Mark my words: Inflation is coming

Mark Levin recently debated Arthur Laffer, the well-known supply side economist, as to whether inflation would be an outcome of the shutdown of the American economy. Laffer didn’t think so; Levin predicted it would be a problem and he’s right. The reasons are simple to understand. In economics, price is a function of supply and demand. Gold is rare; people want it; the price is high.

Why will the American economy suffer from inflation? The answer is simple. Conditions resulting in a supply problem for many products and services are already evident.

* Meat producers are having to destroy both mature and young cattle and pigs because shutting down restaurants and institutional purchasers has depressed demand. The impact will result in higher meat prices when restaurants reopen, as it will take months before producers are able to gear up. Some farmers may go out of business as a result of the lack of a market for their livestock. That too will affect supply.

* Farmers are having to let produce go unharvested due to decreased demand, but more important in the future is likely to be a lack of labor––a function of several factors that will remain in place even after the virus restrictions are lifted. Prices of products from other countries will also go up as they will be battling the same problems we’ll be facing.

* Restaurants are being asked to reduce seating when they reopen. That will result in higher prices as food prices will be higher and restaurants will need to earn more per customer to cover expenses.

* Products sourced from China are very likely to cost more for a variety of reasons including the fact that Chinese factories will need to make up for lost sales during the pandemic.

* The U.S. is looking to move production of medical equipment and pharmaceuticals out of China back to their home countries to prevent a reoccurrence of supply problems that arose at the beginning stages of the crisis. Given the cost of labor is higher in the U.S., products for everything from hand sanitizers to ventilators to pharmaceuticals will be higher than in the past.

* All other products produced overseas, such as clothing, will be higher as a result of the impact on suppliers––some will have been bankrupt, while others will need to raise prices to catch up.

* Labor prices in the U.S. will be higher in many industries as people will be trying to catch up for lost income.

* Governments may have to raise taxes and fees to avoid reducing services.

Higher prices in some cases will be temporary, but high prices has an affect like a tidal wave. When the price of labor, products and services increase, the user of those products must also raise prices. I don’t know what percentage of manufacturing equipment is made in China or other low-wage countries, but if hammers, lithium-ion batteries and robots cost more, those costs will have to be passed along to consumers.

Complicating this is the fact that consumers impacted by the shutdown will have less money to spend. Having lower sales, sellers must raise prices to achieve the income they need to stay in business.

Get ready, folks. Inflation is on its way. Sorry, Mr. Laffer. Your curve won’t solve this problem.

 

Garbage in, garbage out

Many of you might remember the early days of computer programming when the mantra was “garbage in, garbage out.” That needs to be applied to today to computer models predicting the severity of the coronavirus. A few examples should suffice.

The authors of an op-ed in Sunday’s Washington Post admit as much when they quote Anthony Fauci saying “Models are as good as the assumptions you put into them” at the end of an article in which they expose how sketchy the assumptions are that have been put into such models as the one out of University of Washington’s Institute for Health Metrics and Evaluation that Fauci and others have been relying on.

One of the factors that is not included in any of these models that viruses mutate. A study from China (which of course would need to be replicated) found thirty strains of the virus that causes COVID-19. The author writes, “Sars-CoV-2 has acquired mutations capable of substantially changing its pathogenicity.” The implication of that finding is that the reason some people who are otherwise healthy get very sick and die while others are asymptomatic might be that the strain they came in contact with might be more virulent.

The models are being used today to justify extreme social distancing including shutting of all but “essential” businesses in most states. Suggestions that some states and counties can ease these restrictions have been met with outcries, claiming to do so invites more deaths. The problem with that assertion is that unless one knows FOR CERTAIN the number of people who have been infected by the virus the fear of tens of thousands of additional deaths is not backed by fact.

Some recent evidence suggests more people have had the virus that previously known, including people who had mild cases or who are asymptomatic. But the bottom line is we don’t have sufficient answers to make clear-cut policy decisions. As a result, governors and other elected officials are playing safe––not wanting to be blamed for causing deaths.

