Here’s a partial list of medicines, medical treatments and public-health measures that originated outside of the United States and, thus, are made available to us Americans through our connections with non-Americans. How many of these marvels are you willing to sacrifice in order to be shielded from the possibility of the likes of covid-19?
— Antibiotics. Discovered chiefly by Alexander Fleming – a Scot working in London – with important supporting roles played by an Australian and a German.
— Immunology. Major developments originating in England, Germany, France, and Austria.
— Pasteurization. Discovered in France.
— Typhoid vaccine. Formulated in England.
— Epidemiology. Major breakthrough in England.
— Anesthesia. Major developments made in England and Scotland.
— Chlorination of water. Began in Germany and England.
— Insulin. Developed for medical use with the chief contributions coming from Romania, England and Canada.
—Heart transplant. First performed in South Africa.
— Discovery of how the immune system identifies cells invaded by viruses. Major advances in Australia and Switzerland.
To the extent that we close ourselves off to foreign commerce, we close ourselves off to much more than what globalization’s opponents contemptuously dismiss as “trinkets and T-shirts.” We close ourselves off also to, among other non-trivial goods, medical and scientific advances made abroad. And we also lose foreign-produced additions to supplies of medicines produced here at home.
My November 2nd, 2008, column for the Pittsburgh Tribune-Review was inspired by presidential-candidate Barack Obama being called a socialist after he told Joe the Plumber of his (Obama’s) wish to “spread the wealth around.” You can read my column beneath the fold.
Chad Bown of the Peterson Institute for International Economics calculates that the Trump administration has imposed new taxes on almost $5 billion of medical exports from China, totaling about 26% of U.S. health-care imports. With tariffs, the U.S. government is making it harder for first responders to procure masks, sterile gloves, goggles, hospital gowns, surgical drapes, thermometers and breathing masks. America also imports about $22 billion of medical technology from countries all over the world, including CT systems, patient monitors and X-ray devices.
This column is too short to list everything that companies and citizens are now doing to help during this crisis. From private companies searching for cures and developing a vaccine to private citizens tutoring kids for free online to neighbors using the Nextdoor app to set up mutual-aid resources for vulnerable community members needing food, medicines and services, examples abound of the generosity and sense of community of the American people.
Nick Gillespie interviews Richard Epstein on the coronavirus pandemic.
George Will writes wisely and thought-provokingly on the interconnectedness of the modern world. A slice:
In last year’s “The Body: A Guide for Occupants,” Bill Bryson notes a milestone in human history: 2011 was the first year in which more people died from noncommunicable diseases (e.g., heart failure, stroke, diabetes) than from all infectious diseases combined. “We live,” Bryson writes, “in an age in which we are killed, more often than not, by lifestyle.” The bacterium that caused the 14th century’s Black Death was in the air, food and water, so breathing, eating and drinking were risky behaviors. Today, deaths from the coronavirus are not apt to match what Bryson calls “suicide by lifestyle,” an epidemic that will continue long after the coronavirus has.
“Washington shouldn’t force the airline industry to run an experiment in ‘accountable capitalism’.”
Let’s hope that Nobel laureate Michael Levitt is correct about the spread of coronavirus.
… is from page 140 of the original edition of James M. Buchanan’s 1960 textbook, The Public Finances (a volume not included in Buchanan’s Collected Works):
In a democracy, however, collective decision making is a complex process. Final decisions are the result of a whole chain of individual voting procedures, the debates and choices of representative assemblies, the exercise of executive leadership, the partisan activity of political parties, the conflicts of pressure group interest, and the intricacies of bureaucratic administration. At no place in this decision-making process can over-all “efficiency” in the private economy be taken as the overriding aim, and fiscal devices cannot readily be geared to accomplish such “efficiency.” Instead, if the efficiency-promoting purpose of the fiscal system is admitted as legitimate, there will likely arise a rather irresponsible and arbitrary set of fiscal devices, presented under the guise of “efficiency,” which serve to restrict the reasonably free operation of the market economy. In other words, the decision process represented, say, in the United States federal government, seems likely to be unable to distinguish “efficient” from “inefficient” changes, even in the broadest possible sense.
