I honestly don’t know what world Stephen Moore is living in. In his piece at The Hill he says that “Democrats will pay a price for hurting the economy”:

Come fall, it is highly probable that the economy and the stock market will still be greatly hobbled by the aftermath of the lockdowns. There will be a massive amount of human suffering that results from what our politicians have done to our lives and our jobs. Americans are also likely to observe an economy that gets much better in red states than in blue states.

Voters will see the chaos in cities led by Democrats, particularly New York and Los Angeles. They will see people fleeing from blue states in the north to red states in the south, where businesses are treated like assets instead of criminals. They will realize that Democrats are the party of welfare, high taxes, and more government restrictions on the private economy.

The real world is practically the opposite of the one which he imagines. The major media outlets control the message and the message is that Democrats have saved millions from death while Trump’s response to the crisis was and continues to be incompetent and Republicans are indifferent to all of those deaths.

Nearly 80% of House seats are “safe”. That won’t change until after reapportionment in 2021 and probably not even then.

There’s also this. Ineffectual and incompetent government action makes a case for more government action in a way that good and effective government action does not. How else can you remedy the unwanted effects produced by previous bad action? Most people aren’t willing to leave that to markets or the good will of the rich and powerful.

Sweden will be used as the counter-factual to beat over the heads of those who would have done a lot less and as of this writing it looks very unlikely that Sweden’s situation will improve enough to counter that argument. It’s outbreak is worse than ours and its worse than its neighbors that implemented more stringent lockdowns.

In a piece at Bloomberg, Mohammed El-Erian provides what is, to some extent, the opposing view to Mr. Shriver’s presented above. He opens with an analysis from Eric Schmidt:

Schmidt sees populations evolving into three broad segments over the short term: people who are willing to engage, believing they don’t have the virus; those who don’t have it but are reluctant to engage due to personal risk aversion or other considerations; and those who shouldn’t and aren’t engaging because they either know they have the virus or are highly vulnerable due to pre-existing conditions and age. Governments and businesses, as both employers and suppliers, will need to adapt to these groups.

Linking his concepts to a system that’s fundamentally wired for intense human interaction and mobility gives us greater clarity on the shape of outcomes for public health and the macro-economy – that is, lives and livelihoods. These will be underpinned by households and businesses making a micro-set of information and risk-taking calculations, combined with self-identification and signaling.

Testing, tracing and vaccines will be crucial. Without them, there would be considerable mistrust, high risk aversion and low engagement. No trustworthy way exists to entice a sufficiently large number of genuinely healthy people to re-engage in the economy. Internal and external mobility will remain disrupted. The much-expected and hoped-for economic rebound would be weak and inherently vulnerable. More of an L and U/W than a sharp V.

Oddly, for an investment guru, he completely ignores the notion of risk. In the New York City metropolitan area, based on the present statistics, there’s about a 1 in 70 chance that you’ll contract the disease and a 1 in 700 that it will kill you but that overstates the risks since fully half of those who have died have been in nursing homes or other care facilities. In the State of Florida (roughly the same population as the NYC metropolitan area with a much older median age), there’s about a 1 in 7,000 chance you’ll get the disease and 1 in 10,000 chance it will kill you. It stands to reason that the views of risk would vary drastically between the two places. However, since our opinion-making apparatus is very heavily concentrated in the NYC metro area, the perception of risk being portrayed in the media is much more applicable to NYC than it is to Florida. And, as I’ve pointed out in the past, in almost half the states the risks are actually less than in Florida.

And all of that assumes that the risk for any given individual is the same and we don’t even know that.

I want to commend to your attention Lionel Shriver’s polemic in The Spectator, particularly this passage:

I am steeped in dread. I foresee months, if not years, of inane gesturing towards ‘safety’ that makes no appreciable difference to the nation’s health, but does manage to 1) ruin everyone’s enjoyment; 2) perpetuate the socially poisonous notion that one’s neighbour is a threat to one’s very life; 3) maintain an atmosphere of the extraordinary, in which the state may violate civil rights at will; 4) lay waste to what little might otherwise have remained of this country’s economy. The lockdown has been bad enough. Post-lockdown could be worse.

Is there any real science behind this two-metre rule? Or is it an arbitrary convention we’re now stuck with? Recent research suggests that Covid is surprisingly nosocomial (what a wonderful word): spread in the healthcare settings of care homes and hospitals. We’ve also learned that most infections result from the close-up, sustained exposure that we never get with strangers in supermarkets. Yet the two-metre rule that’s consigned us to half-mile queues for Tesco will soon make everywhere else unbearable, too.

concluding

I predict that few of the tedious, costly, time-consuming measures about to be levied on the British public in the coming months will be based on science. We’ll be obliged to make loud gestures of showy compliance, most of which will make no difference to who sickens and who dies, but which will nevertheless irretrievably deep-six this country’s economy and make our daily lives an unremitting misery.

