John Tamny on Experts vs. the Wisdom of Markets
2020-05-08 · Guest: John Tamny (Editor of RealClearMarkets and VP at FreedomWorks) · 52:01
Economic consequences of COVID-19 lockdowns and market freedom
Bob Zadek and John Tamny discuss the economic and social consequences of the COVID-19 lockdowns, arguing that the “money vs. life” dichotomy is false because economic growth is essential for health and longevity. They contend that decentralized market wisdom and individual freedom are superior to the centralized planning of experts, which disproportionately harms the working class while favoring the “managerial class.”
Topics: COVID-19, lockdowns, market wisdom, economic growth, wealth transfer, public choice, the knowledge problem, John Tamny, work identity
Speakers:
- Bob Zadek: Host
- John Tamny: Editor of RealClearMarkets, Vice President at FreedomWorks, and author
- Caller (Jacob): Listener
Your Money or Your Life [00:23]
Bob Zadek: Good morning, everyone. Welcome to The Bob Zadek Show, the longest-running live libertarian talk radio show on all of radio. Thank you so much for listening this Mother’s Day Sunday morning.
We all know the old saw about the robber who pushes you into an alleyway, points a gun at your head, and says, “Your money or your life? Your money or your life?” Isn’t that what all Americans are being asked to pick today in America? Partly or substantially the result of the worldwide pandemic of the coronavirus, and partly, perhaps substantially, the result of unfortunate decisions which governments around the world, especially, of course, the United States, have forced us to make. We are all being told we have to make a decision: our money or our life. Except we don’t get to decide. The government has decided for us by dint of the national—almost throughout the entire country—national lockdown and the shutdown of gainful employment for all but whatever that may mean, “essential industries.”
There, of course, is a different approach than “our money or our life,” and that approach has been expressed in a recent column that caught my attention. The column says it all: “Don’t just plan to reopen, just reopen.”
Introducing John Tamny [01:01]
Bob Zadek: The author of that column was a writer whom I follow almost every morning, a prolific blogger and author, John Tamny. John is the editor of RealClearMarkets. He’s a vice president and director at FreedomWorks, a very important conservative free-market think tank, and is a senior economic advisor at Toreador Research and Trading. John has written many books: The End of Work, a wonderful read about the growth of jobs and the importance of jobs; prior to that, John wrote Who Needs the Fed? and also Popular Economics. To join us this morning, John will help us make the choice of our money or our life, and why we ought to not plan to reopen, but just reopen. John, welcome to the show this morning.
John Tamny: Hey, Bob. Thank you so much for having me. I appreciate it.
Bob Zadek: So, John, here we are. A choice, the crucial choice of our money or our life, seems to be before us. And yet the government seems to have decided, in the words of, I think, the Governor of Pennsylvania, “life before livelihood.” An absurd statement, utterly absurd statement. We’ll explore that this morning. But in deciding, in our government, given our economic history, given our political history, here we have a government which has to balance our money or our life. How should that decision be made in terms of policy which government imposes or doesn’t impose on all Americans? How should that choice be made, and what should be the considerations of our money or our life?
Poverty: The World’s Biggest Killer [03:01]
John Tamny: Well, in obviously our perfect world, there would be no policy. I think the mistake is always to lead with policy. Free people achieve all sorts of amazing outcomes without it. But in this case, to pretend that, “Oh, yes, we’ll just choose life over livelihood,” is a remarkably absurd statement, as you allude. Easily the biggest killer of mankind the world has ever known, and nothing else comes close, is poverty, starvation. And to pretend that the choice of economic growth is somehow anti-life—no, in fact, economic growth is why we live longer and better with exponentially better living standards all the time. It’s why we’ve suddenly discovered diseases like Alzheimer’s. It used to be that people around the world didn’t live long enough, hence they never got to that point. And so it’s economic growth that helps us to live. If you take it away, we will live less and we will live in much worse fashion.
