Posted tagged ‘Solutions vs. Trade Offs’

Coronavirus Consequences: Intended And Unintended

April 8, 2020

 

Consequences Just Ahead Green Road Sign with Dramatic Storm Clouds and Sky.

HOW DO EXPERTS VIEW THE WORLD

The lens through which experts see a problem is important in understanding why they make the decisions they do. Engineers, chemists, immunologists, economists, lawyers, psychiatrists, social workers, farmers, politicians, and bureaucrats could look at the same thing and see it differently.

 

IMMUNOLOGIST

The head of the White House Coronavirus Task Force, Dr. Fauci, is the director of the National Institute of Allergy and Infectious Diseases. He sees our current crisis through the lens of being an immunologist. The end he seeks is the eradicate the Coronavirus. He chooses means that he believes will bring about the end he seeks.

What he doesn’t see are the consequences produced, outside of eradicating the Coronavirus, by the means he has chosen.

 

ECONOMICS

Economics isn’t really about finances, making money, business, profit etc. Economic principles are in play in situations that have nothing to do with money and finances.

Economic principles apply to everything in life. Medics on the battlefield perform triage on the wounded soldiers. They are deciding how to allocate their scarce medical resources, including their time, to the most productive use. Some soldiers have a chance to survive if they get immediate care. Some have wounds that can be addressed quickly and fixed later. Some can’t be saved. Triage is how these doctors make these trade offs. If they spend all their time on a soldier that can’t be saved, others will die who could have been saved and some may lose limbs that wouldn’t have.

Each of us has a limited number of hours (24 ) in a day. And we have an unlimited number of ends to choose from. We choose certain ends and also choose the amount of time we are going to allocate to each.

Good economists see the world differently. They do not see one size fits all solutions in a world of scarce means and unlimited ends. They don’t see a decision as a choice between either A or Z . They see decisions as trade offs between A and Z.

 

THAT WHICH IS SEEN AND THAT WHICH IS NOT SEEN

Frederic Bastiat was an economist in France during the mid 1800’s. His essay, That Which Is Seen and That Which Is Not Seen, starts like this: “In the economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause – it is seen. The others unfold in succession – they are not seen: it is well for us if they are foreseen. Between a good economist and a bad economist this constitutes the whole difference……the bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, at the risk of a small present evil.”

I’m not picking on Dr. Fauci. Every profession, by the very fact of being specialized, has built in blind spots weather it is politicians, bureaucrats, engineers, lawyers, psychiatrists or social workers.

We have to understand this reality and do a better job of looking at the trade offs instead of the one size fits all solution. The financial cost, the psychological cost and the high cost of agreement, have to be seen and considered in every decision.

I know our politicians and bureaucrats are not weighing all the costs of the decisions they have been made concerning the Coronavirus crisis. And the reason is they see the crisis not as a problem to be “solved”, but as a chance to increase government power, and shrink the rights of the individual. Because “You Never Let A Serious Crisis Go To Waste.”

 

ARTICLES

Complex Systems Collide, Markets Crash, by James Rickards, at dailyreckoning.com.    Excerpt from the article:

“Complexity theory has four main pillars. The first is the diversity of actors. You’ve got to account for all of the actors in the marketplace. When you consider the size of global markets, that number is obviously vast.”

“The second pillar is interconnectedness. Today’s world is massively interconnected through the internet, through social media and other forms of communications technology.”

“The third pillar of complexity theory is interaction. Markets interact on a massive scale. Trillions of dollars of financial transactions occur every single day.”

“The fourth pillar, and this is the hardest for people to understand, is adaptive behavior. Adaptive behavior just means that your behavior affects my behavior and my behavior affects yours. That in turn affects someone else’s behavior, and so on.”

“Understanding the four main pillars of complexity gives you a window into the inner workings of markets in a way the Fed’s antiquated equilibrium models can’t. They let you see the world with better eyes.”

“People assume that if you had perfect knowledge of the economy, which nobody does, that you could conceivably plan an economy. You’d have all the information you needed to determine what should be produced and in what number.”

“But complexity theory says that even if you had that perfect knowledge, you still couldn’t predict financial and economic events. They can come seemingly out of nowhere.”

