Friday, April 3, 2020

"Pardon Me if I am Skeptical"

Sydney M. Williams

Thought of the Day
“Pardon Me if I am Skeptical”
April 3, 2020

My life has been full of misfortunes, most of which never happened.”
                                                                                    Attributed to Michel de Montaigne (1533-1592)

Perhaps it is because with age has come cynicism regarding our political class and the press. I am not sure. What I do know is that I am confident in the innate ability of Americans to adapt to trying situations and, if left free, to change conditions for the better for themselves and their fellow man, be that through government or industry. But I am less enamored of our political leaders in Washington and the media.

The United States is the richest large country in the world. We have a healthcare system that attracts the world’s wealthiest individuals. While we may lag some Asian and European nations, we are more literate and better educated than most of the world. We value personal freedom more than any other people, having inherited a unique form of government from our forebearers. Yet, we have a history of gullibility. We believed the editors of Newsweek and Time when they ran articles in the 1970s titled, respectively, “The Cooling World” and “A New Ice Age?” We failed to understand the difference in time to a geologist and opportunistic reporters. We were frightened by Paul and Anne Ehrlich’s prophecy of doom in their 1968 book, The Population Bomb: “The battle to feed all humanity is over. In the 1970s hundreds of millions of people are going to starve to death, in spite of any crash programs embarked upon now.” We were shocked by stories of disasters related to Y2K and of those about asteroids. More recently, entire industries have been built around scaring people about the alleged anthropomorphic causes of global warming: Teslas to wind farms to solar panels – all of which require government assistance to survive.   

The President has said that if we adhere to a system that keeps large segments of the economy closed, if we continue to social distance and practice common-sensical hygiene, we will limit deaths attributable to COVID-19 to 100,000 to 200,000 people. If we do not, expect deaths to reach 2.2 million. China, the fount of the pandemic, has reported 3,400 deaths since the virus was discovered in mid-November of last year. World-wide deaths approximate 40,000. I understand that China’s numbers are not to be trusted, but 100,000 deaths in the U.S. would equate to 400,000 deaths in China. Are they that blatant in their lies? Is their healthcare system that superior to ours? As a dictatorship, they are able to take more draconian measures than a democracy. That I understand, but still? And what about Italy? We are told that our experience should resemble theirs. They have reported almost three times the number of deaths as China, with 1/20th the population. Their reports are probably accurate, except in reporting deaths from COVID-19 they include those with other pre-existing conditions. Nevertheless, 95% of their deaths occurred in people over 60. Italy has a worse healthcare system, roughly half our per capita GDP and a population whose median age is seven years older than ours. As well, Italy has closer relations with China than does the U.S.  So why should we be told that our experience will resemble theirs? Why do reporters not ask? Why do they not try to determine how many deaths from Coronavirus involve those with pre-existing conditions?

The deliberate shutting down of the economy is unprecedented. J.P. Morgan suggests unemployment could reach 8.5%, Goldman Sachs says 15.5%, the Federal Reserve Bank of St. Louis puts the number over 30%. No one knows. What we do know is that we had been headed into an election with the economy doing well and with record high employment and record low unemployment. Now we face an economic hailstorm. Much of mainstream media and most politicians continue to be paid, as are are the roughly thirty percent of people who can work from home. Healthcare workers, the heroes and heroines of this saga, are employed but face the scare of an unknown virus every day. Those laid off are mostly in lower-income jobs. Initial jobless claims reported yesterday were 6.6 million – 23X where they were two weeks ago. The Organization of Economic Cooperation and Development (OECD), according to George Mason University Fellow Bruce Yandle, estimates that the activities most directly affected by the Coronavirus shutdowns account for 30 to 40 percent of GDP in advanced economies. “Social solidarity,” as Holman Jenkins wrote recently in the Wall Street Journal, “can be a perishable flower.” While we have not reached the peak in COVID-19 infections or deaths, getting people back to work should be the foremost concern of all.

Commodities have been hit. Oil prices are down 60% and lumber prices lower by 42%. High-yield bonds have collapsed in price. As for equity markets, March came in and went out like a bear. By the 23rd, the Dow Jones Industrial Average (DJIA) was down 27% for the month and 37% from the peak. With the goddess Hygieia hovering overhead, the Index recovered 17.9% from the bottom, but its quarterly decline of 23.2% was the worst since 2008. Volatility reached extreme levels. During March, there were nineteen days (out of twenty-one trading days) when the DJIA fell or rose more than 1.5%. The closest comparison would be October of 2009. The Index peaked on February 12 of this year, with the economy expanding. The decision to shut down the economy, to combat Coronavirus, was a deliberate act with unknown consequences. The effect of the market sell-off has hurt the well-off but has also impaired the retirement funds for millions of individuals.

And we cannot forget that COVID-19 is not the only disease killing us. Keep in mind, between 7,000 and 8,000 Americans die every day from multiple causes. Over 1,700 die every day from heart disease, 1600 from cancer and 690 from medical errors. An estimated 463 die every day from accidents and 100 every day from falls. A reader in Louisiana sent me questions raised by the Mises Institute in Auburn, Alabama: “How many Americans suffering from other illnesses cannot see a doctor now? How many Americans will lose their jobs, their life savings, their retirement prospects, and their incalculable feeling of self-worth? How many will succumb to depression, drug or alcohol abuse, and suicide? How many will lose their homes, divorce their spouses, or suffer abuse? How many will never recover their careers? How many small businesses, including the vital ones of doctors, dentists, and veterinarians, will vanish from the community? How many young people will ‘fail to launch?’” All good questions, without good answers.

With some notable exceptions, politics retains its ugly veneer. Feuding persists between New York’s Governor Andrew Cuomo and New York City’s Mayor Bill de Blasio. President Trump takes daily hits, but he has been, unusually so for him, generous in praise of others. Nancy Pelosi offered a non sequitur that Congress should roll back the limits on the deductibility of state and local taxes embedded in the 2017 tax bill. That limit negatively affects the wealthy in high-tax states, like California, New York, Illinois, New Jersey and Connecticut. It has no impact on the neediest. Her proposal is designed to help the wealthy.

Did the virus originate in the People’s Liberation Army’s (PLA) Biological Weaponry Laboratory in Wuhan? In that case we have cause to be worried. Or, will this prove another case of unjustified fear where the cure is worse than the disease, where we, like lemmings, follow one another over a metaphorical cliff? My brain says the reaction has been too extreme. But like everyone else, and perhaps because of where I live – in a retirement community, with some who are vulnerable because of age and other ailments – I do as instructed: socially distance (except with my wife), practice commonsensical hygiene and have remained on campus for two weeks. Nevertheless, count me among the skeptics. I can hear members of both political parties whispering those immortal words – never let a crisis go to waste.

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