Could polycentric defence protect us from monsters?

The accompanying photo depicts the views of a couple of protesters who were opposed to Australian involvement in the United States led invasion of Iraq in 2003. I still don’t support defacement of the Sydney Opera House but, in retrospect, the actions of the protesters seem more defensible than those of the Australian government at that time. The government attempted to justify the invasion on the flimsiest of evidence that Iraq still possessed weapons of mass destruction, and then sought to blame its decision on poor intelligence. The net impact of the invasion was to further destabilize the Middle East, including by generating a new terrorist organisation.

The Iraq invasion is part of a pattern of pathetically unsuccessful military operations in which Australia has participated, in partnership with the US, over the last 60 years. Few readers will need to be reminded of similarly unsuccessful military adventures that occurred in Vietnam and Afghanistan.

Nevertheless, a case can be made that involvement in those conflicts has served Australian interests by encouraging US governments to view this country as a staunch ally in pursuit of well-meaning global objectives. Australia is a sparsely populated country that is not easy to defend, so it is understandable that Australians should seek to have great and powerful friends who share similar values, who might come to their aid if they are bullied by a monster in their region. That strategy might come unstuck, however, if public reaction in the US to adverse outcomes of military interventionism results in adoption of an isolationist policy by the US government. Hopefully, the US will find a better approach to foreign relations, rather than resort to isolationism.

Christopher Coyne’s book

I was intensely interested in the consequences of military interventionism during the Vietnam war, but have not spent much time thinking about such  matters since then. The question I have ask above, of whether polycentric defence could protect us from monsters, was prompted by my reading of Christopher Coyne’s book, In Search of Monsters to Destroy.

Anyone seeking a better understanding of why so much US military intervention has been counterproductive should read Coyne’s book. From my perspective, one of the most illuminating contributions that Coyne makes is to draw attention to the relevance of Friedrich Hayek’s views about the hubris of economic planners to the “nation building” efforts that have followed military intervention.  Hayek pointed out that economic planning often has unintended consequences because economic planners can never have “the knowledge of particular circumstances of time and place” that is reflected in the decisions of individuals in a market system. Similarly, nation building efforts have unintended consequences because the architects of such efforts lack the knowledge of how to design and implement policies supporting rule of law, property rights, free speech etc. in settings with different belief systems, values, and ideals.

Rather than attempt a comprehensive review of the book, I want to focus here on polycentric defence, the approach Coyne suggests as a potential path forward. (Several podcasts are available for readers interested in hearing Christopher Coyne discuss his book. I recently listed to his discussion with Jeffrey Sachs and was pleasantly surprised by the extent to which Sachs agreed with Coyne.)

Polycentric defence

Christopher Coyne claims that his position is inherently non-isolationist:

“It is not a retreat from the world, but a call for global engagement by means other than militaristic imperialism and the associated hubris which assumes the world can be controlled by Western government elites”.

He advocates a culture of peace which requires “shedding the belief that the military operations of the nation-state are the central source of security in a free society”.

As an alternative to the current “monocentric order” where there is only one centralized decision-making unit with a monopoly on the use of violent force, he proposes a polycentric system “involving numerous decision-making units – each with autonomy in action – operating within a shared set of rules”.

I see this as a utopian ideal, but one that is worth moving toward. Coyne points out that polycentric defence already exists to some extent because ordinary citizens engage in a diverse range of security activities, individually and in collaboration with their neighbours, to protect themselves against violence and plunder. He reminds readers that non-violent action has sometimes been used successfully against foreign invaders as well as internal usurpers. He also notes that polycentric defence already exists at an international level because nation-states exercise autonomy in decision-making.

The main point that Coyne is making is that a culture of military interventionism has had perverse consequences, unintentionally eroding liberal values and creating enemies abroad. He suggests that we view the search for a stable peace as an ongoing project “entailing self-governing individuals engaged in an active process of discovery, experimentation, and practice to navigate conflicts without resort to violence”.

 What about Ukraine?

In the epilogue to his book, Christopher Coyne expresses disappointment that the Russian government’s invasion of Ukraine in February 2022 has “led to renewed calls for the reassertion of American empire”. He regards that response as “speculative, first best theorizing about international relations” which could potentially devolve into violent conflict between nuclear powers.

My view is that this time it is different. The West’s supply of arms to Ukraine to help it defend itself against Putin’s aggression is far removed from the examples of military interventionism that Coyne discusses in his book. It would obviously be crazy to attempt to destroy an invading monster with nuclear weapons at his disposal, but it would be equally crazy, it seems to me, to avoid giving the victims of his aggression the support they need to defend themselves.

Conclusions

Christopher Coyne makes a strong case that much of the military interventionism of the United States and its allies has had the unintended consequence of eroding liberal values and creating enemies. Attempts to impose the institutions of liberal democracy on people with different belief systems, values, and ideals were doomed from the outset.

Coyne suggests moving away from this interventionist culture, which assumes that the world can be controlled by Western government elites, to a system of polycentric defence. It seems to me that the appropriate answer to the question of whether a polycentric defence system can protect us from monsters depends on how we view polycentricity. It is difficult to see how the governments of the liberal democracies could abandon centralized decision-making on national defence without weakening the ability of their citizens to defend themselves against the autocratic monsters outside of their borders. However, a system in which nation-states exercise autonomy in decision-making on national defence is not far removed from what we have at present. Rules of just conduct that have evolved via diplomatic efforts within this system have done much to promote peaceful coexistence among nations. A system in which nation-states exercise autonomy can do much to protect us from monsters when nation-states are willing to act in concert to punish overt violations of international law.   

Who was Erasmus and why should we care?

 After I stumbled across that quote a few days ago, it struck me that Erasmus might have something relevant to say to people living today.

However, before I discuss the context in which Erasmus made that statement, it might be helpful to provide some relevant background information about him.

The man and his vocation

Erasmus was born around 1467 and died in 1536.  William Barker, the author of a recently published biography, Erasmus of Rotterdam: The Spirit of a Scholar, tells us that Erasmus had become famous by the time he reached his mid-fifties. Erasmus was a prolific author. The rise of the printing press helped him to establish an international reputation during his lifetime. At that time it was possible for a humanist scholar – one steeped in the literature and culture of ancient Greece and Rome – to have fame equivalent to that of an Einstein or Stephen Hawking in more recent times.

Although Erasmus was a priest, he remained independent of the church hierarchy. Patrons offered gifts and allowances, which he accepted, but he was not dominated by any person or institution. He had an aversion for scholastic theology, believing that the words of the Bible show the message of Jesus more clearly than could any scholastic commentator. He based his famous translation of the New Testament on ancient Greek manuscripts because he believed that some of the original reports written by followers of Jesus had become distorted in the official translation used at that time.

In addition to his Translation of the New Testament, Erasmus’ famous works include The Praise of Folly, and his compilation of Roman and Greek proverbs. The Praise of Folly takes the form of a speech by Folly, seeking to persuade us that she is basic to all our lives. Barker sums up the book as follows:

“The work begins with social criticism, a kind of genial mocking, but it ramps up to direct attacks on various interest groups in the political, intellectual and religious worlds, and, in the amazing final move, suddenly turns inwards, and pulls the reader towards the abyss found in the complete loss of self through a total religious faith.”

