There is a baby formula shortage in the United States of America. This is a public health crisis. pic.twitter.com/s1fImGGBem

— Jason D. Meister 🇺🇸 (@jason_meister) May 9, 2022

The share of baby formula out of stock across the U.S. hit 40% on April 24, according to Datasembly. That’s up from 29% in March. https://t.co/Q7m0NZYHva

— NBC News (@NBCNews) May 10, 2022

‘One of the Most Tightly Regulated Food Products’

Few may realize it, but baby formula is one of the most regulated food products in America. That’s not me saying it, but the New York Times.

As Christina Szalinski reported in March 2021, “baby formula is one of the most tightly regulated food products in the US, with the Food and Drug Administration (FDA) dictating the nutrients and vitamins, and setting strict rules about how formula is produced, packaged, and labeled.”

Despite these regulations—or, more likely, because of them—many American parents purchase "unapproved" European formula, despite the fact that it is technically illegal, as Szalinski points out.

"There are enormous Facebook communities devoted to European formulas," she explains, "where parents share spreadsheets and comprehensive notes on components and how these formulations compare to their American counterparts." "Some caregivers say they chose them because European brands provide formula options (such as goat's milk or milk from pasture-raised cows) that are unusual or nonexistent in FDA-regulated form in the United States." Others choose European brands because they believe the formulations are of higher quality and European formula controls are more stringent."

Americans are willing to pay a lot of money for European formula on this black(ish) market. According to Szalinski, German imports cost around $26 for a 400-gram package on one website offering EU baby formula, which is approximately quadruple the price of the top US infant formulae suggested by the Times.

These illicit black market imports have occasionally resulted in high-profile busts, such as in April 2021 in Philadelphia, when US Customs and Border Protection agents seized 588 cases of infant formula (worth $30,000) that violated the FDA's "import safety requirements."

Some may argue that the FDA is simply protecting Americans and their infants, which is undoubtedly what regulators want you to believe, but this ignores an inconvenient fact: despite the FDA's efforts, Americans are ingesting large volumes of black market baby formula, and the children are doing great.

We have high tariffs (technically tariff rate quotas but whatever) on infant formula, of course. https://t.co/M3XKKf9F7J

— Scott Lincicome (@scottlincicome) May 5, 2022

However, the government's regulatory battle on baby formula imports isn't the only factor contributing to the shortfall. Tariffs have also had an impact. The US government slaps an 18 percent tax on baby formula (officially a "tariff rate quota"), as Cato scholar Scott Lincicome pointed out on Twitter.

Economists agree that tariffs cause market inefficiencies that hurt domestic consumers over time, and there's evidence to suspect that these import duties have made it more difficult for Americans to get baby formula during this scarcity (and hit their pocketbooks, too).

Who Gets to Choose

If the Biden administration is serious about addressing the newborn formula shortage, they could forego "working around the clock" and simply repeal the protectionist policies and regulations that make purchasing formula more difficult.

Some may argue that this would lead to more "questionable" foreign imports of baby formula, but it's a fallacy to suppose that bureaucrats in Washington, DC (or anywhere else for that matter) have the "correct" formula that fits some universal standard.

Indeed, as Szalinski points out in her New York Times article, while the EU and the US both need a number of the same vitamins and minerals in baby formula, there are some notable variances, particularly in terms of iron concentration and DHA (an omega-3 fatty acid).

Nearly all American baby formulae fail to fulfill the EU criteria because the EU needs high doses of DHA, which are not required at all in the United States.

"At the moment, the new infant formula Bobbie is the only US formula that meets the EU's DHA standards," adds Szalinski. "Bobbie is advertised as an FDA-regulated alternative to European formulas as a self-described 'European-style' formula."

Bureaucrats in Washington, DC, will probably certainly argue that their formula is the best and healthiest, whilst bureaucrats in Europe will almost certainly argue that they have the best combination of components.

This raises an essential question: does the EU or the United States have the best infant formula?

Many people believe they know, but economist Thomas Sowell points out that this is the wrong question to ask.

"The most fundamental concern is not what is best, but who will judge what is best," says Sowell.

Sowell was arguing that consumers with a stake in the game must eventually select which product or service is best for them, and government attempts to regulate that decision usually make it more difficult for consumers to receive the greatest product at the best price.

This is why, according to Ludwig von Mises, the genuine captains of the economic ship in a free market are customers, not politicians, CEOs, or bureaucrats.

