EclectEcon

Please! No Trade Wars!

Following the failed policies of the 1930s, Trump and now Biden are both indicating there will be more restrictions on U.S. imports, especially from China. Policies like these will greatly harm both th e U.S. and the world economies.

1. Regardless of any other argument, we saw in the 1930s that when one country starts a trade "war" by raising tariffs, others retaliate. See references to the Smoot-Hawley tariff wars. We also saw this same effect with Trump's trade war with China: The Chinese retaliation against US farmers was extremely costly to the farmers, requiring bailout policies that cost much more than any potential benefits (of which there were few). Trade wars make everyone worse off (except maybe the lobbyists).
2. It's REALLY hard to argue that the US needs tariffs to protect jobs when its unemployment rate is so low. 
3. Quite clearly low-wage countries have an advantage in producing products that require more labour intensity. Their labour is cheap, compared to US labour. And one major reason for that is that US labour is so productive -- When people are productive, they get hired for higher-paying jobs, and that makes it unprofitable to hire them to produce many/most of the goods being produced in China (or India or Bangladesh or....)
4. US wages are high possibly because of the minimum wage and unions. But if (I don't think it's serious) and to the extent this is true, it doesn't justify raising trade restrictions to offset those effects. Why don't I think it's serious? the minimum wage in the US is low enough that those jobs are looking for workers; the current minimum wage may be contributing to the general substitution of labour for capital, but because labour has lots of comparatively valuable alternative uses (and because in the US it has lots of capital to work with), wage rates are high.
5. Raising tariffs (or otherwise restricting trade) in general hurts poorer people.
6. When companies relocated from the rust belt to the southern US, people in the north lost jobs. That's what unemployment insurance is for --- to tide them through the changes brought about by market forces. Tariffs against southern production wouldn't have made most northerners any better off -- they just would have made high-cost, protected, northern manufacturers better off at the expense of northern consumers. 
7. related-- The same holds for international trade: the protections usually prop up the high-cost and inefficient local producers at the expense of consumers.
8. Generally, labour is mobile. People change jobs in response to changes in economic conditions, whether the changes are induced by new technology, new domestic competition, or new foreign competition. These changes, like any changes do indeed cause some people to lose their jobs or suffer in other ways. But those results by themselves should not justify making all consumers worse off.
9. But what about unfair trade practices: subsidies, etc.? My brash reaction is that if China wants to tax its population to subsidize exports to North America, hurt me some more. Yes, their subsidized exports to North America distort our prices and affect decisions by entrepreneurs in NA, but these distortions make the residents here better off.
10. Trade restrictions encourage, support, and protect less competition among the local firms. It has often been argued (with little success, dammit) that the best competition policy is freer trade. The prevalence and entrepreneurial drive of some foreign suppliers/producers make it difficult for local firms to collude to raise prices. 

Are the Covid Data Being Cooked?

What am I missing?

The Ontario Science Table (either a gubmnt agency or close to that) reports the following cases in Ontario according to vaccination status:

So per 100,000 in the population, 70.1 fully vaccinated people tested positive for Covid-19, but 101.9 unvaccinated people tested positive. Fully vaccinated people were considerably less likely to test positive for the virus.

Meanwhile, the gubmnt of Ontario website that reports data shows the following for the same date:

What's the difference in the data or the reporting???

The Science Table shows the vaccinated are less likely to be infected (or, more accurately, to have tested positive in test results reported today). But the gubmnt of Ontario website shows (as I reported in my previous post) that the infection rate is higher among the fully vaccinated than among the unvaccinated.

As I said, what's the difference in the data or the reporting?

Do or Did Lockdowns Work?

From this source (called Astral-Codex, written by Scott Alexander), which is a very long read but worth the effort, it looks as if stricter lockdowns probably would have been helpful early on if people had known they would work. It also looks as if continuing blunt lockdowns probably do not pass a reasonable cost-benefit test. Testing, tracing, and voluntary decisions look very good by comparison. Here's the summary, but be sure to look at the comments as well!

1: Various policies lumped together as “lockdowns” probably significantly decreased R. Full-blown stay-at home orders were less important than targeted policies like school closures and banning large gatherings. Talking about which ones were “good” or “bad” is an oversimplification compared to the more useful questions of when countries should have started vs. stopped each to be on some kind of Pareto frontier of lives saved vs. cost.

2: If Sweden had a stronger lockdown more like those of other European countries, it probably could have reduced its death rate by 50-80%, saving 2,500+ lives.

3: On a very naive comparison, US states with stricter lockdowns had about 20% lower death rates than states with weaker ones, and about 0.6% more GDP decline. There are high error bars on both those estimates.

4: Judging lockdowns by traditional measures of economic significance, moving from a US red-state level of lockdown to a US blue-state level of lockdown is in the range normally associated with interventions that are debatably cost-effective/utility-positive, with error bars including “obviously good” and “pretty bad”. It’s harder to estimate for Sweden, but plausibly for them to move to a more European-typical level of lockdown in the early phase of the pandemic would have very much cleared the bar and been unambiguously cost effective/utility-positive.

5: It’s harder to justify strict lockdowns in terms of the non-economic suffering produced. Even assumptions skewed to be maximally pro-strict-lockdown, eg where strict lockdowns would have prevented every single coronavirus case, suggest that it would have taken dozens of months of somewhat stricter lockdown to save one month of healthy life. This might still be justifiable if present strict lockdowns now prevented future strict lockdowns (mandated or voluntary), which might be true in Europe but doesn’t seem as true in the US.

6: Plausibly, really fast and well-targeted lockdowns could have been better along every dimension than either strong-lockdown areas’ strong lockdowns or weak-lockdown areas’ weak lockdowns. We should celebrate the countries that successfully pulled this off, and support the people trying to figure out how to make this easier to pull off next time.

7: All of this is very speculative and affected by a lot of factors, and the error bars are very wide.

More on the Dramatic Decline in Reported Flu Cases

A friend associated with the local hospital system sent me this, in response to the graphs I posted here.

There have been zero reported cases to date of laboratory-confirmed influenza since Aug 30th, 2020 in London [Ontario].  For comparison, last year for the same period there were a total of 105 cases (75 influenza A and 30 influenza B) in London.

 

LHSC routinely tests for influenza and other respiratory viruses when testing for SARS CoV-2, at least since November 2020.  Therefore, the decrease in people testing positive for influenza seems real.

My take: if the cases of flu are not being mis-represented as covid-19, the most likely explanation for the decline in flu cases is that people are being more careful this year: washing their hands more, using hand sanitizer, wearing masks, avoiding crowds, etc. But of course I'm open to other explanations.

 

Update: Jack suggests that more people have gotten the flu shot this year and have gotten it earlier. That could also contribute to the decline in flu cases.

More Data on Excess Deaths

These data are from the US. I can't find a comparable study using Canadian data (I'll be surprised if there isn't something comparable out there, though).

Excess deaths (the number of deaths observed in a jurisdiction above and beyond the number experienced in the same jurisdiction during the previous five years) is a pretty interesting measure of the impact of Covid. Here's one graph from the site:

Interesting that there were brief bouts of excess deaths two and three years ago, too, but nothing like the recent, Covid period of excess deaths.

The site allows lots of different ways of massaging the data, including by state, ethnicity, age, etc. Here's a breakdown of excess deaths by age group over the past year:

For all my friends who aren't concerned: please look at the data again.

For all my friends who think Covid is "just another flu": please look at the data again.

Go to the site and play around with the data.

For those of you living in or with relatives locked down in seniors' homes: there's reason for concern.

What Questions Are Off-Limits for Academia?

• Is it acceptable to ask whether there really was an historical Jesus?
• Is it acceptable to ask whether cold fusion will ever be a possibility?
• Is it acceptable to ask whether Ashkenazim Jews are, on average, smarter than Sephardic or Ethiopian Jews?
• Is it acceptable to ask whether blacks are, on average, better athletes than whites?
• Is it acceptable to ask whether socialism does a better job than capitalism at looking after the poor?
• Is it acceptable to ask just how many people were killed by Stalin, Mao, Hitler, Turkey, the Hutu, the English, Americans or Canadians conquering First Nations people, the Japanese in their conquests of Korea and China?
• Is it acceptable to ask whether members of different racial groups are more susceptible than others to some diseases?
• Is it acceptable to ask whether fiscal policy is ineffective as an economic stimulus?
• Is it acceptable to ask whether, on average, roughly speaking people of one race tend to be smarter or cleverer or have better memories than do people of other races?

You get my drift, I'm sure. ... if you do, please kept reading. Are there some questions it is just wrong to ask in the first place, never mind the answers? How do you decide which questions are acceptable and which ones aren't? And more to the point, how should a university (or any other institution or group, for that matter) set guidelines as to which are the acceptable and which are the unacceptable questions to ask? Is it good policy for universities to say, "We'll wait until we see the answers"?

What prompts me to ask these questions? This column in a recent London Free Press. 