As I see it, theological disputes were a particular focus in this book. Erasmus wrote:

I [Folly] am often there, where when one was demanding what authority there was in Holy Writ that commands heretics to be convinced by fire rather than reclaimed by argument; a crabbed old fellow, and one whose supercilious gravity … answered in a great fume that Saint Paul had decreed … “Reject him that is a heretic, after once or twice admonition.” And when he had sundry times, one after another, thundered out the same thing, … at last he explained it thus … . “A heretic must be put to death.” Some laughed, and yet there wanted not others to whom this exposition seemed plainly theological … . “Pray conceive me,” said he, “it is written, ‘Thou shalt not suffer a witch to live.’ But every heretic bewitches the people; therefore …”.

Erasmus’ book of proverbs was also a vehicle for social criticism. For example, in his revised version of this book, his commentary on the proverb, “War is a treat for those who have not tried it”, is a passionate essay praising peace and condemning war. Barker notes, however, that Erasmus’ condemnation of war was not unbounded. He approved of war against the Turks during the 1520s when they had reached the outskirts of Vienna.

Context of the quote

The context of the passage quoted at the top of this article is explained by Paul Grendler in his article, ‘In Praise of Erasmus’ (The Wilson Quarterly 7(2) Spring 1983). The plea, “Let us not devour each other like fish” was in response to an attack by his former friend Ulrich von Hutten, who had become an associate of Martin Luther. Erasmus welcomed Luther as a fellow reformer in 1517 when he began to criticize greedy churchmen and the worship of relics. However, as Luther’s criticism of Catholicism became more abusive, Erasmus counselled moderation. Luther would have none of it:

“You with your peace-loving theology, you don’t care about the truth. The light is not to be put under a bushel, even if the whole world goes to smash”.

The papacy was not inclined to stand idly by while Luther “led souls to hell”. So, Europe went to smash!

Erasmus continued to try to mediate between Catholic and Protestant, asserting that he found much to admire in Luther while disagreeing with him about predestination. The Catholic response was that “Erasmus laid the egg that Luther hatched”.

Unfortunately, Erasmus was unable to persuade the contending parties to refrain from warfare. If political institutions had provide greater support to Erasmus’ message at that time, perhaps it would have been possible for Europeans to have avoided a few centuries of pointless religious warfare.

Contemporary relevance of Erasmus    

William Barker laments that the old discourse of humanism seems to have been eclipsed:

“Something has happened to the humanities and the old discourse of humanism in our time. The ideal of Erasmian humanism – a cosmopolitan, well-educated Republic of Letters – has moved to the margins of our cultural life. A shift in political, ethnic, gender and ecological values has led to a change in the cultural hierarchy.”

Nevertheless, he still sees Erasmus as relevant to the culture of our times:  

“Despite our hesitations and the new trajectories in our literary culture, there are aspects of Erasmus that still survive for us, that take him outside his historical moment and the programmatic frame of humanist education. We can still turn to him for his irony, laughter, and the free exercise of social criticism.”

I agree with all that, but I also see Erasmus’ message about refraining from war over theology as being highly relevant today. When Erasmus was alive, contending parties engaging in theological disputes were obviously willing to use coercive means to impose their will on their opponents. Today, not much has changed. Extremists among contending parties engaged in ideological disputes are still willing to use coercive power to impose their will on their opponents.

Few people who live in the liberal democracies have any difficulty condemning the authoritarianism of dictatorships which seek to prevent individuals from exercising freedom of conscience in their religious observance. However, there are many people among us who unwittingly engage in similar authoritarianism themselves. I am thinking particularly of politicians who are so certain of the correctness of their ideological beliefs that they struggle with the idea that those with opposing views are entitled to exercise freedom of conscience.

The exercise of freedom of conscience over the status of human embryos is the example that comes most readily to mind. I wrote about his in the preceding post. At one extreme, we have politicians claiming that pharmacists who refuse on conscientious grounds to supply medications that could be used to induce abortion are guilty of some kind of civil rights violation. At the other extreme we have politicians arguing that under no circumstances should it be lawful for a woman to exercise freedom of conscience to terminate a pregnancy.

Will this conflict end in open warfare? The only reason I can see for ideological and theological authoritarianism to result in less violent outcomes today than occurred 500 years ago is the existence of democratic political processes. Unfortunately, in some liberal democracies those processes may no longer be sufficiently robust to provide contending parties with appropriate incentives to moderate their extremist agendas.

at this time, those who regard freedom of conscience as of utmost importance should remember the efforts of Erasmus to promote peace 500 years ago, and endeavor to be more successful than he was. “Blessed are the peacemakers …”.

Did Enlightenment thinkers believe that reason could illuminate all phenomena?

 

When I began to think about David Friedrich’s painting “Wanderer Above the Sea of Fog”, there seemed to be something odd about it. The painting reminded me of a TV news report I saw recently showing an Australian politician walking along a beach wearing a business suit. Both the politician and the “wanderer” seemed out of place. Perhaps the politician had a busy schedule which prevented him from changing into beach attire, but how can we explain the symbolism of the painting?

László Földényi, a Hungarian essayist, has suggested that the painting reflects the longing of Romantics to retreat from the fog of prosaic life “and find in nature that universal connection which civilization was supposedly unable to provide”. Földényi implies that, contrary to their intentions, the Romantics’ view of nature was similar to that of Enlightenment thinkers who viewed it as the object of rational and scientific thought:

“If we look at the wanderer in Friedrich’s painting, he appears to be giving himself over to nature, and yet at the same time he is decisively isolated from it. And this indicates to us that the Romantic “deification” of nature, its enlargement into a metaphysical category results in a tendency leading toward the violation of nature just as much as the openly technicist viewpoint does. For there too in the background lurks the intention to call to account, to seek proof and persuasion, the desire for nature to become the likeness of humanity, to be the mirror of our soul. In a word, the desire for nature to be pliable to their conceptions of it—even if, in certain cases, these conceptions differ from those of the natural scientists.”

The quoted passage is from Földényi’s book, Dostoyevsky reads Hegel and Bursts into Tears. The book
consists of 13 essays in which the author seeks to examine “the experience of inscrutability to be found in depths of all cultural phenomena.” He is attacking the “belief in the omnipotence of reason that illuminates all phenomena” which he believes to be “the great inheritance of the Enlightenment”.

Hegel is a prime target.

The title of the book comes from an essay in which Földényi speculates that Dostoyevsky may have read Hegel’s lectures on the philosophy of world history while exiled in Siberia and writing The House of the Dead. Hegel viewed world history as having a rational purpose and argued that the character of some nations is such that they don’t belong within the purview of world history. He ruled out Siberia as a setting for world culture.

Dostoyevsky suffered greatly in Siberia but felt his estrangement from world history to be a form of redemption from the gray rationality of European civilization. Exile enabled him to obtain a better understanding of other Russians and of himself.

Hegel is also the target of criticism in the final essay which discusses Elias Canetti’s book, Crowds and Power.  Földényi discusses the difficulty of attributing a genre to this book, telling readers that it is distinguished by its openness to metaphysical questions - particularly the ancient question, “What is man?” - and a capacity for amazement at the world.

Földényi suggests that “Canetti almost appears to be sending a message” to Hegel. Canetti was disturbed by “the arrogance of concepts” and held examination of individual phenomena to be more important that generalizations. He claimed that the conceptual interested him so little that he had not seriously read either Aristotle or Hegel.

Hegel believed in the fulfillment of history, but Canetti’s book is “a great pessimistic expression of the viewpoint that man is irreparable”, as he continually repeats brutal acts “while employing ever more refined means”. According to Canetti, Europeans live in an ocean of myth, mistakenly thinking that their rationalism is the fulfillment of history.

I am glad that we do not have to choose between the views of Hegel and Canetti. In Freedom, Progress, and Human Flourishing, I argue that although the roots of liberty run deepest in countries that recognize Western civilization as providing their cultural heritage, history gives us no grounds for complacency about the future of liberty in those countries.