“The real bosses, in the capitalist system of market economy, are the consumers,” Mises wrote in his book Bureaucracy. “They, by their buying and by their abstention from buying, decide who should own the capital and run the plants. They determine what should be produced and in what quantity and quality. Their attitudes result either in profit or in loss for the enterpriser.”

The baby formula shortage is the latest example that shows most people in Washington, DC need to crack open some Mises and stop trying to provide “solutions” to markets.

CNN reports that Holmes, whose trial had dragged on for months, faces 20 years in prison for each count, as well as fines and restitution. Holmes’ fate now hangs with US District Judge Edward Davila, who will preside over her sentencing.

A Meteoric Rise

Holmes' ascension was rapid. Despite knowing nothing about engineering and much less about medical, she recruited some of the world's wealthiest investors to her firm, including Rupert Murdoch, Larry Ellison, Tim Draper, and Walgreens, America's second biggest drugstore chain, with the promise of changing blood testing. Theranos had an illustrious board of directors. Two former US Secretaries of State (Henry Kissinger and George Schultz), a four-star general (Jim "Mad Dog" Mattis), and the attorney who defended Al Gore in the Bush v. Gore case were among the attendees (David Boies).

Theranos employed 800 workers and was valued at roughly $10 billion when Holmes relocated the firm to Stanford University's research park in the fall of 2014. Holmes was friends with some of the world's most powerful leaders and has given speeches alongside Joe Biden and Bill Clinton.

Less than five years later, however, Theranos was bankrupt. The company was worth less than $0 and Holmes and Theranos president Sunny Balwani—her lover—were facing federal charges of fraud for allegedly "raising more than $700 million from investors through an elaborate, years-long fraud in which they exaggerated or made false statements about the company's technology, business, and financial performance."

Edison, Jobs, and … Beethoven?

During Holmes’ trial, my wife and I watched the HBO documentary The Inventor: Out for Blood in Silicon Valley, which details the stunning story.

There are many takeaways from the film, which I encourage readers to watch. One is struck by how easily Holmes was able to dupe some of the brightest and most successful people on the planet, especially older men. When a journalist asked “Mad Dog” Mattis what first came to mind with Holmes, he didn’t hesitate.

“Integrity,” Mattis answered.

Among the journalists conned by Holmes—and they were legion—was Roger Parloff, a respected writer educated at Harvard and Yale who wrote a glowing cover story of Holmes in Fortune magazine. Little did Parloff know that Holmes, when she couldn’t dodge the questions Parloff asked, simply lied to him. This tactic served her well until she ran up against Wall Street Journal reporter John Carreyrou who had the benefit of a Theranos whistleblower. With a credible source and a powerful newspaper behind him that refused to be intimidated by Holmes’ team of lawyers, Carreyrou quickly blew the Theranos story wide open.

Holmes' self-assurance and physical appearance were key factors in her ability to deceive so many people. Her piercing blue eyes, vivid red lipstick, and mane of blonde hair were all eye-catching, but her Jobsian black turtlenecks, baritone voice (an act), and calm manner gave her a svengali-like aura over many others. For them, Jobs and Edison were inadequate parallels; she was the next Beethoven.

Some people couldn't believe Holmes was telling the truth. George Shultz, the late Secretary of State, trusted Holmes above his own grandson, the Theranos employee who later became Carreyrou's source.

Holmes may have had an additional benefit, however, in how she was able to fool so many people around her. She may not have been aware she was lying.

When the Lie Detector Stops Working

Dan Ariely, an Israeli-American behavioral economist at Duke University who appeared in Out for Blood, was one of several people interviewed who suggested Holmes may have rationalized her actions and convinced herself she was telling the truth. (As George Costanza slyly tells Jerry in a Seinfeld episode, ”It’s not a lie if you believe it.”)

Ariely cited an experiment he and his colleagues conducted involving a six-sided die.

They had participants roll a die for a monetary incentive according to the number on the die in one experiment. Individuals were rewarded $4 if the die fell on the number 4, and $6 if the die landed on the number 6. Participants were instructed to choose which side of the die — bottom or top — would determine the monetary amount they would receive before rolling. Participants were advised not to tell the researchers which option they preferred, but to write it down on a sheet of paper. In essence, participants might get more money by just lying, which is exactly what many of them did.

“When people [rolled] 20 times, we found that they were incredibly lucky,” said Ariely. “Not lucky 100 percent of the time, but maybe 13 or 14 times.”

