Article

2020-07-12 Economy

Marginal Revolution via Instapundit
One of the most confounding aspects of the pandemic has been Congress’s unwillingness or inability to spend to fight the virus. As I said in the LA Times:

If an invader rained missiles down on cities across the United States killing thousands of people, we would fight back. Yet despite spending trillions on unemployment insurance and relief to deal with the economic consequences of COVID-19, we have spent comparatively little fighting the virus directly.

Economists Steven Berry and Zack Cooper have run the numbers:

By our calculations, less than 8 percent of the trillions in funding that Congress has allocated so far in response to the virus has been for solutions that would shorten or mitigate the virus itself: measures like increasing the supply of PPE, expanding testing, developing treatments, standing up contact tracing, or developing a vaccine. A case in point is the most recent House Covid-19 package. It calls for $3 trillion in spending; less than 3 percent of that total is allocated toward Covid testing. As Congress considers next steps, it’s imperative to shift priorities and direct more funding and effort toward actually ending the pandemic.

Berry and Copper point to the vaccine plan that I am working on as an example of smart spending:
"Give me money"
...a group of prominent economists, including Nobel Laureate Michael Kremer, has proposed spending a $70 billion dollar vaccine effort. The proposed expenditure is both much larger than anything proposed by the White House or Congress and also quite cheap compared to the potential benefits.

...[Similarly] Nobel Laureate Paul Romer and the Rockefeller Foundation have each sketched out $100 billion plans to increase testing. We say: Let’s fund both, allocating half the funds directly to states, who can spend to activate the vast capacity of university labs, and also fund Romer’s plan to scale up $10 instant tests for true mass testing. We could create a $50 billion dollar challenge prize that rewards the first 10 firms that develop effective treatments for Covid-19 — $5 billion each. We could fund Scott Gottlieb and Andy Slavitt’s bipartisan $50 billion contact tracing proposal. We could allocate $100 billion to fund the libertarian leaning Mercatus Center’s proposal for advanced purchase contracts to procure massive quantities of PPE.

What makes this all the more confounding is that spending to defeat the virus will more than pay for itself! As I said in my piece in the Washington Post (with Puja Ahluwalia Ohlhaver):

Economists talk about "multipliers" — an injection of spending that causes even larger increases in gross domestic product. Spending on testing, tracing and paid isolation would produce an indisputable and massive multiplier effect.

Who gains by killing the economy and letting people die? Yes, it’s possible to spin some elaborate conspiracy about someone, somewhere benefiting. But in talking with people in Congress the message I hear is not that there’s a secret cabal with a special interest in economic collapse and dying constituents. In a way, the message is worse. Multiple people have told me that things move slowly, no one is stepping up to the plate, leadership is absent. "Who is John Galt?," they sigh. Ok, they don’t literally say that, but that sigh of resignation is what it feels like in the United States today at the highest levels of government.
A libertarian instead of faux-libertarian viewpoint?

Posted by g(r)omgoru 2020-07-12 07:47|| || Front Page|| [15 views ] Top

#1 I'm having some trouble finding the death toll for the 1968 Hong Kong flu, which is still circulating.

Estimated deaths from the pandemic are easy to find; total, including fifty-two years of still-not-defeated virus would be anybody's guess. So I'll guess.

100k for the first outbreak, and an average of 10k per year for 50 years ... (carry the one)

Posted by Bobby 2020-07-12 08:51|| 2020-07-12 08:51|| Front Page Top

#2 [oops] 600,000 would be a pretty conservative number. That's a USA estimate.

Posted by Bobby 2020-07-12 08:52|| 2020-07-12 08:52|| Front Page Top

#3 Utter nonsense of the anti-Trump, only-government-spending-counts type. Who needs additional Congressional spending when President Trump had already stood up public-private partnerships to get so much of that done? Ventilators, PPEs, hand sanitizer, face masks of all sorts — all already handled. I seem to recall that in the U.S. alone over 40 million lab tests have been done, never mind the rest of the world, where even the Palestinians and refugees in al Nusra-controlled Idlib have test kits and labs, though the accuracy of those tests varies. A variety of treatments short of ventilation, alone and in combination, are showing positive results — the results being shared among patient-facing medical staff despite caviling by scientific officialdom, news media, and politicians. Research is going ahead at breakneck speed on improved tests, treatments, and vaccines around the world, all without massive, targetted spending packages from America’s national legislature.

The entire world has stepped forward to demonstrate that in a real emergency, those on the ground dealing with it can invent makeshifts to answer pretty much all the needs of the moment using whatever is at hand, including bedsheets, scuba masks, and the leftovers from the nearby whiskey distillery.

Posted by trailing wife 2020-07-12 09:17|| 2020-07-12 09:17|| Front Page Top

#4 Will someone explain how money kills virus?

This sounds like just more Uncle Sugar begging on its face.

Posted by AlanC 2020-07-12 09:20|| 2020-07-12 09:20|| Front Page Top

#5 Anything Mises-related wouldn't make the cut.

Posted by Clem 2020-07-12 09:23|| 2020-07-12 09:23|| Front Page Top

#6 Well, government is often part of the problem, if not THE problem. Although recognized by President Trump, the approval process for drugs/vaccines is dismal. The cozy relationship between the FDA and the pharmaceutical-industrial complex doesn't help at all. I believe the rabid opposition (you, too, Fauci) to HCQ is evidence of that as it is not a money-maker. And the Dem response to it speaks volumes.

And then there's falsifying death certificates for the all-mighty dollar. Sigh....

Posted by Clem 2020-07-12 09:35|| 2020-07-12 09:35|| Front Page Top

#7 I think the idea of challenge prize is pretty good - look at history of aviation.

Posted by g(r)omgoru 2020-07-12 10:02|| 2020-07-12 10:02|| Front Page Top

#8 I could live with a challenge prize. :-)

Posted by trailing wife 2020-07-12 22:57|| 2020-07-12 22:57|| Front Page Top

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