“I make the point that a snowflake can cause an avalanche. But of course not every snowflake does. Most snowflakes fall harmlessly, except that they make the ultimate avalanche worse because they’re building up the snowpack. And when one of them hits the wrong way, it could spin out of control.”

 

The Costs Are Mounting In This Government-Imposed Economic Collapse, by William Anderson, at mises.org.   Excerpt from the article:

“What we are seeing is how many people want governments to respond to a situation characterized by uncertainty. In such circumstances, they demand “solutions” that only can make things worse, and there is no better way to make the masses vulnerable to disease than to impoverish them. Furthermore, theNew York Times and the American Conservative’s one-two punch demanding total subjectivity to the whims of government makes it very difficult for there to be even a smidgen of rational discussion as to what is taking place no matter what one’s ideological stance might be.”

“First, instead of assuming that regulators really intended to minimize costs but somehow proceeded to make crazy mistakes, I began to assume that they were not trying to minimize costs at all……… They were trying to minimize their costs, just as most sensible people do.”

“Politicians are rationally risk averse, and when they shift the costs of their decisions upon the people they ostensibly wish to protect, they are not acting out of character, either of themselves or of the political system. That they wreck the livelihoods of millions of people in the process is of no concern to them and their adoring media. Instead, blame the capitalists.

 

“If Getting Us Into $6 Trillion More Debt Doesn’t Matter, Then Why Not $350 Trillion?” at zerohedge.com.         Excerpt from the article:

“… in case anyone still hasn’t figured it out, the whole “republican, democrat” split of the population in two rival camps is nothing more than theater meant to distract while those in control loot not only the here and now, but also rob the future generations blind. Because the sad truth is that behind the fake veneer of either progressive ideals of conservative values, politicians on both sides have one simple directive: to perpetuate the broken status quo for as long as humanly possible, and get as rich as possible in the process.”

 

“A Multitrillion Dollar Helicopter credit Drop”: How The Fed Turned $450 Billion Into $4.5 Trillion, at zerohedge.com.   This stimulus bill allows The Fed to print $4 trillion dollars. The bill also allows The Fed to bailout anything or anyone it wants. It also allows it to do it secretly.  Why can’t I get a $1 million dollar bailout? I’m a great guy! And I’m great at keeping secrets!

 

Corona Cash Grab: Pelosi, US Agencies Compile Lists For Phase 4 Stimulus, at zerohedge.com.    At what point will this massive amount of debt become too heavy for the real economy to prop up. These geniuses think printing money and going into debt have no consequences. Economic reality will eventually win. And It will be ugly.

 

Michigan Democrat Governor Begs Feds For Hydroxychloroquine Just Days After Threatening Doctors For Prescribing It, at zerohedge.com.  This shows what a B.S. game politics is.  I will play politics until I need something to save my a$$.

 

Stimulus Package Projected To Save The Lives Of At Least 85,000 Government Programs, at babylonbee.com.   The Bee is great. This headline is funny because it is true.

 

The Things You CANNOT Say About Coronavirus, by James Corbett, at guardian.org.  If I don’t buy in 100% to what the “Experts” say about the Coronavirus, everyone acts as if I have committed a mortal sin against humanity. Most people will cave when it looks like the crowd is against them. I’m not most people.

 

How Governments Are Deploying Big Data To Enforce Covid-19 Quarantines, at zerohedge.com. And this article:  Kansas Using Residents’ Cell-Phone Location Data To Fight Pandemic, by Tobias Hoonhout, at nationalreview.com. These articles give us insight into how tyrannical politicians can be in the name of doing good. This is surveillance without a warrant. This is essentially what the FBI got the FISA court to do to Trump.

Garcetti To Non-Complying Businesses: ‘We Will Shut You Down, at laist.com.   Where do these governors get the power to confiscate a businesses property. In reality this is what they are doing with these shut down rules. Do these rules have the force of law behind them or are these Governors using intimidation to get people to do what they want?