It says, in part,

This week, Western’s psychology department finally called [the late Phillipe] Rushton’s research for what it is. Racist...

“Academic freedom and freedom of expression are critical to free scientific inquiry,” the statement said, “However, the notion of academic freedom is disrespected and abused when it is used to promote the dissemination of racist and discriminatory concepts.

“Scientists have an obligation to society to speak loudly and actively in opposition of such abuse.”

Would it have been acceptable to the university and to the psychology department if Rushton had asked the questions he asked but had come up with the answer, "There was no statistically significant difference"?

If so, then it must be that what people objected to was his answer, and not his asking the question. If they didn't and don't like his answer, they should have blown him out of the water, academically. However, contrary to the implications of this column, most open minded people who were openly hoping David Suzuki would demolish Rushton in a debate sponsored by the university back then, reluctantly realized that's not what happened. Suzuki's only point was basically, "How dare you assert such things?" He presented zero evidence to show that Rushton was wrong. I note, too, that the linked column provides no references to what I would hope is abundant literature dispute Rushton's claims. I know there's a wealth of literature arguing that he was wrong; but I also know that there is a wealth of literature arguing that he was right.

I will not defend Phillipe Rushton's findings. I didn't like them. I will say, however, that he was always calm and mild-mannered, as the column says, and it was very difficult for someone not up on the literature to argue with him.

More to the point though, is that the recent denunciations and apologies by the Psychology Department at The University of Western Ontario should send a strong shiver down the spines of all academics still teaching there. It says, in essence, "Yes, we believe in academic freedom... so long as we like your results."

It should not be a matter of liking or not liking results. It should be a matter of furthering academic inquiry. If it's okay to ask certain questions only if we like the answers you get, I fear for the future of academic and intellectual curiosity and questioning.

 

Rethinking Hoarding (aka Preparedness) for the Second Wave

Fifteen years ago, amidst the threat of Avian Flu, we developed a list of things we wanted to have in our house in case all the dire predictions actually came true. Fortunately they didn't, and since then we've moved into a condo. Jack suggested I develop a list of things people in apartment or condo buildings should try to keep in stock in case serious shortages redevelop. So here's my edited list:

• Canned goods (pasta, soups, chili, vegetables, fruit, tuna, meats, lots of peanut butter, etc.) We keep four or five backup soups, four or five backup cans of tuna/salmon, and at least one backup jar of peanut butter on our shelves; and of course we rotate our stock of everything.
• Ready-to-eat foods (raisins, cheese, crackers, granola/energy/protein bars)
• Some perishable foods (fruits and vegetables)
• Plenty of potent Multi-Vitamins, Vit C, etc. [We try to keep at least a 30-day supply of all the placebos supplements we take]
• Dried milk
• Pancake and biscuit mix & syrup
• Rice -- how much depends on your tastes and storage space.
• Dried beans, again depending on your tastes and space.
• Plenty of flour
• Potatoes. But in an apartment, a box or two of instant potatoes for easy storage works well.
• Quick oats and/or other grains?
• Pasta, several packages
• Extra sugar if you use it much (we don't)
• Extra honey
• Extra cooking oil
• Baking powder & baking soda
• Bottled water (at least one backup package)
• Paper or plastic plates/bowls/cups/utensils
  
• Laundry and dish detergent
• Quality manual can opener
  
• Kitchen matches and disposable lighters
• Candles
• Plenty of liner and garbage bags (water storage & waste storage)
• Toilet paper and, if needed, sanitary napkins, diapers, paper towels
• Baby wipes (saves water for personal hygiene use if there are ever water problems)
• Flashlights (ideally LED) and more than one portable radio (update: maybe a hand-crank one as a backup)
  
• Plenty more batteries, at least three sets, for each of the above
• Backup chargers for phones, watches, tablets, etc.
  
• Solar charger to keep your phones, electronics, and chargers charged
• Alcohol and Hydrogen Peroxide
• Aspirin/Tylenol/Motrin, Pepto Bismol, etc.
• Prescription drugs filled, and as much extra as possible. Always.
  
• First aid kits
• Fire extinguishers
• Plenty of masks
• Water filters
• possibly a Coleman cook stove and fuel,etc. We decided against keeping a camp stove around. We had a small propane bbq that we probably should have kept but we gave it away.
• Duct tape, staple guns, and staples.

Of course a household doesn't necessarily need to keep all these things on hand. This is just a list of things to consider, depending on your circumstances and living arrangements, your available storage space, your risk tolerance, and your expectations about the seriousness of any possible threat.

Our additions (we tend to keep a good supply of these on hand):

• scotch
• vodka
• lime juice
• diet tonic water
• Coke Zero
• chocolate bars
• cribbage board and cards

It's called "Capital-Labour Substitution" in Economics

Headline from today's Trono Globe and Mail:

Consumers are buying goods again, but services are slow to recover

Exactly. Without reading the article (it's gated and I'm not a subscriber), I can understand the headline.

• The expected costs of using services have risen considerably under covid, including the costs and risks involve with the possibility of contracting the disease oneself.
• So instead of hiring people to do things for us, or instead of going places for entertainment, we buy stuff instead, e.g. televisions, ready-made meals, etc. We are substituting things (which fall into the broad economics category of capital) for labour.
• Yes, good economic theory often treats consumer durables as capital goods.
• That's the substitution effect.
• There's also an income effect as people who are receiving increased gubmnt assistance during covid are spending more on goods.
• And people who work from home are spending less on day care and less on commuting (including auto services) and spending more money on things to entertain the kids and themselves.

Query: what has happened to personal saving during covid?

Gubmnt Profligacy

Recently, I spent three hours listening to brief speeches by members of group that includes urban planners and policy-makers, i.e. listening to the pleadings of elitist-interventionist rent-seekers. Here's a major portion of my feedback to the organizers, slightly edited. I apologize here for misspelling 'gubmnt' in the letter.

 

Dear _____

 

Let me begin by saying I recognize that I clearly come from a different discipline, with a very different outlook from that of everyone else in the organization....

 

Today's meeting really upset me. I heard politician after politician and urban planner after urban planner pleading for more money from the Federal government. And I heard lots and lots of stories about the importance and the "needs" of major urban areas. As I tell students, "when an economy's scarce goods are allocated on the basis of 'needs', the number and importance of needs multiplies a thousand-fold." This was little more than intellectual rent-seeking, for the most part, saying, "Here's why other taxpayers should help pay our bills."

 

Just because cities have lots of people in them and have lots of people working in them, that does not justify asking taxpayers elsewhere to support those bureaucracies. Self-purported 'need' doesn't make cities any more worthy of Federal support than it does farmers or Alberta oil workers or Maritime lobster fishers. All it does is create multiple layers of competing (and co-operating) bureaucracies, all trying to get a bigger slice of the take from taxpayers.

 

Furthermore, if every city got the money they want from the Federal government, they would, for the most part, be asking the Federal government to tax everyone in everyone else's city and then flow the tax receipts through multiple costly bureaucracies to their own cities. That is a negative sum game: each municipality may get more money, but that money has to come from somewhere. More money for the cities to spend doesn't come out of thin air, and not one single speaker addressed this point; all they said was, "We need it", and everyone else nodded their heads.

 

The other issue that bothers me is that many cities seem not to have saved very much in their reserves for unforeseen contingencies. This is especially troublesome for those cities which are legally restricted in their borrowing. 

 

Of course they didn't see this [the Covid-19 pandemic] coming, and probably didn't anticipate the seriousness of the Covid19 recession even in January. But that's what reserves for unforeseen contingencies are supposed to be for! You put money aside "just in case". You don't say, "Oh we'd rather pay for our pet projects that the voters 'need' instead of building up our reserves." 

 

Cities (and, indeed, all levels of government) have been profligates for a number of years leading up to 2020. Times were good, judging from GDP growth and declining unemployment rates. Those are the times when governments should be running surpluses and putting aside more funds in their reserves. Instead we saw government after government, at all levels, running up their deficits, spending as if the unforeseen contingencies would never happen.

 

Well, they happened. And now these same profligates, instead of losing their jobs, instead of resigning in shame, are begging taxpayers everywhere outside their own municipality to bail them out. It's morally reprehensible, but also from a practical point of view it's a perpetuation of fiscal ponzi schemes and negative-sum games that cannot continue. 

 

My summary take: 

1. If the Covid19 pandemic taught us anything, it should be that cities need to build up stronger reserves for unforeseen contingencies.
2. When you ask for higher-level government financial support, you are really asking other taxpayers to cover for you.

Addendum: Shortly after I sent this letter, I read this article, Just Say No to State & Local Bailouts, by former student, David Henderson. In the article he points out that mismanagement and capitulation regarding pension funds in states like California, Illinois, and New York are not good reasons to bail out those states. He and I are clearly in tune with each other, as evidenced by this sentence:

The most vocal advocates of the subsidy are members of Congress and/or governors of states with big budget deficits, such as California, Illinois and New York. Their budgets are in shambles. Do they have an argument beyond “we need it” and “it's a moral obligation”?

