The Real Issues Concerning COVID-19—Part II

The goal of this series of posts is to explore ways to strike a workable balance between the dueling concerns about health and the economy that are raging. We must deal with the Gordian Knot that while businesses need to reopen, reopening businesses is futile if customers are unwilling to engage with the businesses. Let’s lay the groundwork for that discussion by noting how we got to where we are and then sorting out where we are.

To scare people enough to get them to follow NPI suggestions and orders, the government officials, with the aid of experts and the mainstream media, launched a massive and biased publicity campaign using the scariest numbers to which credible academics would affix their names. More honest and realistic messaging, however, likely would not have worked as well in getting people to follow recommendations and orders. Governments must work with the overly fearful[i] and innumerate[1] citizenry they have, not the citizenry they wish they had.

Consequently, a good case can be made that the deceptive and hyperbolic fear campaign was warranted. Bereft of reliable data concerning the virus (other than it was deadly and coming), full of uncertainty as to how Americans would adhere to NPI orders or recommendations, and confronted with the possibility of inestimable horrors, doing nothing would have been untenable in America’s fearful and disunited society. The campaign met its objective of preventing hospitals from being overwhelmed—even in the hardest-hit New York City. Achieving that objective likely saved many lives and kept doctors from having to decide who lives and who dies, as was the case in Italy. (The NPIs have and will continue to cause deaths as well, but whether the lives taken by the NPIs will exceed the lives saved by the NPIs is academic at this point.)

The stated objective of the NPIs was to “flatten the curve” (slow the pace of infections) so (1) hospitals would not be overwhelmed, (2) the number of people infected during the winter would be reduced (in hopes that warmer summer weather would suppress the virus while scientists gathered and analyzed data to device more informed strategies to deal with the virus when as it spreads across the population). Note, however, that flattening the curve had mostly to do with when the maximum number of people would get infected, not if.  It was and is assumed that the virus will continue to spread across the population until enough people are infected to achieve herd immunity. Although one should acknowledge that NPIs might cause there to be fewer deaths if treatments and devices are found to lessen the severity of illnesses and/or reduce its mortality. While the need to get started on vaccines was a topic of conversation, virtually, no one expressed confidence that a vaccine would be invented, tested, approved, and administered within a year, and experts knew that a vaccine might not happen.[ii]

As discussed in Part I, sheltering in place waiting on a vaccine to save the day wasn’t, isn’t, and won’t be a sound strategy. On the contrary, among other things, doing so would cause many illnesses, financial ruin, spousal and child abuse, and deaths. A very relevant example is that people who shield themselves from viruses and bacteria are weakening their immune systems, i.e., making themselves more vulnerable to illnesses[iii] and not doing their part to achieve herd immunity for many diseases, including the possible winter wave of COVID-19.[2]

Looking at vaccines in the context of “herd immunity” is essential. Is herd immunity a big deal? Yes:

“With all respiratory diseases, the only thing that stops the disease is herd immunity. About 80% of the people need to have had contact with the virus…”[iv]

According to theory, vaccines are a relatively low-risk way to help achieve herd immunity. However, in terms of the health and wealth of a population, the sooner the herd immunity exists, the better. Given that, if there are other low-risk ways to reach herd immunity, waiting for anything, including a vaccine, is a bad idea. That would be true even if there were no high costs inflicted by imposing NPI on people who, with very little risk, could help gain herd immunity sooner, be more productive, enjoy camaraderie, and have more fun. As discussed above, however, being isolated in a relatively sterile lonely house, however, does inflict high costs.

While herd immunity is the best weapon available to defeat COVID-19,[v] consider these important facts about herd immunity:

  • For the pandemic to be put to rest, from 50%[vi] to 80% of the population will need to have been infected,
  • The sooner a herd immunity level of infections is achieved, the sooner it will be reasonably safe for vulnerable people to get back out into the world and enjoying their lives,[2] and
  • By staying at home, people who have a tiny chance[vii] of having severe effects from a COVID-19 are unnecessarily delaying the process of both getting on with their lives, getting the economy back on track, and getting the pandemic behind us—provided the exceptionally vulnerable continue to follow NPI practices until it is reasonably safe to do so.

Given that the goal is to achieve herd immunity, the longer most people stay at home, the more slowly the country will reach “herd immunity,” which, save a miracle, is the ultimate goal of all efforts to deal with the pandemic. It stands to reason that the likelihood of being infected decreases as the percentage of infections increases, i.e., the benefits from more people being infected begin before herd immunity is reached.

So how do we cause young healthy people comfortable enough to engage in commerce? We’ll begin sorting that out in Part III of this series.

____________________________________

[1] If one does not understand the concept of odds or is not proficient in its application, one can have no clue what to make of risks. Stupidly avoiding small risks and stupidly taking large risks are both counterproductive and dumb. Suffering from innumeracy results in dangerous mistakes and causes people to favor foolish government policies.

[2] People who are exceptionally venerable COVID-19 should not be expected to expose themselves to exceptionally dangerous risks, including exposure to the herd.


[i] “Safety has become a cultural obsession to the point that many institutions and policymakers have adopted the ideal of a “harm-free” world as a realistic objective, a fantasy perhaps most strikingly expressed through intolerance toward risk and accidents” “The Paradox of Our Safety Addiction” and “”If we can save just one life!” is a terrible justification for change.”

[ii]Don’t bet on vaccine to protect us from Covid-19, says world health expert” and “Why a coronavirus vaccine may never be found.”

[iii]LIVE Local doctor from Accelerated Urgent Care gives his take on COVID 19 in Kern County” @17:50 and @33:55

[iv]Epidemiologist: Coronavirus could be ‘exterminated’ if lockdowns were lifted.”

[v]If the virus keeps spreading, eventually so many people will have been infected and (if they survive) become immune that the outbreak will fizzle out on its own as the germ finds it harder and harder to find a susceptible host. This phenomenon is known as herd immunity.” [This MIT article is sowing unwarranted fear about the state of affairs (i.e., following the establishment line), but provides a credible explanation of herd immunity.)

[vi]Reaching Herd Immunity Would Require Significant Deaths. Some Experts Think It’s Inevitable.”

[vii] “Preliminary evidence suggests that, particularly in young individuals, many, perhaps most do not develop enough antibodies to be detected, but nevertheless clear the virus with full recovery.”  “Perspectives on the Pandemic | Dr. John Ioannidis Update: 4.17.20 | Episode 4.” @33:39

The Real Issues Concerning COVID-19—Part I

The day to day skirmishes about (1) whether the non-pharmacologic interventions (“NPI”), i.e., quarantine, travel bans, shelter in place orders, social distancing, hand washing, etc. were or are being handled well or poorly, and (2) when and how to “reopen” the economy are interesting and have some importance, but they pale in comparison and are sideshows to the main event. They distract us from attending to the real issues concerning COVID-19. Let’s sort out what those real issues are.