The old horizons

The essay I found most illuminating is the one on belief in the devil. Földényi suggests that beliefs about God and the devil “took leave of their traditional metaphysical theater” toward the end of the 18^th century. He illustrates the metaphysical theater with Goethe’s description of the demonic situation that Faust observed within himself of being torn between the sensual and the non-sensual. He suggests that Faust was “perhaps the last emblematic figure of European culture who … represented his own endangered mentality without losing sight of the Great Plan as envisioned by Pico della Mirandola.”

After that, Földényi claims that the “Good” lost its transcendental constraints and became limited to concepts of utility, advantage, and pragmatism, and “Evil” came to be understood as “anything impeding what general belief proclaimed as advantageous and useful.”

So, what was Pico della Mirandola’s Great Plan?  In the 15^th century Giovanni Pico della Mirandola suggested that the goal of man - the reason God created humans - was to love the beauty of the world or to admire its greatness. However, man can do this in his own way. He can shape himself in whatever form he prefers. He can degenerate into a lower, more brutish, form of life, or “be reborn into the higher orders, those that are divine”.

It seems to me that the essence of the Great Plan can still be followed by those of us who are uncomfortable with the theology of Pico della Mirandola if we take care not to lightly dismiss intuitions that to be fully flourishing we need to transcend a focus on utilitarian considerations. My personal view is that such intuitions deserve to be taken seriously because they stem from fundamental aspects of human nature. Freedom, Progress, and Human Flourishing offers the suggestion that we may take pleasure in seeking to transcend utilitarian preoccupations “whilst rejecting the idea that it is appropriate to employ the metrics of pleasure and pain to assess the worth of our endeavors.”  

Final comments

I have selected only a few of Földényi’s essays to discuss here. Some readers might be interested to follow up his challenging views on melancholy and anxiety, or the sad story of Heinrich von Kleist who features as prominently as Hegel.

In my view, the author is successful in illustrating the poverty of rationalistic approaches in explaining cultural phenomena. However, in asserting that the Enlightenment is responsible for widespread belief in the omnipotence of reason, he is taking a Eurocentric view. Scottish Enlightenment thinkers certainly did not believe that reason could illuminate all phenomena. Modern followers of Frances Hutcheson, David Hume, Adam Smith, and Adam Ferguson are unlikely to feel that their views are under attack in this book.

What have you been thinking about this year?

 

I expect that many readers of this blog will have spent some time this year thinking about the response of governments to the COVID-19 pandemic. That is a topic I have been thinking about, but I have not previously blogged about it this year. I wrote about it on this blog in March and October 2020. With the benefit of hindsight, I think that what I wrote then is defensible, although not particularly illuminating.I set out to write something about the costs and benefits of lockdowns a few weeks ago, but got sidetracked into considering the WELLBY approach to assessing the value of a human life. I thought I might write on that topic in this article but after some additional reading I have decided to adopt less ambitious objectives. My objectives are to consider:

• why there is disagreement on such basic issues as whether lockdowns work;
• whether it would be desirable to have a uniform regulatory approach in all jurisdictions; 
• what we should learn from policies adopted in East Asia; and
• how we should be thinking about government intervention.

Do lockdowns work?

I don’t think disagreement about the effectiveness of lockdowns can be attributed solely to the ideologically blinkers of the participants in policy debates. Some people who are not ideologically opposed to much other government regulation – including Paul Frijters, Gigi Foster, and Michael Baker (authors of The Great Covid Panic) claim that lockdowns do not prevent deaths. On the other side of the debate, some classical liberals who are opposed to much government regulation, nevertheless saw merit in lockdowns - at least during the early stage of the pandemic - to buy time to enable hospitals to prepare for an influx of patients requiring treatment.

The reasoning behind lockdowns is that if you can get people to stay far enough apart from each other, they cannot infect each other. The most obvious problem in getting people to stay at home that is that they need to go to shops to buy food and, in some instances, to deliver health and other “essential” services.  

Lockdowns seemed to suppress virus transmission in Australia in the first half of 2020. In October 2020 I suggested that the combination of self-isolation, shutdowns and lockdowns had worked well in April and May of that year. I have become more pessimistic about the efficacy of lockdowns in Australia this year.  Lockdowns seem to have become less effective in Australia in presence of more infectious strains of the virus, and a decline in public support for lockdowns which was particularly evident in Melbourne - the world’s most locked down city.

Some evidence from other parts of the world suggests that lockdowns have never been effective in reducing death rates. For example, despite its relatively elderly population, Florida did not experience higher death rates than other regions of the United States after abandoning lockdown policies.

The chart shown above (based on a survey conducted by YouGov, an international research data and analytics group) suggests an important reason why the effectiveness of lockdowns is likely to depend on context. Willingness to comply with such regulations is much higher in some countries than others. I think the relatively high compliance level in Australia reflects strong public support for the regulations rather than the substantial penalties that applied if non-compliance was detected. The regulations were difficult to police even in the presence of strong public support, and would have been impossible to police if blatant non-compliance had become widespread.

Would it be desirable to adopt a uniform approach in all jurisdictions?

Differences in support for regulation and associated differences in willingness to comply, are good reasons for different approaches to be adopted in different jurisdictions.

Frijters et al suggest a more fundamental reason why a diversity of approaches is desirable. After noting the value of state-level experiments in the United States, including the minimalist policies adopted in South Dakota, the authors suggest:

“The provocative takeaway is that the intelligence of a whole country is enhanced when it contains communities adhering to truths completely opposed to those of the intellectual elites. That takeaway is, moreover, a deep lesson from history that Western countries have embedded into their institutions over centuries. It has been remarked upon before by historians that competition between radically different systems leads Western countries to learn faster than more centralised places like China.”   

What should we learn from the policies adopted in East Asia?

The experience of East Asian countries in preventing deaths from COVD-19 has been held up as example for others to follow. For example, an article by Mingming Ma,  Shun Wang, and Fengyu Wu, published as Chapter 3 of World Happiness Report 2021, concludes as follows:

“In general, we find that the relatively successful story of the five East Asian regions, compared with the six western societies, can be attributed to the stronger and more prompt government responses and better civic cooperation. Except for Japan, all of the East Asian governments implemented more stringent mobility control and physical distancing policies, as well as more comprehensive testing and contact tracing, especially at the early stages of the outbreak. A summary of the government interventions and anti-COVID measures in the East Asian regions indicates that a combination of strong government response systems, early and rigorous mobility control, extensive screening, testing, contact tracing and isolation, coordinated resource allocation, clear communication, enforced self-protection practice, and supportive economic measures are important in fighting COVID-19 outbreaks and resurgence.”

The five East Asian jurisdictions referred to are China, Hong Kong, Taiwan, Japan, and South Korea. The six Western countries included in the study for comparative purposes were France, Germany, Italy, Spain, the United Kingdom, and the United States.

 The authors seem to be suggesting that all the East Asian jurisdictions adopted stringent policy responses.

Frijters et al reach a different conclusion using the same data on policy stringency in a study published in Chapter 3 of The Great Covid Panic. The authors group countries and regions into three categories, Minimalists, Pragmatists, and Covid Cults, on the basis of the stringency of the average stringency of their policies during 2020. They found that the minimalists had far fewer claimed Covid deaths than either the pragmatists or the cults and that the pragmatists accumulated only a little over half the death rate of the cults.

It is interesting that most of the East Asian jurisdictions referred to in the first study were classified as either minimalists or pragmatists. Taiwan and Japan were classified as minimalist, and South Korea was classified as pragmatist. The United States and most European countries were classified as cults, along with China, Australia and New Zealand.

