Lest you believe (or hope) the world is coming to understand the foundation of Monetary Sovereignty (a Monetarily Sovereign government cannot run short of its own sovereign currency), we bring you sad news: The Libertarians.
They call themselves “Libertarians,” but in fact they are anarchists. To them, there is no amount of government that is not “too big,” and there is no level of government spending that is not “too much.”
Here are some excerpts from a Libertarian article you may find discouraging:
Trump Is Right To Worry About the Cost of Aggressive COVID-19 Control Measures
So far politicians have been acting as if only one side of the ledger matters.
JACOB SULLUM | 3.25.2020 12:01 AMPresident Donald Trump is rightly worried that the “cure” for COVID-19—sweeping restrictions on travel, local movement, business activity, and work—could prove to be “worse” than the disease.
How is that possible? The disease causes human misery and death. How can anything be worse than human misery and death?
The Libertarians have the answer. It’s “the ledger.”
That may already be true, because politicians have been acting as if only one side of this ledger matters.
Economists are predicting that the official response to the pandemic could lead to a downturn as bad as or worse than the Great Recession of 2008–09, which cost Americans an estimated $22 trillion.
It is hard to see how a loss of that magnitude can be rationally justified.
When government agencies evaluate health or safety regulations, they routinely consider not only the number of deaths they might prevent but also the cost of doing so.
That makes sense, because finite resources spent to reduce one kind of risk, depending on the payoff, might better be spent or invested elsewhere, possibly in ways that would save more lives.
Here, the Libertarian argument begins to become a bit murky.
It is true that when resources are finite and scarce, they must be allocated to a “best use” situation. An example would be coronavirus test kits, hospital beds, even doctors and nurses.
But as you will see, those are not what the author, Jacob Sullum, is talking about. He is talking about the supply of dollars (which are infinitely available to our Monetarily Sovereign U.S. government) vs. the value of human lives.
A rough calculation based on the “value of a statistical life” (VSL) that the Environmental Protection Agency uses to assess proposed regulations suggests that the cost of COVID-19 deaths in the worst-case scenario, which assumes that containment and suppression efforts are largely ineffective, would be huge: on the order of $13.6 trillion.
But if the economic projections are right, the cost of aggressive COVID-19 control measures will be substantially higher.
A definition to keep in mind:
From STRATA: THE VALUE OF A STATISTICAL LIFE: ECONOMICS AND POLITICS
Government agencies design regulations that are meant to benefit Americans. However, each regulation also comes with costs. Ideally, agencies use benefit-cost analysis to decide whether a proposed regulation is worth the cost.
When policies are designed to reduce health risks, agencies use a metric called the Value of a Statistical Life, or VSL to estimate benefits. In the simplest terms, a VSL is an estimate for how much people are willing to pay to reduce their risk of death.
Think about it. The VSL estimates how much people are willing to pay to reduce their risk of death.
How much are you willing to pay to reduce your risk of death? The question becomes meaningful if expressed in more concrete terms:
–How much extra would you pay for a car that has side-window airbags?
–How much extra would you pay to have a full-time lifeguard for your swimming pool?
–How much extra would you pay to employ a full-time, on-site doctor at your company?
–How much would you pay for a bodyguard?
–How much extra would you pay for a medicine that has a 75% chance of saving your life vs. a different medicine that has a 50% chance of saving your life.
We could go on and on with examples, but buried in the questions are more fundamental questions, such as:
–What is the likelihood you (or someone I care about) will sicken or die if you don’t pay for the preventative?
–How soon would your death happen if you don’t pay?
–How long will you live, even if you do pay?
–Are we talking about your life, your loved one’s life, your friend’s life, a stranger’s life?
STRATA goes on to list the problems with VSL. These are just a few examples:
PEOPLE DO NOT ACCURATELY PERCEIVE RISKS. Individuals have cognitive biases that do not allow them to accurately assess the risks they face.
THE VSL MAY BE OVERESTIMATED DUE TO PUBLICATION BIAS. Publication bias occurs when journals are more likely to publish studies that find large or statistically significant VSL estimates, while studies with small VSL estimates are less likely to be published.
MANY STATED PREFERENCE STUDIES ARE UNRELIABLE. Stated preference studies ask people how much they would be willing to pay to reduce risk in a hypothetical situation.
AGENCIES HAVE INCENTIVES TO MAXIMIZE BUDGETS. Public Choice Theory suggests that government agencies are incentivized to use policies and procedures designed to maximize budgets.
POLITICAL OR BUREAUCRATIC CONSIDERATIONS MAY TRUMP BENEFIT–COST ANALYSIS. VSL estimates are subject to political pressure.
Ideally, using accurate estimates of the VSL would enable agencies to conduct cost-benefit analyses that correctly identify efficient policies designed to protect people from risk and improve health.
Mr. Sullum’s article goes on to describe why he is “skeptical of policies proposed by government agencies” (his words).
That comparison assumes government intervention will be completely successful at preventing those deaths, which is certainly not true, and it uses a VSL that is arguably excessive in this case, since COVID-19 fatalities are concentrated among the elderly, meaning fewer years of life lost on average.
The true case fatality rate (CFR) for COVID-19 is likely to be much lower than the rates suggested by the official numbers, which include only confirmed cases.
Based on data from the cruise ship Diamond Princess, John Ioannidis, an epidemiologist and biostatistician at Stanford University, calculates that “reasonable estimates for the case fatality ratio in the general U.S. population vary from 0.05% to 1%.”
There is a great deal of uncertainty about these projections, and public officials may think they are erring on the side of caution. But that is true only if you ignore the potentially devastating impact of disrupting economic transactions, shutting down businesses, and depriving millions of people of their livelihoods.