The uber-issue is how best to balance the dual goals of minimizing the damage that will be inflicted by COVID-19 and preventing the economy from falling below the point of no return (I’m not talking about a return to the robust economy the country had before. I’m talking about returning to a smaller, but sustainable economy—assuming the deficit spending fueled economy we had before was sustainable) with a chance of resuming growth. The cacophonies that have arisen around each of the two goals clouds the real issues concerning the balance that must be struck. Let’s start cutting through the haze.

Both goals are of paramount importance. Sadly, however, to a very significant extent, the two goals are in tension, i.e., the more we do to address one the more the other is impeded:

Economy.  Effective NPIs are necessary, but they suppress economic activity. Economic activity stifled too much and/or too long will result in losses of:

  • Human flourishing, community, fun;
  • The dignity associated with providing for one’s self and family;
  • People’s financial security and ability to fund charitable activities;
  • Pension plans’ asset value; and
  • Wealth and wealth creation which fund job creation, research, development, infrastructure, government activities.

To boot, there will be more illness and deaths from stress, depression, and related illnesses as people’s life savings or life work evaporates.[i]

COVID Damage Mitigation. Epidemiologists appear to be convinced that the COVID-19 is exceptionally contagious[ii] and discriminating as to which groups are spared consequences and the degree to which other groups are ravaged. To not take reasonable steps to mitigate the damage that will be inflicted by the virus would be inhumane.

While taking reasonable steps to address both goals is imperative, taking unreasonable steps would, of course, be unreasonable. That is the easy part. The hard part is figuring out what is reasonable while we have insufficient data from which to determine what works and doesn’t work, and never will.[iii] What experts cannot know is overwhelming:

Economy. There are too many unknowable variables to allow anyone to know how long the economy can continue to be stifled before it reaches the tipping point of no return. For a hint at why that is, consider this: Whether the US can continue to deficit spend (which it has been and is doing to a high degree) depends on foreigners’ willingness to continue to purchase US bonds. The more bonds that are sold, the less demand for additional bonds there is likely to be (the US becomes less creditworthy and the demand for bonds is satiated somewhat with every bond sold). The more the US continues to create money (which it has been and is doing to a high degree), the more likely the value of US bonds will fall because the inflation-adjusted profit from holding US bonds is reduced. As the US imports less as a result of having stifled its economy, the less US cash foreigners will have to buy US bonds. In light of these and many other imponderables, no AI-augmented human mind can calculate where that tipping point is or how soon it will come. Economists can, however, tell us that every day the economy is stifled will likely bring the tipping point more than a day closer. The damage done to Americans and everyone else in the world if America’s economy collapses will result in much more damage than could be caused by the worse scenarios for COVID-19.

Despite the above realities, some people are proposing that aggressive NPIs must be aggressively imposed everywhere until a vaccine is invented, proven, validated by the FDA, manufactured, and widely administered. Here are a few of the problems with that proposition:

  • No one can know either that an effective vaccine can be invented or how long the process will take. A time frame of 18 months has been bandied about. On the other hand, that might be as optimistic as early projections as to how long NPIs would be needed (e.g., long enough to get us into the warmer summer months). On the other hand, according to The College of Physicians of Philadelphia. “Vaccine development is a long, complex process, often lasting 10-15 years and involving a combination of public and private involvement.” (Does anyone think we can survive 10 years stifling of the economy?)
  • Making matters worse, while there are many great vaccine success stories concerning many viruses, “the record of coronavirus vaccines, however, has not been very successful. In some cases, doing more harm, including death, than good.”[iv]
  • The vaccine itself will cause some people to become seriously ill and others to die.
  • If a vaccine were discovered and approved quickly, it might be completely ineffective against one or multiple mutations of the current COVID-19 virus, i.e., it wouldn’t solve the problem.

Obviously, input from experts is essential to tackling the problems created by COVID-19. Sadly, however, experts have two unhelpful habits. They tend to myopically focus on their own areas of expertise[v] and, because they have little to say and are motivated not to say anything about the problems associated with their proposals, they say things that distract the citizenry from what it needs to know. If we are going to reasonably address the COVID-19 pandemic, we must listen to the experts but seek information on what we are really up against.


[i]Suicides Go Up When Economy Goes Down.”

[ii] Id.

[iii] For example, serious and lively debates among expert economists continue to this day as to which, if any of Hoover’s and FDR’s actions, which were quite similar, to recover from the crash of 1929 did more harm than good.

[iv]Perspectives on the Pandemic | Dr. John Ioannidis Update: 4.17.20 | Episode 4” (@36:45)

[v]Dr. Fauci Follies.”

The Data On Coronavirus Does Not Prove We Need Medicare For All

In “Coronavirus Proves It: We Need Medicare For All?,” I discussed some general problems with a ubiquitous claim coming from the left that COVID-19 proves America needs Medicare For All. The gist was that for the COVID-19 pandemic to prove that America needs universal healthcare, one must demonstrate that universal healthcare systems handled the pandemic better than America’s system. While I presented some evidence that America was doing better than European healthcare systems, I did not present data on what I believe to be the ultimate test of the healthcare system: Deaths per capita. This post presents data comparing COVID-19 deaths per capita in the US and in the 15 European counties that had the most “Confirmed Cases” of COVID-19 as of April 2, 2020. Data for April 2nd, 9th, and 16th, 2020 is analyzed.[i] A comparison of deaths is used because the number of deaths is less subject to false positives, interpretations, and vagaries, and, as I have discussed before, “Confirmed Cases” is mostly a meaningless number.[ii] Confirmed Cases do, however, sufficiently correlates to the relative intensity of the problem among countries to be a reasonable means to select the sample of countries to be analyzed.

I had expected the numbers to show more convincingly that America’s healthcare system is handling the COVID-19 pandemic better than the universal healthcare systems of Europe. While the analysis shows evidence of that, the deeper one digs into the issues, the more questions arise. A comprehensive and fair comparison is impossible* because of the many variables involved, and the data compiled on most of those variables are not consistently compiled by all countries.[iii] For example:

  • The US counts every death, no matter how likely the deceased would have died soon from other causes, as a COVID-19 DEath so long as the deceased infected with COVID-19, or probably was infected. (In fact, a person killed in an auto accident who happened to be infected with COVID-19 is classified as a “COVID-19 Death” according to the CDC guidelines. Other countries do not do that.[iv]
  • Population densities and modes of transportation (e.g., compare New York City[v] to Houston[vi]) vary greatly and can have a considerable effect on death rates during a pandemic.
  • Nonpharmaceutical interventions (NPIs) and the degree to which populations adhere to NPIs, both of which significantly affect death rates, are unrelated to the effectiveness of a county’s healthcare system.

