Bonus Quotation of the Day…

by Don Boudreaux on June 24, 2022

in Current Affairs, Myths and Fallacies

is from pages 135-136 of Scott Atlas’s important 2021 book, A Plague Upon Our House: My Fight at the Trump White House to Stop COVID From Destroying America:

This conclusion was inherently nonscientific – modeling that something might occur, and then because it did not occur with a given intervention, concluding that the intervention was effective. That was not proof of anything at all; it was circular reasoning. Why couldn’t the explanation be that the model’s prediction was wrong? Indeed, modelers had concocted a scenario in which [covid] cases would keep spreading as if everyone was equally susceptible, without regard for increasing immunity or seasonal effects – all known to have occurred in every respiratory virus pandemic over the past 130 years.

DBx: I say again that few academics have fueled as much destruction of life, liberty, property, and prosperity as has the reckless Imperial College modeler Neil Ferguson. Not to be excused, of course, are the legions of politicians and bureaucrats who took his and his team’s model-predictions seriously and without regard for collateral damage from lockdowns.

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Kyle Smith, writing at National Review, decries the CDC’s peddling of fake news about covid child mortality. A slice:

The CDC displayed a slide at a conference that falsely claimed Covid-19 was the fourth or fifth leading cause of death for all pediatric age groups. A writer who is publicly known only by the name Kelley immediately saw that the claim was “completely and utterly false.” Among several errors, which are so blatant as to seem like intentional massaging of the numbers, Kelley discovered that all data from a 26-month period were being crammed into one year, and that deaths were attributed to Covid, regardless of whether the death was caused by Covid, if the disease was mentioned on the death certificate. The CDC slide, which cited a pre-publication British study that is now being re-examined, also bumped up the numbers by altering the definition of pediatric (ordinarily understood to mean under 18) to include 18- and 19-year-olds.

The danger to children from Covid is very, very low. For instance, babies and toddlers are 25 times likelier to die of an accident than of Covid. And all-cause pediatric mortality in the pandemic era for young children (up to 12) is 30 percent lower than it was a generation ago, in 1999. All-cause mortality for children over 12 has spiked in the pandemic era because of accidents, drug abuse, and other factors unrelated to disease. Covid barely registers as a cause of death for teens or small children.

Wall Street Journal columnist Daniel Henninger writes that “[t]he Covid pandemic revealed how complicated the private economy is — and how easy it is to wreck it.” A slice:

The current global discontent with economic life is overwhelmingly a function of one other word: lockdown. Lockdowns are normally associated with prison riots, not the world’s economies. One may admit that the first months with the mysterious Covid-19 virus were a time of generalized panic, and governments defaulted to the epidemiologists’ standard fix of social quarantining. But then leadership essentially let the public-health bureaucracies take over their countries’ economic life.

What’s impossible not to notice is how the lockdowns exposed the intricacies of the world’s market economy. We are hearing a lot now about long Covid, the physical aftermath of the virus. As debilitating is long economic Covid.

Long economic Covid is why anyone you sit next to at dinner can dilate on the arcana of interrupted global supply chains. We’re now coming to realize how the market economy’s performance and benefits are taken for granted. All those goods—made, purchased, packed and shipped—were as reliably available as turning on a light. Actually, one of the things we’ve learned during this time is that even turning on a light isn’t like turning on a light. Disrupt the always-on but complex power grid, as in Texas and California, and the lights stop coming on.

This persistent post-pandemic disruption is the result of government choices. In 2020, the public sector told the private sector simply to stand down. When the pandemic lockdowns were extended deep into 2021—in the U.S., France, U.K. and elsewhere—the global economy’s extraordinarily complex grid of relationships fractured at every level.

Layoffs were widespread, ending paychecks overnight. Trucking hasn’t recovered. Airlines are struggling with flight-canceling staff shortages. Manufacturers can’t fill orders for lack of basic parts, workers or a reliable transport system.