Let me answer his question. The empirical evidence supporting the “two-metre rule” is scanty at best. It’s based on modeling. It has been criticized for being far too lenient (an 8-metre rule has been proposed) or too strict. I suspect it was arrived at as a compromise between no social distancing and the obviously unworkable 8 metres.

I have no idea what policies are best suited for the United Kingdom’s circumstances and won’t offer any suggestions. Here in the U. S. it appears that the number of new cases of COVID-19 reported daily has been declining since April 24 while the number of new deaths due to the virus reported daily has been declining since April 21.

It remains the case that the New York City metropolitan area accounts for fully half of all cases and all deaths due to COVID-19 and that the majority of those have been in nursing homes and other care facilities.

Here in Illinois the number of new cases or the number of new deaths seem more closely related to vagaries in reporting than to any underlying disease activity. I think you either must conclude that the measures adopted to oppose the spread of the disease have been a flop or that other changes are obscruing what is actually going on.

I’m skeptical of R. J. Lehman’s suggestion at RealClearPolicy that we need federally subsidized business interruption insurance:

About once a generation, the U.S. insurance market encounters a crisis that demands a federal response. In the 1960s, it was severe uninsured flooding. In more recent memory, it was the catastrophic terrorism of September 11th. Yet another protection gap has been revealed in recent weeks, as the COVID-19 pandemic shutters thousands of businesses across the country.

Business owners have responded to the unexpected — and, in many cases, mandated —interruption in business by filing claims on their business insurance policies. However, most of these have been denied, as existing policies simply don’t include coverage for cases like this.

Certainly, some of those denied claims will be disputed. In fact, a spate of lawsuits has already been filed. Ultimately, it will be up to the courts to scrutinize the nuances of contractual exclusions for pandemics and determine whether a virus can count as a “physical loss.” Even if some of these suits prove successful, insurers will simply redraft their policies to make the exclusion more explicit in the future.

This may be the reality, but it cannot be the end of the story. If private insurers won’t provide businesses with this sort of protection in future pandemics, then the federal government must.

The reason I’m skeptical is that every example he cites is an example of moral hazard and the heightened level of public risk that ensues from the federal government’s insensitivity to it.

The flooding in the 1960s is the easiest one. There should be no federally-subsidized flood insurance. It encourages the behavior we should wish to avoid—people building in flood plains. The more you indemnify people against the consequences of their own folly, the more they will engage in folly.

The attacks on 9/11 didn’t just materialize out of thin air. They were a consequence of our stationing troops in Saudi Arabia at the end of the Gulf War and our maintenance of the “no-fly” zone over Iraq. Those in turn were the price of assembling the coalition that were our allies during the Gulf War and that in turn was a consequence of our intervention on behalf of Kuwait. Each step in that chain was deemed the less risk-filled alternative. Those calculations were clearly wrong. The net effect was to offload risk from the Kuwaitis to Americans and the cost of those risks tell us clearly that the calculations were wrong. It doesn’t seem to me that you reduce risk by assuming more risk but that’s what’s being proposed. IMO the key question is not how do you mitigate the risk but how do you ensure that those making the decisions have more incentives that are better-aligned with reality? I think they need to have more “skin in the game”.

The present circumstances are more complex. I think that the author’s point that mitigating the risk was beyond the ability of any insured or any insurer is a good one but it makes some assumptions. The fact is that greater exposure to pathogens that may result in a pandemic is a risk of globalization. Some very smart people have been telling us for quite a while that the risk was being understated, e.g. Bill Gates. Is the correct strategy to indemnify insurance companies against the risks of what may not be nearly as rare an occurrence as they had assumed. Additionally, the discontinuity wasn’t caused by the virus but by the regulatory response to the virus. Are acts of government insurable risks? I don’t think so.

There are times when I question the sanity of economists and economics writers more generally. After articles predicting deflation, isn’t it time to put up or shut up? Where’s the deflation?

That’s what I thought of when I read this piece by Brian Chiappatta at Bloomberg:

For years, Fed officials fretted that consumers’ inflation outlook was almost too stable at historically low levels. Vice Chair Richard Clarida, for one, follows University of Michigan data that surveys expected price changes during the next five to 10 years. That gauge fell to 2.2% in December, a record low. A year earlier, when it was at 2.6%, he called it “within — but I believe at the lower end of — the range consistent with price stability.” Since 2012, expectations have fluctuated in a tight window of 2.2% to 3%, including 2.6% in a report released Friday. The central bank generally views 2% as its target rate.

