Pandemic Diaries

Rod Dreher, the conservative Christian writer who blogs at American Conservative, published my “Pandemic Diary” this morning on his blog. (The New Yorker ran a great profile of Rod several years ago.)

Full text is here:

My wife works in a hospital, and there’s no sign of COVID-19 yet.  She’s an occupational therapist in a cancer hospital, so it’s unlikely that she’ll be asked to treat any COVID-19 patients. They’re also doing their best to keep the hospital COVID-free, since the patients are medically fragile.  Still, they don’t have enough N95 masks, and everyone at the hospital is under tremendous stress, as the hospital has been implementing difficult new procedures. What’s more, visitors have been disallowed — even for dying patients.

I’m now home alone with our two kids (2 and 5 years) for 11-12 hours a day. I normally thrive on my time with my kids, but it’s been a struggle.  They miss their friends and their activities, and I’m the one that’s got to fill the hours now.  How do I balance education and fun?  Do I create a schedule?  How much chaos am I willing to endure?  Last week didn’t go so well.

I’m an author and consultant who often works from home, but last week I found it impossible to get any work done at all.  The kids are just too demanding.  My second book, which I’ve been working on for six years, comes out in May.  In the last 10 days, the launch events have all been cancelled.  It’s a huge, huge disappointment.  The book will still get some attention — It was excerpted in Quillette back in January, and another excerpt will be published in Education Next in early May.  (AmCon requested a review copy.) But, like all those high school seniors who will miss prom and graduation, it seems unlikely that I will experience the celebratory rituals that I was looking forward to.

That said, there are bigger things to worry about right now.  I’m an older dad — just turned 50 — and it’s incredibly stressful to read accounts of patients in their 30s, 40s, and 50s being put on ventilators or even dying.  I waited so long to be a dad, and our life has been so blissfully happy the last few years. I can hardly bear to think that all of it could be at risk.  My family will be okay financially.  But we have many family and friends who were already struggling.  I wonder what may become of them if this gets really bad or if the shutdown lasts for months.

Over the weekend, with all of those thoughts rattling around in my brain, I had a panic attack.  I woke up in the middle of the night with my heart pounding.  It took me about three minutes to convince myself that I was having a heart attack, and I was just another few minutes away from telling my wife to call 911.  But she kept her cool and talked me down — She knew right away what it was.  It only lasted minutes, but it was terrifying.  Never happened before.

But, since that night, things have been better.  I decided to attack my new job.  I get up every morning at 5:30 and get a couple hours of work in before my wife leaves for the hospital.  I make a list of everything we’re going to do in the day — educational games, trips to the park, marathon reading sessions, meet-ups with their church friends on Zoom.  During their nap, I cram another 90 minutes of work in.  Last week I had my phone out the whole day, checking for COVID-19 updates constantly.  This week, I’ve put it aside and only checked once or twice a day.  I’m less informed but also less stressed.

And I’ve become a hyperactive Mr. Mom. If I let the house fall into chaos, I start to feel my stress levels rising.  So I clean the house *all day long*.  It sounds ridiculous, but it’s working.  This is my new job, and I’m going to try to do it to the best of my abilities.

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We’re all Keynesians now — except when we’re not

The famous quote is “We’re all Keynesians now” credited to Milton Friedman and/or Richard Nixon.   Or as Paul Krugman wrote in 2011, “Keynes was right“.

What they mean is that — in an economic downturn — there’s a general consensus among economists, policy makers, and monetary leaders that the government should engage in expansionary policies, increasing the federal deficit and enlarging the money supply.  As Keynes said: “The boom, not the slump, is the right time for austerity.”

As someone who was once an unrepentant deficit hawk in the style of the Concord Coalition, I have to admit that these types of policies have established a track record of easing economic pain in the short run.  It’ s made me reconsider some of my most dearly-held beliefs.*

But it also begs the question:  Where are the calls for austerity now?  This is the boom that Keynes was talking about.  To be consistent, Krugman and all of the Keynesians (i.e., everyone!) should be arguing loudly for decreasing the deficit and tightening the money supply.  But that’s not happening.