Unfortunately, there is a price to pay for being overly cautious in terms of millions of people’s livelihoods. The longer the country is shut down the harder it will be to get back up and the longer it will take. The exact price also cannot be calculated because we don’t have those answers either.

We do know there is a limit to how long the federal government can print money and distribute it to everyone in the country. One factor is that the debt even at zero interest will have been repaid. Another more immediate factor is that printing more money could result in rapid inflation––which coupled with scarcity of certain goods will have its own social cost.

My advice to governors is not to take the entire burden on yourself. With the assistance of your legislature and executive agency personnel, set broad guidelines for when certain types of businesses can reopen in each county of your state. That way when deaths occur you can deflect the blame and justify the policy. Some states are facing bankruptcy. It’s time to fight that war as well as the one brought about by the virus.

Media Negativity Leads to Despair, Violence

The Biden (formerly Washington; formerly Amazon) Post featured recently a story about teenage girls who have become global warming warriors. Motivated to save the planet, they dress in black (for mourning), take off school to demonstrate at the Capitol, and should be put on suicide watch if Donald Trump wins re-election.

This is an example of the news media’s chickens coming home to lay fool’s gold eggs. The girls are parroting what the media has been selling for years––not just that we’re facing an uninhabitable planet in ten or twelve years, but also that corporations, Republicans and white males are responsible for the impending catastrophe.

The Post clues us in: Maddie “can’t remember a time when the news wasn’t full of burning forests, melting glaciers and hurricane-lashed cities.” The Post even connects the coronavirus to Maddie’s angst: “The pandemic has shut down Maddie’s life and offered a taste of the global turmoil that scientists say climate change will bring.” Attributing wild claims to science is the kind of unfounded, politically-motivated indoctrination that leads young people like Maddie to think they personally have to save the world.

Girls like Maddie take their lead from a 17-year old Swedish media star and a first-term congresswoman graduate of a university that gives out M.A.’s in economics like McDonalds gives out big macs––to any and all takers.

A consequence of the media’s symphony of negativity is that millions believe African-Americans, Hispanics and women have it worse off today than fifty years ago, and that socialism is a viable economic model. It is also responsible for the rising suicide rate among young people––especially young white males. The media also deserves some responsibility for acts of personal violence, such as the shooting of Congressman Scalise and mugging of U.S. Senator Rand Paul.

While threats to infect the president with the coronavirus by elected officials are taken down quickly, the poster is not punished and the media forwards the message suggesting a ticket to fame awaits she who would undertake that mission.

The Biden Post and New York We Fit the News to Our Narrative Times may argue they only report the news and hide behind claims of objectivity, but those bromides have been shown to hold less water than a social distancing face mask. The location of stories in each edition, the wording of the headlines, and the perspective taken all color a story’s impact. Further, the impact of coverage of a topic cannot be judged on one story. Rather it is the cacophony of stories on a topic that infiltrate a reader’s consciousness leading her to decide, as in the case of the Post’s subject, that she has no choice but to give up planning for the future in order to save the world today.

When her parents try to reason with Maddie, she replies “But it’s zero hour. Two minutes to midnight.”

I doubt that the media that now promotes these teenager warriors will be around when they discover planet Earth is doing fine without them, but meanwhile Maddie expresses fear and others no doubt feel anger and consider violence. But that too will be reported as if someone else is responsible.

What’s needed in the State of Maryland to get back to normal?

The coronavirus crisis has hit Maryland hard like it has other states––no, not the number of cases which totals only 8,225 as of April 12 or deaths which number only 235, but in terms of the shutdown of the economy. The pain Marylanders feel is in the number of people out of work (more than 125,000 have applied for unemployment), the number of businesses whose existence is threatened and the closure of schools, parks and other public facilities.

Any death due to the illness is sad and unfortunate, but Maryland is not a hot spot and is unlikely to become one. The state’s number of new cases started to decline this past week and only 1,709 people are currently hospitalized due to the virus. The disease is not overly taxing Maryland’s healthcare system.