$350k Bond For Man Charged In ‘We Don’t Give A F*** Caronavirus’ Video, at fox19.com.    $350,000 bond for a second degree misdemeanor?  Seriously?  Here is what the Prosecutor said: “Millions of Ohioans are following Governor Mike DeWine’s social distancing order. It’s not a suggestion, it’s the law,” Hamilton County Prosecutor Joe Deters said in a tweet over the weekend. “Gathering in big groups is dangerous, especially to our police when they have to intervene. It’s real simple: stay at home or expect to be prosecuted.”

This is all about intimidating people to do something that is an order (Suggestion) and not a law. These are the very real unintended consequences of Government is doing. This guy committed a mortal sin against the powers that be.

 

From Denmark, A Clever Way To Stop Panic-Buying And Hoarding, by Mark J. Perry, at carpediemblog.   This is how you ration scarce resources. Raise the price. But this is really thinking outside the box. One bottle of hand sanitizer $5.73,  2 bottles $143 each. This should be the pricing system for toilet paper and paper towels.

 

UK Drug Dealer: People Are “Panic-Buying Cocaine And Weed To Cope With Covid-19 Lockdown, at zerohedge.com.    In the UK people are panic buying cocaine and marijuana. A dealer said: “…the price of cocaine is set to surge because there are no new shipments coming in from abroad for at least six weeks……When the stock begins to run low, people higher up the chain will charge more or cut the cocaine and decrease its quality.”   Economic principles are always in play. Even in the black market. The price will go up to ration the scarcity, or they will cut the quality to extend the supply.

Solutions? Or Trade Offs?

March 24, 2020

Diagram of tradeoff

I heard this statement the other day about our present Covid 19 “crisis”: ” Do we save lives and kill the economy? Or do we save the economy and kill lives?

I’ve learned from economist Thomas Sowell that in our imperfect world, there are no solutions, there are only trade offs. What does that mean? It means that the two choices above are not the only choices. These choices are stated as all or nothing categorical decisions. But many of “experts” fail to see the incremental trade offs that can be made between these two extremes.

When a “crisis” pops up, a particular “solution” to the crisis is imposed on us by an “expert”. People who criticize the “solution are usually hit with this statement: “Even if it saves just one life, isn’t it worth it?” My answer to that question is, “NO” it is not worth it.

The question implies that there is no limit to the amount of resources that should be used in order to save just one life. But a price is put on life everyday. If these people were serious about “saving just one life” they would fight to get the speed limit reduced to 20 mph. Would any of us be willing to trade off the economic benefits of a higher speed limit as well as our ability to get places faster, for the lives lost in accidents.

The deaths of coal miners and power line workers are an acceptable trade off to have electricity in our homes. Some of the most deadly professions are fisherman, farmers and loggers. Yet we don’t think twice about the trade off of these lives when we eat crab legs or a steak or build a house.

The point is, there is a trade off between lives lost and the goods and services our free market economy produces. In fact the standard of living produced by free market capitalism has saved exponentially more lives than have been lost in the production of that standard of living.

Swine Flu data from 09-10 shows 60 million contracted the virus and 22,469 died. Influenza data for this flu season shows between 38-59 million contracted the flu and between 23,000-59,000 died. These were no big deal to the media. These lives were an acceptable trade off to the powers that be and the media. So why is our present “crisis” different?

 

Here are some great articles with great information.

Coronavirus Isn’t A Pandemic, by Richard Epstein, at ricochet.com.

Excerpt from the article:

“But why might the dire predictions be wrong? The theoretical answer to the question of how deadly the virus will turn out lies in part in a strong analytical relationship between the rate of spread and the strength of the virus. Start with the simple assumption that there is some variance in the rate of seriousness of any virus, just as there is in any trait for any species. In the formative stage of any disease, people are typically unaware of the danger. Hence, they take either minimal or no precautions to protect themselves from the virus. In those settings, the virus—which in this instance travels through droplets of moisture from sneezing and bodily contact—will reach its next victim before it kills its host. Hence the powerful viruses will remain dominant only so long as the rate of propagation is rapid. But once people are aware of the disease, they will start to make powerful adaptive responses, including washing their hands and keeping their distance from people known or likely to be carrying the infection. Various institutional measures, both private and public, have also slowed down the transmission rate.”

