Part II of a Projected Three-Part Series
The Keating Files – May 21, 2020
The COVID-19 crisis turns out to be a moment to consider a 19th-century French economist.
Frederic Bastiat (1801-1850) was a leading economic and political thinker. One of Bastiat’s most important insights has popped up among those who have been arguing strongly against any kind of government restrictions during the COVID-19 crisis. What is this point? Bastiat opened his famous essay “What Is Seen and What Is Not Seen” this way:
In the economic sphere an action, a habit, an institution, or a law engenders not just one effect but a series of effects. Of these effects only the first is immediate; it is revealed simultaneously with its cause; it is seen. The other merely occur successively; they are not seen; we are lucky if we foresee them.
The entire difference between a bad and a good economist is apparent here. A bad relies on the visible effect, while the good one takes account both of the effect one can seeand of those one must foresee.
Bastiat actually comes in handy for all of us when looking at the economic and health costs of this crisis.
First, we are seeing a wide array of economic costs due to the governmental restrictions and shutdowns implemented in response to the virus, including declining economic output and investment, lost jobs, diminished trade, and falling income and consumption. There’s no missing this grim fallout.
But there is, indeed, more. Assorted economists are right to point out that there are unseen costs. Politicians and many in the media refer to trillions of dollars being spent by the federal government to aid individuals, families and businesses – in response to government having shutdown large parts of the economy – as “stimulus.” They see dollars and loans helping certain people and firms. Unseen, though, is the fact that those resources must come from somewhere, that is, being diverted from other endeavors, and resulting in real and substantial costs. Also, unseen are the future costs of this spending, in terms of burdens placed on taxpayers not too far down the road. Those unseen costs promise to be significant and lasting.
But Bastiat’s unseen effects go beyond this as well. For example, at the time of this writing (early morning on May 21), according to the Johns Hopkins Coronavirus Resource Center, global coronavirus cases registered 5.02 million, including 1.55 million in the United States, and worldwide deaths stood at 328,471, and at 93,439 in the U.S.
As tragic as these deaths are, the actual numbers likely are worse. Unseen are a rise in unexpected deaths not assigned to the coronavirus but likely tied to the pandemic by either being undiagnosed coronavirus cases, or dying due to other causes untreated because of the COVID-19 outbreak. (See, for example, a Tampa Bay Times analysis for Florida, and a Wall Street Journal article.)
And then there are the unseen lives saved. Critics of stay-at-home orders, social distancing and even wearing masks like to look at the latest number of deaths and rather callously proclaim that this hasn’t been as bad as was predicted, and therefore, the actions taken have meant little to nothing. In reality, the death toll not only keeps rising – soon to pass 100,000 in the U.S. – but it should be obvious that staying at home, social distancing and other efforts have avoided unseen deaths, that is, it has saved many lives. After all, that was and is the point of such actions. Duh.
The New York Times has reported on work done by researchers at Columbia University that estimates that 36,000 fewer people would have died if social distancing efforts had gone into effect a week earlier in March, and if lockdowns had gone into effect on March 1, some 83 percent of the nation’s deaths could have been avoided. Now, there always are major problems with such modeling, but the directional aspect is undeniable.
Yes, I’m comfortable in assuming that the number of unseen deaths in the U.S. would have been markedly higher (double or more than double?) without social distancing undertakings. In turn, a strikingly higher number of deaths, of course, would have come with a wide array of additional, unseen economic costs.
Indeed, this is a Bastiat moment, and yes, it is untidy in terms of nailing down exact numbers and estimates, and arguments promise to labor on as to the costs and benefits of what’s been done, and what would have happened under other scenarios. And these kinds of discussions and analyses will need to be done so that we can learn, and be better able to address future pandemics.
But throughout, let’s have compassion and regret for those who have fallen ill and died; let’s deal soberly with the real and brutal economic costs; let’s show some humility in terms of what we know and what we don’t; and let’s assume that, while we disagree, we’re all trying to do what’s best.
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Ray Keating is a columnist, economist, podcaster and entrepreneur. You can order his new book Behind Enemy Lines: Conservative Communiques from Left-Wing New York from Amazon or signed books at RayKeatingOnline.com. His other recent nonfiction book is Free Trade Rocks! 10 Points on International Trade Everyone Should Know. Keating also is a novelist. His latest novels are The Traitor: A Pastor Stephen Grant Novel, which is the 12th book in the series, and the second edition of Root of All Evil? A Pastor Stephen Grant Novel with a new Author Introduction. The views expressed here are his own – after all, no one else should be held responsible for this stuff, right?
Also, tune in to Ray Keating’s podcasts – the PRESS CLUB C Podcastand the Free Enterprise in Three Minutes Podcast
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