government imposed on the population. All-cause excess deaths – below baseline levels in 2020 – shot up in 2021 and in 2022. Some weeks, recorded death rates were at 32 per cent above the norm. New Zealand delayed and reduced Covid deaths at the expense of increasing deaths from other causes. And then, of course, there are the enormous economic, psychological and additional health costs of lockdown that the population will pay out for over the coming years.
Ultimately, New Zealand’s Zero Covid strategy was immoral, incoherent and a grand failure.