It is certainly difficult to maintain that stringency has been a major factor explaining the relative success of policy responses in the East Asia region.  I am not sure what other conclusions can be drawn, except that further study will be required if we are to learn from the experiences of countries adopting different policy responses.

How should we be thinking about government intervention?

Many politicians and other commentators seem to imply that apart from lives lost (or saved) the only other factor that needs to be considered in evaluating policy responses to COVID-19 is their impact on GDP. Far too little account is taken of the future consequences of increases in public debt that have been incurred to support people during lockdowns and the psychological impacts of restricting social interactions for long periods.

When freedom is mentioned by advocates of stringent regulation, it is often viewed as something frivolous that must be sacrificed to prevent deaths from Covid. That is the way a bureaucrat might view the options if given prevention of deaths from Covid as a key performance indicator (KPI). Within that mindset, freedom must be sacrificed to a sufficient extent to ensure that lockdowns work. Prevention of deaths from Covid is seen as being of utmost importance. Just as some soldiers have claimed that they had to destroy villages in order to save them, the single-minded advocates of lockdowns seem to be willing to destroy people’s lives in order to save them.

I am not implying that freedom is more important than health, or that liberty is more important than human flourishing. I am just suggesting that it is unhelpful to view the issues in that way.  

About 15 years ago, after reading some of the writings of Douglas Rasmussen and Douglas Den Uyl, I realized that it makes no sense to think in terms of a need to choose whether priority should be given to liberty or to human flourishing. Human flourishing does not exist apart from the flourishing of individuals, and the flourishing of individuals is not possible without opportunities for self-direction. Once we recognize the importance of self-direction to individual flourishing, that poses the question of what rules of the game – or political / legal order - would allow greatest opportunities for individual self-direction. Liberty is the answer! The protection of individual liberty – or the natural rights of individuals – provides the context in which individuals can flourish in different ways, provided they do not interfere with the rights of others. (You can find further explanation and links to the works of Rasmussen and Den Uyl in my book, Freedom, Progress, and Human Flourishing.)

Recognition of the foundational role of liberty doesn’t tell us what rules of the game should apply in a pandemic. However, it does tell us that we should be looking for rules of just conduct that would provide an appropriate balance between the different interests of individuals in getting on with their lives and avoiding exposure to infection.

The discussion earlier in this article suggests:

• The most appropriate rules in any society must depend, to a large extent, on the degree of support for them.
• A diversity of approaches in different jurisdictions is highly desirable to provide greater opportunities to learn from the experience of others.
• Different interpretations of the East Asian experience suggests that some caution is required to ensure that we learn the right lessons from the experience of others.

How useful is the WELLBY concept in assessing the benefits and costs of alternative policies?

 

There are good reasons why public policy discussions often revolve around the benefits and costs of alternative policies. Discussions that begin with the consideration of rights often require participants to acknowledge conflicting rights and to weigh up consequences in a search for the principles that can most appropriately be applied.

For example, consider what followed when I suggested recently in a discussion of the merits of lockdowns to counter the spread of COVID19 that such policies should be assessed against the principle that individuals have a right to direct their own flourishing, provided they do not interfere with the similar rights of other people. The latter part of that assertion implies a willingness to consider whether infected people who spread disease are interfering with the rights of others. At an early stage of the discussion, I acknowledged that it would be a step too far to insist that everyone has the right to recklessly endanger the lives of others. I argued that there should nevertheless be a presumption in favour of freedom, and that those who advocate restriction of freedom should be required to demonstrate that the benefits clearly exceed the costs.

That illustrates how the discussion of benefits and costs tends to rule the roost in civilized discussions of public policy. An exchange of different views about rights can be enlightening, but endless repetition of conflicting assertions about rights does not qualify as civilized discussion in my view.

A WELLBY (or Wellbeing Year) is equal to a one-point increment on a 10-point life satisfaction scale. If you assessed your level of life satisfaction as 8/10 in 2019 and 7/10 in 2020, that would be a decline of one WELLBY.

I began thinking about the WELLBY concept while considering how it is possible to measure the costs and benefits of lockdowns, but in this article, I will focus on the usefulness of that concept rather than on the question of whether benefits of lockdowns could ever exceed the associated costs.

Assessing the psychological cost of lockdowns

Indicators of subjective well-being are obviously relevant in assessing the psychological costs associated with policies that require people to stay at home. Available evidence suggests that lockdowns caused a decline in average life satisfaction of about half a point in the UK and similar countries in the
period to March 2021. On that basis, Paul Frijters, Gigi Foster, and Michael Baker estimate that lockdowns cause loss of life satisfaction to the general public in the U.K. of 41,667 WELLBYs per million citizens for each month of lockdown. This estimate is in Chapter 5 of their book, The Great Covid Panic, 2021.

I think that is an appropriate use of the WELLBY concept. If anyone knows of a better way to assess the psychological costs of lockdowns, I would be interested to know what it is.

Frijters, Foster, and Baker incorporate several other items in their assessment of the costs of lockdowns. I will consider one of those later, but I want to turn now to use of the WELLBY concept in the assessment of the main hypothetical benefit of lockdowns, namely lives potentially saved.

Assessing the value of a life saved

Richard Layard and Ekaterina Oparina have published a provocative article using a WELLBY approach to assess the monetary value of preventing the loss of one year of human life (Chapter 8 of World Happiness Report, 2021).

Layard and Oparina begin their discussion by observing that the average WELLBY is 7.5 in advanced countries. On that basis, they claim that preventing the loss of one year of the life of one person saves 7.5 WELLBYs.

The authors draw upon information on the relationship between income and life satisfaction in order to assess the monetary value of that loss. After some discussion of relevant research, they suggest that a coefficient of 0.3 is an appropriate measure of the impact on life satisfaction of a unit change in absolute log income. With average income of $30, 000, the loss of $1 is equivalent to 1/100,000 WELLBYs (0.3/30,000). It follows, they suggest, that “we” should be willing to pay up to around $750, 000 to save a year of life (7.5 WELLBYs).

Layard and Oparina point out that the $750, 000 would be shared over the whole population. Nevertheless, it still seems an extremely large sum to pay to prolong a life by just one year.

One possible source of error is that life may have no value for people with very low life satisfaction, for example those with a rating less than 2/10. If you assume that a life year is equivalent to 5.5 WELLBYs (7.5 minus 2.0), the estimated sum that “we” should be willing to pay to prolong life by one year is reduced to $550, 000. That still seems implausibly high.

The estimate could be further reduced by taking account of the fact that the people who are most vulnerable to COVID19 often have pre-existing ailments that would tend to reduce their life satisfaction, and many of those in nursing homes would be unlikely to live another year in any case.

However, let us return to the question of whether $550,000 is a plausible estimate of what “we” should be prepared to pay to prolong by one year the life of a person with an average life satisfaction rating. An alternative way to approach the issue of determining the monetary value of a year of life is to consider estimates of the impact of changes in healthy life expectancy on average life satisfaction. Regression analysis suggests that the addition of one year to healthy life expectancy adds only 0.033 to average life satisfaction (Table 2.1, World Happiness Report, 2019). The income loss providing an equivalent loss of life satisfaction is only $3,300 (0.033*100,000). That strikes me as an implausibly low estimate of the value of a year of life.

My view of what is a plausible estimate of the value of one year of life is not based solely on my own gut feelings. The assumed value of a life year in cost-benefit analysis typically ranges from $50, 000 to $250, 000. Those assumptions are based on surveys asking people how much they would be willing to pay to extend their lives and estimates of amounts people need to be paid to accept jobs involving greater risks to life.