The Problem with Centralized Planning [05:00]
Bob Zadek: Now, John, Governor Cuomo and others—I don’t mean to single him out, but he is a perfect example because of some statements he made recently—Governor Cuomo, the Governor of, of course, of New York, recently said with righteous indignation—in fact, it was righteous indignation all capital letters, italicized and underlined—with righteous indignation, he in effect said the policy of New York will be: even losing one life would be too many. Therefore, he said, as policy in response to a question, that he will not reopen the New York state economy until basically—he didn’t quite say this, but clearly that was the implication—until there’s no danger. In other words, it’s sort of like zero tolerance for COVID-19 deaths. Which means he is deciding for life over livelihood.
Now, how should—since both are at risk, livelihood is at risk and life is at risk—tell us in your opinion what the process should be. How do governments and governors make the important decision? How do they sort out how best to behave? What are the beacons which lead the way, or which should lead the way, to our governments, state and local, in making that decision in creating or not creating policy? What are the guiding lights?
John Tamny: Again, I think I speak for the both of us: there should be no guiding lights. The guiding light can only be freedom. And the reason for that is that because if people are free to make their own decisions, it’s not as though they’ll disregard the new coronavirus. They’ll just approach it in different ways. Some businesses will open up completely and say, “We’re not going to worry about crowds. We think the more customers the better.” Some will open up halfway. Some will say, “We’re not going to open up at all. We’re fearful that people coming in and interacting with one another will mean that we create hot zones such that our business is compromised over the long term.” Let’s also add that some individuals will not go out at all for fear of being infected. Some, on the other hand, will say, “Oh, are you kidding? I can’t wait to get back to normal life.”
Experts vs. The Wisdom of Crowds [07:06]
John Tamny: And so with that, we’d create abundant information. We’d find out: is the new coronavirus really—does it pass on through touching one another, shaking hands and things like that? Let’s remember that in the 1980s, it was assumed that AIDS could be passed on just by being in the same room as someone who had AIDS. We now laugh at that. So through people interacting freely, some people taking enormous precaution, some taking very little caution, we create the information that tells us how to live in this new future. The problem with plans is they blind us. We have no information when government is planning things because people, if they’re not able to act freely, they can’t produce the information that we need.
Bob Zadek: John, you have written on that, following that train of thought. You have written eloquently and passionately and with fact-based observations. You have not been fond of the use of or the reference to experts. And you have favored providing information, as you have just said, by experimentation, by letting humans in their behavior produce, in effect, the data which experts can then use, perhaps, to make decisions. So in effect, you have railed against the reliance—and of course, facts have proven you correct—in reliance upon experts. So tell us more about that dichotomy between reliance upon experts, which produces bad results, as opposed to observing behavior.
John Tamny: Well, let’s think about Anthony Fauci. According to some, he’s a formidable intellect. So let’s just agree he’s enormously smart. Okay. Well, so if he walks into Redskins stadium next fall to the first Redskins game, it may be that he’s the smartest person at FedEx Field. But the 80,000 fans collectively are much smarter than he is. And it doesn’t even come close. And the reason they are is that they bring 80,000 different bits of knowledge and information about how the world works.
And so what I’m describing there is markets. It’s not as though there weren’t experts in the former Soviet Union. It’s not as though there aren’t experts in North Korea and Cuba now. But anytime you substitute the genius of the very few for the broad genius of the marketplace, or this decentralized information, invariably you create problems. That’s why the formerly centrally planned economies failed. These were smart people, but you can’t plan the infinite decisions people are making every second of every single day.
And so it’s the same idea here. Governments decree a crisis, at which point they hand over handling of the crisis to experts. And so in doing so, it’s a self-fulfilling prophecy. The experts are the crisis because suddenly, rather than letting market signals guide how you respond to things, how you approach a new virus or any kind of health issue or any issue at all, you suddenly have the very few planning in centralized fashion, whereas in normal life, decentralized planning guides us on the way to plenty. And so governments, in relying on experts, create the crisis every single time.
