Samizdata

So few people have any understanding of the importance liquidity plays in markets (which is why ‘speculator’ is a dirty word to the ill-educated twats who don’t grasp the essential role speculators play).

– Perry de Havilland

“President Trump can’t do right by some critics no matter what he does. For three years he’s been denounced as a reckless authoritarian, and now he’s attacked for not being authoritarian enough by refusing to commandeer American industry. The truth is that private industry is responding to the coronavirus without command and control by the federal government.”

The Wall Street Journal’s editorial board. Unfortunately, no-one is likely to find a cure for Trump Derangement Syndrome this side of the heat death of the universe.

I have taken the liberty of adding this excellent comment by Ross Clark, in the Daily Telegraph today. He seems to be one of the saner voices out there:

The year 2020 has already brought many firsts: never before has the British population been confined to home, nor has a UK government previously offered to pay the wages of private sector staff. But here is another: it is the first time that Donald Trump has stood out as a rare voice of reason amid a cacophony of panic.

At any other time, and coming from anyone else’s mouth, the statement “We cannot let the cure be worse than the problem itself,” would hardly raise an eyebrow. It is surely a principle which ought to be baked into all government policy. But, no, it aroused instant condemnation from the President’s critics.

As for his hope that he could get the economy roaring again by Easter, it led to an eruption from senators who appear to be enjoying the global emergency, are who have no doubt sensed that coronavirus could be the black swan event that succeeds where impeachment failed.

Sure enough, Trump has not bathed himself in glory over coronavirus, foolishly calling it a ‘hoax’ at one point. But he is right to recognise that there is a balance to be struck between fighting the disease and maintaining a functioning economy. So far, much of the developed world has embarked on a course which pursues the former to the total exclusion of the latter.

Last week, our own government published a dossier of the modelling which has informed its policy on coronavirus. There was plenty of epidemiological evidence in there, yet not a single paper modelling the economic effects of a lockdown. It is merely assumed that what will almost certainly be a steeper decline in economic output than either the 2008/09 crisis or the Great Depression can be put right by oodles of public money, much of it printed by central banks.

I am sceptical: what is this crisis going to do to the entrepreneurial spirit of millions who invested time and their life savings to set up businesses only to find them forcibly closed by the government? It is going to take a long time to recover that.

The most foolish remark you hear made in these situations is “lives are too important for money”. As Trump quite rightly points out, unemployment will itself cost lives. So, too, will social isolation. There are 7.7 million Britons who live alone, many of them elderly. There will be a serious cost to life now that enforced confinement will reduce them to the point of invisibility.

In any other situation, the Left would be jumping up every five minutes to claim that poverty costs lives. How often have we heard this fanciful figure that Tory ‘austerity’ has cost 130,000 lives over the past decade? That is nothing compared with the toll we face from mass unemployment.

Philip Thomas, Professor of Risk Management at Bristol University, calculates – in a study which has yet to be peer-reviewed – that if a lockdown causes the economy to shrink by more than 6.4 percent then the recession will have cost more lives than coronavirus itself. I would say a 6.4 percent shrinkage in GDP is on the seriously optimistic side.

We don’t normally seem to have a problem balancing the needs of medicine with those of the economy. We could save lives by going into lockdown every winter – the US Centers for Disease Control estimates that seasonal flu kills between 300,000 and 650,000 people annually.

But we don’t because we know the economic havoc would be even worse. Covid-19 is a serious disease, and one to which we began this year with no resistance. But its most damaging effect has been to destroy our ability to make a trade-off between medicine and the economy.