Confessions of an "Outside Agitator": I'd do it again

From September, 1965, until July, 1967, I attended The Chicago Theological Seminary and lived on the South Side of Chicago. During that period we participated in numerous civil rights marches and numerous anti-war demonstrations. At every one of those events, I was outside my neighbourhood and, in many cases I was in a different city. I was one of the many, many outside agitators. And I'd do it again.

On the civil rights front, our seminary was a hotbed for activism. We were a de facto base for Martin Luther King's civil rights activities in the summer of 1966, while Jesse Jackson was a student in the seminary (a year ahead of me). We marched in Skokie and Gage Park and other places I can't remember. I even trained to be a safety marshal on those civil rights marches. We were determined to be non-violent. We demonstrated for a break down of racial barriers in housing and jobs in particular, and we had considerable success along those lines legally and nominally (or so it seemed; I think we had far less success on the schooling front.). Yes, we lectured people about racism, but we had specific, achievable goals as well.

On the anti-war front, we traveled to Washington DC for an antiwar demonstration (only about 25,000 in total) in the spring of 1966, and we traveled to New York for a massive march against the war (hundreds of thousands) in the spring of 1967.

Also in Chicago at the same time, there were race riots, especially on the west side. We thought we understood much of the frustration of black people in Chicago and we hoped their actions would lead to more action on the housing and jobs fronts. We didn't condone the fires, looting, or the shootings, but we understood a chunk of the frustrations. That same summer, Detroit experienced devastating race riots, as did other cities.

While the two actions, marches and riots, were linked in their underlying causes, they manifested themselves very differently. King, Jackson, the SCLC, and all the civil rights demonstrations had specific goals: We may not be able to change people's minds and hearts, even though we wanted to, but we can at least make laws and practices combine toward providing more nearly equal opportunities and protections. We white people knew things had to change legally and governmentally to achieve the desired goals.

At Iowa State, from 1967 - 1971, we continued our activism, joining and participating in movements to end the war in Vietnam and to fight racism on campus.

How does that relate to today?

First, I present my background above in part, I'm sure, as virtue signaling, but also to draw what I think are some truly important contrasts between then and now.

I believe there is systemic racism. I had thought that by providing better housing, job, affirmative action, etc. policies, things had improved substantially for non-whites. I hadn't imagined the strength of the systemic racism until I saw black students cheering wildly when O.J. Simpson was found not guilty. I agreed the crown had not made its case, but their wild cheering made me realize there was a gulf to which I had been blind. I kept asking myself, "What has happened to these kids? They are cheering that he was freed because he was black, not because the crown didn't make its case." I realized I didn't understand. And I had no idea what it was I didn't understand.

Further, when I knew people were making decisions in the 2008 US election based on race, I knew there was endemic racism. It hurts. It hurts that it's there, and it hurts that it affects us all in so many ways we don't know or comprehend. And it hurts that it creates a gulf that I'm not sure we can entirely bridge.

Today's clashes remind me of the summer of 1966 but with one major exception. The protests back then had specific, achievable goals. I'm not sure what the goals of today's protests are, other than to impress upon us the extent of racism. When politicians in Canada (e.g. Stockwell Day and Doug Ford, inter alia) deny there is systemic racism in Canada, they are clearly out of touch. Ford understood it and backtracked, to his credit.

Here's a more direct goal for current protestors, then: If we haven't stopped extreme police brutality against non-whites, let's work to stop extreme police brutality. Let's limit police "qualified immunity"; let's maybe even make police pension funds liable for civil damages resulting from police brutality to create an incentive for police officers to police other officers. Let's roll back the phenomenal macho-brutalism in the police forces, and let's roll back the extreme militarism of the police forces. If police can't do these things at all, they can't do them to non-whites. My more recent Facebook postings point in these directions.

I'd like to add, "And let's have more discourse so we can try to understand each other," but that may be more pollyannaism than a real goal; I don't see it as a very successful strategy. I anticipate that the discourse that will likely emerge will be dominated by political posturing, playing the victim or race card, playing the law and order card, virtue-signaling, distortions of facts (see every headline in every media source, right or left), misuse of data, et cetera, et cetera.

I see it all the time on Facebook. Hell, I know I'm even part of it sometimes. People lash out with memes, misrepresentations, and ad hominems, et cetera, without addressing important issues fairly.

It is time for us to admit that there is systemic discrimination.

It is time for us to do what we can individually to try to overcome it in ourselves.

It is time for us engage in discussions and not arguments.

And it is time to try to address potential feasible solutions.

I'm lucky. I have friends from all over the place, politically, geographically, religiously, racially, LGBTQ-wise, etc. I am confronted by conflicting arguments and flame wars all the time. They upset me and disturb me, but I rarely unfriend or block anyone involved in these events.

And yet, they tear me apart inside.

Inflation: a Long-Term Outlook

Earlier this month, I wrote a post predicting that we will experience inflation in the 2-3 year long-term. This prediction was based solely on the expectation that central banks will be forced to monetize the massive deficits being created by gubmnts at all levels. Furthermore, even if these are short-term huge increases in deficits, they won't just go away. They are enormous additions to gubmnt debts and will have to be dealt with somehow even if gubmnt deficits return to pre-pandemic levels in the next year or so.

The trouble is, if I'm right and if others agree with me, then long-term interest rates should be higher than they are, and TIPS (inflation-protected bonds) rates should reflect higher inflation expectations. Given that neither the long-term bond rates nor the TIPS yields reflect an expectation of strong inflation, clearly others don't agree with me.

So was I wrong? Am I wrong to hold onto these beliefs?

As a part of a webinar* that I attended yesterday, presented by Dennis Lockhart and David Altig, both affiliated with the Atlanta FED, the question of long-term inflation was addressed.

They mentioned the exploding balance sheet of the FED. They pointed out that although an exploding balance sheet would normally go along with rapid inflation, in this case the velocity of money has shrunk considerably as people are holding onto money, not spending, etc. They continued,

• The FED balance sheets have been growing rapidly and will likely continue to do so, at least in the short run
• Aggregate Demand and Aggregate Supply curves are both shifting to the left, and without much implication about what will happen to overall price levels. When both curves shift to the left, we know output will fall, as it has, but we can't predict much about the overall price level without knowing more about the relative shifts.
• There will be some (or considerable, they weren't sure) structural shifting in the makeup of AD .
• Most of the growth in the FED balance sheet has been in very short-term paper. The FED has mostly been buying up short-term debt, Treasury Bills, and lending money very short-term through re-purchase agreements with major banks. Unlike the financial crisis of 2008, the commercial banking system seems pretty solid and solvent, but providing sufficient liquidity has been the aim of the FED.
• As countries emerge from the pandemic, the FED will gradually scale back its creation of reserves, and the balance sheets will shrink slowly, roughly in sync with the emergence from the pandemic. 

Two issues where they didn't really face the questions I have:

1. The gubmnt debt is growing rapidly. The FED can't let all the short-term paper expire; they'll have to monetize the debt. This is a potentially serious problem. All that increased debt created by governments at all levels simply won't go away. And as the FED monetizes that debt, there will be inflationary pressures. One possible out might be to increase the interest rate the FED pays on reserves, but neither of them mentioned that possibility.
2. (and this one really bothered me) They argued that the Fed massively increased the balance sheet in dealing with the 2008 banking crisis and we didn't have inflation. My reaction would have been (if it had been a Zoom) don't be myopic:

• • That was when the Fed started paying interest on reserves. The Fed created reserves and the commercial banks saved them. The extra reserves didn't lead to much of an increase in the money supply as a result.
  • They both seemed to think we'll emerge from this depression as quickly as possible as soon as we know we have a vaccine and/or treatments. If so, can the FED shed all those short-term securities just as quickly? 
  • How quickly we can emerge from it will depend on how serious the structural re-alignment will be and has been.

Put differently (or the same way I started), I don't think gubmnts are going to reduce their deficits or debts by cutting spending or increasing taxes much; Central Banks are going to monetize these increases in debt for the most part:

How can Central Banks monetize such extreme increases in gubmnt debt without creating inflationary pressures eventually?

And if I'm right, why aren't markets reflecting higher inflationary expectations?

-----

*I'm grateful to the Global Interdependence Center for inviting me to participate in their sponsored webinar, "College of Central Bankers presentation: Assessing the Monetary Policy Response"

 

Masks: Pluses and Minuses

I wear a mask every time I leave our condo building, and I go out for walks maybe four or five times a week. Over the past month and a half, I have had some thoughts about the pros and cons of wearing a mask.