Bob Zadek: And what you have—the most important word, I think, in your last statement was “collective.” The collective wisdom of millions of people acting independent of one another. The collective judgment of those people is—the wisdom of experts is no match for that. It’s just information that cannot be discerned other than by observing behavior. That is—cannot be debated. That is an absolute. The price of something is only the price that a seller is willing to sell it for and a buyer is willing to pay for it. Only that determines the price. The government can set the price by fiat, but that is just using a gun to determine the price. That’s not the real value. You cannot set the price except in the market.
And the same with policy. Policy is humans acting in their own self-interest on the basis of information. And that is crucial. Our founders knew that. Economic scholars in the past have known that. The decision of individuals acting in their self-interest is valuable, but only to the extent that it is informed. So, John, I think you would agree with me that it’s not an individual alone is smarter than your hypothetical Dr. Fauci, but it’s the collective wisdom, the sum of all those independent decisions which tell us the right way to behave.
And also, John, you have written so passionately about freedom. Even if it’s a wash between two policies, the default has to be to freedom. Expand upon that if you would.
John Tamny: Yeah, I think it’s got to be stressed always that I would be for low taxes, no regulation, free trade, and a dollar that holds its value throughout time, even if you could prove to me that those policies correlated with slower economic growth. I’m for freedom. It’s as simple as that. I don’t think—I think free people make the best decisions. Implicit there is not that, “Oh, yeah, when you’re free, you’re just left alone.” Let’s never forget that free people are guided by all sorts of people: people in the town they live in, influencers in that town. Free people are not individuals acting alone without any sort of information. There are going to be all sorts of people around saying, “You know what? This virus is pretty dangerous, and you ought to consider staying at home for a while.” Or, “You know what? This virus is actually—it’s overstated. It’s not very dangerous for young people. Hey, 23-year-old, this is probably a good time for you to get into the job market while other people are pulling themselves out of it. This would be a chance for you to shine at a time when labor is very much needed.”
And so again, I’m for freedom no matter what. And I’m always skeptical if government—Holman Jenkins even says government should be providing information right now about the coronavirus. I disagree. Now, government, of course, always expands beyond what it’s supposed to be. But does anyone really think that if there weren’t government, we wouldn’t know about the coronavirus? I mean, let’s be serious.
Bob Zadek: But of course, individuals do need information. Whoever provides it, that’s sort of almost besides the point. But individuals acting in their own self-interest with free choice—some will make the wrong choice, some will make the right choice. Collectively, the right choice will be known to all. And what’s most importantly is individuals are acting, as you have said, John, by exercising free choice and without coercion.
The Value of Work Beyond the Paycheck [16:14]
Bob Zadek: Now, John, you have written an entire book on the importance of jobs. The importance of jobs in the economy—that doesn’t have to be discussed—but the importance of jobs to the worker, and the relationship of workers to their job. And that becomes crucially important because right now, individuals are denied by fiat, by dictat by the government, they are denied access to their job. So tell us some of the conclusions you have reached in your study of jobs and the relationship of an individual to their work.
John Tamny: Well, it’s a great question. I’ll say in my case that I couldn’t not work. I can’t get enough of it. If I weren’t able to do my job as a writer in these eight weeks of lockdown, I don’t know what would have become of me. I just—I can’t get enough of it. Warren Buffett could easily make it possible for me to retire in grand fashion today. If he offered me the money to do that, I think I’d be pressured by my wife to accept the money. But Warren Buffett could not give me happiness. Work to me is an endless source of happiness, of accomplishment, of identity. It gives me everything.
And that’s one of the many things that I found so distasteful about what government did. Politicians on the local, state, and national level imposed lockdowns that put tens of millions of Americans out of work. That was bad enough because it was unnecessary. I don’t need a law to protect myself from illness and potential death. But worse than that is they took from people what gives them purpose. And so the response was, “Oh, here’s $1,200 to make you feel better.” Is my work so cheap to you that you think you can buy it for $1,200? The very arrogance of the political class that they said, “Okay, here’s your compensation for that.” My work means exponentially more to me than that. And really, there’s no way you could put a dollar value on it. And so when you think of the tens of so many Americans lost their chance to do what makes them great, what makes them shine, what reinforces what’s brilliant and unique about them—the levels on which politicians destroyed lives and livelihoods, you cannot minimize what horrific acts they’ve conducted in the past eight weeks.