DBx: Relatively few people understand the first thing about the logic of markets, and, thus, relatively few people are disposed to trust markets. In contrast, everyone can imagine the existence of a superhuman creature being both superhumanly benevolent and superhumanly informed. There is, therefore, a bias in the public toward assuming that the state can and will improve upon any perceived shortcomings or “failures” in markets.
After all, market prices seem, to the economically uninformed, to be arbitrary numbers set by powerful sellers, market wages seem to be arbitrary numbers set by powerful employers, and self-interest rather than altruism governs each market transaction. Given the widely held if wholly mistakenly belief that order – or, at least, good order – in human affairs must be arranged consciously, the objective of political activity is presumed to consist in stopping the bad guys and gals from gaining hold of state power and ensuring that that order-creating power is exercised only by the good guys and gals.
And there are, of course, good guys and gals; thank goodness! We know of the existence of these miracle-working saints because politicians are forever proclaiming their unusual love of their fellows, their excellent intentions, and their spectacular abilities. Furthermore, economics textbooks and journals are filled with detailed descriptions of how these god-like guys and gals can indeed use their power to create better economic outcomes. What more proof is needed of the advisability of giving good guys and gals a great deal of discretionary power to superintended, “regulate,” and override the measly, selfish, blind choices of ordinary men and women?
During traditional recessions we witness a reluctance or inability of people to spend money because they are unemployed, or because they fear the future and so hoard their money. No such clear “demand-side” shock is what we have now, although this kind of demand-side problem will likely arise as a follow-on consequence. Instead, what we have now is a situation in which people who still have jobs, cash, and a desire to spend nevertheless don’t spend because they are avoiding physical contact with others. Americans don’t want to get sick, and they don’t want to get other people sick. At the same time, we have federal, state, and local governments trying to limit the spread of the virus by restricting consumption and asking, among other things, restaurants to reduce their services and banning gatherings larger than 50 people.
This source of reluctance to spend and government requirements to stop consuming are not what John Maynard Keynes, Milton Friedman, F. A. Hayek, or other economists theorized about when they searched for better ways for governments to respond to recessions.
Bryan Caplan, much like Vero (above), points out the unprecedented nature of the economic problems caused, and likely about to be caused, by COVID-19. (I’m somewhat – but not much – less pessimistic than is Bryan.)
Federal money is on its way. On Tuesday the administration proposed a nearly $1 trillion stimulus. But the economy needs a wiser deployment of limited resources than just a cash dump. First, not even the U.S. government has infinite resources. Its unique ability to borrow even when nobody else can borrow, and to promise eventual repayment by taxation, is a treasured but finite resource. When a crisis comes in which even the Treasury can’t borrow, we are in for a true catastrophe.
Second, this isn’t the last virus. What we do now sets the precedent for what we will do in deadlier pandemics to come. Overall, our society will transfer savings from those who have it to those who need it, via markets, Treasury debt, taxation or force. But we must do it in a way that allows savers to reappear in the next crisis, to buy Treasury bonds, forbear loans and provide liquidity.
Mark Perry reminds us of the folly of “anti-price-gouging” legislation.
John Stossel, too, weighs in against the absurdity of “anti-price-gouging” legislation. A slice:
Prices should rise during emergencies. That’s because prices aren’t just money; they are signals, information. They tell suppliers what their customers want most.
Entrepreneurs then make more of them and work hard to get them to the people who need them most. If “anti-gouging” laws don’t crush these incentives, prices quickly fall to normal levels.
… is from page 166 of Bas Van Der Vossen’s and Jason Brennan’s excellent 2018 book, In Defense of Openness:
It’s not just that when people get wealthier they can afford better homes, medicines, and sanitation, and so are less likely to be killed by earthquakes, hurricanes, or climate-related disease. A wealthier world is also a world in which more human minds can be dedicated to high-level problem-solving rather than meeting basic needs.