It’s easy to be a Keynesian during a downturn.  Just open up the spicket to placate a panicked populace.  It’s a lot harder to do as Keynes recommended and actually tighten things up when the party is underway.


*As an aside, there is no doubt in my mind that the expansionary policies of Bernanke and Obama helped ease the pain, and perhaps prevented a much more significant downturn, during the Economic Crisis.  That said, I still feel very ambivalently about those policies.  The crisis was caused — at least in part — by incredibly loose monetary policy and incredibly large budget deficits under George W. Bush.  Seemingly, we were able to avoid a Depression by (1) making monetary policy even looser, (2) increasing federal spending at a time when the deficit was already historically high, and (3) transferring billions of dollars of debt from private entities to public ones.  That’s a troubling pattern…  We may have only been successful in kicking the can down the road.

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Double meaning – The “broken windows theory” vs. the “broken windows fallacy”

Two influential ideas from the social sciences.  A theory and a fallacy.  With the same name.

The broken windows theory was first introduced by James Q. Wilson and George Kelling in 1982.  The idea is that small signs of disorder in a community — like broken windows — can increase the sense of lawlessness and lead to more serious crimes.  Police leaders in the 1990’s and 2000’s used this theory to justify a crackdown on lots of small offenses  (drunkenness, fair evasion, vandalism), believing that it would lead to a reduction in violent crime.  (Violent crime has indeed decreased dramatically since the rise of these policing techniques, though no one is quite sure if the relationship is causal or not.)

The broken windows fallacy is 130 years older.  Frédéric Bastiat introduced this thought experiment in 1850 in order to show that GDP is not a full measure of an economy’s health.  In fact, certain things that might increase GDP — like the repair of a broken window by a glazier — might reflect an underlying loss of economic wealth.  This is why we don’t root for natural disasters…. They might lead to an increase in GDP as we aim to replace destroyed capital.  But that increase in GDP doesn’t reflect wealth creation.

Back in 2012, Matthew Yglesias fell into a 21st-century version of the broken windows fallacy, when he wrote this article for Slate:

Help America: Get Divorced!  The coming boom in failed marriages and why it’s exactly what the economy needs.

Yes, perhaps divorce does lead to an upward blip in GDP.  But it’s almost certainly also destroying economic wealth, and there’s no doubt that it reflects a reduction in the well-being (the utility, if you will) of the folks involved.

Some enterprising young professor needs to craft a whole course on behavior and economics, using broken windows as a case study.

Photo by Tomas Castelazo – Own work, CC BY-SA 3.0, Link

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Economists tout “success” of policy that drove housing costs up for millions of Californians

In the midst of an affordable housing crisis  in California, UCLA economists have the balls to put out a study trumpeting the success of California’s 2008 anti-foreclosure law.

Their definition of success?  Housing prices are now 15% higher than they otherwise would have been… up to 60% higher in some middle-class neighborhoods of Los Angeles.

Our politicians continue to pass laws — often with the backing of prominent economists — that drive up the cost of education, health care, and housing.

Isn’t it at least possible that one reason we all feel less secure is that the government is driving up the cost of those things that are most critical for a sense of well-being and security?



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Do investment returns decrease…as society becomes wealthier?

William Bernstein – in the Financial Analysts Journal – claims that investment returns decrease as society becomes wealthier.

I stumbled over this.  Why would that be?  

But he makes a compelling case.  When we talk about investment returns from the POV of the user of the capital, we talk about the “cost of capital.”  This is what we have to pay the capital holder in order to use their funds for a while.  For a bond, the cost of capital is fixed ahead of time.  For equities, the return/cost is unknown….but it has no upper limit.

The key here is that we have to persuade someone to part with their capital, which means they can’t buy a second home or a boat or anything else.  In a poor society, it’s hard to persuade someone to give up their capital…since the majority of society is struggling to afford the essentials.

But – as wealth increases – people have more capital to play with.  And they’re more easily persuaded to give it up for a while.  Thus, lower cost of capital.  And lower long-term returns for investors.

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