Bob Zadek: And your point is so profound. Imagine if government said, “Okay, we are going to take away something else you value. Take away contact with family members, but here’s a check, and here’s a nice-sized check.” Do you now say to yourself, “Well, that’s a wash. I’m losing contact with family members, but I’m getting a nice big check, so I’m just as happy as I was before”? John, I think your point is that getting paid for work is only part of the exchange. What workers get is far more than simply a check. They get self-esteem, they get self-respect, they get satisfaction, they get control over their lives, and they are not—I can’t even say the word—dependent upon somebody else.
And this is yet again another example of replacing all of the positives that come from work and replacing it with dependency. So we are sitting around looking at our bank account, waiting for the transfer to hit the account so we can buy groceries. But where do we get the transfer of the self-esteem? And that’s what government has not built into the equation. So when government says “your livelihood or your life,” they are misunderstanding everything. Your life is your livelihood. They are not separate. They’re one and the same. And the fact that your life is the amalgam of all those components, including work. So it is your partial life or your full life. That is the choice. Isn’t that kind of the point you’re making, John?
John Tamny: Without question. Work is happiness. Again, Warren Buffett could retire all sorts—many of the listeners on this show to a life of grand fashion. He could give us money, but he could not give us happiness. I think happiness comes from doing things and doing them well. And that’s—and to be clear, this has been a long struggle with me and conservatives and libertarians too. They say, “Well, government creates dependency.” I disagree. I think most Americans would work even if they had lots of money. Americans need that self-esteem that you talk about. They need that sense of accomplishment. I think you put it so well in talking about family. Could government write you a check to separate from family? I’m sorry, I don’t raise my kids because of a check. It’s something I couldn’t not do. For government to separate me from them and say, “Okay, in return for that, because you’re a lethal menace to them because you might give them coronavirus or give them the virus, we’ll pay you to be away from them”—there’s no way. There’d be mass revolt. People just generally want to be good parents and they want to be good workers because they get something from it far more important than money. And it just—it’s so sickening. And in our call last night, I think it should be stressed: you put it so well about this, that governments think that we just work for money. And no, we work—you put it much better than that, but they’ve devalued what we do by pretending it’s all about money. No, it’s so much more than that.
Wealth Transfer and the Productive Class [24:11]
Bob Zadek: And the unwritten or the undiscussed—at least not for much that I have read—concept of what’s going on now with trying to buy off workers by giving them money is what we are doing is: this is the mother, the mother of all income transfers. “Income transfers” is kind of an abhorrent word among those who prefer to live in a free-market environment. Income transfers are simply compelled by government with the point of a gun or a jail cell—compelled transfer of wealth from those who have it to those who don’t.
And what is happening today is—and we will explore this after our break because it is under-discussed and under-reported—is that since the overwhelming majority of the victims of the virus are people in their 60s and 70s, the older people to be sure—and let’s just say without being judgmental, just trying to be objective, and please I mean no offense—but the less productive elements of society, because they have been productive for so many years, they are allowed to be, of course, less productive. But the wealth transfer once again, just like Medicare and Social Security, this transfer in the trillions of wealth from the most productive elements of society—all the workers who now are locked out of their job—a wealth transfer from the workers to who are we protecting? We are protecting seniors. Not that they do not deserve protection, but that is an economic decision we are making to transfer wealth from the most productive to the less productive. And that wealth transfer has not been discussed or debated as to whether it’s a good idea for anybody, the transferor or the transferee.