“At some tipping point, the most virulent viruses will be more likely to kill their hosts before the virus can spread. In contrast, the milder versions of the virus will wreak less damage to their host and thus will survive over the longer time span needed to spread from one person to another. Hence the rate of transmission will trend downward, as will the severity of the virus. It is a form of natural selection.”

 

Coronavirus Overreaction, by Richard Epstein, at ricochet.com.

Here is a point that jumps out at me: “Italy has taken the lead with 6,077 deaths……… which stems, it appears, from a conscious decision not to supply ventilators to anyone over 60.” Death panels anyone?

Excerpt from the article:

“Out of over 367,000 COVID-19 cases reported as of noon March 23, 2020, 16,000 people have died, a rough increase of about 9,500 from the past week. China has contributed about 3,500, a figure that is holding relatively stable — if we are to believe the reporting coming out of the People’s Republic of China — as is Iran’s total of 1,812 deaths (another potentially dubious total). In Spain, the death toll is 2,206. Italy has taken the lead with 6,077 deaths, 85 percent of which are of people over 70, which stems, it appears, from a conscious decision not to supply ventilators to anyone over 60. These four nations make up close to 13,000 deaths or about 82 percent of the total. Taken together, these four countries account for over 13,595 of the 16,097 deaths. The good news here is that the growth rates in both Italy and Spain have turned downward in the past 48 hours.

“We need a public debate on the political response to COVID-19, and we need it now. I fully understand the need for immediate responses to immediate threats, like fires, but not for crises that may last for three months or more. At this point, everyone knows that people who are elderly, especially those with chronic conditions, should stay out of harm’s way. But that prohibition is self-enforcing because those people know that it is in their best interest to self-quarantine, at least in place of high incidence, but by no means nationally. But for low-risk groups, a different set of precautions may fit the bill — an emphasis on thorough hand washing, reduced work hours, reducing workers per shift, and better availability of ventilation equipment.”

“The central Hayekian principle applies: All of these choices are done better at the level of plants, hotels, restaurants, and schools than remotely by political leaders. Our governors have failed to ask a basic question: When all the individual and institutional precautions are in place, what is the marginal gain of having the government shut everything down by a preemptive order? Put otherwise, with these precautions in place, what is the extent of the externalities that remain unaddressed?”

“Progressives think they can run everyone’s lives through central planning, but the state of the economy suggests otherwise. Looking at the costs, the public commands have led to a crash in the stock market, and may only save a small fraction of the lives that are at risk. In addition, there are lost lives on both sides of the equation as many people will now find it more difficult to see a doctor, get regular exercise, stay sober, and eat healthily. None of these alternative hazards are addressed by the worthy governors.

 

Podcast: Richard Epstein Talking With Nick Gillespie About Coronavirus, at reason.com. Listen to this podcast. Epstein makes good sense.

 

Article here: The Costs Are Mounting In This Government-Imposed Economic Collapse, by William L. Anderson, at mises.org.

Excerpt from the article:

“Federal and local authorities are stretching their constitutional limits well beyond anything our ancestors would have recognized in their attempts to keep people away from each other and prevent social contact.”

“…….. Military terms such as “shelter in place” now are part of ordinary language as governments at every level issue orders, with governors competing to see how they can be perceived as being “in charge” as they bark out increasingly draconian commands, threatening deadly force if necessary.”

What we are seeing is how many people want governments to respond to a situation characterized by uncertainty. In such circumstances, they demand “solutions” that only can make things worse, and there is no better way to make the masses vulnerable to disease than to impoverish them. Furthermore, the New York Times and the American Conservative’s one-two punch demanding total subjectivity to the whims of government makes it very difficult for there to be even a smidgen of rational discussion as to what is taking place no matter what one’s ideological stance might be.

As noted earlier, all of this is a response to the uncertainty of just how much this virus will spread and what its actual effect will be on the health of Americans. What we do know (at least at this point), however, does not exactly raise our confidence in American politicians and the media, especially the elite media.

 

Prevention Expert:Data Shows Our Fight Against Coronavirus May Be Worse Than The Disease, by James Barrett, at dalywire.com.