Pluses:

• For others: A mask will trap some or most of the virus as I exhale or if I cough or sneeze, thus reducing the likelihood that I will transmit the virus if I have it (I don't think I do, but who knows?).
• For me: A mask will trap some, but almost surely not all, of the potential droplets or aerosols containing the virus if I'm near someone who has the virus. When I go walking, I wear a mask made from a T-shirt  (see this and this) into which I insert a triple layer of paper towels and a double layer of facial tissue. It's a good, tight fit, and I expect it's at least as good as many surgical masks. The very few times I have gone shopping and the one time I had to go to a clinic I wore an N95 mask. I know my wearing a mask won't stop all the viruses all the time, but it will most likely reduce the probability of my being hit by a cloud of virions, and the evidence I've seen suggests that is good.
• Face: Wearing a mask keeps me from touching my face. Unkind friends also point out that it keeps them from having to see my face.
• Signaling: When I'm walking, people see that I'm wearing a mask. They tend to give me a wide berth. I don't know why for sure, but I think some do because they can see that I am concerned and they want to honour that; another reason might be because a mask signals that maybe I have Covid19 and they want to avoid it if I might transmit it. Either way, the signal seems to lead to some distancing behaviour on the part of others.
• Virtue Signaling: It's a different type of signaling. It says to the world, "Look at me. I want to save lives." I don't know, honestly, if I regard this as a plus or a minus because it seems too much like the Pharisees of the New Testament, but I'll marginally call it a plus.

Minuses:

• Hydration: It's really hard to keep hydrated if you're wearing a mask. So I don't, even though I know hydration is generally a good idea. Instead I drink a lot before I leave home.
• Itchiness: People generally don't realize how often they touch their faces until they wear a mask. I often find I'd like to scratch my cheek or nose but can't because I'm wearing a mask.
• Glasses: The masks I wear do not have exhale vents, and so some of my exhaling seems to find its way up to my glasses. On cooler (and colder) days, my glasses fog up, which probably means there's too much leakage, but I can't imagine there isn't leakage around most masks. Fortunately, my eyesight is good enough, I can just take off my glasses when I'm wearing a mask.
• Nuisance: It's a pain, putting on a mask. For me, it's probably more of a pain because I have to refit my layers of filter each time, tie the mask on properly, untie it when I get home, throw out the filter, and put the masks in the washing machine. We put the N95s on the balcony in the sun to disinfect because otherwise we can't reuse them, and we have only one apiece.
• Recognition: Friends in our condo building don't recognize me: I wear a hat, no glasses, and a mask covering most of my face. It's only a little amusing; I see it as a negative more than a plus.
• Smiling [added after the original post] It's hard for people you meet on the trail to know whether you're smiling. I try to avoid people, but there are times when you meet someone; you both take opposite sides of the trail or sidewalk and try to leave at least 10' between you. I'd like to smile (and in fact I do) but I'm not sure they can tell, and so I nod or wave or try to indicate friendliness or kinship or something.

On balance for me, in our situation, the pros strongly outweigh the cons, and I'll keep wearing a mask for quite some time when I leave our building. We distance assiduously, wash frequently, and use hand sanitizers a lot; and our building does not permit any visitors, but there are enough people living here who are at risk that I want to be careful not to bring the virus here. Other nearby buildings have had Covid19 cases, but we've been careful and lucky here... so far.

I know I could reduce the risks even more by not going out for walks at all, by hiring others to do our shopping, etc. But in the great realm of trade-offs and risks, these are the few chances I'm willing to take. I'm just super cautious when I take those risks. But if some stores in this area require customers to wear masks before going in, those are the stores that will get my business.

How Can I Predict Inflation in the Face of Such a HUGE Drop in Consumer Spending?

Apparently consumer spending declined in March by nearly 8%, by far the largest drop in recent history.

How can I predict inflation when there has been such a drop in demand?

One big reason is that inflation arises when there is too much money chasing too few goods, and the recent drops in GDP have been monumental.

Here's more of an explanation for my predictions:

The drop in consumer spending provides an impressive graph, to be sure! From it, alone, it looks as if a lack of consumer (and undoubtedly business) demand will keep the lid on spending pressures, at least in the short run. 

 

The argument coming from me and other monetarists [channeling Milton Friedman, I hope] is that there's been a massive reduction in output, as well, and it won't get back to 2019 levels for a long time; at the same time there has been and will continue to be a massive injection of spending power (the money supply) as central banks monetize the rapidly growing gubmnt debt. Unless the extra money supply is soaked up somehow as we come out of the depression, it'll create inflationary pressures. 

 

Consider the old quantity equation of money: MV=PQ, where

M is the money supply

V is the number of times each dollar turns over during the year in spending for final goods and services.

When interest rates are low, this number also tends to be low because the cost in terms of foregone interest income tends to be minor. When interest rates are high, people move money into earning assets more quickly and the 'Velocity' of money tends to rise.

P is the overall price level

Q is the rate of real output [i.e. Real GDP]

 

The equation is a tautology, with V being the variable that makes it true by definition.

 

But it's clear that V is pretty low right now (people fleeing to cash for security, hence not turning money over so rapidly; also because interest rates are low). So current increases in M are not having much impact on P despite a falling Q. 

 

As the economy emerges from the depression, Q will grow back to 2019 levels, but V will also grow. And M will be much higher than the 2019 levels, meaning P will have to grow. 

 

When and how much?

As Friedman is famous for having said, "It's a long and variable lag."

 

 

Contest!!! What's the oldest thing you have found in your freezer or pantry during the covid19 isolation?

After I posted a photo to Facebook of some half-year-old ground beef we found in our freezer, others began commenting that they, too, had come across treasures in their freezers that were considerably more past their expiration dates. So here's the contest:

Contest #1:

Post a photo, either in the blog comments or on Facebook, commenting on this post, with a photo of something old from your freezer. The oldest item for which a photo is posted will win a signed copy of one of my novels, either 2605 or Murder at the Office Christmas Party. E.g., here's some not-so-old ground beef:

Contest #2:

Post a photo, either in the blog comments or on Facebook, commenting on this post, with a photo of something old from your pantry (I have a box of tea from 2009, for example). The oldest item for which a photo is posted will win a signed copy of one of those two novels, as well.

General:

• Contest ends 10am EDT, June 1.
• The photo must show the "best before" date on the box, can, or package. It's probably a good idea if the photo also shows what the product is, too.
• Each winner gets their choice of novel.
• I'll add the novel, Susan's Story to the prize list if I receive the author's copies in time.
• Anything dated before 1975 is automatically excluded.
• I reserve the right to alter the rules if people find loopholes. 8-).

I Love My T-Shirt Masks, but tie them correctly

Last month I posted on how to make a mask from an old T-shirt in 15 minutes. I have two of them now, and my guess is that they're at least as good as most surgical masks. Here are some tips for using them, if you decide to make them:

1. Watch this ODIVI video. Alternatively, the steps are laid out in my blog post (linked above).
2. Don't cut it the way she does or the way I did in the earlier blog post. Instead, to get good straps, cut it so that you leave the full tops and bottoms of the sleeves -- that way you'll have good straps, as I did in the photos below.
3. Sew a rough seam along the bottom of the mask to hold the front and back together and to hold filter material in the mask, like a pocket. I did this by hand while watching tv.
4. Put fresh filtering material in the pocket you just made, between what used to be the front and back of the T-shirt. I use three layers of paper towels plus two layers of Kleenex. Someone suggested to me that the blue paper towels used by mechanics are good filters, too, but I don't know for sure.
5. Change the filtering material for each use.
6. Tie it right. The upper straps go under your ears and tie in the back of your head. The lower straps pull the mask up under your chin and tie right on top of your head. I know, that can look stupid, but it works for the woman in the video. It works for me, too, because I always wear a hat when I go out.
7. The minute you get home, dispose of the filtering material and put the mask in the washing machine (that's why I have those two plus some other masks).

I just returned from a five mile walk and had zero problems with my mask. I took these photos near the end of the walk:

 

 

Distancing -- a serious question about various activities

Background:
I try to get out of our condo unit nearly every day. Some days I just leave the unit and climb the stairs  for exercise within our building. Other times, if I'm not shopping (and only rarely am I shopping), I go for walks.

Inside
In this building, for several weeks we had a policy of only one person on the elevator (or two if both are from the same unit). We also had a policy of absolutely no visitors at all, and we have hand sanitizers next to the elevator doors on every floor. We also have hand sanitizers strategically placed throughout the main lobby and in the parking garage. Whenever we encounter someone else in a hallway or near the mailboxes, we all wait patiently. Most of us try to leave at least ten feet between us and someone else.

The elevator rules have now been slightly relaxed so that we can have up to three people on an elevator so long as we don't face each other, which seems pretty anti-social to me. I'm okay with having one other person on the elevator, standing diagonally across from me, so long as they aren't looking directly at me when they talk. But it's a small building and that has happened only once.

Outside is a different story.

Near us there are numerous wonderful paved walkways through parks and alongside branches of the Thames River. Joggers, runners, bikers, skate-boarders, and walkers all make considerable use of these walkways, especially on nice sunny days.