We will explore this wealth transfer implications which has been done without any discussion when we come back from our 30-second break. This is Bob Zadek, I’m speaking with John Tamny. John is the editor of RealClearMarkets, the author of The End of Work, and of course, he does not propose the end of work; he writes passionately about work. More about the COVID virus and its economic effects when we come back. There is so much more to discuss.
[Break]
Bob Zadek: Welcome back to The Bob Zadek Show, the longest-running live libertarian talk radio show on all of radio. This morning we are speaking with John Tamny. John is the editor of RealClearMarkets. He’s a vice president and director of FreedomWorks, a prolific author and blogger. He writes frequently—they are must-reads—three or four times a week for the American Institute of Economic Research, a very informative column that John writes. John recently wrote about “Don’t plan to reopen, just reopen.” Of course, John was talking about the economic policy imposed upon us by the coronavirus. Even the word “policy” one has to recoil a bit, because policy means behavior forced upon us by our government instead of policy and decisions arrived at by each of us independently based upon our own self-interest.
Now, John, the economic effects of government policy is the core subject this morning and what you have written about quite a bit. As you pointed out to me and as of course all your readers know, you are not commenting at all as a doctor, nor am I. We are only commenting on the policy, on the constitutional limitations on what government can or should do, and most importantly, we are talking about the economic effects.
The Statistical Reality of Policy Trade-offs [28:48]
Bob Zadek: Now, in a discussion of the economic effects of the virus, we are required—we being all of us acting individually and collectively through government—we are required to make a decision about how much we should spend—spend being either reducing economic growth or by taxation and wealth transfer—how much we should spend to save a life. I.e., what is the value of a human life?
Now, that conversation is very painful to many Americans, many people in the world, and they would rather not have the conversation. Many who are perhaps less thoughtful than you will say you cannot put a value on human life. That is exactly what Andrew Cuomo said. But of course, government, every—almost every policy government does or certainly should do—put a value on human life. Policy decisions which are made for the collective well-being are always determining how much to spend for how much benefit on people’s health and longevity. So that decision goes on all the time. That is not special to the virus. And isn’t that really what should be driving the policy opening or closing work by government? Shouldn’t that be the determining factor, and how should it be made?
John Tamny: Again, I have no policy and I have no plan. I think it’s dangerous. I think people should be free to put their own values on life. I know that in my case, I’ve just always assumed that the new virus was very lethal. Let me explain. Because I don’t know the difference. And so because it’s viewed that way, I put on a mask on occasion—I could be wrong—I wash my hands, all these different things. It’s not my place to say whether or not this is lethal.
What I want to stress is that even if it were true that the original Imperial College projections of millions of Americans dead, my approach still would be freedom. Simply because freedom is what produces the information that makes us most able to limit the lethality of it. We know more. And let’s be clear why we know more. Some people in response to the possibility of millions of dead would have gone into hiding and quarantining and they wouldn’t have allowed anyone near them. But some people also would say, “Are you kidding me? I refuse to change my lifestyle at all.” And some businesses would say, “Are you kidding? We’re going to continue to serve come one, come all.” Let’s be clear: those who don’t take the virus seriously are as crucial to combating it as those who take it very seriously. Because in their actions, they tell us how easily or not easily it’s transmitted and what happens to us if in fact it is transmitted.
Let’s never forget drugs are illegal, but people still use drugs. Some say that cocaine and heroin can kill you, yet people still use it. And the fact that they do provides information to us all about the implications of use. In the same way here, you want massive amounts of information. You want people trying—free people creating information. Let’s also remember that when people are free, economic growth is abundant. In as recently as the 1940s, the biggest expense for hospitals was bedsheets and bandages. Well, since then, because of massive economic growth that has been matched with scientists on the way to myriad cures, hospitals can actually elongate lives, doctors can elongate lives.
And so if the question is here, “Oh, the virus is lethal?” Oh my gosh, keep the economy open! We’ve got to create as many resources as possible so that we can match them with doctors and scientists on the way to finding answers to this. The answer is always freedom, not because people if they were free would just go out and kill themselves—of course they wouldn’t—because free people produce the economic growth and also the information that gives us answers.
