Month: April 2020

Most of us are aware of the image of how the laws of supply and demand work.  We often attribute the phrase “invisible hand” to Adam Smith and use it as an illustration of how efficient markets work.  Very few would argue that efficient markets are better in the long run than regulated markets, but almost everyone is aware of the dangers of free markets: price spikes when demand exceeds supply in the short run.  We are all seeing this in hand sanitizer, face masks, and even toilet paper.  Few, however, study the damage done when supply greatly exceeds demand, and prices plummet or can even go negative.  That is happening in our wholesale electricity markets at times when solar plus must run generation resources exceed the demand.  It happens for hundreds of hours a year in many places in the US.

As with any market mechanism, some people will seek evil wrongdoing, and others will simply take advantage of price movements to arbitrage this or that.  But, now we have a huge external governmental wrecking ball to our economy which is very likely to put many free-market businesses out of business.  We are living through an experiment rightfully conducted to protect human lives, but also likely to destroy a huge swath of the world economy.  Most know that economic growth is driven by small business but these are also going to be the casualties of the government shut down of businesses.

What is the cost?  Far be it from me, a mere mortal to know these things, but we do have a small experiment being conducted by Sweden breaking from the world’s pattern of a shutdown.  If you compare Sweden with Norway, you can see the casualty of this … many more deaths in Sweden even now with many more in the future until either a vaccine or a medical cure is discovered.

We are about to see some stark differences and could learn quite a bit for the next time if we studied them.  I do hope we take a close look at the not so invisible hand and decide what it is telling us.

As one of our key employees used to say: the handwriting is on the wall and widely spaced for easy reading.

I grew up with this quote from The Three Musketeers. Perhaps you remember the rest of it: for united we stand and divided we fall.

I remember that as an inspiration for our national life. But, now I am beginning to doubt the wisdom of that saying for the first time.

Are we one nation? I don’t think so. We are the most divided I can remember. I felt we came together on 9-11. You might have thought we would come together for Covid-19. Nope, the tensions are running high these days, despite the appearance that we may be gaining on this. So much of what you hear in news soundbites is crafted to discredit the other political party.

How do we set national policy when there are such strong divisions within our societal fabric? I hope you would agree that we must be sensitive to those who have little to no voice and can so easily be swept under the carpet with cavalier phrases like let them eat cake. But, we still try to solve problems on a statewide basis even when there are huge disparities within these states.

Take a look at what is happening in Michigan: Read the NPR story here.

Averages are so misleading. We all know you can drown trying to cross a lake

that averages 2 feet in depth. We average health insurance premiums where healthy people pay for those who choose unhealthy lifestyles. Which doesn’t happen in car insurance? People with bad driving records pay far more for insurance than those with safe ones. And this certainly doesn’t happen with life insurance where premiums for smokers and the overweight are higher than their healthier counterparts. Why does it happen on health insurance?

Will we have a sober debate about this? Let’s see what happens in Michigan. We will all learn lessons by comparing the different approaches to the pandemic taken by Sweden and its neighboring country, Norway. Sweden didn’t force business closures, Norway did. These otherwise similar countries have chosen markedly different approaches, and here are the results as of April 18. The impact on the Swedish economy may be less, but the loss of life far greater. Which begs the question, at what cost of a single life?

This has been a tragically costly experiment whose results may radically change how we make decisions about our economy, our provision of healthcare, and our expectations of federal, state, and local governments.

I hope it reinvigorates the spirit of “All for one and one for all, for united we stand and divided we fall.”

While we in this country watch the coronavirus spread, the country of China has mobilized an all-out war on it … and it is working. But, it invades privacy and would be outright unconstitutional in the United States … so, of course, we won’t go there. However, it is extremely instructive to see how they are cracking down on it with predictably good results … but at what price?

This would have been considered Orwellian here.  In fact, the humorous Alexa conversation where she admonishes the customer for ordering things that are not good for their health seems unthinkable.

As you watch the Wall Street Journal summary, I would suggest we are not that far from similar thinking in this country. Watch the WSJ Video.

Listen carefully to the logic of the Chinese government and the reactions of people clearly in fear of dying.

To me, this seems eerily reminiscent of how countries move from democracies to socialist.  Are we headed in the same direction?

I hope not.

I remember it like yesterday when my high school history teacher opened the class with the title of this blog and then said: “is that we learn nothing from history!”

The regional newspaper covering Jacksonville put an Op-Ed piece from their historical files about the summary of what the town learned from an outbreak of Yellow Fever ins 1888.  I summarize it here because it is stunning in its clarity of what we should be learning through and about our Covid-19 experiences today:

Lesson 1: Look for advice from scientists, not politicians.

One of the key lessons I would take away from how Jacksonville elites dealt with the epidemic, is that that expert scientific advice had not actually penetrated the local political level of Jacksonville.  They believed, and there’s somewhere an article in The Florida Times-Union, that what causes disease are animalcules, tiny animals.  Their recommendation was the exact wrong recommendation. They said to leave buckets of water around your house to breed mosquitoes to eat the animalcules. It said you should do this, and people did it. The mosquitoes became vectors of infection.  There are experts. They do know what to do. They’ve studied this extensively for years. There is knowledge we should not politicize, and we should let certain kinds of experts lead in this situation.

Lesson 2: Quarantines, by their nature, create class conflict.

Quarantines have always pitted workers and bosses, citizens and merchants, industrialists and public health advocates. The people who make money on trade and commerce don’t want to see things shut down. They will fight and fight and do what they can to subvert quarantines and fight them. When they do so, all they do is prolong the misery. All they do is make things worse, even though they take a financial hit in the end. If Jacksonville had been able to figure out the quarantine more quickly, they might’ve been able to get through yellow fever quicker than they did. The city government was really still weak. The idea that government should have powers to intervene and declare that everyone should stay indoors, couldn’t have happened in the 1880s. Instead, they needed buy-in from merchants who had to volunteer to shut down.

That didn’t happen.

 Lesson 3: Beware of philanthropy replacing the government.

Private actors who aren’t the government used fundraising, charity, and philanthropy to displace Jacksonville city government. When the yellow fever hits, everybody who has the resources to bug out and leave, go to New York and form the Jacksonville Auxiliary Sanitary Association. They raise half-a-million dollars in relief funds, which is a lot of money in 1888.  They then use this money to run the government by fiat. Once the yellow fever was done, it wasn’t that hard to go to Gov. Francis Fleming and say you can remove home rule and put us in power because we’ve shown we can do it.

The third lesson is: There will be moments where people swoop in and pretend to fix things and will use it to exercise control.

I think we should all heed this advice.  The truth is now emerging about China and the World Health Organization.  We should study the results from Sweden vs. Norway … the blog from last week … and think carefully about who we elect to make sweeping decisions for our society.  And, most importantly, we should be wary of people who swoop in and pretend to fix things only so they can exercise control.

OK, we are all now having our lives disrupted and perhaps threatened by something that has been repeatedly known to be a time bomb in the health industry: these exotic foods markets in Southwest China. This is far from a new issue and has repeatedly been reported in the medical journals.

So, here is the “blinding flash of the obvious” question we should all be asking here in the US and around the world … and even in China: Why does the Chinese government permit these markets to exist? They locked down the country as a result and are now prancing around the world offering free masks and doctors as an olive branch.

What is going on here? Do they permit these idiotic things to exist so they can validate their authority and control when outbreaks occur? Or, as Sigourney Weaver asked when she returned from years in hyper-sleep in the movie Aliens: “Did IQs drop sharply while I was away?”

Sorry, but the right answer here is obvious isn’t it?!?