Estimates of the value of a year of life within that range seem to be broadly consistent with community expectations. Some groups may lobby for lives to be valued more highly in assessing whether life-saving drugs should be subsidized by governments. However, I don’t see large numbers of people suggesting that they would be willing to pay higher taxes to fund that.

There seems to me to be a fundamental problem in attempting to assess the value of a life-year from the relationship between average income and average WELLBYs. As I explain in Freedom, Progress, and Human Flourishing, psychological well-being is just one of the basic goods of a flourishing human. When you ask individuals open-ended questions about how they are faring, their responses are not confined to the extent that they are “satisfied” with life. They are likely to talk about whether they are achieving their aspirations, the state of their health and their personal relationships. If you ask a person who already has high life satisfaction why they aspire to earn a higher income, they are not likely to claim that they expect a higher income to enable them to become more satisfied with their own life. They are more likely to say that they want to put some money aside for various reasons, for example to assist with education of children or grandchildren, or to have something to fall back on in the event of illness.

If an individual is faced with a decision about whether to use accumulated wealth (or to mortgage their house) to purchase an expensive drug that might prolong their life for a year, the quality of that extended life (WELBYs) is not the only factor that they are likely to consider. The choice they make may well give consideration to their desire to improve opportunities available to the next generation of their family. There is an intergenerational choice involved in placing a value on an additional year of life.

What value should be placed on the lives of potential humans?

Frijters, Foster, and Baker include among the costs of lockdown the shutting down of the in-vitro fertilization (IVF) program during lockdowns in the UK because it was deemed to be a nonessential service. This resulted in about 30 fewer IVF births per million citizens per month of lockdown.

The cost of disruption of the IVF program is not critical to the authors’ conclusion that the cost of lockdowns exceed the benefits. Nevertheless, in my view there is a strong case for it to be taken into account. Potential parents clearly place a high value on the new lives that the program makes possible.

However, the methodology which Frijters, Foster, and Baker use to estimate the cost of disruption of the IVF program is a straightforward application of the WELBY concept to value lives. They calculate that each of these potential humans could be expected to enjoy 480 WELLBYs during his or her life – each is assumed to have a value equal to 6 WELLBYs and to live on average for 80 years. With the loss of 30 IVF babies per month, that amounts to the loss of 14,400 WELLBYs worth of human well-being per month per million citizens.

The reasoning is impeccable if you accept the utilitarian assumptions associated with use of the WELLBY concept to measure the value of a human life. Within that framework, if government policies prevent potential humans from being born, that diminishes the sum of human happiness by the amount of happiness they would have enjoyed during their lifetimes.

I have already indicated that I don’t accept that people value their own lives exclusively on the basis of WELLBYs. However, if I have not yet persuaded you to reject the WELLBY approach to evaluation of lives, you may wish to consider the following possible outcome of applying that approach.

Let us suppose that a government is considering a ban on all forms of contraception and seeks the services of some utilitarian advocates of maximization of human happiness to evaluate the costs and benefits of the proposal. It seems reasonable to predict that the utilitarians would conclude that the additional births resulting from the policy change would result in a large net increase in WELLBYs, and therefore an increase in the sum of human happiness. The more, the merrier they might say!

Conclusions

The WELLBY concept has a useful role to play in evaluation of some policies that have an impact on psychological well-being.

However, the valuation of lives according to the number of WELLBYs individuals might enjoy seems to be at variance with the approach that individuals take in making choices in relation to extension of their own lives. That approach to valuing lives is widely at variance with the approach most people in advanced countries adopt in considering the value of potential lives of the many additional humans that they could bring into the world if they felt inclined to do so. It counts the lives of potential people as having equal value to the lives of the living.

The WELLBY approach to valuation of human life should be rejected.

Postscript

A survey conducted by UBS has provided relevant information on the proportion of wealth that investors are willing to sacrifice for additional years of life. The survey covered 5,000 wealthy investors in 10 countries. On average, those with financial wealth in the $1 to $2 million range indicated that they were willing to give up 32% of their wealth for an additional decade of healthy living. That may seem a lot, but amounts to only $32,000 to $64,000 per annum when spread over 10 years.

Those figures are far lower than the $750,000 (discussed above) that an application of the WELLBY approach to life evaluation has suggested that “we” should be willing to pay to save a year of life.

Do political partisans make credible assessments of the views of their opponents?

 

The charts shown above suggest that some of the assessments that political partisans make of the views of their opponents are wildly inaccurate. The probability that a Democrat will consider that men should be protected from false accusations of sexual assault is higher than Republicans believe it to be, and the probability of a Republican accepting that racism still exists is higher that Democrats believe it to be. The organization which published the data makes the point that Americans have much more similar views on many controversial issues than is commonly thought, especially among the most politically active. My focus here is on why partisans make such large errors in assessing the views of their opponents.

Probability assessment is not always easy.

Steven Pinker included “a sense of probability” in his list of 10 cognitive faculties and intuitions that have evolved to enable humans to keep in touch with aspects of reality (Blank Slate, 220). Individuals obtain obvious benefits from an ability to keep track of the relative frequency of events affecting their lives. A capacity to reason about the likelihood of different events helps them to advantage of favorable circumstances and to avoid harm.

Pinker points out that our perceptions of probability are prone to error, but Daniel Kahneman has a much more comprehensive discussion of this in Thinking, Fast and Slow. Kahneman points out that even people who have studied probability can be fooled into making errors in assessing probability when they are led to focus unduly on information that appears particularly pertinent and to ignore other relevant information. He gives the example of a cab involved in a hit and run accident in the city in which 85% of cabs are Green and 15% are blue. A witness identifies the cab responsible as Blue, and the court establishes that he would be able to identify colors correctly 80% of the time under circumstances that existed on the night of the accident. What is the probability that the cab is Blue? Most people say 80%, but the correct answer, provided by Bayes’ rule, is about half that (Loc 3005-3020). People tend to make a large error because they overlook the fact that a high proportion of Green cabs means that there is a good chance that the witness has mistakenly identified a Green cab to be Blue, even though his observations are accurate 80% of the time.

Kahneman notes that people are more likely to make errors in assessing probability when they “think fast” rather than analytically. However, it is not necessary to understand and apply Bayes’ rule to solve problems such as the one presented above. A simple arithmetic example can suffice. If there were 1,000 cabs in the city, there would be 850 Green cabs and 150 Blue cabs. If we had no more information, the probability of a Blue cab being responsible for the accident would be 15%. We are told the witness saw a Blue cab and would correctly identify 80% of the 150 Blue cabs as Blue (i.e. 120 cabs) and would mistakenly identify 20% of the 850 Green cabs as Blue (i.e. 170 cabs). The total number of cabs that he would identify as Blue is 290 (120+170). The probability that the witness has correctly identified a Blue cab is 0.414 (120/290) or 41.4%.

Kahneman also makes a point about causal stereotypes. He does this by altering the example to substitute information that Green cabs are responsible for 85% of the accidents, for the information that 85% of the cabs are Green. Other information is unchanged. The two versions of the problem are mathematically indistinguishable. If the only information we had was that Green cabs are responsible for 85% of accidents, we would assess the probability of a Blue cab being responsible at 15%. As before, if we evaluate the witness information correctly, it raises the probability of a Blue cab being responsible to 41.4%.

However, when people are presented with the second version, the answers they give tend to be much closer to the correct one. They apparently interpret the information that the Green drivers are responsible for 85% of the accidents to mean that the Green drivers are reckless. That causal stereotype is less readily disregarded in the face of witness evidence, so the two pieces of evidence pull in opposite directions.