We have arrived at stupid.

David Stockman describes “the spasmodic chaos of the post-lockdown US economy.” Two slices:

Accordingly, the business sector is flying blind: It can’t forecast what’s coming down the pike in the normal manner based on tried and true rules of cause and effect. In many cases, the normal market signals have gone kerflooey as exemplified by the recent big box retailers’ warnings that they are loaded with the wrong inventory and will be taking painful discounts to clear the decks.

Yet it is no wonder that they stocked up on apparel and durables, among others, after a period in which the Virus Patrol shutdown the normal social congregation venues such as movies, restaurants, bars, gyms, air travel and the like. And than Washington added fuel to the fire by pilling on trillions of spending power derived from unemployment benefits that reached to a $55,000 annual rate in some cases and the repeated stimmie checks that for larger families added up to $10,000 to $20,000.

Employed workers didn’t need the multiple $2,000 stimmie checks because in its (dubious) “wisdom” the Virus Patrol forced them to save on social congregation based spending.

…..

When it comes to Washington-induced whipsaws, however, there are few sectors that have been as battered as the air travel system. During April 2020, for instance, passenger boardings were down a staggering 96% from the corresponding pre-pandemic month, as in dead and gone. Moreover, this deep reduction pattern prevailed well into the spring of 2021.

The airline shutdowns were not necessitated by public health considerations: Frequent cabin air exchanges probably made them safer than most indoor environments.

But between the misbegotten guidelines of the CDC and the scare-mongering of the Virus Patrol, even as late as January 2022 loadings were still down 34% from pre-pandemic levels.

The industry’s infrastructure got clobbered by these kinds of operating levels. Baggage handlers, flight attendants, pilots and every function in-between suffered huge disruptions in incomes and livelihoods—-even after Washington’s generous subsidies to the airlines and their employees.

And then, insult was added to injury when pilots and other employees were threatened with termination owing to unwillingness to take the jab. The result was an industry to turmoil and sometimes even ruin.

Jay Bhattacharya tweets:

The people who constitute “World Health Network” are repackaged zero-covid zealots, many in the discredited iSAGE group. I guess since they could not scare the world into perpetual Shanghai style lockdowns with covid, so they are trying again with monkey pox.

Here’s some good news reported by Will Jones: “South Africa Ends All Remaining Covid Restrictions Including Vaccine and Testing Entry Requirements.”

Phil Magness, writing on his Facebook page, is correct:

It turns out that the reason plagiarism is such a widespread problem in academia…is that an alarming number of academics will excuse or even defend plagiarism when one of their friends does it.

Damon Root argues that “Alito’s leaked abortion opinion misunderstands unenumerated rights.”

Jeffrey Singer laments this unfortunate reality: “The FDA is on a quest to snuff out tobacco harm‐​reduction.”

GMU Econ alum Nathan Goodman compares Austrians and Marxists on imperialism.

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Quotation of the Day…

by Don Boudreaux on June 24, 2022

in Balance of Payments, Myths and Fallacies, Trade

… is the closing paragraph, on page 17, of Edwin Cannan’s excellent November 13th, 1931, Sidney Ball Lecture – a lecture titled “Balance of Trade Delusions“:

But even so we manage to carry on, and whether on or off the gold standard we certainly shall not benefit by reviving the three-hundred-year-old and long-ago exploded superstition that the balance of trade must be watched over and kept right by Parliament – a superstition which can only be ranked with the once equally widespread belief that witchcraft must be smelt out and witches burnt at the stake.