I wear a multi-filtered homemade mask when I go out of the building for these walks. Most of us using the the walkways try to practice distancing. Whenever I see someone coming toward me, I move off onto the grass; often they do, too, but not always. And runners or bikers (or fast walkers) sometimes pass me and don't leave as much distance between us as I would prefer. For the most part, it works out okay, aside from bridges and tunnels. For those, not everyone waits. If I start on a bridge or through a tunnel and someone at the other end doesn't wait, I turn around and go back and wait for them to pass.

Actually, I've found it easier to distance from others when I walk through residential areas. It's relatively easy to go up on a lawn when I meet someone and just about as easy to cross the street. Increasingly my walks are like these.

And now the question(s):

If I can do these things, why can't people golf (it's pretty easy to distance on a golf course)? How is that different from walking (properly distanced) with a few friends in a park?
If I can do these things, what about going to a beach so long as I distance just as I would in a grassy park?
Given that I'm pretty careful and pretty concerned about not wanting to bring Covid19 home, you can bet I'd stay away from others on the beach, and I'd not even get out of my car at the beach if it looked crowded.

Is it because policy makers don't trust others to distance? Recent photos from the beaches in Florida looked to me as if most people were trying to distance, though not all were, for sure. And keep in mind that UV is a pretty effective sanitizer.

Is it because if someone goes to the beach, is asymptomatic but infected, and doesn't distance, they could consequently transmit Covid19 to others? As a potential victim, I'd try to distance ... a lot ... but others might not.

Still, that's gotta be safer than walking on sidewalks downtown riding on a bus or subway where distancing can be much more difficult.

Addendum: Here's the photo from the Washington Post. [much better quality if you click on the link]. Most of the people in it are distancing, but if I went to the beach and saw this, right now I wouldn't stay.

Covid19 Despondency

Below is a letter (somewhat edited) I wrote to a friend this morning.

How are you handling the CV19 situation there? I hope you're healthy and will continue to be healthy. I don't know about you, but I feel so blindsided by the whole thing.

 

...

 

I worry about and for everyone. I see no way out of this for at least a few months, and meanwhile so many people will have been pushed to the edge. I try to control my despondency by thought-blocking and thinking about positive things, but every once it awhile it hits.

 

So far, Ms. Eclectic and I are okay. We're both over 75 and have some health issues, and so we're trying to be careful... very careful. Over a month ago, we visited our oldest son and his wife and their new son, but since then we have had only two outings together: once to meet some friends in a parking lot where we opened our trunk and the friends put a bag with homemade masks and shields in it. And once when we took lawn chairs to an open park and sat in the sun, well away from everyone else, while I tried to fly my kite.

 

Our visit to our son was the last time we saw any of our children, grandchildren, or great grandchildren in person. We miss the hugs, kisses, and laughter together. We Facetime, but it's not the same.

 

Meanwhile, I'm going stir crazy, but fortunately only some of the time, and I have it under control when it hits. I know it's a bit risky, but I get out of our condo unit every day. Some days it's just to climb some stairs up and down here within our condo building; other days I go for walks. Rarely, I go out to do shopping. Every time I leave the unit, I take hand sanitizer with me and use it after any incident when I might have touched some surface. And every time I go outside the building, I wear a mask.

 

Mostly, now, I walk in residential areas, not on popular paved walking trails; it's easier to avoid other people in residential areas.

 

 If I'm just going for a walk where at worst I'll pass jogger or biker, I wear a homemade mask, but I line it with two layers of paper towels and two layers of Kleenex tissue to improve the filtering. For shopping, I have an N95 mask that I wear, but I've had to trim and reshape my beard and sideburns so it fits properly. We also take our temperatures frequently now. We have become borderline paranoids. At our age and in our states of health, we figure the odds are high that we're goners if we get it.

 

... Our sons have both been able to arrange most/all of their work to do it at home, but our daughter and some of our grandchildren and their families are really beginning to feel the economic effects of the shutdowns.

 

Meanwhile, my three main outside social activities are gone: 

• Encore, the concert band, no longer rehearses and will likely have to cancel our June concert. I'm hoping things are under control enough we can resume in the fall.  
• I no longer do stage work, but the mystery dinner theatre shows have been canceled until fall at the earliest. I'm hoping those can resume then, but who knows if customers/clients/restaurants will want to hire us even then?
• I (used to) play bridge weekly with three other men, but of course we no longer see each other, not even to get together with the others (or anyone else) in the building. 

[addendum: It's been so long that I forgot to add a fourth thing: we like to eat in restaurants, and can no longer do that. We order takeout or delivery now and then, but not often, and yes we are amazingly careful (I hope) when interacting with others in those situations. ... pay in advance, get it left outside our building where I'm waiting 15' away, or have them set it outside their establishment for me to pick up, etc.]

 

I miss the social contacts. Of course I'm much more actively exchanging emails with some friends and relatives, and I spend far too much time on "pandemic porn", watching counts and policies. 

 

I'm also doing some writing. I've published two more novels (see my .sig file below) and am working on another, but I'm not getting much written on it because of all the emotional and other distractions caused by Covid19.

 

I fear that we are in for a major economic depression. In addition, I fear all the central planners who want to reshape society and economic activity without regard for the benefits of individual freedom and choice. And I really worry about the ever-present nationalistic, protectionist tendencies I see regaining strength everywhere. This pandemic will set the world back by 3 years, if not 30 years. This is just one of the many very serious reasons I despair.

 

I felt early on, thinking about our friends and relatives who work in and/or run small businesses, that we (our countries) needed an emergency assistance programme in addition to our otherwise reasonably adequate social safety net. Everyone in those positions was completely blindsided (as were most of us), even if they saw it coming in early January (when most of us were more concerned about Australian wildfires). So many businesses will have to shut down, and so many landlords will lose massive amounts of income as business and residential tenants default on rent payments (and many in Ontario will actually choose to do so because the province has put policies in place to protect tenants who miss a couple of months of rent payments). And so many residential tenants on the edge will eventually lose their apartments. Shelters are overflowing and find it difficult to practice any kind of distancing. And people living on the financial edge will face serious mortgage issues.

 

So many little people will be hurt. So many. 

 

Believe it or not,  I'm glad politicians are trying to help out those people. Yes, even I, John Palmer, quasi-libertarian, Mr. small-gubmnt, think it is right for gubmnts to do this. But I detest the bailouts of major corporations, and I resent the fact that so much tax money will be used for the cronies in the name of helping out the little people. 

 

Where is the money coming from for all these programmes??? Before this happened, both the US and Canada were already grotesquely adding to their deficits and debts despite the good economic conditions (when budgets should have been in surplus!), and now there's less wriggle room. 

 

Will they raise taxes? How much? and on whom? Now would be a great time for tax reform, but instead of a simple flat tax without all the deductions and exemptions exploited mostly by the rich, I'm afraid we'll see a return to higher marginal tax rates for high income folks, and we'll return to the sluggishness of the pre-Thatcher "English Disease" and the pre-Reagan era. 

 

Will gubmnts borrow? Now is not a bad time to lock in long-term debt at low interest rates, but watch for runaway inflation and stagflation about two years from now. And with inflation,  interest rates will go up considerably.

 

And I further resent the use of the term "stimulus". There's nothing to stimulate! This is a major supply-side shock to the economy, and until people can start producing goods, and especially services, we can't help but experience a major drop in GDP.

 

Anyway, I'm sure I've rambled on far too long. Despite the despair I feel, I'm also fairly happy and contented. We're okay, and for now so are our progeny.

 

I hope you and yours are doing well. 

 

------ John Palmer,   www.EclectEcon.net ------  

Buy my novels:   2605

  Susan's Story

  Murder at the Office Christmas Party

 

Economics and old age have much in common: Both dwell on foregone opportunities

Grocery prices During the Pandemic

Have you noticed that grocery prices have risen? Some of my friends have mentioned it, and yesterday I think I saw some prices that are higher now than they were a month ago.

If prices are higher now, are rising, and are expected to continue to rise for the next few months or longer, here are some possible explanations:

I. Microeconomics

Costs are rising:

• Many grocery chains and other retailers have given their employees raises of 10% or more
• Many grocery stores have put down tape or spray painted markers 6' apart inside and outside their store to promote distancing; they have also put up queue-control barriers to keep people distancing in the queues instead of crowding near the front; doing this is not cost-free.
• Many grocery stores have someone at the door to limit the number of people in the store at any given time.
• They also have people wipe down the handles of the baskets, carts, trolleys, etc.
• Some even have sanitizer stations for people to sanitize their hands.
• Restocking shelves isn't cost-free either, and since people are staying at home and eating at home more now, this means they're also buying more at grocery stores rather than at restaurants, hotels, trains, planes, etc. How does this add to costs/unit? see the next item.
• Diminishing marginal product: you can add more product and you can hire more employees (maybe), but it's hard to add more space in the store and in the back storage areas. More people and more product means more congestion and more congestion costs. Also, hiring more workers means digging deeper into the pool of potential workers, and retraining current employees is also costly
• Higher demand typically means stores just try to order more from their suppliers, but there are higher costs for suppliers, too, as they face shortages and rising costs of their own.
• Given that the value of the Canuck buck has declined relative to the US dollar, that means Canadian importers are paying more for everything that might end up on the shelves or might be used to produce things that might end up on the shelves.