On the other hand, a completely objective and fair comparison is not required to address the issue at hand, whether the available data, compromised as it is, is sufficient to conclude: “Coronavirus Proves It: We Need Medicare For All.”

The data here presented reveal that such a claim is not supported by the numbers available to those who make that claim. (Ironically, those who are the first to declaim as “science deniers” anyone who does not accept every aspect of every assertion and proposed solution concerning climate change is not basing their conclusions on data or science).

Here is a table that compiles some available relevant data:

COVID TABLE

The first column lists the US separately, as the control, and the 15 European countries with the most Confirmed Cases of COVID-19 (per the COVID-19 Map) as of April 2, as the comparison countries. The second column shows each country’s population.

The first two columns of each of the three sections of the table (for April 2nd, 9th, and 16th) show the relatively unreliable, and therefore unimportant, “Confirmed Cases” and Confirmed Cases per capita. The important and relatively reliable data, the number of COVID-19 deaths and deaths per capita for each country, are in the right two columns of each of the three color-highlighted sections.

Note that for every date, the deaths per capita in the US are markedly lower than the average deaths per capita in the 15 universal healthcare countries (e.g., On 4/2/2020, America’s deaths per million were 16   and the European average was 79 ). Only three of the fifteen countries in the first section had lower death rates than the US, and the majority of states did worse than the US in every section. Individually, each section would support the proposition that the US healthcare system is better suited to deal with pandemics than are the listed universal healthcare systems. The data offers no support for the opposite proposition.

An objection to the above comparisons might be that the waves of virus infections started earlier in Europe than in the US. Consequently, some might say that using the same starting date for Europe and the US is to compare incomparable numbers. For reasons described below, there are problems with such an objection. For now, however, let’s assume that the objection is fair.

If one were to try to line up the dates to correspond to comparable points in the waves of various countries, how many days to shift the numbers is the critical question. In March, the US Surgeon General said that the US’s wave was two weeks behind Italy.[vii] However, note the following:

  • Italy’s deaths per capita on April 2 were 219, and the US’s corresponding number two weeks later (April 16) was 95, i.e., the US deaths per capita were less than half of Italy’s when the waves were supposedly synchronized. Making matters more stark, Italy’s wave started when there was far less demand for PPE and ventolators
  • According to The Guardian, Britain’s wave was approximately two weeks behind Italy,[viii] i.e., the same as the US’s wave. Note, however, on April 2, 9, and 16, the UK had 2.2, 2.3, and 1.1 times, respectively, as many deaths per capita as the US.
  • According to Wikipedia,[ix] on average, the first confirmation of COVID cases in Europe occurred 23 days after the first confirmation in the US. If anything, the US’s wave should have been sooner than the average of the European countries’ waves. Excluding Italy, if wave-timing adjustments are to be made, the US system’s numbers would be even more complimentary to the US healthcare system.

If, despite reality, one were to go with the idea that Europe’s average wave was two weeks ahead of the US, note that on April 2, Europe’s average COVID death rate per capita was 79, and that the US COVID death rate was 95, i.e., 20% higher. However, consider the following:

  • Obesity increases risk for coronavirus complications: report.” Obesity is in the US is 163%[x] higher than the average obesity in the 15 European countries in the analysis. A country’s healthcare system is not responsible for America’s extraordinary prevalence of obesity. Consequently, in comparing healthcare systems, America’s healthcare system should get credit for the ability to handle a more vulnerable population during a pandemic. America’s 163% obesity rate could alone account for at least 20% of the higher death rates between April 2 and April 16.
  • There is no universally accepted international standard for what deaths are counted as “COVID-19 deaths.” For some reason (US epidemiologists are especially embarrassed by their wildly high death rate projections produced by their models? They desire the appearance that the problem they are handling is bigger than it is?), the CDC and other are dreaming up every imaginable way to define “COVID Deaths” in ways that inflate America’s death rates.[xi] [They are doing this despite the fact that muddying the data complicates, if not stymies, the identification of the best way to phase in the reopening of economies,[xii] and painting a much scarier picture of how dangerous COVID-19 is—thereby reducing the chances of convincing people that it is time to go back to work and play—regardless of when that time is.]

Even if one were to suppose the CDC definition of “COVID Deaths” is proper or that the number of “COVID Deaths” in the US are even higher than deaths counted by the CDC method,[xiii] claims that the pandemic proves that America needs a universal system would still be unfounded. To make that claim based on the reported number of COVID deaths, one must also prove that the listed European countries are not reporting more accurate death numbers. In light of this, one should acknowledge that the CDC deemed “COVID Deaths” are likely to overstate deaths caused by COCID compared to methods used by more reasonable countries (as Dr. Birx confirmed. See endnote iv). More to the point, one cannot validly assume that the US COVID death rates are not overstated compared to the 15 European countries—thereby reducing the nominal 20% difference in death rates to a lower, possibly negative percentage.

Contra facts exist, e.g., the median age of Europeans is higher. Pointing out the contra facts in the absence of accurate identification and quantification of all relevant data would not alter the facts that (1) America’s healthcare system is not demonstrative worse than Europe’s universal systems,** and (2) the jury will remain out for a long time while the final tallies of the relative merits and demerits of the two kinds of systems concerning dealing with pandemics. Until then, no proof will exist concerning the pandemic that a universal healthcare system would be better for America.

There is a high correlation between (1) the people who claim that America’s handling of the COVID-19 pandemics is proof that America’s healthcare system is inferior to universal healthcare systems, and (2) the people who claim that the reason America is handling the pandemic so relatively poorly is because of the incompetence of President Trump and his administration. If Trump is doing as poorly as they claim and America’s COVID Death rate per capita is not substantially higher than the rates of countries with universal healthcare systems (something not supported by the data), then the healthcare system must be outperforming the other countries sufficiently to overcome the calamities they say Trump is inflicting. In other words, the more say the country’s COVID-19 problems are attributable to Trump, the more they are making a case that America’s healthcare system is superior to European universal healthcare systems—the exact opposite of what they claim when talking about America’s allegedly bad healthcare system.

Aside from the data and the fact that most research, innovation, and development of medical devices, drugs, and techniques, upon which all healthcare systems rely, have been and are funded by Americans paying higher prices for those things than foreigners do,[xiv] if it were shown that America’s healthcare system was inferior to universal healthcare systems when it comes to pandemics, that would not prove that universal healthcare would necessarily be better. With a government competing to be the wokest government in the world and a citizenry that supposedly loves its universal healthcare system, Canada’s healthcare system was not as prepared and is not outperforming America’s.