The coronavirus pandemic has shaken American households to their core in any number of ways. At best, it’s acclimating to working from home and adjusting day-to-day behavior. At worst, the most economically vulnerable individuals are suddenly unemployed and unsure when — or if — they’ll be rehired.

Right now prices are going in every direction. Yesterday I filled my gas tank for the first time since March. I paid about the same price at the pump as I did then. The price went down, then it went up again. Where will it go now? I have no idea.

Food prices, particularly for meat, are skyrocketing. After years of stability the price of a steak has tripled over the last couple of months. Where will prices be in a year? I have no idea and I don’t think anyone else does, either.

Also, it bothers me when they talk about “inflation” or “deflation” when what they mean is that prices are going up or down. When I was in school inflation was thought to be a monetary phenomenon. When wages and prices go up, that’s inflation. When some prices go up, some go down, and wages go down, which is what really seems to be happening, calling that “inflation” is a misnomer.

The federal government has already decided to expand the M1 money supply (physical currency, demand deposits, travelers’ checks and the like) by about 20% and the M2 money supply (M1 + savings deposits, money market securities, mutual funds, etc.) by 12% since January. And they’re preparing to do it again.

Issuing a lot of credit and declining demand for the dollar don’t sound like the raw materials of deflation to me but what do I know?

Let’s start listing the real life experiments that are being carried out during this distressing, disastrous, and in some ways exciting period. I’m not talking about the trials of vaccines or treatments for COVID-19 although those count, too. I’m talking about social, economic, and policy experiments.

We are testing John Maynard Keynes’s theory of government action in a severe economic contraction or, at least the folk variant of that prescription.

We are testing the central proposition of Modern Monetary Theory. Or, again, at least the folk variant of it.

We are testing remote education.

We are testing telemedicine.

We are testing “work from home”, whether offices are really necessary for productivity.

We are testing Americans’ ability to act in a way that is at the least unfamiliar and may even be against their basic natures.

We are testing whether business lockdowns and social distancing with very little else in the way of policy responses can be maintained over an indefinite period and whether they are effective ways of slowing the spread of disease.

And that’s just scratching the surface. I’m pretty pessimistic about all of these experiments.

When you compare two analyses, one from FiveThirtyEight and other from Pew Research, something interesting emerges. FiveThirtyEight lists the industries hardest hit by the lockdowns and when you combine that with Pew’s list of employment of illegal migrant workers by industry you get this:

Mexicans and Central Americans could return to their countries of origin and I suspect that many will, not the least because they do not qualify for social services here. Other nationals may face a real problem. There’s no work; they can’t leave; and they can’t stay.

I would add that even foreign workers here legally may face a problem. If they’re laid off long enough they will lose their legal status.

You know, I really wish I had the time or energy to start using data mining techniques, especially such techniques that employ neural networks, to analyze the enormous amount of data about COVID-19. I strongly suspect that at this point we have the data to know a lot more than we do.

The big news story in Chicagoland yesterday was that Cook County has become the single county in the U. S. with the most diagnosed cases of COVID-19. The Sun-Times reportage on this:

Cook County has surpassed Queens County in New York as the U.S. county with the most coronavirus cases based on Sun-Times analysis of the latest public data.

There have been 58,457 total cases of COVID-19 recorded in Cook County, which includes all of Chicago and many of its suburbs, after officials added 2,051 new cases in the last 24 hours. Queens, by comparison, added only 336 cases over the same time frame to bring its total to 58,084.

Cook County still has a lower rate of COVID-19 per capita given its population (5.1 million) is more than twice as large as Queens (2.25 million). But Queens also has a much higher population density with 20,500 people per square mile compared to 5,500 per square mile in Cook County, which can make social distancing measures more challenging to maintain.

furnishes a little context for this but not nearly enough. Let me try to remedy that. Cook County is second only to LA County in population in the U. S. Not only is it twice as populous than Queens, it is nearly ten times the size in total area and land area.

According to the IDPH, the mortality per million population in Cook County is about 700. I don’t know the exact mortality rate in Queens but my back-of-the-envelope calculation suggests it’s no less than 2,100/million—at least three times that here. Despite that there’s an opinion piece in the NYT today claiming that population density is unrelated to the prevalence or mortality of COVID-19. That’s balderdash. It’s density, folks. Population density is not the only factor but it’s an important one.

Cook County is the home to more than half of the deaths due to COVID-19 in the entire state. Not including Cook County Illinois’s mortality rate due to the virus would be about the same as Iowa’s or Wisconsin’s which is to say quite low.

I also think that there’s a lot less to the reported statistic than meets the eye. A lot more tests for SARS-CoV-2 have been conducted here, too. You’re bound to find more cases that way. Cook County’s health care system is more likely to be overwhelmed by the rash of shootings on the South and West Sides of the city than it is by COVID-19.