Assuming the numbers will continue to decline, it is incumbent on state, city and county officials to begin to put in place concrete plans to remove restrictions and allow people to begin to resume normal activities while still exercising caution and common sense.

I’m calling for the governor to set up a bi-partisan body of public officials to put in place guidelines for when restrictions can be lifted. Right now only businesses designated as essential may remain open and these must enforce distancing and other safety measures.

What would resumption recommendations look like? Here’s an example: When the number of new cases in a county drop below 60 for two or three days in a row, there should be a list of businesses that are allowed to re-open. Then when the number drops below 40 a day in that jurisdiction, the list should include other businesses that can re-open. For example, retail establishments where the same safety measures employed now by pharmacies and grocery stores would apply might fall into the first camp. The first list might also include dentists who were forced to close under the assumption their masks would be needed. Restaurants, hair salons and the like might be allowed to reopen after the second milestone is reached.

When number of new cases in a county drops below 25 a day, public parks, golf courses, basketball courts and other sports settings should be allowed to re-open and education officials should be strongly advised to resume normal school activities.

Fourteen Maryland counties have had fewer than 100 cases. All social restrictions should be removed in those counties immediately.

Until a vaccine is developed and distributed widely, it is likely we will continue to see coronavirus cases resulting in hospitalizations and death. There has to be a point, however, when we as a society determine the fear of the disease should not result in the destruction of our economy. Each year tens of thousands of people die from the flu in the U.S. We don’t ask our public officials to restrict our behavior as a result of the flu. We recommend that people get flu shots and act intelligently when ill.

The president has stated that the cure should not be worse than the disease. For Maryland that means public officials need to act now to enable residents to resume normal activities sooner rather than later.

 

Why reporters don’t report contrary data

What should a national newspaper do when there is credible information that doesn’t fit their narrative? They should report that info. Right?! What did the Amazon Post do when publishing, “Trump relies on impulse in push for unproven drug” in today’s issue? They complete ignored conflicting data.

The goal of the article was to blast Trump for going against science. That meant the reporters needed to find a bunch of “experts” saying that there’s no scientific data supporting the use of hydroxychloroquine to combat covid-19. The problem is that there is credible evidence that this drug which has been used to prevent and treat malaria and to treat lupus sufferers can be effective in reducing the severity of covid-19.

Dr. Mehmet Oz reported Monday on the Sean Hannity radio show at 4:00 p.m. EST and again on his TV show that data from a French study moves this drug off the anecdotal status. Here’s what he said on his own show:

“. . . the word ‘anecdote’ is used a lot — that is an incorrect description of where this medication is now. There’s no question it’s not proven to be beneficial in the large clinical trials we expect in America, and certainly the FDA and medical societies would desire. But these have been supported with case studies. I just got off the phone with Didier Raoult, who’s the well-respected French physician who’s done a lot of this work. Thousand series of patients — 1,000 patients in a row he’s treated, and he’s not published yet, he’s going to be published over the next two weeks. But he’s got seven people who have died, they were all older and had other co-morbidities, 20 people have gone to the ICU of that trial. Now, it’s not a randomized trial, but that’s not anecdotal. The data from China we discussed last week for the first time on Fox & Friends also, pretty evident that it’s a randomized trial. That is the opposite, if I had to create an opposite of an anecdote. So when those words get thrown around and I saw us this morning in some of the papers, it’s an error on the part of journalists.”

Not only is there evidence hydroxychloroquine helps covid-19 patients, there also strong evidence that those who are taking it will not contract the virus. Dr. Oz reported that one of the top rheumatoid arthritis doctors in the country reported that none of his 1500 patients have come down with covid-19. A larger study is being done to verify that no one in the country who has been taking the drug for lupus has come down with the virus.

Why didn’t the Amazon Post report those facts? If you press them they’ll probably say the relied on their own experts or some such garbage. The truth is that they weren’t looking for evidence that conflicted with their thesis.

P.S.: What’s wrong with mainstream journalism today? The reporters are sent into the field with a thesis to prove rather than to seek all the news that’s fit to print.