Political partisans don’t have much incentive to make accurate assessments of the views of their opponents.

The potential for errors in fast thinking and the impact of cultural stereotypes may account for much of the error of partisans in assessing the views of their opponents, as shown in the above charts. People do not have a strong personal incentive to ensure that they accurately assess the views of their political opponents. Potential errors do not affect their income and lifestyle to the same extent as, say, errors in the probability assessments they make relating to personal occupational and investment choices.

In addition, political partisans may not even see any particular reason to be concerned that they may be misrepresenting the views of their opponents.

Reasoning along those lines seems to me to provide a straightforward explanation for the prevalence of partisan conspiracy theories. Research by Steven Smallpage et al (in an article entitled ‘The partisan contours of conspiracy theory beliefs’) suggests that partisans know which conspiracy theory is owned by which party, and that belief in partisan conspiracy theories is highly correlated to partisanship. The authors conclude:

“Many conspiracy theories function more like associative partisan attitudes than markers of an alienated psychology”.

Extreme partisans tend to promote theories that discredit their opponents. Perhaps that is the way we should expect partisans to play politics in a society where many people think it is ok to “bear false witness” because they believe everyone has “their own truths” and objective reality does not exist.

We do not have to speculate that partisans are deluded or crazy when they hold firmly to improbable theories about their opponents in the face of contrary evidence. They are more likely to be ignoring the evidence to demonstrate loyalty to their party and its leaders.  

However, that doesn’t offer us much solace. Some of the conspiracy theories currently circulating seem similar to the false rumors that governments circulate about their enemies during wartime. Extremists among political partisans may be circulating those rumors with the intention of promoting greater political polarization and a breakdown of the values that have hitherto made it possible for people with divergent views to coexist peacefully.

Is increasing polarization inevitable?

Much depends on the attitudes of the majority of people who currently disinclined to spread rumors that they believe to be false and likely to promote social conflict. If people with moderate views make known that they expect political leaders to disavow false rumors about their opponents, they can encourage that to happen. Leaders of the major parties have an incentive to try to attract voters with moderate views away from opposing parties. If leaders disavow false rumors, partisans will tend to echo their views.

Is it possible to have sensible policy discussions about climate change?

 

Development of public policy depends to a large extent on sensible public discussion to filter out stupid proposals.  Climate change is no exception. The problem is that instead of having sensible discussions a lot of people just accuse one another of being deniers or alarmists, and use political stunts to advance or defend stupid policies.

It is easy to get the impression that most people can be classed as either deniers or alarmists, but surveys suggest to me that such extremists make up a relatively small proportion of the population of most countries. How many people get classified as deniers and alarmists is obviously influenced by the way these concepts are defined.

It makes sense to classify people as “deniers” if they claim climate change is “not a threat”. A survey by the Pew Research Center conducted in 2018 found that the percentages saying that climate change is not a threat vary substantially among the 26 countries included, from 21% in Nigeria to 3% in France and South Korea. Corresponding numbers were 16% in the U.S., 9% in Australia and 4% in Sweden.

The Pew survey found that in most countries a majority viewed climate change as “a major threat”, but it would be an exaggeration to label all those as alarmists. The people I describe as alarmists tend to say things like: “It is already too late to avoid the worst effects of climate change”. An international poll by YouGov, taken in 2019, found that people who say that vary from 20% of the population in France to 4% in Oman. Corresponding numbers were 10% in the U.S. and Australia, 8% in Sweden, 11% in Britain, and 6% in China.

False alarm

I was prompted to attempt to get a handle on the percentages of deniers and alarmists by my reading Bjorn Lomborg’s latest book, FalseAlarm: How climate change panic costs us trillions, hurts the poor, and fails to fix the planet. Lomborg sees climate change alarmism as a greater problem than denial. He suggests that the arguments of the deniers have been “thoroughly debunked” and approves of media refusing to give space to deniers. His main gripe is that media are “failing to hold climate alarmists to account for their exaggerated claims”.

However, it seems to me that different media outlets have different biases. Some pander to the prejudices of the noisy alarmists among their readers, while others pander to the noisy deniers. Unfortunately, the mass media no longer does much to promote sensible discussion of issues that have become politicized.

Lomborg’s book seems to me to advance a coherent viewpoint that could provide a basis for sensible discussion among people who are not wedded to extreme positions. His main points are as follows:

• Climate change is real. The amount of CO2 in the atmosphere affects global temperature.
• Global warming will have a negative impact on human well-being. Estimates of the likely damage from global warming by 2100 amount to a modest percentage of GDP (about 4%) if allowance is made for adaptation, fertilization (positive impacts of CO2 on crop yields and forest production) and the expanding bullseye effect (the tendency for more people to live in flood prone and fire prone areas).
• If all nations met their promises under the Paris Agreement, that would have only a small impact on global warming.
• With known technology and using the most efficient policy instrument to achieve Paris Agreement targets, the cost involved would be much higher (perhaps 3 times higher) than the expected benefits.
• There is potential for research and development to reduce the cost of green energy alternatives to use of fossil fuels. However, governments are not meeting the commitments they have made to expand relevant R&D activities.
• Carbon taxes and green energy innovation will not obviate the need for adaptation to a warmer climate over coming decades. Adaptation is a less costly option than attempting to reduce CO2 emissions to zero over the next few decades.
• Geo-engineering is worth researching as a backup plan to be used as required, e.g. if the West Antarctic ice sheet starts to melt precipitately.
• People in low-income countries will be better able to cope with the adverse impacts of climate change if they become wealthier. Holland and Bangladesh both have substantial areas of land below sea level, but Holland can afford infrastructure that enables it to cope better. 

 

My overall impression is that Lomborg has made a serious effort to focus discussion on things that are worth discussing. I have some reservations about his views, which I will mention below, but my initial focus is whether the book is generating useful discussion. I have found a couple of reviews by people who could be expected to challenge the argument that Lomborg advances.

Reviews

The first review is by Joseph Stiglitz, a Nobel prize winning economist. Stiglitz’s review was published in the New York Times. Rather than addressing the cost of current policies, Stiglitz appeals to an authority which he seems to view as infallible - an international panel chaired by himself and Lord Nicholas Stern – which apparently “concluded that those goals could be achieved at moderate cost”. I have not been able to find that conclusion in the report of his High-Level Commission, but I can’t claim to have read the document thoroughly. My brief reading left me with the impression that the costs will only be moderate if there is rapid progress in development of green technology. Stiglitz does not acknowledge that Lomborg advocates increased R&D for to promote more rapid development of green technology.

Stiglitz concludes by asserting:

“Lomborg’s work would be downright dangerous if it were to succeed in persuading anyone that there was merit in its arguments”.

Rather than engaging in sensible discussion, Stiglitz seems to me to be intent on using polemics to defend alarmism.

Surprisingly, there has been more sensible review in “The Guardian”. That review is by Bob Ward, who is associated with the Grantham Research Institute on Climate Change at the LSE. Ward combines his review of Lomborg’s book with a review of Michael Shellenberger’s book, Apocalypse Never. Ward’s remarks are somewhat offensive - he labels the authors as “lukewarmers”, promoting a “form of climate change denial”. Nevertheless, he manages to acknowledge that they make legitimate criticisms of alarmism by environmentalists. He agrees that the world should be investing more in helping poor people become more resilient to climate change. He also expresses sympathy for the view that nuclear power has a role to play in creating a zero-carbon energy system.