Excerpt from the article:

“…..By taking an “at war” approach to fighting COVID-19 widespread shutdowns and isolation of the entire population rather than a “surgical strike” approach focusing on the truly vulnerable, Katz argues, we have set ourselves on the path to “uncontained viral contagion and monumental collateral damage to our society and economy.” 

“The reason this is so dire, he underscores, is that our current approach is rapidly causing severe damage socially, economically and in terms of public health.”

“I am deeply concerned that the social, economic and public health consequences of this near total meltdown of normal life — schools and businesses closed, gatherings banned — will be long lasting and calamitous, possibly graver than the direct toll of the virus itself,” Katz writes.”

“While the stock market might rebound, many businesses and thus many jobs, may never come back, a result that has massive societal ramifications. Meanwhile, by stretching our limited health care resources “so widely, so shallowly and so haphazardly,” we are likely setting ourselves up for failure on multiple levels.”

 

Never Let A Serious Crisis Go To Waste

Thomas Sowell: “The first rule of economics is scarcity, there are not enough resources to meet the desires and needs of everyone. The first rule of politics is to ignore the first rule of economics.

If that is the first rule of politics than the second rule of politics is: Politicians are always trying to increase the power of government. But when a crisis hits that effort increases exponentially.

I don’t like the fact that the multiple trillion dollar “Stimulus” bill will bail out banks and corporations that previously used The Feds printed money to buy back their stock in order to prop up their stock price. You and I also know that this will end up being more like 4 trillion dollars when you add everything up. This 2-4 trillion is all debt. This debt will be purchased directly or indirectly by the Federal Reserve’s printing press. We are piling more debt on top of what we all ready have. This is what we did in the 2008 crisis (TARP Bailout). Non of the 08 debt has been repaid. We have a Empire State building of debt built on a sand foundation. It is totally top heavy like an inverted pyramid. But we’ll address the Fed money printing in another post.

I also don’t like the Democrats 1400 page bill that is nothing more than the democrat policy platform for the 2020 election. They are trying to implement their agenda before the election takes place.

Here are a few things that are in the 1400 page bill. Increased fuel emission standards for airplanes. Same day voter registration, early voting, voting by mail, and something called ballot harvesting (no potential for voter fraud here). Reserve collective bargaining power for unions. Expand wind and solar tax credits. Money for planned parenthood.

The Democrats, Republicans and the Federal Reserve are definitely not letting this crisis go to waste.

These articles have more info in them.

Nancy Pelosi Proposes 1,400 Page Coronavirus Bill Stuffed With Pork, at breitbart.com.

McConnell: Dems Holding Up Coronavirus Relief Over solar Panel Tax Credits, at breitbart.com.

Everyone In America Should Read About Dems Killing Emergency Relief Package, at theblaze.com.

 

People Want A President Who Will ‘Get Something Done’

March 15, 2016

I hear a recurring theme from people when asked who they want as their next President? The answer goes something like this; I want someone who will ‘get something done’, or I want someone who will ‘fix things’, or I want someone to ‘run the country’. What do people mean when they say these things? More importantly what is implied by these statements?

People who make these statements are implying that government is the place where problems get solved. They seem to think everything emanates from government. This is 180 degrees from the principles on which our country was founded where individuals solved their problems and government stayed out of their way.

GET SOMETHING DONE?

If ‘getting something done’ is the standard for rating the success of an administration, than every President has been a success. The Federal Government has been growing at an ever-increasing speed over the last century and especially over the last fifty years. This couldn’t have happened unless presidents and politicians were ‘getting something done’. So from the stand point of growing the size and power of  Government, politicians have been ‘getting something done’ for quite some time. Unfortunately this ‘something’ that has been ‘getting done’ is destructive to the principles and institutions on which our country was founded, such as individual liberty, the rule of law, property rights, and a free market economy.

Everybody has their own idea of what ‘getting something done’ means. For me ‘getting something done’ would be cutting government in half and probably more. Of course the only person who agrees with what I ‘want to get done’ is me, and I’m not running for President.

