Ep. 112 Commentary on the Politics and Economics of the Coronavirus Response
Bob comments on various aspects of the response to the coronavirus. Although many libertarians are accusing the authorities of exaggerating the threat, it would also be a “libertarian take” to accuse them of downplaying the threat early on, misleading the public on how to stay safe. Bob also tries to clarify thinking about the Fed’s repo bailouts and the outrage over hand sanitizer price gouging.
Mentioned in the Episode and Other Links of Interest:
- U. of Minnesota’s Michael Osterholm (head of Center for Infectious Disease Research and Policy) on CNBCs “Squawk Box” on Mar. 17, explaining what Americans should expect.
- Osterholm’s Mar. 10 appearance on the Joe Rogan Experience.
- Bob on the Tom Woods Show on Mar. 5, talking about a free society’s response to coronavirus (second half). Bob’s article from 2007 on how a free market would handle quarantine. Bob’s 2017 article on the economics of price gouging.
- Carlos Lara and Bob Murphy on “How to Weather the Coming Financial Storms,” a video from September 2016.
- David Stockman’s The Great Deformation (which explains why your ATM wasn’t about to stop working in the fall of 2008). Bob Higgs’ Crisis and Leviathan, which explains the ratchet effect of government power. Stephen King’s The Stand. #CommissionsEarned (As an Amazon Associate I earn from qualifying purchases.)
- Help support the Bob Murphy Show.
The audio production for this episode was provided by Podsworth Media.
Very good analysis of economics issues around Coronavirus.
I am impelled to submit some observations on the market signal sent by someone who ‘cleans out’ a store in impending times of shortage.
To make it short: The market signal can be detected at point of sale. There is no contractual reason why a retail store can’t limit sales, or charge higher prices as their stock dwindles.
This way, scarcity is reflected in price to end consumer much faster (within the span of a single sale) and doesn’t need to make the roundabout trip back the supply chain.
In addition, retail stores serve as a ‘place where i can reliably find hand sanitizer’ to their market. The benefit to the store of selling all their stock to one customer is over time much lower than remaining ‘the place where i can reliably find hand sanitizer’, as the latter will result in them also being able to sell other items on the shopping list of customers.
The tradition of all items being sold at the same price applies during normal situations, not supply/demand shocks. Allowing intelligent, market pricing INCLUDES flexible pricing and/or quantity limits at the retail level.
Hi Clort, you’re right, on this point “Allowing intelligent, market pricing INCLUDES flexible pricing and/or quantity limits at the retail level.” I totally agree. I meant to say that but I just forgot.
We now know that vast amounts of basic medical equipment was purchased in Australia, USA and Canada and then shipped into China. This includes gloves, sanitizer, masks, etc.
I don’t begrudge the Chinese for wanting these products because they had a genuine need and they paid the asking price … however lack of price flexibility resulted in medical supplies not being available for medical professionals, let alone the general population. Nurses have been asking for donations of medical equipment, in a wealthy country that’s a bit disturbing.
Hospitals, governments and individuals do not keep their own stores of essential items “just in case” but instead have learned to buy “just in time” because usually nothing goes wrong. Another big issue is that politics has now permeated everything, and all the major political groups (including Dems, Republicans and Trump himself) saw this as a great moment to make a power grab, a money grab and milk it for everything it’s worth. All of these people should be ashamed but we live in some kind of post shame era and they all know they are beyond any consequences. The World Health Organization proved it was not trustworthy, while the CDC released the “noble lie” that masks don’t work, in order to get hold of the last few masks available for medical staff. When you hear these people say, “We are all in this together”, ask them what they have personally sacrificed, what they are putting at risk.
There is no way to provide a unified measure of all crisis situations, but based on the commonly used statistics of life lost and damage to property, this virus crisis is not the worst that our countries have seen. However it has exposed some deep problems in the way we go about handling a crisis because actually we should have been able to sort this out very easily.
By the way, Thomas Massie was the only one who was correct on the insanely large pork barrel bill , Dave Smith episode #564 has an excellent interview. Trump was a fool to sign off on so much spending when caught like this, he should have been stronger.
I was highly skeptical of your claim that the economy would bounce back after reopening, and now I think it is definitely not correct.
It is going to be nearly impossible to operate a business profitably under the new regulations, even if there were some way to restore after reopening.
Did you catch this video on track and trace? It is, by far, the most informative piece I have seen, and it is very, very scary. They will search your home, take you away from your kids, shut down businesses, etc. I think when businesses see this happening they will shut down, en masse.
Can you point out exactly what statement I made about that? I thought I had been saying the opposite?
Maybe I am misremembering, but I thought you said that this would be the equivalent of saving up some money, then going back to spending again.
I would have to go look it up myself, but I’m pretty sure I was saying, “The stock market drop isn’t merely due to the virus, it has to do with the weakness of the economy going into this. If it were merely people not spending for a few months, that wouldn’t be a huge deal.” So your point about continued regulations doesn’t contradict me either. I obviously wasn’t saying, “If gov’t limits restaurants to half capacity, that won’t affect restaurants.”