My reservations

The main problem I see with Lomborg’s argument relates to the use of GDP as a welfare measure. As well as the usual problems in the use of GDP in this way, there is the additional problem that many of the costs of adaptation are counted as making a positive contribution to GDP. For example, infrastructure investment to build walls to hold back rising sea levels is counted as part of GDP. As such adaptation investment comes to represent an increasing share of total investment, it will crowd out other investments that have potential to enhance human well-being.

This line of reasoning reinforces the importance of R&D that has potential to reduce the cost of alternative energy and hence to reduce the cost of mitigation. If it becomes less costly to pursue greater mitigation over the next few decades, that can obviously reduce the combined total of damage and adaptation costs over the longer term.

My other reservation relates to something that is not central to Lomborg’s argument, as outlined above, but is difficult to let pass. It is his endorsement of the proposition that “if everyone does a little, we’ll achieve only a little”. That seems to me to promote unwarranted pessimism about the likelihood of success of the polycentric approach promoted by Elinor Ostrom.

In a paper presented to the World Bank in 2009, Ostrom suggested that rather than wait for national governments to take concerted action, the best way forward was multi-layered action by individuals and firms, as well as by local, state, and national governments. The polycentric approach is messy, but there are hopeful signs emerging that it is developing sufficient momentum to facilitate effective action. The individual actions of environmentally conscious individuals may not add up to much by themselves, but they seem to be inducing an increasing number of firms to modify their behaviour. Some firms are presenting an environmentally friendly image without doing much to back it up, but others seem to be actively planning for a carbon-free future. The announcement last year by the world's largest asset management firm, BlackRock, that it will put climate change at the centre of its investment strategy, seems to me to signify a substantial change in the way the game is being played. If enough firms adopt R&D, innovation and investment strategies based on expectations of a carbon-free future, those expectations will tend to become self-fulfilling.

Bottom line

Lomborg’s book is not likely to persuade many climate change alarmists (or deniers) to modify their views, but it provides a basis for the rest of us to have sensible discussions about policy options.

How can governments mitigate the impact of COVID-19 on human flourishing?

This is an appropriate question for economists with an interest in public policy to be considering. It recognizes a possible role for governments and recognizes that an approach focused on human flourishing is likely to be more appropriate than one focused entirely on reducing the death rate or reducing adverse impacts on GDP.

The possible role for government stems from the perception that people who are most vulnerable would not able be to protect themselves adequately without some government intervention. People who know they are vulnerable have a strong incentive to practice social distancing, but personal circumstances often make that difficult. Without the threat of coercion, it is unlikely that we will see the degree of social distancing necessary to reduce the rate of spread of the virus. In that event, hospital services are likely to be over-whelmed by the number of people requiring treatment. 

As always, with government intervention, there is a risk that the cure will end up worse that the disease, but the risk is probably worth taking in this instance.

What is the appropriate indicator of human flourishing to be used as a policy objective? There isn’t just one! The prime candidates, per capita GDP and average life satisfaction both suffer from the same flaw – they don’t account for the impact of early death on the well-being of the dear departed. We should continue to consider the impacts of policies on death rates as well as their impacts on the well-being of the living.

Per capita GDP was never intended to be a measure of well-being, but it is relevant. Many factors that impinge on well-being – such as the ability of people to afford food, housing and health care – are influenced by per capita GDP levels. However, per capita GDP cannot account for impacts of coercive policy interventions, such as enforced home confinement, on psychological well-being.

Average life satisfaction seems to be a reasonable indicator of the average psychological well-being of groups of people. It is a poor indicator of economic and social progress because it doesn’t account for the extent that members of one generation perceive themselves to be better off, or worse off, than members of preceding generations. Fortunately, that deficiency is not pertinent for present purposes.

There is some evidence that lock-down and GDP decline have potential to have substantial negative impacts on average life satisfaction.

An article entitled ‘Health, distress and life satisfaction of people in China one month into the COVID-19 outbreak’, has recently been published by Stephen X Zhang, Yifei Wang, Andreas Rauch, and Feng Wei. The article is a pre-print and has not been subjected to peer review, but no major flaws are obvious to me. As might be expected, the study suggests that the life satisfaction of people with chronic medical conditions was adversely affected in locations with severe outbreaks of COVID-19.

However, the life satisfaction of people who exercised a lot was also adversely affected in locations with more severe outbreaks, suggesting frustration at restrictions imposed. Those who were able to continue to work had higher life satisfaction than those who had stopped work, with people who were able to work “at the office” having higher life satisfaction than those who worked at home.

The relationship between per capita GDP and average life satisfaction is complicated. Average life satisfaction is relatively high in countries with high per capita GDP, but tends to grow very slowly, if at all, as per capita GDP rises further in such countries.  However, there is some evidence suggesting that when per capita GDP falls in high-income countries, this is likely to be accompanied by substantial declines in average life satisfaction. Austerity in Greece reduced per capita GDP by about 26% over the decade to 2017 and was accompanied by a decline in average life satisfaction of about 20% (GDP data from OECD and life satisfaction data from World Happiness Report, 2020).

Hopefully, COVID-19 will result in much smaller declines in per capita GDP than in Greece. and economic recovery will be much more rapid.

What are the trade-offs involved in shut-down? The human welfare implications of shutting down large parts of an economy for an extended period are enormous. However, a short close-down of all those activities in which social distancing is difficult might be preferable to a less severe and more prolonged lock-down. Tomas Pueyo’s discussion of the hammer and dance (see graphic above) makes sense to me, even if the Hammer needs to last more than 3-7 weeks.

Social distancing and lock-down is an investment in buying time. Buying time for what? It can’t be for development of a vaccine. That will take too long!

It makes sense to buy time to build up the stock of respirators, ICU beds etc. to help cope with an influx of hospital patients needing treatment.

It also makes sense to buy time to obtain testing equipment that can give accurate results within a short time frame. Speedy and accurate testing has potential to enable infectious people to be detected and temporarily taken out of circulation, so that the rest of the population can return to something like normal life.

This post has not yet referred to stimulus packages. I support giving money to people to help them survive a crisis that is likely to depress aggregate demand. Please note, however, that what people can buy depends ultimately on what is produced. When an economy closes down the necessities of life tend to become scarce.

My conclusions:

• Policies to mitigate COVID-19 should be considered from a human flourishing perspective rather than solely in terms of either minimizing deaths or minimizing damage to an economy.

• The best policy seems to be to buy time by enforcing strict social distancing for a relatively short period rather than less strict distancing for a longer period. The policy aim should be to buy enough time to enable hospitals to cope better with an influx of patients and to put in place a testing regime that can enable life to return to something like normal as soon as possible.

Postscript: May 6, 2020

There isn’t a great deal of substance that I would like to change in this article with the benefit of 6 weeks hindsight. The graphs showing possible outcomes in terms of exponential growth and bell curves still look right. Some countries, including Australia, have moved along to the end of “the hammer” phase of the bell curve and are beginning the tricky “dance”. Perhaps infection rates may be greatly under-estimated and there is now considerable herd immunity, but I doubt it.

Although the governments of some countries are behaving abominably, at this stage I am confident that in Australia the intervention ‘cure’ (palliative might be a better word) will not be worse than the disease. To a large degree, the shutdown occurred spontaneously, with governments playing catchup, as large numbers of people stayed home, and businesses shut down. There has been some coercion, e.g. shutting of beaches in metropolitan areas and travel restrictions. Some police have risked public goodwill by excessively diligent (stupid) enforcement, e.g. picking on individuals sunning themselves in parks many metres away from any other human. Most people seem to be following social distancing rules because they accept that it is a sensible precaution to take for their own benefit and/or the benefit of others.