DBx: The truth of this insight is easy to miss in the midst of a crisis such as the one now upon us. However much danger a virus or other threat poses to us, we judge that danger relative to our expectations and sense of risk-exposure before the crisis arose. And the fact is that those of us in wealthy countries had been – and continue to be – protected from many of the sources of mortality and morbidity that routinely afflicted humans throughout history.
We must be careful not to let panic over COVID-19 (and, by the way, also over climate change) lead us to endorse policies that make us materially poorer over time. Any such reduction in wealth will have difficult-to-detect but nevertheless very real negative consequences on humanity’s future ability to predict, possibly avoid, deal with, survive, and cure viruses and other calamities that nature will throw, as she has always thrown, at us.
Here’s a letter to my good and wise friend Reuvain Borchardt, who wrote in response to this recent letter:
Reuvain:
You’re correct that many advocates of caps on prices that buyers can legally pay also propose caps on quantities that buyers can legally purchase. The idea behind the latter cap is to stop the former cap from causing buyers near the front of the lines from buying so much that nothing is left to buy for buyers further back in line.
But such “quantity caps” (as we might call them), while doing absolutely nothing to prompt suppliers to bring more supplies to market, do very little to prevent some buyers from hoarding excessive amounts to the detriment of other buyers.
It’s true that a store can limit the number of rolls of toilet paper and gallons of milk that each customer purchases per shopping trip. But it’s practically impossible for stores to prevent any customer from going to many different stores to build up his or her hoard. More importantly, even a “quantity cap” enforced vigorously by government would do nothing to prevent members of reasonably well-provision households who might otherwise avoid shopping for goods priced “gougingly” high from stocking-up further at artificially low prices.
Proponents of price controls deny at least three realities. One is that whenever supplies fall short of demands, some demands necessarily remain unmet; this fact is a matter of simple arithmetic. Second, the determination of whose demands are met, and whose aren’t met, is at best arbitrary and, more realistically, done according to political, business, family, and social connections. Is it realistic that the supermarket manager won’t stash some hand-sanitizer aside in case the Mayor or the manager’s niece might come in to buy some?
Third, the unintended negative consequences of government restrictions on market exchanges breed other and ever-more authoritarian government restrictions on human actions. Price caps breed purchasing caps. Purchasing caps, in turn – for reasons hinted at above – breed additional government controls on who can and who can’t buy how much and when and for what purposes.
Ludwig von Mises wrote brilliantly on this matter.*
Sincerely,
Don* See, for example, chapter 4 of Mises’s 1952 collection, Planning for Freedom.
Here’s a letter to the Washington Post:
Editor:
Heavy skepticism is always appropriate – if rarely exercised – whenever Congress is moved by emergencies to hastily enact legislation. Consider, for example, the attempt by members of the House to include, in a COVID-19 relief bill, anti-price-gouging measures (“Add to list Congressional leaders, administration push swift action on third coronavirus relief bill with major economic stimulus,” March 17).
Such measures are perfect examples of what government ought not do. High prices in the midst of emergencies reflect the unhappy reality that supplies have fallen relative to demands. This reality is not made happier by legislation that hides its clearest reflection from public view. Indeed, such legislation only makes reality worse. By keeping prices artificially low, such legislation encourages those consumers who are lucky enough to find available supplies to purchase more than they would have purchased at higher prices. Other consumers thus face an increased prospect of finding no supplies at all.
Worse, prices kept artificially low discourage suppliers from exerting the extra effort necessary to rush additional inventories to locations stricken by tragedy.
Every politician and pundit greedily grabbing for votes and public applause by objecting to so-called “price gouging” is someone who – unlike the suppliers at whom they point their accusing fingers – does absolutely nothing to actually increase the flow of supplies of much-needed goods and services to suffering people. Quite the opposite.
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
…..
My son, Thomas, called me this morning from his home in New Hampshire to happily report that he just bought 24 rolls of toilet paper for a total of $60. “I paid that high price voluntarily, Dad,” Thomas said. “The economics that you taught me allows me to understand that it’s better to have the option of actually getting 24 rolls for $60 than to be stuck with being able to get only zero rolls for zero dollars.”