His experiment, however, did not end there. Ariely repeated the experiment, but this time with participants wearing a lie detector. Is it true that people still cheat? Yes, and the lie detector backs up this claim. (Ariely admits that it isn't always and ideal.) The major surprise comes when researchers repeat the experiment but tell participants that the money they earn will go to a charity of their choice.

So, what happens next?

“People cheat more,” Ariely says. “And the lie detector stops working.”

Blind to Reality

Lie detectors don’t actually detect lies, of course. They detect the tension humans experience when they tell lies. And what Ariel discovered is that the tension humans experience can disappear when they believe they are doing something good.

Watching Out for Blood, it’s clear that Holmes is a pathological liar. Time and again it’s shown her machines can’t do what she claims. The highly-touted “Edison” she guarded with CIA-like secrecy proved to be a diagnostic disaster, which forced Theranos to rely on commercial technology to perform blood testing, something she denied over and over.

What also is clear is that Holmes believed she was doing something extraordinary and something good. Her invention was going to revolutionize medicine and save lives. When asked (prior to her downfall) by an interviewer what she dreamed, Holmes appeared genuine in her response.

“That less people have to say goodbye too soon to people they love,” she answers.

Ken Auletta, a writer who interviewed Holmes in 2014 for a New Yorker article, said he believes Holmes is incapable of seeing herself as a liar or swindler because she rationalized her actions.

“I wish I could say to her, ‘Elizabeth, I’m going to give you a truth serum, and you’re going to tell me what was going through your mind at that time. The question becomes, do we believe she’d say ‘I knowingly lied.’ I have a hard time imagining her saying that,” Auletta said. “She’s a zealot. And a zealot is such a true believer in what they’re doing that they are blind to the reality of what’s happening.”

What Auletta describes is known as cognitive dissonance.

Although everyone can experience cognitive dissonance, some people are more prone to it than others. One example is zealots, and Ariely's study sheds light on why they exist. People who firmly feel their cause is beneficial are more likely to reject reality that contradict their beliefs or obstruct their aims from being realized.

I’ve previously suggested that cognitive dissonance helps explain why socialists can’t accept the idea that socialism doesn’t work. And, once again, Ariely’s dice experiment can perhaps help us understand why.

The tension humans feel over doing something wrong—such as lying—can vanish if we believe what we’re doing is serving a greater good. The action itself might be wrong, even vile; but if it’s being done for a noble enough reason—more equality, health care for all, poverty alleviation, eradication of a dangerous group—humans are less likely to feel tension over an immoral action and are more likely to rationalize it. They’ll also be less likely to see evidence that shows their idea is not working.

The Greater Good: How Tyrants Are Made

As difficult as it may be to believe, the horrors of the 20th century that saw 100 million killed under collectivist regimes did not begin as plans to commit genocide and mass famine; they began as plans to build a better world. The same can be said of places like North Korea and Venezuela today. The mistake was believing that the noble ends pursued justified the vile means used.

Millions died under the murderous Khmer Rouge regime, but in a 1979 interview its leader Pol Pot explained their goal was simply “to provide an affluent life for the people. There were mistakes made in carrying it out.” Hitler may have been a genocidal maniac, but he died believing his greatest mistake was that he had “been so kind.”

This is the danger of pursuing “the greater good,” and it helps explain why the French philosopher Bertrand De Jouvenel warned that tyranny lurks “in the womb of every Utopia.”

Elizabeth Holmes is not a tyrant. But her inability to see the reality around her helps us understand how tyrants are made.

Is the assertion correct? Only the IRS knows for sure who the greatest taxpayer in US history is, although Musk looks to be correct, according to Forbes.

“The eccentric billionaire (and the world’s richest person) likely owes the federal government at least $8.3 billion for 2021,” Forbes reports.

Business Insider projects Musk’s tax bill is even higher when state taxes are included.

“Taxes on his stock, nearly a billion in Net Investment Income Tax, and the billions he likely owes California could add up to about $12 billion in total,” report Jason Lalljee and Andy Kiersz.

CNBC, meanwhile, figured Musk’s total tax bill was even higher—$15 billion.

Musk's tax burden is mostly due to the roughly $13 billion in Tesla stock he sold as of December 13, which is even more than Jeff Bezos' record $10.2 billion in Amazon shares sold last year.