From an analytical perspective, I have been reminded that it is possible to incorporate deaths and economic considerations in a common metric if you try hard enough. Richard Layard, Andrew Clark et. al. have presented a WELLBY analysis that seeks to do that in a paper entitled, ‘When to release the lockdown: A wellbeing framework for analysing costs and benefits’. The authors use estimates of wellbeing-years (based on life satisfaction surveys) to balance the impact of policy decisions upon the number of deaths from COVID-19 against incomes, unemployment, mental health, public confidence and other factors (including CO2 emissions).

Their analytical framework looks elegant, but I am concerned about the implied policy context. It seems to me that this kind of analysis is more relevant to decision-making by a benevolent dictator (one applying utilitarian philosophy) than to a society where government should see its prime responsibility as protecting the lives and liberty of citizens.

Another article that has been brought to my attention is: ‘Some basic economics of COVID-19 policy’, by Casey Mulligan, Kevin Murphy and Robert Topel. This article looks at the trade-offs we face in regulating behavior during the pandemic.  It uses conventional cost benefit analysis to consider several possible policy objectives, including buying time and limiting the cumulative cost of a pandemic that will ultimately run its course. They conclude:

“The key difference in terms of the optimal strategy is whether our focus is on keeping the disease contained. If the objective is to buy time, then our analysis favors early and aggressive intervention. This minimizes the overall impact … . In contrast, limiting the cumulative cost of a pandemic that will ultimately run its course argues for aggressive policies later, when they will have the biggest impact on the peak load problem for the health-care system and when they will have the greatest impact on the ultimate number infected”.

The authors conclude by listing some simple economic principles to guide how public policy should proceed when faced with a new but poorly understood pandemic. Those principles include buying time upfront, and using that time wisely to gather information to implement a screen, test, trace and quarantine (STTQ) policy. They suggest that both the “buy-time” and long-term containment strategies will have to be based on an effective STTQ policy.

The approach adopted by Mulligan et. al. of considering the nature of trade-offs and suggesting policy principles is more to my liking. If these authors had used their conventional cost benefit analyses to provide specific recommendations of the kind provided by Layard et. al. I would raise the same concerns about the implied policy context of advising a benevolent dictator, rather than informing a democratic political process.

I have misgivings about the valuation of life in both studies, but have not considered the relative merits of each approach, and have nothing better to offer other than directly considering the economic cost of saving lives under alternative strategies.  

"How dare you?"

I have stopped laughing about Greta Thunberg’s performance at the United Nations a few months ago.

At the time, I was amused by her quixotic antics in attacking world leaders. People who think they can change the world by staging tantrums do not deserve to be taken seriously. It was predictable that Greta’s outburst would have a negligible impact on climate change policies.

I was also amused by Greta’s misconceptions about the relationship between economic growth and climate change.

On reflection, however, those misconceptions are no laughing matter. They are more widely held than I had imagined, including among some people who have had a great deal more education than Greta. By making economic growth the villain, climate activists seem likely to antagonize many of the people who would like more action to be taken to reduce greenhouse gas emissions.

Global climate change is perceived to be a serious problem by a high proportion of the population in many different countries. However, there is much less support for action to be taken to limit greenhouse gas emissions. The obvious obstacle is the additional cost to consumers of transition to alternative energy sources (including the cost of energy storage and backup to ensure reliable supplies). The advocates of zero economic growth add another obstacle by telling people they will have to make huge changes in their lifestyles to mitigate climate change. The lifestyle changes required for adaptation may seem preferable to many people.

The nature of economic growth

Misconceptions about the relationship between economic growth and climate change stem largely from ignorance about the nature of economic growth.

When economists talk about economic growth, defined as an increase in the amounts of goods and services produced, some environmentalists just think of increases in the amount of stuff they don’t like. A little further thought might enable them to acknowledge that much additional stuff is being produced these days under environmentally friendly conditions. They might even be particularly fond of some additional stuff e.g. organic food, solar panels, electric cars and batteries. There are also some services they might like, such as health and education. 

Greta and her followers are probably concerned that economic growth requires us to dig up more and more natural resources until there are no more to be discovered. If that was true, it would be easy to understand why they might see endless economic growth as a fairy tale. However, growth in capital stock - created by transforming natural resources into equipment, buildings and infrastructure - typically accounts for only a small proportion of economic growth. In the 1950s, research by Robert Solow, a Nobel prize-winning economist, showed that only one-eighth of the increase in gross national product per man-hour in the United States between 1909 to 1949 could be attributed to increased capital stock. The remaining seven-eighth, which became known as the Solow residual, was attributed to technical change. Subsequent research has shown part of the Solow residual to be associated with improvement in labour skills, with the remainder, often described as total productivity growth (or multifactor productivity growth) being attributed to innovation, technological progress and the advance of knowledge.

Economic growth will probably end one day, but there doesn't seem to be anything inherent within the growth process that must bring that about. How do Greta and her followers propose to end economic growth? Do they propose to require people to take the benefits of technological progress in the form of more leisure, rather than more goods and services? Or do they propose to stop the advance of knowledge and innovation? 

The former approach seems more likely. It is certainly not unprecedented in human history for the advance of knowledge to come to a virtual standstill for long periods. However, it would be surprising to see the environmentalists of wealthy countries advocate policies to make that occur.

Environmental impacts of growth

If economic growth is largely about innovation, technological progress and the advance of knowledge, does it necessarily have adverse environmental impacts?  Of course not! In recent years, a significant amount of research, development and innovation has been directly related to development of alternative energy or other environmentally friendly activities.

Much of the other innovation that has occurred over the last decade or so - for example, improvements in communication technology - seems to have been benign in terms of its environmental impacts. It is possible to think of technological innovations that have raised environmental concerns, e.g. fracking and genetically modified crops, but that could hardly justify the blanket ban on innovation that is implicit in a zero economic growth scenario.

My view of growth

At this point some readers might have gained the impression that I am an advocate of endless GDP growth. That is not so. My reservations about GDP as a measure of well-being, and of GDP growth as a societal objective have been on display in articles I have written over the past 15 year (for example one on the priority given to economic growth in Australia, and one on the concept of Gross National Happiness).

As discussed previously on this blog, I advocate growth in opportunities for human flourishing - that is, growth of opportunities for individuals to live the lives that they aspire to have. If increasing numbers of individuals choose a lifestyle involving stable incomes and more leisure to one with rising incomes, I can see no reason to object (unless they want me to subsidize their lifestyle choice). In my view, there is certainly no case for governments to require or induce people to work harder or longer to foster growth of GDP.

However, it seems likely, even in high income countries, that for the foreseeable future the aggregate outcome of choices freely made by individuals as consumers and producers of goods and services will continue to involve economic growth. That outcomes seems likely, even in the presence of the minimal restrictions on individual freedom are necessary to achieve widely accepted environmental goals.

Those who urge the introduction of policies to stop economic growth are contemplating a great deal more interference with the rights of individuals to manage their own lives than could possibly be justified to pursue widely accepted environmental goals.

Bottom line

Despite substantial reductions in the cost of alternative energy that have occurred over the last decade or so, the cost of transition to alternative energy still seems to be a major obstacle to effective international action to reduce greenhouse gas emissions. Those who make the false claim that economic growth is incompatible with widely accepted environmental objectives are adding a further obstacle to effective international action.

Instead of frightening people by urging governments to impose huge changes in lifestyles on citizens, perhaps environmental activists could pursue their goals more effectively by making a case for further government funding of research to help make alternative energy more affordable.