Demand is rising:

• As I noted above, people are buying more from grocery stores than they used to.
• As some managers and some suppliers see the increased demand, they raise the prices. Often not in any major or obvious way. Pricing decisions are not simple textbook [find the q/t for which MR=MC] but rather involve considerable trial and error, either at the store or at some regional or head office.
• When people have to queue up to get into stores, and when people read or hear about stores being out of some things, they don't worry so much about paying a few cents more for many of the items on their shopping list. [in econ-speak, the price elasticity of demand is lower in those instances]
• Some stores have fewer sales, and some stores no longer put out flyers advertising sales.

II. Macroeconomics

Aggregate Supply

• The CoVid-19 pandemic has caused a decline in the overall rate of production. Many (probably most) manufacturing facilities are still trying to operate full time, but they are facing increased supply problems for some items, in part due to transportation issues and in part due to bottlenecks.
• The lock-down, quarantine, and isolation policies have primarily affected the service sector of the world economy, but not exclusively. Also, the drop in production of services has led to a major shift to the left of the overall Aggregate Supply curve.

Aggregate Demand

• One would think that with so many people's incomes dropping, Aggregate Demand would decline. However...
• In both Canada and the United States, numerous policies have been implemented to dampen the effect of the pandemic on people's incomes. This is especially important if (1) people expect the support policies to be reasonably lucrative, (2) people expect to be supported if they over-extend, and/or (3) they expect it all to be over in a couple of months or so. Following the Friedman permanent-income-hypothesis, if people consume according to expected income (including gubmnt programmes), consumption may not drop much at the aggregate level.
• What is there to spend money on? People who regularly (or even irregularly) traveled, ate in restaurants, shopped a lot in person, etc. all have less to shop for. They (we) are driving up demand for the things we can still buy.
• Over the next year or so, the gubmnts plan to increase their fiscal deficits astronomically. These deficits will almost surely be monetized to a great extent by the central banks. [in colloquial language, the gubmnt won't raise taxes to pay for all the programmes; instead it will print more money]. The increased money supply will lead to much more rapid inflation over the the next two years unless the central banks try to neutralize that effect. They've shown no indication they intend to so so.

Sectoral Shifts in Demand

• As consumers try to buy more household products in general, manufacturers cannot instantaneously hire and train more employees the products that consumers want more of. As I once wrote (albeit in reverse) back in the late 1970s, "you can't easily transport and train all the workers in the oil patch to some place where they can produce more surgical masks, toilet paper, etc.

Grocery Shopping during the CoVid-19 period

Walmart opened at 7am today for Geezers/Elders/Seniors/etc. I arrived at 7:15 and had to join a queue of about 15 people waiting to get in because the store was limiting the number of people in the store. Of those in front of me, not one was wearing a mask; I was wearing a cloth mask over my N95 mask (for reasons I'd rather not go into). Photos below.

They let about 4-5 people in at a time. When I neared the front of the line, I looked back and over half the people in the lineup behind me were wearing masks, mostly surgical masks.

Also while I was near the front of the line, a woman went to the security guard who was controlling the number of people being let in and asked, "Seniors can go in early, can't we?"

"Yes, that's the lineup."

"For seniors???"

Every person in the line was clearly a senior. The man behind me in line and I looked at each other and laughed, complimenting ourselves for looking so young.

- - - -

How do single parents, working couples, or for that matter anyone who works regular hours get any shopping done? The Walmart lineup was VERY long when I left, and the line up at Costco (London North) looked to be at least 100 people long an hour before they opened! Is it that bad everywhere? If so, it reminds me of the old gasoline shortages in 1979 when people queued up for hours to get gas and many people hired others to do the waiting for them. I see a potential for a booming business for seniors who will shop for other people.

----

I was disappointed (though I shouldn't have been surprised) to see none of the employees wearing a mask. One was, but it was down around his neck. I can imagine that Walmart might be reluctant to outbid healthcare employers/employees for even surgical masks, but I thought maybe some of the employees might be wearing some they had made for themselves.

Everyone tried to maintain distancing, but it's not always possible in the aisles, even with fewer people in the store. That's the reason I trimmed my beard and sideburns last night and wore my mask combination.

I saw one employee cough. Only once, but into her hand, not her arm or elbow. I avoided the area where she was working. She needs lessons in coughing, for sure.

----

Checking out was carefully policed for distancing, both in the overall queue and at each cash register. Walmart would still let shoppers use their own reusable bags, but I didn't expect that, so I didn't have ours with me.

I was stunned to see the customer in front of me pay for their shopping with cash and receive cash in change. Currency is a great way to transmit a virus.

After I received my order, I thanked the cashier for working today. She said others had thanked her, too.

[Addendum: they had toilet paper (our brand, even), chicken, chicken parts, eggs, milk, most everything I wanted. I didn't see any hand sanitizer or sanitizing wipes or sprays, though.]

 

This is getting too long. I'll post about grocery prices in a separate post.

Pure speculation: Virion Bombardment

Based on the scant reading I've been doing over the past two months, it looks as if maybe (please note the emphasis) people who are only lightly exposed to Covid-19 are less likely to get the disease, less likely to suffer as much from it, and less likely to die from it than are those who are very heavily exposed to it. They still get it, but not as seriously or maybe even asymptomatically.

This is all probabilistic of course. As well, there are very likely many other determinants of getting infected, the seriousness of the infection, and death.

But suppose that roughly speaking, probabilistically , in general, it's correct. If so, it has some important implications:

1. Social Distancing

Why the 6' line of demarcation? Surely potential droplet and aerosol contamination isn't binary. What about 5'10"? what about 6'3"? Is it possible that if people stay farther apart, the result is that if they happen to get a few virions of CV19 into their bodies, it's not enough to make them seriously ill, ceteris paribus? Is it possible that people who are closer to a carrier are more likely to be bombarded by more virions because their are closer to more people, and it's the number of virions per some unit of time that determines everything? I don't know how viri and virions work.

2. Masks

Why are some masks recommended in some situations and not others? Maybe it depends on both the likelihood and strength of the potential bombardment?

Front-line health workers may very well need N95s or the equivalent because they are constantly and heavily bombarded, and even with N95s, a few virions get through, but not enough to cause serious damage (in most people; remember this is probabilistic).

So if I walk past someone who is a carrier, they might expel a droplet or an aerosol containing the virus, but if that's it, I might not get the disease because of the low bombardment, or I might get a low-grade infection because my body can fight it off at that level? But if I'm at a restaurant, sporting event, concert, play etc. (pre bans, of course), I'm more likely to be more heavily bombarded and more likely to be infected and more likely to suffer more seriously?

If these guesses are correct, then maybe even wearing a t-shirt or bandana mask might not only protect others from me if I am infected, but will also, at the margin, protect me by somewhat lowering the rate of bombardment that would get to my lungs. This might work when I'm walking on trails or along the sidewalk or in environments which assiduously practice social distancing, etc. [e.g. the Blood Donor Clinic].

But if I'm in a grocery store, where who knows what is in the air and on the products, maybe I face a higher risk of heavier bombardment? And if so, in those environments I might be better advised to trim my beard so an N95 mask fits better and wear that mask.

3. Hospital Workers

People working nowhere  near CV19 patients might be okay with just surgical masks if all my above hypotheses are correct. They're unlikely to be heavily bombarded by virions or by many. The surgical masks will stop enough to leave most of those workers ok.

But others working with ER and CV19 cases are more likely to need N95s or better just to reduce the number of virions that get through to them.

The whole point, here, is that protective measures don't just reduce the probability of being infected by CV19 virions; they also reduce the bombardment effect -- they reduce the number of virions that get through to my lungs, etc., and thus leave me less less likely to be symptomatic, or, if symptomatic, with the effect that I would suffer less and be less likely to die.

I.e., it's not just the probability of being hit and infected by a virion, but it's the density and severity of the intake of the virions.

 

I may be right out to lunch. After all, I'm not a virologist, Jim.

Scarcity, Choice, and Triage

The National Post has an article about how people are facing choices about death because of CoVid-19.

Here's the important quote:

A letter was shared widely last week from a Michigan hospital, for example,

outlining its triage criteria for intensive care, making clear that other conditions

such as cancer, heart disease or trauma could make a patient “not eligible” for

intensive care or mechanical ventilation.

“Patients who have the best chance of getting better are our first priority,” read

the public letter from Henry Ford Health System.