“Even in normal times, the average wait in Canada from referral to treatment by a specialist is 20 weeks, compared to less than four weeks in the U.S. Long before COVID-19, an estimated 1 million Canadians languished on waiting lists, waiting in pain or flying abroad for faster treatment… Per capita, Canada has one-third as many ICU beds as the US and about the same number as ravaged Italy. In some provinces, including Alberta and British Columbia, ICU beds number fewer per capita than Iran.”[xv]

Sadly, we are still nowhere near the end of the COVID-19 saga. It is possible that things could turn much worse for America and much better for the European countries in ways that show America’s healthcare system is relatively inferior. (I doubt it, but who knows at this juncture?) However things turn out, based on the data so far, no one can reasonably say that “Coronavirus Proves It: We Need Medicare For All.”

UPDATE: The table below adds data as of 4/27/2020.
Speadsheet

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* This is not to say that much scientism will not be devoted to the attempt.

** NOTE: When people talk about America’s healthcare system, all too often they confuse the healthcare system (which has to do with the quality and availability of medical care) with accessibility which primarily has to do with the ability to pay for healthcare. That some people do not have sufficient wealth to buy the healthcare they want is a welfare system problem. It is not a healthcare system problem. Measures to improve the quality and delivery of healthcare have no necessary connection to improving the economic conditions of poor people can, and often are, in conflict, i.e., trying to address both issues in a single package can making solving problems in either system more complicated, if not impossible.


[i] As reported by the Johns Hopkins COVID-19 Map reports for April 2 [LINK], 9 [LINK], and 16 [LINK]. [A note about the April 2 data: It did not occur to me to take screenshots of the COVID-19 Map data to document the April 2 numbers in the table. Fortunately, I happened to take a screenshot of the map on April 4, which shows that the April 2 numbers are, at least, in the ballpark. (Not only are they in the ballpark, I attest that the numbers were taken directly from the COVID-19 Map website.)]

[ii]COVID-19—THE DATA or ‘the data’?

[iii]Coronavirus: Why death and mortality rates differ.”

[iv] Id. and “New ICD code introduced for COVID-19 deaths,” “COVID-19 should be reported on the death certificate for all decedents where the disease caused or is assumed to have caused or contributed to death.”

[v]The Subways Seeded the Massive Coronavirus Epidemic in New York City.”

[vi]Houston’s $7 billion solution to gridlock is more highways.”

[vii]Surgeon general says U.S. cases are at the point where Italy was 2 weeks ago.”

[viii]Coronavirus: how do Italy and the UK compare?

[ix]

WIKIPEDIA
First Case Days Behind
 US 1/20/2020
20
Italy 1/30/2020 10
Spain 1/31/2020 11
 Germany 1/27/2020 7
 France 1/22/2020 2
 U.K. 1/31/2020 11
 Switzerland 2/25/2020 36
 Belgium 2/4/2020 15
 Netherlands 2/27/2020 38
 Austria 2/25/2020 36
 Portugal 3/2/2020 42
 Sweden 1/31/2020 11
 Norway 1/30/2020 10
 Ireland 2/29/2020 40
 Czechia 3/1/2020 41
 Denmark 2/27/2020 38
AVERAGE DAYS BEHIND THE U.S. 23.2

[x] Obesity by Country

Country                      %

US                              36.2

Italy                           19.9

Spain                         23.8

Germany                   22.3

France                       21.6

U.K.                           27.8

Switzerland              19.5

Belgium                    22.1

Netherlands             20.4

Austria                      20.1

Portugal                    20.8

Sweden                     20.6

Norway                     23.1

Ireland                      25.3

Czechia                     26.0

Denmark                   19.7

AVERAGE                   22.2

US/Eur Avg.              163%

Source: https://worldpopulationreview.com/countries/most-obese-countries/

[xi]Liberal approach to mortality (Dr Deborah Birx)” and “Problematic definition of ‘COVID-19 death’ may be inflating death rate, leading to draconian lockdowns.”

[xii]COVID-19, Urgent Reassessment, Diagnosis and Basic Principles of Infectiology: Open Letter from Professor Sucharit Bhakdi to German Chancellor Dr. Angela Merkel.”

[xiii]Why the true COVID-19 death toll in NYC could be much higher: Only those tested BEFORE they die are counted as virus victims, says Big Apple councilman, as the city records 3,400 fatalities.” NOTE: NYC is addressing this “problem.” “N.Y.C. Death Toll Soars Past 10,000 in Revised Virus Count.”

[xiv]High Drug Prices Are Bad. Cutting Them Could Be Worse,“”Despite these glaring problems, current policy choices must confront the real world we are living in. In the current situation, drug pricing and research funding are intertwined;” and

The Link Between Drug Prices and Research on the Next Generation of Cures,” “Market conditions not only affected the size of research spending, it also affected its location. Looking at other sets of data, they found biopharmaceutical research in the EU countries exceeded research conducted in the United States by 24 percent in 1986. But by 2004, U.S. levels were 15 percent greater than EU levels.82 This is mostly due to EU spending stalling between 1997 and 2001, roughly the same time the two price indexes diverged. Total U.S. biopharma research by foreign firms has been growing at a faster rate than foreign research by U.S. firms, largely because U.S. prices for on-patent drugs are higher than those in Europe. Higher prices have therefore caused foreign companies to divert their attention to the U.S. market, thereby strengthening the U.S. domestic industry.”

Despite these glaring problems, current policy choices must confront the real world we are living in. In the current situation, drug pricing and research funding are intertwined;

[xv]Canada’s Government-Run Health Care Buckles Under COVID-19.”

 

It Was “the data.”

Bhattacharaya_Hoover
 
In “COVID-19—THE DATA or “the data”?” I described a way in which the Johns Hopkins “COVID-19 Map” is misleading concerning the likelihood that people will become seriously ill or die from COVID-19. The post was about how the map’s “Confirmed Cases” understates the number of people who have been infected, and why the understatement is important in understanding how dangerous COVID-19 is. Studies confirming that the COVID-19 Map’s “Confirmed Cases” are highly misleading about the likelihood of a person becoming seriously ill or dying have now been done.
On March 11, Dr. Fauci said the following in testimony to Congress, “The flu has a mortality rate of 0.1%. [COVID-19] has a mortality rate of ten times that.”
 