That’s my boy!
… is from page 3 of the original edition of James M. Buchanan’s 1960 textbook, The Public Finances (a volume not included in Buchanan’s Collected Works); the following two sentences are the opening lines of this book’s Chapter 1:
Few people enjoy being governed; almost everyone enjoys governing. This paradox in human emotions explains many of the problems that arise in any society concerning the functions and purposes of government.
DBx: Toward the end of his long life – a life that began in 1919 and ended in 2013 – Jim modified, at least on the surface, the first part of the above claim. In much of his final work, done post-9/11, Jim expressed the belief that many people actually want to be ordered about by the state. Jim lamented this fact, but he always did his best to work with reality as he understood it to be and not as he wished it would be.
Nevertheless, the deeper truth of the above observation – one made when the occupant of the Oval Office was Dwight Eisenhower – remains. Each of us as individuals would like to be exempted from many of the rules to which each of us wishes all others to be bound. Every person understands that rules that carve out spaces for the exercise of individual autonomy and freedom of choice prevent each of us from violating each other’s space. And many of us understand also – or believe that we do – that such rules better ensure peace and prosperity.
Such understanding reflects the higher part of human intelligence. But the more primal parts of our brains incite each of us to want something for nothing – for me, at a deep level, to crave others to toil for my benefit and for me to avoid doing anything in return. The same, I assure you, is true for you, whoever you are. Yet in a civilized and liberal society, most of us are socialized to be ashamed of this primal craving. And so we – most of us – consciously think of ourselves as not wishing to live at others’ expense.
I’m thankful for such socialization in me and in most other denizens of liberal society.
The state, however, is an organization that permits those of us so socialized to live at the expense of others while fooled by the fiction that we don’t do so. To the state we grant the authority to violate the rights of others – rights-violations that we would immediately recognize as such were we to perform these rights-violations privately.
Examples of such rights-violations abound. They include protective tariffs, government-granted subsidies, occupational-licensing restrictions, minimum-wage commands, and most so-called “regulation” – from land-use restrictions to the many diktats that burden financial markets. Peel away the fine-sounding justifications for these state interventions and you find that each of them enables some identifiable group of people to gain from the toil or justly earned treasure of others without having to reciprocate.
Protective tariffs allow some domestic producers to extract, rather than earn, gains from consumers. Minimum-wage legislation allows higher-skilled workers, as well as firms that use disproportionately large amounts of high-skilled labor relative to low-skilled labor, to benefit at the expense of low-skilled labor and at the expense of firms that use disproportionately small amounts of high-skilled labor relative to low-skilled labor. And so this primal pattern continues for much of what is presented in modern textbooks as “public policy.”
“Among economists, price gouging … simply reflects the emotional response non-economists have to rapid price increases,” write Antony Davies, associate professor of economics at Duquesne University and James Harrigan, managing director of the Center for the Philosophy of Freedom at the University of Arizona, in a recent column. “What politicians and other anti-price gouging proponents would have you believe is that we can have what we want, at the price we want, simply by passing a law.”
Laws can’t change the market conditions that drive prices up.
John Hirschauer, too, warns against price controls.
My intrepid Mercatus Center colleague Veronique de Rugy was a guest this morning on CSPAN’s Washington Journal to discuss what government ought – and ought not – to do in response to the COVID-19 epidemic. (I must say that it hurts my head and saddens my soul to listen to many of the people who call in to this program.)
Here’s Scott Gottlieb and Caitlin Rivers on some measures that might be advisable to take to halt the spread of COVID-19. And here on the same is an anonymous author (shared by Tyler Cowen).
Chris Edwards writes informatively and wisely about funding for the NIH and the CDC.
Kevin Williamson rightly bemoans Uncle Sam’s addiction to fiscal recklessness.
Phil Magness reports on the New York Times‘s retraction of the key claim in its now-infamous “1619 Project”. And here’s Randy Barnett’s twitter thread on the same.