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Here’s a letter to the Wall Street Journal:

Editor:

You report that “Mr. Biden ordered U.S. refiners last week to come up with short-term solutions to increase capacity – or else” (“A Gas Tax Holiday From Reality,” June 23). The president’s actions are as brutish and stupid as are those of a schoolyard bully who, having scared away his playmates, warns them to come back and play – or else. Neither of these bullies should be surprised to discover that their threats won’t work.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

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Bonus Quotation of the Day…

by Don Boudreaux on June 23, 2022

in Seen and Unseen, Work

… is from pages 148-149 of the 2021 35th anniversary edition of Steven Rhoads’s excellent 1985 book, The Economist’s View of the World: And the Quest for Well-Being (footnote deleted; links added):

Just as landlords adjust when forced to keep rents low, employers adjust when required to pay low-skilled workers more than a market wage. If they have previously offered workers inexpensive insurance or partial daycare coverage, they can discontinue these nonwage benefits. Perhaps more important, they can discontinue on-the-job training. Jacob Vigdor, one of the University of Washington economists who conducted the Seattle study, worries that, by harming employment opportunities for junior workers, we may be removing the bottom rung of the ladder to future, better-paid jobs.

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Writing in today’s Wall Street Journal, David Henderson and Casey Mulligan accurately describe Biden as “practically engineering a recession.” A slice:

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…

Richard Gunderman praises the insights of the late Elinor Ostrom, co-winner (along with Oliver Williamson) of the 2009 Nobel Prize in economics. A slice:

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.

“We need more refinery capacity but policy uncertainty makes companies less inclined to invest in new refineries or update old ones” – so argues Scott Lincicome. Two slices:

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.

…..
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.

My intrepid Mercatus Center colleague Veronique de Rugy explains that the biggest problem with the fiscal incontinence that occurred in response to covid hysteria is not that much of it was – as much of it indeed was – spent wastefully and fraudulently. A slice:

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.

Telegraph columnist Allister Heath writes that “[b]asket-case Britain is the definitive proof lockdown was an epic mistake.” A slice:

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.

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Quotation of the Day…

by Don Boudreaux on June 23, 2022

in Seen and Unseen

… is from page 229 of Robert Higgs’s September 1986 Freeman essay, “To Deal With A Crisis: Government Program or Free Market?” as this essay is reprinted and slightly revised in the excellent 2004 collection of some of Bob’s essays, Against Leviathan:

An emergency governmental program is said to have the important attribute of speeding the process of adjustment. Undeniably, coercive programs often work more quickly, but is this aspect of their operation really an advantage?

Coercive programs “save time” only because they compel wastefully hasty adjustments. They do not save valuable resources. Rather, they redistribute the costs of adjustment in comparison with the distribution of the costs when responses are determined by voluntary arrangements in free markets.

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Commenting on this recent EconLog post by Scott Sumner, Thomas Lee Hutcheson writes:

The point of a carbon tax (tax on net emissions of CO2 and methane) is that is is exactly as large as it needs to be (requiring the least amount of lifestyle changes) to minimize those future costs. If future costs are not large, neither will be the tax on net emissions of CO2 and methane. The idea is to minimize the sacrifice.

In response to Mr. Hutcheson’s comment, I wrote (and posted as a reply at EconLog) the following (here slightly amended):

Mr. Hutcheson: Who will determine in practice what is the optimal carbon tax “to minimize those future costs.” And how will this determination in practice be made? We already tax carbon fuels, and we’ve done so for a long time. How do you know that the current array of taxes – include those on retail gasoline sales – aren’t optimal? Perhaps these taxes are now even super-optimal. There is no way to know.

We can, of course, draw graphs on whiteboards and create models with specified parameters and reaction functions. The former are analytical tools that only enable us to understand and describe some general, abstract features of optimally set taxes. The latter – the models – unavoidably are infused with many assumptions – some explicit, some implicit – the realism of many of which we cannot really know. Our knowledge is especially meager if the modelers purport to make predictions for decades out.

Of course, we can’t know future-generations’ preferences. But this fact is minor. More importantly, we can’t know what discoveries and innovations will happen in the future. To truly know what is the optimal level of taxation of carbon we’d have to know the different kinds of discoveries and innovations that would emerge under each of the countless different possible alternative levels and systems of carbon taxation. We cannot begin to know any such thing.