In THIS VIDEO, Dr. Bhattacharya describes the results of the first few studies based on tests for the presence of antibodies in randomly selected people. The research found that the mortality rate of COVID-19 is about the same as the flu. Instead of one in every hundred infected persons dying from COVID-19 (as Dr. Fauci’s testimony asserted), only about one in 1000 infected people die, i.e., the likelihood of death from a COVID-19 infection is about the same as the flu.
Given, however, that (1) the “number of deaths” data upon which these studies are based come from CDC records, even these new studies overstate the COVID-19 death rates. The CDC counts as a “COVID-19 Death” the death of any person who happens to also be infected with COVID-19.[i] Consequently, many of the counted deaths are predominately attributable to causes other than COVID-19. For example, the CDC would classify the death of a person killed in an auto accident who tests positive for COVID to be a “COVID-19 Death.” Such accounting would be malpractice in any other setting.

Coronavirus Proves It: We Need Medicare For All?

The title to this post is the title (sans the question mark) of a Common Dreams article dated March 25, 2020.[i] Similar claims have become a regular feature of leftist commentary on the pandemic. For many decades, a primary goal of leftists is for America to replace its healthcare system with a universal healthcare system. They were quite disappointed when Obamacare turned out not to be a universal healthcare system of their dreams but hoped that it could be used as a stepping stone to Medicare for All (‘MFA”). Trump pretty much dashed those hopes. Now they are attempting to exploit the COVID-19 pandemic to convince Americans that MFA would be better than America’s more capitalistic healthcare system. I hate to give them any tips, but it would help if they came up with some logical arguments to make their case.

I’ve regularly asked people who claim MFA would be better than America’s system to explain what the pandemic has to do with their claim. I’ve yet to get a credible explanation (most seem to think berating me or ridiculing the question is an explanation). I am compiling evidence that I believe will demonstrate the reverse of Common Dreams’ claim. I expect to publish that analysis soon. In the meantime, let’s sort out some other things that are wrong with Common Dreams’ claim.

Shockingly absent from the Common Dreams article and similar articles that I have read is a sound argument that MFA would work better against pandemics than the existing system. Their “arguments” typically boil down to something like this: “The U.S. was unprepared, slow off the blocks, and somewhere between ham-handed and idiotic in its decisions and responses.”

While those things are largely true, those things were also true of all countries (with possible, but unverifiable exception of China[ii]). On the other hand, American doctors, unlike Italy’s universal healthcare doctors, have not experienced this: “There are now simply too many patients for each one of them to receive adequate care. Doctors and nurses are unable to tend to everybody.” More generally, pointing out the shortcomings of America’s healthcare system is not proof that MFA would be better. For the COVID episode to prove that the pandemic proves that America’s system should be replaced with MFA, one must at least provide some solid evidence that MFA systems have performed better against the pandemic. Let’s explore what the Common Dream article did instead of offering such proof.

Common Dreams’s claim was not based on evidence. It was based on predictions that have since proved to be false. For example, the article says:

“…the U.K.’s National Health Service is well-positioned to cope. It has a clear and comprehensive emergency planning structure with the ability to optimize resource use, even after years of government budget cuts.”

Only a few days later, The Guardian published an article entitled, “A public inquiry into the UK’s coronavirus response would find a litany of failures.” That article reported, “During the last decade, funding for public health has been fragmented and downgraded.” It went on to list a long series of shortcomings of the system. (As is typical of MSM, The Guardian placed much of the blame on government incompetence and that the socialized healthcare system was not socialized enough—with no appreciation of the irony of the claim.)

Common Dreams then moved on to cite unverifiable evidence from totalitarian China as if it were true. Fail.

It also cited S. Korea’s relative success in battling the virus. So far it appears S. Korea is doing relatively well (good for them). However, among other things, South Korea (1) had a different history (e.g., SARS),[iii] (2) used a different pattern of containment strategies than most Western democracies (that worked comparatively better—possibly by luck), (3) had IT and infrastructure to trace infected people that few, if any, other countries had, and (4) has a culture, government, and other characteristics that are very different from those of Western countries. To base sweeping claims on one data point (S. Korea) is weak at best. To pick one healthcare system that happens (for who knows what all reasons) to be the best the world (some country had to be that) concerning one incident is not science, it’s cherrypicking. It is certainly no proof that MFA would work better in America than its existing system.

Having exhausted her imagination as to why Coronavirus might prove America needs MFA with such weak arguments, the author of the Common Dreams article moves on to something completely irrelevant to her argument for MFA. To wit, MFA would be cheaper. The issue of which system costs more has nothing to do with which system can best handle pandemics.

In short, the article titled “Coronavirus Proves It: We Need Medicare For All” proves nothing.

UPDATE: “CORONAVIRUS & SOCIALIZED MEDICINE: Why Healthcare in the UK, Italy is FAR Worse than America” provides some great additional observations.


[i]Coronavirus Proves It: We Need Medicare For All.”

[ii]  China’s reported data will never be verifiable: See “Chinese scientists destroyed proof of virus in December” and “Where it all began: Wuhan’s virus ground-zero ‘wet market’ hides in plain sight.”

[iii]Experience of Sars a key factor in countries’ response to coronavirus.”

COVID-19—THE DATA or “the data”?

Author’s Note: Dr. Birx, Dr. Fouci, and others continually talk about “the data,” its importance, and what they have learned from it. I know too little about epidemiology to offer commentary concerning what is discoverable from sound data concerning COVID-19. I do have some largely unreported reasons not to believe “the data” upon which the country is relying is as sound as some would have us believe.

🙛

COVID 0

The data depicted above is from John Hopkins’s much-referenced COVID-19 Map. The information is chocked full of misleading information. Let’s sort out a few of the big ones.

The most prominent number on the map is “Total Confirmed,” the total number confirmed COVID-19 infections worldwide. The fact that the “Total Confirmed” number is reported at all, much less touted, implies that it is valuable information about how contagious/dangerous the virus is. Not so fast! The number is far less informative than it is cracked up to be and it is being misused[i]:

  • First and foremost, “Total Confirmed” is flawed and is insignificant (more on that below) compared to an overwhelmingly more meaningful number, i.e., a number that might be labeled “Total Infected.” That is the only number that can reveal the danger posed by COVID-19. That epidemiologists are looking to “Total Confirmed” for answers reminds me of the old adage about an economist looking for his lost keys under a streetlamp. When asked if he lost his keys near the lamp, he said, “no.” When asked why he was looking under the lamp for the keys, he answered, “because this is where the light is.” Epidemiologists do not have access to the number that sheds enough light on COVID-19 to fully assess its danger. Without knowing how many or what kind of people have been infected with COVID-19, their only option is to grope around in dim light for compromised data. That data is a distant second best.[ii] [If you are interested in what can and should be done about this problem, I highly recommend the endnote ii video.]
  • Another critically important number ignored by “Total Confirmed” is the number or percentage of people exposed to the virus who do not contract the disease. Not everyone exposed to the virus becomes infected.[iii] Consider these examples:
    • President Trump has attended multiple meetings with people who soon after tested positive for COVID-19.[iv] Yet all of the several tests he has taken since reveal that he is not infected.
    • Many, perhaps most, doctors, nurses, and assistants who are exposed to the virus every day have tested negative.[v] For example, if only 10% of the people exposed to the virus get infected, social distancing, much less universal stay-at-home orders would be a cruel hoax. I suspect that the contagion rate is higher than 10% but much lower than 100%, which is the impression that the COVID-19 Map might leave in the minds of the unwary.