 

The article then discusses attempts to quantify (objectively!! Hah!) expected future years of quality-adjusted life. My take:

• Scarcity is rampant (time, ventilators, healthcare workers, space, supplies) [Economists discuss this all the time for all goods and services]
• Scarcity means people have to make choices, like it or not. [Economists also discuss this all the time; indeed some people say that economics is the study of choice due to scarcity.]
• Those choices, when it comes to a pandemic, involve triage, deciding who to treat and how (recall gripping scenes from MASH that captured this effect to some extent).
• You can call them "death panel" decisions if you want, but someone has to decide who gets what treatment. What will be their decision rules?
• The CV19 triage decisions are analogous, but on a much larger scale, to decisions about who gets what transplants.
• The linked article talks about being neutral, objective, etc. I call BS. There are normative values embedded in these measures.
• Even though I'm relatively healthy, and even if I might have as much as 15-20 years left, I could very easily lose out in triage to others who are younger, have more 'productive' years ahead of them (i.e. will work at real jobs, earning money and paying taxes, and not lounge around writing and acting). E.g., I'm over the 75-years-old criterion applied in some parts of Italy. It's not 'agism', and I understand it, but the realism of it is a huge gutwrench.

It is this situation that leads many of us elders (a term I'm coming to like a lot more than seniors) to:

• wear masks,
• use sanitizers,
• wash a lot,
• avoid crowds (especially in confined areas),
• do large shoppings at odd hours to avoid having to be in stores too often,
• isolate a great deal,
• pay for delivery so we can avoid stores, etc.

I know I'm going to die at some point, but I'd rather not have it be after I've been lying on a table, realizing that some young ER doc or nurse has triaged me into death.

I Got It Up!!

It was a lovely day... Sunny and nice breeze... So I took my $6 parafoil kite from Ali Express down to the park to fly it. The breeze was somewhat variable, but after only a few minutes, I had the kite up in the air and flying nicely. I love that sensation!

Interestingly, not one person I saw was wearing a mask today.

Also, interestingly, there were many people on the paved trails through the park, but none on the sidewalks, which I took to return home. I understand it because the paved trails are beautiful and along the river. But from now on when I go out for walks it will be along abandoned sidewalks. And I'll wear my mask.

 

 

How Serious Is This? Really.... Some Perspective, perhaps

Amid forecasts of anywhere from 5000 to 5 million deaths from Covid-19, how serious is the pandemic, really?

I admit it, I'm a little scared. I'm old, my wife is older and has other conditions that put her even more at risk, and I have several friends who are older and who also have many conditions that put them at risk. Most of us figure that if we get it, we'll likely die, be left to die,  or be triaged into death. One of my friends says he's unlikely to still be alive next year, even though the odds of his actually getting the virus are low.

Here's a perspective that might help address the fear and concerns, based on what I consider the worst case for which we might even have semi-reliable data --- Italy [I don't know what to believe about China's cases and data].

From Worldometer as of 11am today, data for Italy:

CLOSED CASES

23,809

Cases which had an outcome:

13,030 (55%)

Recovered / Discharged

10,779 (45%)

Deaths

 

 

Wow! 45% of all closed cases (recovered/discharged or died) were deaths! That doesn't seem very reassuring.

But look at the numbers per million in Italy,  Spain, and other countries near the top of the list ....

Country, Other	Total Cases	New Cases	Total Deaths	New Deaths	Total Recovered	Tot Cases/ 1M pop	Deaths/ 1M pop
Spain	85,195	+5,085	7,340	+537	16,780	1,822	157
Switzerland	15,526	+697	333	+33	1,823	1,794	38
Italy	97,689		10,779		13,030	1,616	178
Austria	9,454	+666	108	+22	636	1,050	12
Belgium	11,899	+1,063	513	+82	1,527	1,027	44
Norway	4,436	+152	31	+5	12	818	6
Germany	63,929	+1,494	560	+19	9,211	763	7
Netherlands	11,750	+884	864	+93	250	686	50
Portugal	6,408	+446	140	+21	43	628	14

Even Spain, which has the highest number of cases per capita of these relatively heavily infected countries, EVEN SPAIN has had only 0.18% of their population infected.... so far. What if the percentage infected where I live ends up even quadruple those numbers, what are the chances my wife, my friends, or I will get it and die? Probably not very high, especially since we are all pretty much self-isolating at the moment.

Still... suppose there's only a 0.5% chance of my contracting CV19. If I do get it, the odds are good that my wife and I won't survive it. And that is why we're being so friggn careful.

As I said in a previous posting,

This isn't a video game. We can't press the reset button if we don't like it.

When Will All of This End?

A wild guess for Ontario, though it seems roughly correct for other jurisdictions:

Restaurants and pubs will be allowed to open just before the May 2-4 weekend* but camping in provincial parks won't open until just before or just after July 1.

Why? The caseloads in countries that are well-along seem to be declining slightly and can likely be expected to decline more over time. Also, physical distancing seems to be slowing the spread.

We won't be over the pandemic by then, but the politicos will say things like,

"Don't go out if you even think you might have symptoms."

"Be careful, wash your hands and wipe down surfaces frequently."

"But we have to be mindful of all the poor businesses and their employees, too."

"Businesses are strongly encouraged to limit the number of people in their pubs and restaurants" (as if we won't do that ourselves anyway).

The traditional Victoria Day fireworks will be cancelled. Large, dense gatherings will still be banned until just before July 1, when the fireworks will proceed, but with dire cautions about physical distancing.

* The May 2-4 weekend was originally a national holiday to celebrate the birthday of Queen Victoria. When I moved to Canada, it was called "Victoria Day" (who knows, maybe it still is, officially). But sometime after I moved here, it was moved to the somethingth Monday of May. People started calling it the May 2-4 Weekend because it occurs around May 24th and because some people consume lots of beer from cases, affectionately known as 2-4s here.

Risk, Probabilities, Losses, and Uncertainty -- CoVid-19

Yesterday I had an exchange with a young man on Facebook who said, in part,

I assure I will not catch it and I will not fall so easily , my day consists of working my manager position and also shopping for people who are to afraid of going out my job status is HERO now and I cannot change that and I will not submit to societies will of masking myself or hiding inside a cave , we as humans will thrive and no flu or disease can bring us down we are STRONGER THAN THAT

He may very well be right. Judging from these data, not many people get CV19 (or not many get it seriously enough to be counted in the data). Even in the worst imaginable situations (so far!), he probably has only a twenty percent chance of getting the virus. And even if he does, he is young and healthy and has probably has no more than a five percent chance of dying from it.

So he will likely not get the virus, and even if he does get it, he will likely survive and be healthy. So for himself he's not worried, and in fact he'll be able to crow to me and others, "See. I'm strong. I told you so."

But what if he does get it? What are the odds he'll transmit it? I don't know. Maybe 50% (higher if he refuses to wear a mask)? And what are the odds he'll transmit it to someone in the at-risk category. Maybe only 5%? And what are the odds that if he gets it, he'd take up a spot in hospital that would lead to the death of someone else (generally older or already ill with other conditions, i.e. someone about whom the death panel would say, "they're going to die anyway, so give the ventilator to this young man instead.")

Put all together, the odds that he will get the virus with the consequence that someone else will suffer seriously or die are very low. Let me add that he is likely judgement proof (legally), depending on how much resale value his personal possessions would have. If I got sick from him, I couldn't sue him for his negligence because there's not much to get when suing him.

My concern is that because we essentially have a taxpayer-paid-for medical system, and because he has little to lose, he will take risks for which he won't have to bear all the costs or consequences. This is a classic example of moral hazard. He gets the benefits of taking the risks and others bear the costs if he gets sick.

But CV19 isn't a video game in which imaginary characters get seriously ill, are triaged into death, or die. It's real. And if he does get sick, there's no reset button for the rest of us to push.

Make a Mask from a T-shirt in Fifteen Minutes

I know I'm not going out very often where there will be other people, and I know that finding any factory-produced mask will be difficult, if not impossible (I have friends who work in hospitals, and they can't/shouldn't get them for home use now), and so I was considering making a mask from a virus-shield 3M furnace filter (of which we happen to have a spare). Unfortunately, the YouTube videos that show how to do that, all involve sewing something... which ain't gonna happen.

Then my friend, Ted Frank, posted a video on how to make a mask from a T-shirt.

I did it, and it takes less than 15 minutes. Here are the steps and the photos.

First, find a T-shirt you don't want to keep as a T-shirt. Unfortunately, I had given away most of my less interesting T-shirts, and I hope the students who gave me this one won't be upset that I've used it to make a mask. Think of the trade off: T-shirt sits unworn in a drawer or is used to maybe somewhat reduce the probability of spreading a contagious disease to or from me. (I know, it ain't an N95 or whatever, but at least it'll fit tight).

The chalk in the next photo is important. It not only half-sorta helped me cut straight, but drawing the cut lines before cutting helped me avoid some serious mistakes.

Here is the shirt with my chalk lines. Notice that I drew two bottom lines. I drew the higher one of the two because I didn't really want the word "Assume" to be on the mask but then I realized the underarms of the sleeves will help hold the pieces in the front and back together. Also I wanted a longer (top-to-bottom) mask.

And if I were making another one, I'd probably leave some of the tops of the arms as well.

Those next chalk lines show where to cut so there will be two sets of ties on each side of the mask.