Bob Zadek: And if we think that it is tempting for individuals to say that has an element of thoughtlessness, of even cruelty, to allow people to behave in self-destructive behavior, I will just remind our listeners that every single day of our lives, our government, in decisions large and small, makes decisions that some must die for the ultimate common good.
Freedom and the Risk of Death [34:31]
Bob Zadek: Now, if that seems harsh, think of war. Think of sending troops overseas. Who do we send overseas? The most productive, the young, the future of our country, the younger generation. Those are the ones which government selects—some of you will die. Why? Because the collective—there’s a collective benefit that is offset, that more than offsets, regretfully, your life. We make that decision. And we make it with a heavy heart, but it doesn’t question the decision-making. If the decision—if war is essential—now, we can debate that in another show—but if war is given, it is essential that we send troops in harm’s way, some of whom will die. If that is the right decision, it’s the right decision because the collective benefit outweighs the damage to the few.
So that’s a decision we are totally comfortable making. When we make decisions to permit driving—driving kills 55,000, more or less, Americans every year. Would anybody suggest that, “Hey, let’s save 55,000 lives and ban the automobile”? Now, for sure you would save lives from auto deaths, but the collective damage from the absence of the automobile is obviously far greater than the 55,000 random Americans who will die. So it is the same decision. And as John points out, the decision to open up the economy, knowing that some people will die or will get sick, is the same decision as sending Americans into harm’s way. Some will die, but the collective benefit. And as John points out—
John Tamny: And it’s the same decision as letting people live, as you allude. Living itself can lead to harmful outcomes. Again, car accidents, there’s all sorts of things that we do. Some people like to extreme ski and they get caught in avalanches. Freedom to live includes death. Life—viruses will come up in life. It’s unfortunate, but because they will, it’s essential that people be free so that we can limit the collateral damage from viruses. Freedom is the path to understanding them as quickly as possible.
Bob Zadek: Exactly. And therefore it is freedom first. The default has to be freedom. And a decision to deny even to deny any freedoms, any inherent, especially enumerated rights that Americans have, any rights that we have because we are free people living in a free country—those rights cannot be taken away from us thoughtlessly without profound examination that there better be a clearly defined—not a guess—a clearly defined benefit to us all that offsets the deprivation of freedom. Freedom is not a giveaway. Freedom is not a throwaway. It’s not a five-cents-off coupon. Freedom cannot be given up on a policy matter because it may be the right call. It must be the right call before government takes away freedom.
Caller: Conspiracies vs. Incentives [36:54]
Bob Zadek: Now, John, we have a caller, a regular caller on the show. I’d like to take the call now. Jacob, welcome to the show this morning. What’s on your mind?
Caller (Jacob): Bob, I’m wondering if your guest—he brought up the Soviet Union and, you know, you’re talking about wealth transfer, Bob. Could there be a similar objective, ulterior objectives if you will, sort of like what happened with the fall of the Soviet Union, how all these great wealth of the Soviet Union was up for grabs, and there was a—you know, could the same thing be happening now with the school system, the health system? They’re going to make everything depressed, and then they’ll swoop in and loot the school system properties, the health system properties. And could this be an Operation Northwoods, acts of terrorism against civilian targets?
Bob Zadek: I’m not much of a conspiracy theorist, and I don’t think John is either. But John, I think this is simply a question of the infatuation that government has with reliance upon experts, and experts are smarter than a free people acting, making their own decisions. John?
John Tamny: Yeah, governments want to be doing things. They’re not—you don’t get into politics because you want to shrink government. I don’t care whether you’re a Republican or a Democrat or a Libertarian. You get into politics because you want to do things. And so they exist to do things. They want to protect themselves. They—if in fact this had been incredibly lethal, they want to be say, “Well, we did this, this, and this.”