Consequently, the “Total Confirmed” number omits many, perhaps a majority of infected people. In terms of the more relevant (but unreported) number of severe illness and death per person infected, the “Total Confirmed” number is seriously flawed and misleading. It leaves the impression that COVID-19 is much more dangerous than it is.

COVID 3

  • The object of the “Total Confirmed” number is to inform as to how dangerous/scary COVID-19 is, i.e., how alarmed people should be. Let’s look at some of the ways “Total Confirmed” overstates the danger of COVID-19.
    • Many people (some say a majority[vi]) infected with COVID-19 experience no effects. Whether they represent the majority of COVID-19 “victims” or not, they can be a huge number. Omitting large cohorts of the population in question unscientifically skews the results. In this case, the skewing overstates how scary/dangerous the virus is.
    • People experiencing flu-like symptoms disproportionately seek tests and get “confirmed.” On average, the sample of people tested is unrepresentative of the COVID-19 infected population, i.e., they are sicker than the average infected person. Unrepresentative data is of limited value for analysis purposes but also skews the results toward scariness.
  • In light of the above, the “Total Confirmed” number is necessarily smaller than the total number of people infected. No one can know how small a fraction “Total Confirmed” is of Total Infected.[vii] Comparing “Total Confirmed” to the number of severely ill or deaths (almost all of which are counted), the COVID-19 Map and the COVID-19 DATA Pack overstates the scariness of COVID-19—bigly.
  • Even the “Total Confirmed” number is not nearly as scary as people appear to believe it to be.
    • 81% of the confirmed COVID-19 cases are “mild.”[viii] Some are so mild, especially in children,[ix] that the symptoms are hardly noticeable, while others are indistinguishable from colds or the flu. So, the odds of an infected person (counting both confirmed and unconfirmed) having serious problems is substantially less than the 20% of “Confirmed Cases” the COVID-19 Map reports. Based on some reporting,[x] it is likely less than 10% of all COVID cases. Deaths per infected person could be much less than 2% of people infected.
    • With its “New ICD code introduced for COVID-19 deaths,” the CDC is causing physicians to overstate the number of COVID-19 deaths. The code requires, “COVID-19 should be reported on the death certificate for all decedents where the disease caused or is assumed to have caused or contributed to death.” [Emphasis Added.] Rules that err in favor of what appears to be a desired, scarier attribution overstate the danger.
  • Compilations of incomparable data are always of limited use. COVID-19 data from one country, state, or city has limited applicability to other countries, states, or cities. Here are some illustrative examples:
    • COVID-19 first visited New York City and Seattle at approximately the same time. The population density of NYC is 3.4 times greater than in Seattle (and 7.3 times greater than Houston).[xi]5% of NYC residents use public transit, while only 20.1% do int Seattle (Houston doesn’t make the top 50 list that includes cities with only 7.8% ridership).[xii] NYC has 282 skyscraper buildings (massive clusters of people in confined spaces), while Seattle has 21.[xiii] Based on these characteristics, New Jersey, just across a river and connected by subways, should experience contagion rates more similar to New York than Seattle. These observations are born out by this data chart Dr. Brix presented.
    • A person’s genetics can have a big impact on susceptibility and reactions to viruses. The genetics of populations vary by country.[xiv]

COVID 1

COVID 2

  • The prevalence of certain preexisting conditions of an area has a significant bearing on the impact of the pandemic. The prevalence of relevant preexisting health conditions and combinations of preexisting conditions in each country or state are not measurable during the outbreak. The relative relevance of all the combinations of preexisting conditions when exposed to a new virus is determinable only after the virus’s pandemic is in the past, if ever.
  • The quality and quantity of testing by the listed counties vary widely from country to country. When testing began relative to when the virus entered the counties varied significantly, e.g., the U.S. got off to a slow start. How testing progressed varied by country, e.g., slow starting America now outpaces most, if not all, other countries.[xv]
  • Cultural differences likely play a role as to how a population will respond to advisories or orders, e.g., stay at home orders. Determining what cultural characteristics are relevant would be a challenge, would not be consistent from country to country, and probably cannot be measured in real-time anywhere, much less everywhere.
  • As noted above, different jurisdictions will classify the causes of deaths and define “mild,” “severe,” and “critical” conditions inconsistently.
  • Hopefully, few cities will have to suffer the consequences of the bad advice that New York City officials gave to New Yorkers.[xvi] For sure, edicts from officials will vary.
  • According to reports, U.S. Intelligence has confirmed that China misrepresented the extent of its COVID outbreak.[xvii] China is a big part of the COVID-19 story, and the numbers its population adds to the analysis could substantially alter conclusions and recommendations.[xviii]

This list could go on indefinitely. Hopefully, this list is sufficient to convince you that “the data” upon which the country is relying to make monumental decisions about the extent to which and for how long the economy should be stifled is not all that it is cracked up to be.  [See also, “Dr. Fauci Follies.”]


[i]Let’s Sort Some Things Out Facebook Page.”

[ii]Questioning Conventional Wisdom in the COVID-19 Crisis, with Dr. Jay Bhattacharya.”

[iii]Most Americans Will Likely Be Exposed to Coronavirus, Republicans Told.

[iv]All the times Trump risked exposing himself to coronavirus as his advisers urge people his age to be extremely cautious.”

[v]KCUS tested 48 samples, seven positive, doctors test negative.” [Google appears to be deep-sixing this kind of information. How this article slipped through Google’s filters is a mystery to me.]

[vi]The majority of people who are exposed to this virus or may have been exposed to this virus never exhibit symptoms…

[vii]The biggest breakdown yet of novel coronavirus cases suggests that 80% are mild. Some patients never show symptoms.”

[viii]COVID-19 #Coronavirus Infographic Datapac.”

[ix]Joe Rogan Experience #1451 – Dr. Peter Hotez.”

[x]Half of people with coronavirus have no symptoms, data shows” and “Coronavirus symptoms: 80% of infected likely not showing COVID-19 symptoms, expert warns.”

[xi]Population Density for U.S. Cities Statistics.”

[xii]List of U.S. cities with high transit ridership.”

[xiii]List of cities with the most skyscrapers.”

[xiv] See endnote ix.