Now it's time to cut (you can probably do all this in less time than it takes to read what I did).

 

And here is the final result. Just tie it on and adjust it.

Before I go out, I'll probably put some tissue between the front and back. And to sterilize it after I've been out, I'll leave it in the sun on the balcony.

 

 

 

Fight CV19 and STAY HOME

We had a bit of wet snow overnight, and since most of us are trying to avoid catching or spreading Covid-19, we're staying home as much as possible and isolating as much as possible when we're out.

My previous snow stomp art:

        Fight CV19 and STAY HOME (This Post)

        Skool Daze

        I Think It Might Rain

        The Penrose Triangle

        Snowflakes (done with my granddaughters)

       Tobogganing Through the Trees   

        Kilroy Was Here

       Happy St. Patrick's Day, 2019

       Spring is Sprung

       You Wanted Spring? 

       Too Cold to Build a Snowman 

       Simply a-MAZE-ing 

       Let There Be Music

      Ommadawn 

      The First Robin of Spring? 

      Be My Valentine, 2018

      Curling AND the Super Bowl

      I'm No Escher... 

      Hark! the Herald Angel Sings

      Nativity Scene, 2017

      Planning an Escape

      Caught in the Net

Surf's Up 

Diagonally Warped in a Parallel Universe, Part 2

      Diagonally Warped in a Parallel Universe

      Pikachu

      Happy New Year, 2017

      O Tannenbaum

      Nativity Scene

Special Weather Statement

Think Tropics

Qubix

Valentine, 2016

Paisley'd Circles

Happy New Year, 2016

The House of the Rising Sun

Easter Eggs

A weak pattern in the blowing snow.

The same pattern after some melting

New Year's Champagne

Tiptoe Through the Tulips

Happy Valentine's Day

Cabaret

A Christmas Tree (my first effort)

Jeff Jacoby on Bicycle Lanes

From his recent column called "Arguable", but I can't find a specific link to it (I subscribe).

---------

How bike lanes kill

As regular readers may know, I’m no fan of the relentless push in many towns — including the ones I live and work in — to make the streets more and more friendly to bicycles by making them less and less friendly to automobiles. I have nothing against bicycles, which are nimble, nonpolluting, healthful, and inexpensive. I also have nothing against rollerblades, Segways, wheelchairs, scooters, unicycles, or horse-drawn buggies. But none of them belong in the middle of crowded urban traffic.

Designated lanes for bicycles are a fine idea — where traffic is minimal or there is ample room to expand roadways. But the current mania for subtracting or narrowing already-crowded car lanes in order to benefit cyclists is terrible.

Inserting bike lanes into city streets disadvantages the overwhelming majority of drivers and passengers who rely on automobiles in order to accommodate the relatively tiny minority who bike. In a column last year I wrote: “The doctrine that cars, buses, and trucks should ‘share the road’ with bicycles sounds egalitarian and green, but it’s as impractical as expecting motor vehicles to ‘share’ urban thoroughfares with skateboards and strollers. The chief function of those roads is to keep people and goods moving as rapidly, efficiently, and safely as possible. Bike lanes unavoidably impede that function — often to the detriment of bike riders themselves.”

But taking away road lanes from cars in order to provide more lanes for bicycles isn’t just inconvenient. It’s also deadly, as Gary M. Galles, a professor of economics at Pepperdine University, shows in a recent essay for the Foundation for Economic Education.

He begins by noting that in the wake of implementing a new plan to bring down the number of people killed in Los Angeles traffic, the number of people killed in Los Angeles traffic went up:
 

Los Angeles Mayor Eric Garcetti created Vision Zero in 2015 in an effort to reduce non-driver traffic fatalities, especially pedestrian deaths. Its goals were to cut non-driver fatalities by 20% by 2015, 50% by this year, and 100% by 2025. Following that vision, the City Council adopted Mobility Plan 2035, a 20-year initiative to remove automobile lanes and make more room for bus and bike lanes to upgrade pedestrian and cyclist safety.

Results to date? Since Vision Zero was launched in 2015, according to the Los Angeles Times, the number of pedestrians, vehicle occupants, bicycle riders, and motorcyclists killed each year in crashes has risen 33%. (Fatalities surged in 2016 from 183 to 253, a 38% increase, and have dipped slightly since then.).

It isn’t hard to understand why cramming Los Angeles drivers into fewer driving lanes makes LA’s roads more dangerous, not less. And with the city planning to double down on its approach — a blueprint just approved by City Council would remove even more traffic lanes in order to make more room for bikes and buses — it seems obvious that congestion will only grow worse and fatal accidents more frequent.

Until reading Galles’s essay, though, it hadn’t occurred to me that there is another way in which increased congestion will cost lives. “More motor vehicles trapped in gridlock,” he writes, “cannot clear the way for ambulances or fire trucks responding to emergency calls.”

I tend to be skeptical of the “adopt-my-policy-or-people-will-die” school of analysis, but there is nothing theoretical about the outcomes to be expected when emergency response times slow down. When it takes EMTs longer to reach people suffering a heart attack, or becomes more difficult for fire trucks to reach a blazing building, the cost is paid in human lives. Galles quotes the Mayo Clinic’s Roger White, an expert in the treatment of out-of-hospital cardiac arrests: “A one-minute decrease in the call-to-shock time increases the odds of survival by 57%,” White told USA Today, while decreasing the response time by three minutes “improves a victim’s chance of surviving almost fourfold.”

Even backers of the new Los Angeles transportation plan agree that it will worsen traffic in many parts of the city. That is another way of saying that emergencies will be responded to more slowly. And that is another way of saying that more victims of heart attack (or a stroke or ingested poison or a shooting or a fire) won’t make it.

The numbers are jolting. If transportation economist Randal O’Toole is correct, for every pedestrian whose life might be saved by so-called traffic calming — i.e., by policies that deliberately slow automobile traffic in order to boost bikes and buses — more than 30 lives are apt to be lost due to delayed paramedics and firefighters. When Ronald Bowman, a scientist with the National Bureau of Standards, crunched the data for a plan to slow traffic in Boulder, Colo., he came up with an even more lopsided risk factor: 85 lives lost for each life saved.

To the militant and self-righteous bicycle lobby, of course, little of this matters. They want more bike lanes and fewer cars, they want them now, and they can be counted on to browbeat any objectors with loud insults and vehement sanctimony. But the objections are valid, whether or not they’re heeded. Bikes are terrific, but they don’t belong on the busiest city streets. The price of insisting otherwise isn’t cheap.

Harvard's Racial Discrimination and the Counterfactual

According to this article in The Boston Globe, one reason Harvard won its affirmative action defense in the suit launched by Students for Fair Admissions was that they presented testimony from African-American and Hispanic students to the effect that their admission to Harvard was tremendously beneficial to them.

To combat the statistically heavy case presented by two experts from Students for Fair Admissions, eight black, Latino, and Asian-American Harvard students and alumni took the stand to share their personal stories of making it to Harvard and the benefits of using race in admissions. Students for Fair Admissions [SFA] did not call any students or present any cases of applicants who were specifically disadvantaged by Harvard’s admissions process.

Apparently, by implication, the Students for Fair Admissions [SFA] lost in part because they didn't send a parade of students to the stand to testify that not being admitted to Harvard hurt them.

There's a good reason, I suspect.

The hypothetical, potential value-added from going to Harvard for those on the cusp but not admitted to Harvard would likely have been negligible. They almost surely went to other high- or possibly even higher-quality schools and ended up doing, roughly and on average, just as well as they would have done had they been admitted to Harvard. The SFA apparently presented no evidence that these students were harmed, undoubtedly because the value-added of attending Harvard is minimal for bright, capable students, relative to their next-best options.

This same argument should also be reversed and applied to all the students who were racially favoured by affirmative action at Harvard. If they, too, were bright and capable students then they would also likely have ended up attending some other high- or even higher-quality university. The enormous benefits to which they testified were almost surely not all due to having attended Harvard.

The Harvard defense team's strategy, at least in this regard worked, in part, because it is difficult to argue the counterfactual in court.

Let me add, though, that weighing the benefits to those who gained admission versus the losses suffered by those denied admission is the wrong approach. Racial discrimination is morally wrong, and here's hoping Harvard loses on appeal.

Housing Codes, Homelessness, and Affordable Housing

At the end of this month, I get to make a ten-minute PowerPoint presentation to an international conference about how stricter housing codes contribute to homelessness and reduce the supply of affordable housing. Seems like a no-brainer to me, but I expect few if any of the other participants will even agree that perhaps one cause of homelessness and the lack of affordable housing is strict housing codes, and even fewer will even consider the possibility that reducing the seriousness of housing codes might help to alleviate the problems.

Ten Minutes. PowerPoint. Helpful suggestions/criticisms welcome!

Below is a former convent that was converted to a rooming house and that met with great difficulties because the rooms were not up to code. I lived there in the fall of 1978 when I was down, out, and had little money.