And if there’s one area that I might disagree with you on, it’s not about freedom—we’ll give up our freedom if you can demonstrate a reason for giving it up. Governments have been using that forever. I even heard that from libertarians this time around. They said, “The problem with freedom here is that free people could go out and infect other people, so we need government to step in and limit our ability to move about.” And I said to them, “You know, this is what they said after 9/11. They said we have to have the Patriot Act. We have to do all—we have to limit your freedom so that we can save you.” And it’s—don’t—I would just—I think I preach to the choir here: don’t ever fall for that. Again, I would be for freedom even if you could demonstrate that it led to reduced health outcomes, reduced economic outcomes. I just think it’s the better policy.
And in answer to—and as far as the conspiracy theories, no, I don’t buy too much into that. I think too often our side buys into this idea that government is trying to take control of the schools to indoctrinate us. I’m sorry, I’m not a victim. I refuse to be a victim. You can’t make me stupid. No school can make me stupid. I’m so sick of conservatives blaming teachers and everything for the problems in society. Why can’t people just think for themselves?
The Managerial Class and the “Rich Man’s Coronavirus” [40:01]
Bob Zadek: John, I know it’s your point of view, and I might invite you to expand upon it a little bit, that even if, or despite that, not shutting down the economy, allowing people to continue to go to work—even if the fact was, even if it was indisputable, that that would cause more coronavirus deaths—I can’t say in the short run or the long run, I don’t know, you don’t know—but the fact that keeping the economy open would cause more deaths is not a reason not to do it. Is that a fair summary? That it is too important to us all collectively to keep the economy open. The collective damage to us all is far greater than the damage to the few by keeping the economy open.
John Tamny: Absolutely. I mean, again, as you allude, theoretically they could reduce automobile deaths if they took away our rights to drive our cars. That’s the same. Okay. But again, the loss of freedom—but let’s consider more broadly what would happen if suddenly we couldn’t drive our cars. The economic contraction would be so profound, we would be reduced to autarkic individuals. We’d be far more reliant on local farmers for our food and everything. Life would suddenly become dreadful. And consider all the deaths that would result from that, all the loss of ability for people to earn a living that would lead to suicides.
Let’s consider also in that scenario the massively reduced amount of wealth created, which means there would be exponentially less investment in healthcare advances that consistently elongate lives. No one doubts—let’s never forget that “flattening the curve,” this decadent notion that political types came up with, never said—never said that was going to delay the getting of the virus. It just—it just said it was only going to delay it. You can’t push it back forever. And so we have to consider, okay, yeah, to flatten the curve, assuming they even did that—and even that’s debatable. Look at—there’s no big virus outbreak in India, and people are very close in India. But even if you could do that, look at what all we’ve lost: tens of millions of jobs gone down the tubes, businesses out of business, wealth creation to some degree at a standstill.
What are the long-term implications of that in terms of investments that never happen in healthcare advances? What are the long-term implications in terms of jobs never created, companies never created that would have elongated life in countless other ways? You can always point to, “Yeah, well we saved 20,000 lives here.” But how many lives will end too early because we basically put our economy and our ability to produce resources at a standstill? So if it’s going to become a statistical argument, the idea that, “Okay, well this is going to save lives in the near term”—please, the long-term implications are much worse.
Bob Zadek: And you and I both know that you’re making indirect reference to an observation by an economic journalist in the 1850s in France, Frédéric Bastiat, who wrote persuasively about what he calls “the unseen.” That politicians often will point to the visual benefits of their policies, ignoring the unseen long-term policies, which is exactly what you’re referring to.
And along those lines, John, and as an economic observation, you and I live in what I will call, what we will call, the managerial class. We are able to work from home. I find that all of my colleagues, professionals, attorneys, business people, are able to work from home. So we can sort of shrug this off economically. I’m not profoundly affected, and even my lifestyle—it’s kind of unaffected. But the people who are most affected are the hourly workers, the service economy. A waiter cannot work from home. A factory worker cannot work from home. The concept doesn’t exist. So there is an ugly, an ugly class implication that we have adopted a policy that favors the middle class and upper-middle class and profoundly, and you’ve written about this, adversely affects the lower classes. And that may—I can’t tell how much that fact drives the decisions made by government to close down the economy, because the only economy that was closed down is those that which the people who are dependent paycheck to paycheck on their salaries to live. They are the most affected. And John, you and I kind of get to coast through. So speak about that unseen, again borrowing from Bastiat, the unseen effects upon those people who are least able to protect themselves and how insufficient the “throw them a bone, let them eat cake” $1,200 check is to them.