When we say we want someone who will ‘get something done’ we are implying that ‘solutions’ to perceived problems can only come from government central planners. Even so-called conservatives, who are supposed to be for smaller government and greater individual liberty, seem to think that ‘solutions’ to ‘problems’ can be found if the right people are put in power. The world is so big, people seem to think that the complex order that exists in society can only be brought about and operated by top down planning from politicians and bureaucrats. People have no understanding that complex order can happen spontaneously when individuals are allowed to voluntary cooperate in free markets. Government central planners, can’t bring the amount of knowledge to bear on any situation as the total amount of knowledge that individuals acting in a free markets can bring. Thomas Sowell has said, “People who are very aware that they have more knowledge then the average person are often very unaware that they do not have one tenth of the knowledge of all the average persons put together. In this situation, for the intelligentsia to impose their notions on ordinary people is essentially to impose ignorance on knowledge.” Does this sound like our present day political and bureaucratic class? Now add their thirst to rule over the masses, and you have a dangerous situation for individual liberty.

Politicians have been talking about change for decades. My goodness President Obama was elected on Hope and Change. Unfortunately when you run on something as ill-defined as change, each voter ascribes his idea of change to the candidate. By using the vague phrases like Obama’s ‘hope and change’ or Trump’s ‘America’s going to win again’, the politician holds up a mirror in front of himself, allowing the voter to see his perfect candidate, himself. It’s a verbal sleight of hand trick that fools many in the audience.

SOLUTIONS? TRADE OFFS? OR TOLERABLE BESTS?

What needs to be fixed? Is there a solution, a trade-off, or just a tolerable best?  Where does the best possible outcome lie; top down decision-making by central planners in government, or individual decision-making in a free market?

Top down decrees can’t solve problems for two very important reasons. 1) There are no solutions to most ‘problems’ there are only trade offs. and 2) Top down decision makers don’t have access to the amount of knowledge that millions of individuals bring to bear as they make decisions about the trade offs they face everyday.

If government intervention caused a problem in the first place, the problem can’t be fixed by implementing another government solution. Many of the original ‘problems’ that Government tried to solve are not problems at all, they are the inescapable realities of the imperfect world in which we live. When it comes to these ‘tragedies of the human condition’ there are no solutions or good answers, only bad or worse choices (a tolerable best).

What would constitute a solution? Is the solution an end result, or is the real solution the process for making trade offs between tolerable bests? Because of subjective value, scarcity, and the passage of time there can’t be end results. The solution lies in the process of allowing individuals to freely produce, consume, exchange, and save whatever they want.

THE ROAD TO SERFDOM

When thinking about the possibility of solutions, trade offs, and tolerable bests, ask yourself, who should have the power to make a particular decision, you, or a government central planner? In  The Road To Serfdom  F.A. Hayek said, “Few are ready to recognize that the rise of fascism and nazism was not a reaction against the socialist trends of the preceding period but a necessary outcome of those tendencies. This is a truth which most people were unwilling to see even when the similarities of many of the repellent features of the internal regimes in Communist Russia and National Socialist Germany were widely recognized. As a result, many who think themselves infinitely superior to the aberrations of the nazism, and sincerely hate all its manifestations, work at the same time for ideals whose realization would lead straight to the abhorred tyranny.”….. “Hitler did not have to destroy democracy; he merely took advantage of the decay of democracy and at the critical moment obtained the support of many to whom, though they detested Hitler, he yet seemed the only man strong enough to ‘get things done.”

The growing power of the executive branch over the last two administrations is what should give us pause. We probably don’t have to worry too much if a Republican is elected President in 2016, because the Democrats and the media will push back hard against everything he would try to get done. The only reason President Obama has gotten away with ‘getting something done’ is because the Republicans were too afraid of being called racist to push back, and the media was cheerleading the Presidents usurpations of power.

How far down the road to serfdom are we? How many exits remain before there is no turning back?

I know, I know: IT CAN’T HAPPEN HERE!

Related ArticleMilton Friedman: Moving Toward Serfdom, at austrianaddict.com.

Related Article – Spontaneous Order Utilizes More Knowledge Than Central Planning Could Ever Hope To Utilize, at austrianaddict.com.

Related ArticleIs America Still On F.A. Hayek’s “Road To Serfdom“, by Richard Ebeling, at fee.org.