If the CFR for COVID-19 is much lower than many people fear, “locking down the world with potentially tremendous social and financial consequences may be totally irrational.”
In settling on an appropriate response to COVID-19, there are no easy answers. But wise policy starts by recognizing the tradeoffs that politicians so far have been inclined to ignore.
There is one key point Mr. Sullum ignores. There is no cost for federal money.
There is no cost for federal money.
Zero. Zilch. Zip. And no, not even inflation.*
If you were to ask someone, how much extra would they pay for side-window airbags or for a medicine that has a 75% chance of saving their life (vs. a 50% chance), they would receive varying answers, depending on among other things, their personal wealth.
But if you asked a person the same kinds of questions, but said, “The federal government would pay — it would be free to you; do you want it?” — the vast majority would say, “Yes.”
In short, if we are talking about money cost, the VSL is meaningless when the Monetarily Sovereign federal government is the payer.
Unlike state and local governments, and unlike businesses and individual people, the federal government is Monetarily Sovereign. That means it has the unlimited ability to create dollars. It simply cannot unintentionally run short of dollars.
No matter how many dollars the federal government spends, it has no need to raise taxes. Federal money is absolutely free to all taxpayers. Federal spending could double, triple or increase by a factor of ten, and not one additional penny of federal taxes would be needed.
(Federal taxes serve two purposes: To help the government control economic activity and to fool the public into not asking for benefits. See: A Monopoly™ story, why you can’t see dollars, and why federal tax dollars are destroyed.)
When Mr. Sullum writes about, ” . . . the potentially devastating impact of disrupting economic transactions, shutting down businesses, and depriving millions of people of their livelihoods” he is referencing money, which the federal government has the unlimited ability to create.
*Though the public has falsely been told that federal spending causes inflation, the fact is that it would be the shutting down businesses that creates the unavailability of goods and services, and the resultant shortages are the real cause of inflation.
The best cure for inflation actually is increased federal spending for, and dissemination of, the goods and services whose scarcity caused the inflation.
In summary:
The coronavirus crisis can be addressed by massive federal investment directed in three fundamental directions.
- Increasing the supply of medical resources: research/development, equipment, drugs, facilities, and personnel.
- Increasing the supply of human resources — food, clothing, housing, education, transportation, infrastructure, etc.
- Increasing the buying power of the public.
The Value of Statistical Life (VSL) is meaningless in discussions of federal Monetarily Sovereign spending, which is limitless and comes at no cost.
Please give all of the above information to your favorite Libertarian.
Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell
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THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.
The most important problems in economics involve:
- Monetary Sovereignty describes money creation and destruction.
- Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:
Ten Steps To Prosperity:
2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)
4. Free education (including post-grad) for everyone
5. Salary for attending school
6. Eliminate federal taxes on business
7. Increase the standard income tax deduction, annually.
8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
9. Federal ownership of all banks
10. Increase federal spending on the myriad initiatives that benefit America’s 99.9%
The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.
MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
The real financial risk right now would seem to be massive deflation that will be brought on by a deep recession. I can’t imagine there is any amount of appropriately targeted federal spending that would risk inflation at the moment.
Also, I suppose on one hand it’s good that many businesses will have access to credit to keep them afloat during this crisis, but that may lengthen the recovery period as they deleverage from that debt once operations are somewhat back to normal. It would seem that direct federal subsidy would certainly hasten the recovery period.
I imagine it must be a real intellectual and rhetorical challenge for these politicians and pundits when facts and data are in direct conflict with your ideology.
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As is typical for Republicans, Democrats, and LOLbertarians alike, no one seems to do nuance, nor do they understand Monetary Sovereignty apparently. And the Donald is clearly no exception to the rule either.
That said, there are reasons to be concerned that longer-term shutdowns and lockdowns (some pundits even predict up to 18 months!) can cause a depression that NO amount of federal money can solve until well after such drastic measures are lifted. Because we didn’t quash it early on when we had the chance, there will likely be a long battle against COVID-19, to be sure, but the current “sledgehammer” phase of the battle cannot last indefinitely. Sooner or later we will have to ease or lift restrictions and pivot to case-based interventions rather than population-based ones once any of the following occur: A) the epidemic is largely under control, B) we reach the point of irreversible damage to the economy, or C) the epidemic exceeds 1% of the population and “flattening the curve” thus becomes impossible. Whichever comes first. And one of these three will happen within a few weeks from now at most, for better or worse.
That’s to say nothing of the cost in terms of individual liberty, which is at *least* as priceless as life itself, as well as the cost in terms of mental health at least in the long run. Economic depression is not the only kind of depression to worry about, after all.
And even for hardcore communitarians who believe that individual liberty is worth absolutely zilch, one can argue that the social consequences of long-term lockdowns and social distancing are ultimately corrosive to community as well.
Thus, while I half-agree with you, Rodger, I also half-agree with the LOLbertarians and (dare I say) The Donald. Because I love more country far more than I loathe its “leaders”.
I do agree 100% with you about Monetary Sovereignty and the need for a much, much larger stimulus and the Ten Steps, yesterday.
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Thanks, Alex
Good comments. I take issue with only one of them: ” . . . a depression that NO amount of federal money can solve . . .” I personally do not believe such a circumstance can exist, unless a substantial percentage of the population is physically incapacitated.
Even the Great Depression finally was cured by pre-war spending, and the economy remained vibrant during the war, even while a huge percentage of the prime workers — 18-35 — were overseas. Depression = money shortage. Add money and the depression ends.
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Kiss Trump’s butt or die. Even Republicans are appalled.
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