As the Economy Collapsed, Why Were Economists Silent? – The Epoch Times

Commentary

Public health as a profession has fallen into dispute but it is hardly the only one. The economists bear responsibility too, for it is they who should have been aggressive, open, and loud about every aspect of the pandemic policy response. And yet, they were largely silent as markets were wrecked, Congress blew up the budget, and the Fed flooded the world with newly printed cash to pay the bills.

Every bit of training in economics should have signaled that this was not the right path. And yet all surveys we have from the last 30 months show that most establishment economists had not much to say at all. How to explain this? Its a combination of intellectual failing, cowardice, and careerism.

Today we are paying a very heavy price as economic conditions the world over grow ever worse.

The history of this intellectual apostasy is unerasable. For example, in late March 2020, the IGM Forum at the University of Chicago polled economists nationwide, as they have been on various issues for ten years, concerning the lockdowns. Enough of them acquiesced to the prevailing strategy to make it policy for the national press to announce with confidence that economists are all for these wealth-destroying measures.

Incredibly, and to the everlasting disgrace of all those polled, not one single American economist who was asked was willing to disagree with the following statement: Abandoning severe lockdowns at a time when the recurrence in infections remains high will lead to greater economic damage than sustaining the lockdowns to eliminate resurgent risk.

Fully 80 percent of American economists agreed or strongly agreed. Only 14 percent were uncertain. Not one economist polled disagreed or had no opinion. Not one! This allowed Vox to announce triumphantly: Top economists warn ending social distancing too soon would only hurt the economy. Further: There is no evidence of a disjuncture in views between what public health experts think and what economic policy experts think.

It was the same in Europe. Economists polled there were all for this completely destructive, unworkable, and essentially insane policy that had never been tried before to deal with a new virus that we knew then was mostly a threat to people above 70 years of age with comorbidities.

Why was it not obvious that the right approach was to encourage the vulnerable to shelter and otherwise let society function as normal? Anyone who raised such an incredibly obvious question about lockdowns was shouted down. Dont you dare question expert opinion! Look how the economists agree!

Who precisely is on the list of the economists surveyed in this poll? There are eighty of them. You are welcome to have a look at their names and affiliations. You will notice that, without exception among the Americans, they have Ivy League associations.

Now, this is a puzzle. Theres no question that elite opinion was squarely on the side of unprecedented restrictions on the lives of citizens. Did these people study virology? Did they look at the data? Did they know something by virtue of their elite affiliations that the rest of us did not know? Did their models give them special insight into the future?

The answer is surely no in each case. What we have here is a demonstration that even the smartest people are susceptible to the frenzies of political fashion, groupthink, crowd psychology, and mob behavior.

It was clear by late March which way the winds were blowing. And people of a certain status, even if they do not share in the panicked attitudes of people on the street, are savvy enough to know what they are supposed to say and when. They too experience fear; it is a different kind of fear, one for their reputations and professional standing.

The courage to stand up against prevailing winds is rare indeed, even for those who can afford to do so. To be sure, I knew plenty of economists who were against the lockdowns. Donald Boudreaux, David Henderson, Gigi Foster, and a few others wrote articles and said so. Among major public figures, only Ron Paul spoke out from day one. Its true that they were a tiny minority but they did exist. They also took enormous professional risks in daring to defy what quickly emerged as mainstream opinion.

All of which still begs the question of the rationale that the economists gave to justify their destructionist posture. Here is where a remarkable piece by Jayanta Bhattacharya and Mikko Packalen provides great insight.

The first justification concerned the precautionary principle. Here is the idea that in the presence of uncertainty, it is better to be safe than sorry. The principle got a huge boost from the movie Jaws: the police chief was right that they should have closed the beaches given the well-founded worry that a giant shark was on the loose. Those who ignored his advice were responsible for lives lost.

Its not obvious how this principle should lead immediately to lockdowns for COVID. We knew from mid-February that the risk gradients put the danger of this virus squarely on the old and infirm. The data was clear. The virus would become endemic just as all previous ones had, via natural immunity. That was going to happen regardless. You can prevent a shark attack by closing beaches but you cannot make a virus go away by closing economies!

Whats more, the precautionary principle has to apply to policies too. Lets say that we had some uncertainty about the virus. We still had absolute certainty about the consequences of lockdowns. We knew it would lead to business failure, depression, demoralization, capital destruction, supply-chain breakage, and vast loss without precedent. They favored the lockdowns anyway, trading in what they knew for sure with concern for that which they knew almost nothing.

This was highly irresponsible. A consistent application of the precautionary principle would also have assumed the worst about the collateral harms of COVID restrictions, our authors write.

The second justification is even more strange. Based on cell-phone mobility data coming out at the time, economists found a way to say that the lockdowns were really a market response to the virus, not a consequence of government policy. You see, the data showed that people were canceling dinner reservations and trips and generally staying off the highways.

Therefore:

Economists reasoned that the virus, not lockdown, caused economic harm. There was no tradeoff between viral spread and the economy, economists intoned. Lockdowns would stop the virus, and our lockdowns would not impose meaningful costs on society either at home or globally (in spite of the heavily connected global economy), economists reasoned.

Even at this time, I heard friends and colleagues saying these things, much to my astonishment. I knew for sure that it was all incorrect. Yes, some of the loss of mobility reflected virus fears but those fears themselves were irrational and fanned by media hysteria. They might have disappeared in days or weeks but for the forced lockdowns.

In addition, the mobility loss was in part due to public fear about the government response. There had been talk of closures and quarantines since early February. Everyone could see what was going on in China. It was hard to imagine that the same would happen here, but Americans know not to trust the government. We knew they were capable of anything.

Even on March 12, 2020, I was very reluctant to board an Amtrak, not because I thought I might get COVID but rather because I knew for sure that a panicked government had the power to stop the train and put us all in quarantine camps. This fear was legitimate, and a major reason why people stayed home.

This was NOT market workings. It was fear of government and trickery by media that drove the results. As our authors write:

The idea that people would have voluntarily locked anyway is spurious and ignores the grave distributional impacts of lockdowns. A lockdown imposes the same restrictions on everyone, whether or not they can bear the harm. Nevertheless, many economists favored imposing formal lockdowns and shelter-in-place orders rather than offering public health advice.

Of all people, the economists should have known. If they did know, not enough spoke out. The whole scene reminds me of the Prohibition period during which all the leading economists stepped up to defend and rationalize the policy that everyone knew was on its way.

It took more than ten years before it became stunningly obvious how goofed up was that opinion all along, that it completely failed to think through what economists are trained to think about, namely the relationship between means and ends and the tradeoffs involved in every policy decision.

The economists should have been out front in warning ahead of time where lockdown policies would take us. Its a tragic historical fact that they did not.

Why exactly do we pay intellectuals? So that they can use their knowledge and wisdom to provide guidance away from catastrophe and toward a better world. They failed to do so, and here we are.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

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As the Economy Collapsed, Why Were Economists Silent? - The Epoch Times