The fact that humanity continues to emit carbon does not tell us that the current level of emissions is too high. Nor is such knowledge given to us by fact that the earth continues to warm (even if, as I willingly grant, all of this warming is the product of human activity). We do not know and we cannot know.

In the face of such inescapable ignorance, a perfectly legitimate course of action is to do nothing – or nothing further – to tax or regulate with the aim of reducing carbon emissions. Indeed, I believe that this course of (government in)action is the best one available, at least until god chooses to share with us its detailed knowledge about such matters. I hold this belief with reinforced confidence because of the fact that carbon fuels themselves have overwhelmingly powered (and continue to power) the countless innovations that have made human existence safer and more comfortable.

Do the following mental experiment. Suppose you could go back in time to circa 1900 and prevent the introduction and use of air-conditioning. Suppose further that you know that if you chose to prevent air conditioning, the world in 2022 would have less carbon in its atmosphere. That result would indeed be an advantage. But not an advantage without cost.

How much less carbon in the atmosphere in 2022 would you think is minimally necessary to justify a world without air conditioning? How much less carbon in the atmosphere today would you think is minimally necessary to justify a world with 50 percent less air conditioning? With ten percent less air conditioning? How could someone in 1900 have known such a thing?

Now do the same mental experiment, not with air conditioning, but instead with automobiles.

All one can do in such mental experiments is to guess, and to guess rather wildly at that. And, frankly, that’s all one can do when attempting today to calculate the optimal carbon tax.

I believe to be preposterous the widespread presumption that we possess, or can come to possess, sufficient knowledge to inform us what will be the likely full consequences of further raising carbon taxes. In practice, we cannot know if any increase in such taxes will move us closer to or further from optimality. In the blinding light of this inescapable ignorance, I say that we at least should avoid further artificially raising the cost of carbon fuels – fuels which were a major source of power for the industrial revolution and continue today to be the major source of power to produce the standard of living that affords rich-world denizens the luxury to fret about climate change.

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In my column for the January 23rd, 2013, edition of the Pittsburgh Tribune-Review I remembered my Nobel-laureate colleague Jim Buchanan, who at the age of 93 died two weeks earlier. You can read my tribute to Jim beneath the fold (link newly added).

Note that the James Buchanan who I remembered was a real person, unlike the “James Buchanan” that a Duke University “historian” (so called) and her poorly informed, or ideologically blinkered, apologists portray in their fictional works masquerading as factual works.

Read the full post →

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George Will warns that “‘stakeholder’ capitalism is parasitic progressivism.” Two slices:

Semantic infiltration is the tactic by which political objectives are smuggled into discourse that is ostensibly, but not actually, politically neutral. People who adopt a political faction’s vocabulary also adopt — perhaps inadvertently, but inevitably — the faction’s agenda. So, everyone who values economic dynamism, and the freedom that enables this, should recoil from the toxic noun “stakeholder.”

The Oxford Reference definition is “all those with interests in an organization,” including “shareholders, employees, suppliers, customers, or members of the wider community (who could be affected by environmental consequences of an organization’s activities).” Which means: everyone. “All” in the “wider community” who claim an “interest.” Anyone can make such claims; no one can refute them.
…..
In a dynamic society, resources are efficiently disposed by corporate managements whose primary duty, which other corporate activities do not compromise, is to maximize shareholder value by profitably supplying the demand for goods and services. Furthermore, in a congenial society, boundaries are respected: Most people say about most things, “this is none of my business.”

Self-proclaimed stakeholders, parasitic off others’ labor and accumulation, assert that everything is their business. Actually, although everyone has a right to advocate progressivism, no one has a right to insist on a stake in deploying others’ property for the stakeholders’ political ends.

Here’s a thought that Ryan Grim’s essay on wokism sparked in Arnold Kling.

Speaking of the insanity of wokism, recent Stanford graduate Ginevra Davis decries what has become of her alma mater.