[xv]U.S. becomes world leader in virus testing after slow start

[xvi]NYC Leaders On COVID-19” at Let’s Sort Some Things Out

[xvii]China Concealed Extent of Virus Outbreak, U.S. Intelligence Says.”

[xviii]Dr. Birx Suggests WH’s Slow Coronavirus Response Was Due to ‘Incomplete Data’ From China.”

Dr. Fauci Follies

Fauci says that all states should have stay-at-home orders” blared The Hills’ headline today.[i]

A Washington Post article offers a Dr. Fauci quote, “I don’t understand why that’s not happening. If you look at what’s going on in this country, I just don’t understand why we’re not doing that. We really should be.”

One should not expect an epidemiologist to understand why some states have not issued stay-at-home-orders. Neither should one rely an expert’s recommendations on matters (1) outside the field of the expert’s expertise, or (2) about which he admits he doesn’t understand why it is happening. Let’s sort out some details about this.

Dr. Fauci has exceptional expertise in a particular field. Relying on experts concerning matters within their competence can be helpful, but even then, only with caution. A reason for caution is that human nature produces something called “The Law of the Instrument.” Abraham Kaplan illustrated this law thus: “Give a small boy a hammer, and he will find that everything he encounters needs pounding.” Another illustration is that when a person goes to a surgeon about knee pain, the likelihood that the doctor will recommend surgery will be higher than had she gone to a physical therapist.

Another aspect of human nature is in play with Dr. Fauci’s befuddlement. As an epidemiologist, Dr. Fauci should focus on the means to mitigate the havoc the virus is wreaking on people and the healthcare system. His expertise, credibility, and focus are both his raison d’etre and why the President enlisted him. It should come as no surprise that his hammer is quarantine (or as close to quarantine as can be achieved). As he has admitted, however, his focus has blinded him to enough of the negative consequences of the stay-at-home orders that he “doesn’t understand.”

Moreover, wielding the quarantine hammer pounds things about which he has no expertise and for which he will not be held accountable. Consequently, he is swinging the hammer with reckless abandon. Dr. Fauci can safely ignore the tears of the lady who runs the local dry cleaners whose clientele and hours have fallen by 75%—and she is one of the lucky ones who still have a job (but surely not for long if the country keeps it stay-at-home orders in place too long.) Dr. Fauci will not be held accountable for the heart attacks, increased obesity, and other ailments due to stress, or suicides from the financial insecurity and collapse the stay-at-home orders are inflicting on people. No one will blame him in the future for all the miracle drugs that were not invented because the country wasn’t wealthy enough to fund the extra research needed to find the essential component. Worse, epidemiologists have incentives to exaggerate both the severity of the pandemic and the scope of his recommendations.

I am not claiming Dr. Fauci has succumbed to his human nature or overdoing his advice. The extent to which he has is unknowable by anyone, including himself. I’m suggesting it is likely that he has to some unknowable degree and it is best to assume such when deciding when and how to impose or lift stay-at-home orders.

Saving lives, which Dr. Fauci is undoubtedly helping to do, is tremendously valuable and laudable. Saving lives, however, is not infinitely valuable or laudable. Causing more harm than good by saving too many lives is blameworthy.

We all know this. The EPA could set benzene and arsenic standards for drinking water so stringently that no one would die from those chemicals being in drinking water. The EPA doesn’t do that. EPA knows that some people will die due to permitted levels of those chemicals being in drinking water. The same is true of most, if not all, EPA standards. The reason the regulations are not more stringent is that the cost per life saved would be ungodly high (instead of the exceedingly high cost of complying with the current rules). Almost all of the mayhem of auto accidents (including the loss of 35-40 thousand lives in the U.S. annually) could be avoided by banning left-hand turns and lowering the speed limit to 20 mph everywhere. No state, much less country, has adopted those simple, sure-fired measures to save many lives—nor should they. In addition to the inconvenience and inefficiencies of driving that slowly and the money that would be required to facilitate banning left turns, the tremendously higher cost of food and other goods and services would significantly lower everyone’s standard of living. This is because the multiple billions of dollars it would take to eliminate those deaths would generate more significant benefits if spent in other ways.

As I’ve discussed elsewhere,[ii] sapping the vigor from our economy will have massive adverse effects on the mental and physical health of most Americans and will kill many. The more stay-at-home orders hammer the economy, the more negative the consequences will be. At some level of economic slowdown, the weakening of the economy will kill more people than the pandemic ever could. Mostly everything Dr. Fauci says takes the country closer to, if not farther beyond that point. Even this, however, does not mean that Dr. Fauci should hold his punches in advising the President. The President and governors need the best input from epidemiologists they can get.

So, what’s the problem? The left, particularly the MSM, are misleading Americans to believe that Dr. Fauci’s advice should trump any counsel that differs from Dr. Fauci’s. Regardless of their motivations,[iii] adopting the “In Fauci We Trust” motto will result in an unbalanced, ill-considered, and net-negative approach to addressing the pandemic. Health concerns will play a disproportionate role in setting the balance between saving life and health in the short run and avoiding a collapse of the economy, which will save lives, health, and a better standard of living for everyone in America and the world in the long run.


[i]Fauci says that all states should have stay-at-home orders.”

[ii]The health of the country’s population is directly connected to the health of the country’s economy. A poor economy leads to greater joblessness, despair, homelessness, mental illness, drug and alcohol addiction and abuse, drug crimes, including gang wars, child and spousal abuse, etc., all of which cause collateral physical and mental illnesses. In short, contrary to the impression left by the reporters’ question/indictments, healthcare and the economy are not diametrically oppositional issues.”

[iii] Much of this lunacy is motivated by combinations of politics, pursuing power, envy, hate of Trump, putting America in its place (bringing it to its knees), and revenge. The bad ideas underlying each of these motivations prevent the country from reaching consensus on a good policy.

Bernie, the Bad Guy

Bernie bad guy

This gem appeared on my Facebook timeline this morning. It is a testament to the depth of Bernie Sanders’s supporters’ misunderstandings.

The fact that Sanders wants an education, health care, good jobs, and good pay for everyone distinguishes him from virtually no one. Wanting those things does not make him the bad guy. Everyone who does not want those things for everyone is a bad guy.

A problem with the list of wants is that it is too constrained. In addition to the things listed, all good people would want everyone to be happy, in good health, knowledgeable, and wise as well. Good and knowledgeable people know that no government has a magic wand that can wave all of those things into existence. Learned and wise people know that pursuing an impossible dream would be a waste of resources that could have been used to do good. Activist people who do not understand that and people who do understand that but can profit from the fact that most people do not realize that are called “socialists.” Those in the latter group are not only bad, but they are also evil. (Bernie strikes me as smart enough to know that his proposals are not in the best interest of the American people. I cannot tell if he is wise enough to see that the demise of America is not in the best interest of the world.[i] A case can be made that one who seeks power over a people in order to lead those people to their demise exhibits the essence of evil.)