John Tamny: Yeah, no, it’s no question. Going back to March, I was writing “Rich Man’s Coronavirus.” I find it incredibly distasteful seeing people from the class that you and I are part of—you know, for them it was just several weeks off and, you know, they’re posting on social media, “Look at us with our kids with our cookie kits, and look at what we’re doing with our kids today. Oh, look at me working side-by-side with my wife and everything.” I thought the tone-deafness of that! Yes, for America’s great, the vast middle, yeah, this was about working from home. It’s easy, we’ve got jobs that we can continue to do. But for those low-rent people that we just deal with when we go out, for whom work is a destination—oh, as you say, “let them eat cake.” This was the most arrogant—and I do not blame the rich. The super-rich created these technological advances that made it possible for us to work from home. Let’s remember, as you well know, there were viruses before, but they couldn’t shut down the economy because for everyone, work was a destination. And so the super-rich created these advances that made it possible for all too many of us to work from anywhere. But the little people? Oh no, those people, see, they have to go somewhere for work. And who cares about them? And so I find it so unsettling that the middle class in the United States could be so tone-deaf and unaware of the implications of these policy—of the coronavirus policy, how it’s impacting the little people. And I hope politicians pay in enormous fashion for what they did to all too many. If I hear one more time that the middle classes are the backbone of our economy, spare me. The middle class accepted this, “Oh, we’ll just bend the cost curve downward and bake cookies for a few weeks,” while everyone else gets it with a fist. And I find it disgusting how many people we know who’ve just gone along with this and pretended that all is normal while people, desperate people, immigrants, legal and illegal, have nothing and nowhere to go and no job to go to. I find it so offensive.
Bob Zadek: As do I. It is—they’re invisible and they’re not politically connected, and therefore they are the true victims of this economy. And as I said when I introduced the topic this morning, this is a profound wealth transfer in the trillions from those people, John, that you spoke about almost with tears in your eyes. Those people against their will have their wealth, their job, which is their wealth, transferred from them to prevent an infinitely fewer number of people from getting ill or from dying. They didn’t get to vote on this policy. However, they are the victims and they have no seat at the table to establish this policy. John, you are so right in writing what you did about the importance of jobs.
Why the Stock Market is Rising [46:11]
Bob Zadek: Now, John, we have only a minute to go. Because you have such interesting thoughts on this, in about a minute, can you help us understand—because it just puzzles me—why the stock market seems to be behaving as if we are not in the economic crisis that we’re in? Yes, it went down, but recently it has been going up. We have about a minute, John. Any observations on that?
John Tamny: Yes. Markets never price in the present. They always price in the future. And this is why I have written throughout all my pessimism, I’ve written that the economy is going to roar back. That for the typical American entrepreneur, this is nothing. Someone like Phil Knight faced death for 18 years in building up Nike. He just felt like every day was his last, and that’s what entrepreneurs understand. As they’ll constantly tell you, “I’m too smart for Trump, I’m too smart for Obama, I’m too smart for the people in politics.” And so the entrepreneurs will bail out the political class yet again. And so the stock market is just a reflection of the fact that these lockdowns have to end, and they have to end because Americans will not accept having their lives and livelihoods taken from them forever. And because they won’t, eventually they’ll be allowed—
Bob Zadek: John, I gotta interrupt. I’m sorry. I have to interrupt to say goodbye to my guest, John Tamny, editor of RealClearMarkets. We’ll be back again next Sunday for another hour of hopefully thoughtful conversation. See you then.