Colleen Hroncich and Solomon Chen reflect on yesterday’s U.S. Supreme Court ruling in Carson v. Makin. A slice:

Carson v. Makin is centered on Maine’s tuition assistance program, one of the oldest school choice programs in the nation. Created in 1873, the program funds students from a town without a public school to attend a school of their parents’ choice—whether private or public, in‐​state, or out‐​of‐​state. For more than a century, parents could direct these funds towards religious schools. In 1980, Maine Attorney General Richard S. Cohen released an opinion that said funding a child to attend a school with a “pervasively religious atmosphere” would be unconstitutional. In response, the legislature changed the law to prohibit families from using the tuition assistance at religious schools.

The Institute for Justice filed a federal lawsuit in 2018 on behalf of three sets of parents—Alan and Judy Gillis, David and Amy Carson, and Troy and Angela Nelson—whose children qualified for the program but were prevented from directing funds towards the schools they preferred because those schools provided religious instruction. The district court initially found for the state and the First Circuit affirmed on appeal. Last July, the Supreme Court agreed to hear the case.

In today’s ruling, as it did previously in Espinoza v. Montana Department of Revenue, the Court flatly rejected the respondent’s claims that allowing religious schools to receive the tuition funds violates the first amendment.

The Wall Street Journal‘s Editorial Board rightly criticizes Biden’s endorsement of a bill, newly passed by the House, that would require the Federal Reserve to include among its goals greater “racial equity.” A slice:

Now House Democrats want to codify racial equity as part of the Fed’s mandate. Their bill would require the Board of Governors and FOMC to “exercise all duties and functions in a manner that fosters the elimination of disparities across racial and ethnic groups with respect to employment, income, wealth, and access to affordable credit.”

The bill directs the Fed to include race in monetary policy, the operation of payment systems, and the supervision of banks and non-banks deemed by the Financial Stability Oversight Council to be systemically important.

Central bankers have a hard enough time balancing full employment with stable prices. Adding a racial equity mandate could cause their models to go catawampus. How small would the black-white unemployment gap have to be, and how high would prices have to climb, before the Fed considers raising interest rates?

My George Mason University Econ colleague Vincent Geloso describes the very real, if often delayed, “damaging ripples of government intervention.”

Who’d a-thunk that the outcome reported here by Eric Boehm about covid funding would ever occur?

For more on the grotesque waste uncorked by covid hysteria, see this piece by Peter Suderman.

Aaron Kheriaty warns of the dangers of the attempt in California to punish dissent by physicians from the official position on covid vaccines. (DBx: Every reasonable person, regardless of his or her position on the efficacy and safety of covid vaccines, should be appalled by this attempt.)

Ian Miller explains that vaccinating toddlers against covid is unwise.

Marty Makary, Vinay Prasad, and Neeraj Sood are among the many physicians who signed a letter, addressed to top U.S. government covidocrats, urging elimination of many remaining covidocratic diktats. (HT Jay Bhattacharya) A slice from the letter:

Many European countries, U.S. states and Canadian provinces have already updated their COVID-19 policies to reflect that vaccines and infection-acquired immunity have reduced the risk of a severe COVID-19 outcome for youth, and to acknowledge that all mitigation measures have unintended consequences. Massachusetts, the United Kingdom, Denmark, Norway, British Columbia and elsewhere have recommended an end to routine screening testing and mandatory isolation periods for children. Most have also eliminated any COVID-19 vaccine requirements for children to fully participate in public life.

The CDC’s COVID-19 school guidelines continue to cause significant disruption to children’s education and to working parents, while providing no demonstrable public health benefit in limiting COVID-19 spread. These policies have serious unintended consequences–-such as school closures, increasing school absences, forcing parents to miss work, and the expense and time of testing. At this point, nearly all U.S. adults and children are protected by either vaccination or infection-acquired immunity, and the U.S. is seeing far lower hospitalization and mortality rates than in prior surges.

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