So, Bernie is not a bad buy because he wants the listed things for Americans. He is a bad guy for his (1) self-righteous, and self-serving skills at persuading people to believe (or validating people’s errant beliefs) that socialism is a viable economic system for the U.S. (unlike all the other more socialist countries in the world, the U.S. has no sugar daddy for their daily inventions, defense, funds for pet projects, high-price customers for medical and other research and development companies, and many other goodies upon which it can rely), (2) fanning the self-defeating flames of envy, resentment, and revolution, and (3) providing debilitating false hope to millions of people.


[i]Medicare For All? At What Cost To Us and The Rest Of The World?

About All The Planned Government Spending

AUTHOR’S NOTE:

I hate to be the bearer of this news, but the plan for the federal government to spend more trillions is current and a big deal. Because economics is a primary topic of this blog, I believe that I owe it to my readers to address the issue. The last thing we all need right now is something else to worry about, but the issue is too huge to be ignored. On the other hand, if you cannot handle more bad news right now, my advice is to find something else to read for the time being.

🙛

For many years (1) Republicans have donned somber faces and spoken in ominous tones about the national debt—as they did essentially nothing about it and have routinely voted for things that have exacerbated the problem, and (2) Democrats have scoffed at the national debt as unimportant except when it can be used to justly bash Republicans as hypocrites—as they have continuously proposed and voted on new spending, tax, and other proposals that increase debt and diminish the economy’s ability to produce enough wealth to service the debt.

Prior to the pandemic, the levels of national debt and unfunded liabilities were untenably high,[i] ineluctably growing, and the political will to slow the growth was nonexistent. Given the mal-informed public’s indifference to debt and pleas for more spending, for a politician to actually do anything to slow the growth of spending, much less reduce the country’s spending would have been an act of political suicide.

Worse, even if there had been such a political will, no plausible theory to reduce the debt to a tenable level exists (with the possible exception of a pandemic or other disaster that would wipe out a high percentage of people drawing social security and welfare benefits—which, of course, would be beyond terrible). There are plenty of reasons to believe that moves to reduce the debt would result in destructive civil unrest. Yet, Congress is in the process of passing a spending plan that will vastly increase the debt and the Federal Reserve is printing money with unbridled abandon. Here are a few images from Venezuela showing what the end of the above process looks like.

As a result of the history described above, the country may have already created such a powerful black hole of debt that being sucked into its vortex (i.e., suffering a financial collapse) is unavoidable. The closer mounting debt pushes the country toward the black hole, the more powerful its pull.

In light of the above, one might conclude that bailing out companies, sending checks to individuals, and “printing” money to deal with the current crisis is a mistake. After all, there is no question that each move will take the country closer to the black hole and will fortify the populous’ errant belief that government spending is excellent, unlimited, and harmless—thereby making it even harder to turn back from the brink.

Nevertheless, one would be wrong to conclude that spending and “printing” should not be done.

The country’s chances of avoiding a financial collapse in the (hopefully distant) future were low before the impending spending splurge. However, unless the country’s economy can be revived, its chances of avoiding an economic collapse in the near term are almost certainly zero. The economy weakens with every hour that it remains mostly shut down. The business interruptions have placed many large and most small businesses at or beyond the point of no recovery. Without a significant recovery by most businesses, the economy will surely collapse soon. If desperate people have no hope of receiving cash for an extended period, civil unrest could bring the whole thing to a stop. Keeping enough companies and desperate people afloat will not be possible without federal government action. The planned measures are desperate and unwise in non-desperate situations. Sadly, we are in a desperate situation.

Let’s hope and pray the bitter pill of more spending will allow us to have a chance gain a footing that will enable the country to push the economic collapse well into the future and that the country finds a way to convince a solid majority of voting Americans that socialism is both unsustainable and a huge step in the wrong direction. The alternative is too bleak to discuss.

UPDATE: Following the publication of this post, Peter Robinson of the Hoover Institution conducted this excellent and pertinent interview of John Taylor: “The Corona Economy with John B. Taylor


[i] As I write, the reported national debt is almost $24 Trillion, is growing, and the clamor for more spending may be at an all-time high, not counting the $2 – 3 Trillion additional spending Congress is trying to get passed right now. The government’s commitments to pay money in the future are over five times larger than the reported debt.

Preventing Stock Buy Backs—A Bad Idea

In yesterday’s daily press briefing, Trump said his administration would figure out how to prevent any corporate bailout money being used to buy back stock. The country is facing many problems right now. Spending time and effort in these times on a non-problem is a bad idea.

Companies buy back their stock when they have more cash on hand than they have ideas, skills, or capacities to produce things people need or want. If those companies keep such excess money, the money won’t be used to provide goods or services people want or need. Idle cash helps no one. Money put to productive use helps everyone.

If a company buys back its stock, the stockholders who receive the money will use most or all of the part of the money (leftover after capital gains taxes are paid) to invest in companies that have good ideas as to how to make stuff people need or want.

Consequently, whether or not the bailout money is used to buy stock, that money will be invested in making new or more stuff people want or need. Workers and consumers win no matter which company profitably invests the money. Idle cash in companies with insufficient ideas as to how to deploy it effectively prevents the money from being put to better uses.

The bailouts of corporations will be either a good idea or a bad idea independent of what any individual corporation does with the money.

Another relevant observation is that few companies reject the corporate finance theory of an “optimal debt/equity ratio.” A rule of thumb is: “The optimal D/T ratio varies by industry, but it should not be above a level of 2.0” (i.e., company debt should not exceed twice the value of its stock).

So, almost all companies have debt. Given how much the value of corporate stocks have fallen recently, most companies have an unusually, probably dangerously, high debt ratio (the higher the debt/equity ratio is, the greater the risk of going out of business. Given how much riskier doing business is now than it was two months ago, the best use of some or all of any bailout money could be paying off debt to stay in business (rather than buying back stock or being thrown into bankruptcy).

Concerning companies that do not have too much debt right now, if Trump precludes companies from buying back stock with bailout money, nothing would prevent them from paying off debt.

The worst alternative would be for Trump to disallow the use of bailout money either to buy back stock or to pay off debt. In that case, the funds would be far less likely to be put to productive use.

The idea that the government dictating how companies use their resources will either work or is a good idea is a bad idea.

The fact that leftists are in constant fear that someone somewhere might be making a profit is making the adoption of sound economic policies harder. That the general public thinks it knows more than it does about corporate finance or how a company can increase its chances of continuing to provide jobs and to serve the wants and needs of the people isn’t helping either.