Today was a good day. I got to “see” my friend David Henderson. Like many of you, my social circle has become more virtual than actual. As I posted earlier this week, David was kind enough to allow me to pose some really great questions from all of you with regard to the ongoing COVID19 pandemic.
Here’s the result. We hope you enjoy.
P.S. Here’s the link to Richard Epstein’s Reason interview, which David mentions during our conversation.
READER COMMENTS
SaveyourSelf
Mar 21 2020 at 8:32am
09:30 “Many nation states allocate massive resources to spare capacity for military readiness…but none allocate comparable resources to spare physical and professional capacity for readiness against potential pandemics. So how can economics explain this contrast?”
The differences between “military” and “civilian” functions of the government can be explained by defining what actually comprises government. Here is the best model of government (that I know of): Citizens enter in an agreement not to harm each other and to help each other when threatened with harm—specifically physically harm from other people like invaders or thieves. It is an agreement on justice. Some of those citizens then choose to specialize in the fulfillment of the terms of that agreement on justice on behalf of other citizens who are willing to pay for that service. These professionals who work to fulfill the terms of the agreement on justice are “government”. The fee to secure said services is the “tax”. In this simple model, government is the military and police. Thus, asking the government to respond to a non-military crisis is asking a bunch of guys with guns to solve problems that are non-violent. No surprise that they don’t do it well. The targeted application of violence which is the specialty of the government does not lend itself to much other than combat. Which is why governments do not focus on readiness against pandemics the way they do against war. They have no advantage in solving problems that are non-violent. Their tools are, frankly, inappropriate for non-violent problems. And, furthermore, asking the government to solve such problems is a mistake. Because when all you have is a hammer, everything gets hammered. And when all you have is a gun, everything gets shot or threatened with bullets.
Amy, David, I enjoyed this interview. It was fun to feel like I was a part of the conversation. Thanks.
Amy
Mar 21 2020 at 9:43am
Thank YOU! It was fun to do and to “see” my friend. I’m sure we’ll do more. Stay well!
Thaomas
Mar 21 2020 at 11:26am
Please don’t make us watch videos. There is not way to dialogue with videos. 🙂
SaveyourSelf
Mar 21 2020 at 1:50pm
The Richard Epstein interview linked in this post was excellent and Richard began to answer the question I posed for this conversation.
Question: Adam Smith in The Theory of Moral Sentiments states that justice is the foundation of civilization. Even Libertarian’s accept accept limitations on their freedom that promote justice. Justice is restraint against activities that cause harm. There are clear distinctions in the insurance industry between harm caused by other people and harms caused by “Acts of God” like hurricanes, hail, floods, and plagues. If “Acts of God” were theoretically amenable to limitations on human activies—ie. restraints on freedom—would Libertarians accept those restrictions or oppose them?
Answer: Richard Epstein: “There has always been a long tradition of limited police power. And the big exception to the limited police power rule has always been the rules dealing with Vis Maior—major catastrophies [act of god]. And so you could go back to the 1820s, you could go back to Roman times, and the moment you get floods, the moment you get earthquackes, the moment you get invasions, essentially the rules of private property are suspended. And the courts have basically decided in all of these cases to stay out of this game. In one very instructive opinion the selective service cases in the middle of World War I—the judge who decided on this was Mahlon Pitney—(He is one of the greatest unknown justices of the supreme court and a very rigorous and consistent classical liberal.) And so when it came to the question of whether or not the United States could draft everybody into the Militia and put them into the Army he just said ‘We defer to the political branches of Government. We have absolutely nothing to do about this stuff. We’re not warmakers or warfinders.’ So if that’s your libertarian judge, you can imagine how everybody else feels.”
Richard Epstein. Reason Interview 3/18/20.
Unfortunately Richard’s answer does not tell me if it is a good idea to sacrifice liberty (property rights) in the presence of calamity. It only tells me that it happens. I can say with confidence that long term suspension of individual property rights leads to decreases in standard of living both in models an in real life experiments. I guess than that only leaves the question of whether short term suspension of property rights can be beneficial during emergencies. The models say no. Rationing of resources by individual who own those resources is the most efficient way to allocate resources that we have ever discovered. Price rationing during a hurricane, for example, is still the most optimal way to serve those affected by the weather. (See Munger on Price Gouging) I think, then, that libertarians should appose impositions on liberty at all times, even during–and perhaps especially during–times of vis maior.
Scott G
Mar 22 2020 at 10:28pm
Wonderful interview. Really impressed with Dave’s responses.
Stéphane Couvreur
Mar 24 2020 at 9:33am
Thank you for your answer.
I was wondering why market-based research on SARS-CoV1 had stalled. Well, it appears that this “epidemic” caused 800 deaths around the world and then stopped: that’s probably a good enough reason.
I have also learned thanks to Tyler Cowen that some of the major 20th century vaccines were invented by Maurice Hilleman at Merck. This made me think twice about Michael Kremer’s proposal.
As for the FDA bureaucratic obstacle which David highlights, we are having our own case study right now in France. As I write, a large part of the politico-scientific parisian establishment is still making unreal comments about Didier Raoult’s experiment with hydroxychloroquine and azithromicine. It’s too bad his books are not translated in English.
Best regards,
Stéphane
Jacob Egner
Mar 24 2020 at 12:10pm
Nice to put a face and voice to the name, Amy. Thanks for the enjoyable video!
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