Elon Musk will pay over $15,000,000,000 in taxes this year, the most in American history.

— Jeff 💙✌️ (@JeffTutorials) December 15, 2021

Freeloading Off Everyone Else?

Whatever Musk's tax bill turns out to be, it's important looking at his assertion in perspective. Musk wasn't gloating about having the world's biggest tax bill; rather, he was replying to Sen. Elizabeth Warren, who, for some reason, chastised Musk for not paying his fair amount of taxes.

“Let’s change the rigged tax code so The Person of the Year will actually pay taxes and stop freeloading off everyone else,” Warren tweeted.

And if you opened your eyes for 2 seconds, you would realize I will pay more taxes than any American in history this year

— Elon Musk (@elonmusk) December 14, 2021

Yes, you read that right. Warren, a Massachusetts Democrat, referred to Musk as a freeloader. It's conceivable that Warren is unaware that Musk is on track to pay more in taxes than any other American—possibly human being—in history, but it's more probable that she doesn't care and is content to spread the lie that Musk isn't paying taxes. After Musk had answered to Warren, Warren made it apparent in later statements.

“He’s the richest guy in the world, and he just doesn’t want to pay taxes,” Warren said. “That’s what it’s all about for me.”

She continued:

“I gotta say, on behalf of every school teacher who pays taxes, on behalf of every waitress who pays taxes, on behalf of every American citizen who goes out and works for a living and pays taxes …that’s just fundamentally wrong. We have a broken tax system that lets Elon Musk freeload off everyone else, and it needs to stop.”

Warren’s claim that Musk is a “freeloader” is preposterous, of course. Taking the lowest estimate on what Musk is expected to pay, he’ll cough up more in taxes than the entire state of Massachusetts collected in sales and use taxes through the first half of 2021—from its 7 million residents.

Moreover, unlike Warren, who collects a salary from the government, Musk earned much of his wealth by creating value. Tesla employs nearly 80,000 people who’ve built no fewer than 623,000 energy-efficient cars in 2021 alone.Tesla's market capitalization is approaching $1 trillion, making many Tesla employees and stockholders extremely affluent. Warren, on the other hand, does not produce anything. Every dollar of her $174,000 salary—and the money she uses to pay her staff—comes from taxpayer-funded funds. Every dime she spends was stolen from someone else who worked hard for it.

Musk's accomplishments should be celebrated, but Warren, the ultimate freeloader, accuses him of "freeloading" and feels he should be paying more.

A Philosophy Built on Envy

What appears to be bothering Warren is Musk's wealth. In other words, it's an envious politics.

Envy is rightfully regarded one of the Seven Deadly Sins. It's a destructive personality trait that has negative consequences for both people and civilizations. The celebrated philosopher Immanuel Kant described envy as,

“…a propensity to view the well-being of others with distress, even though it does not detract from one’s own. [It is] a reluctance to see our own well-being overshadowed by another’s because the standard we use to see how well off we are is not the intrinsic worth of our own well-being but how it compares with that of others. [It] aims, at least in terms of one’s wishes, at destroying others’ good fortune.”

The pre-Socratic philosopher Democritus (c. 460 BC – c. 370 BC)—in a wonderfully libertarian quote—once warned of the danger of envy and purpose of the law.

“[Just] laws would not prevent each man from living according to his inclination, unless individuals harmed each other; for envy creates the beginning of strife,” he wrote.

Strife is precisely what Warren and those who share her philosophy are sowing, and it’s clear she and others view Musk’s good fortune with distress. If that’s not envy, I don’t know what is.

The $1.8 trillion proposal, which was unveiled only weeks after Biden signed a $1.9 trillion COVID relief bill into law, includes "free" community college for all three and four-year-olds as well as universal preschool for all three and four-year-olds.

According to The New York Times, "Mr. Biden may herald in a new era that substantially enhances the size and influence of the federal government."

How Much Debt Is Bearable?

The news comes months after the Congressional Budget Office projected a $2.3 trillion deficit in 2021 in a report.

The deficit will almost surely worsen under Biden's approach. Despite the fact that the plan includes numerous tax hikes to pay its initiatives, experts predict that the levies will fall well short of government spending.

In a recent NBC News report, Joshua Jahani, managing director of Jahani and Associates, stated, "The rules of economics are more rigorous than the laws of the federal government, and these tax rises are unlikely to generate the windfall Biden hopes."

As a result, the nation's $28.2 trillion debt will grow even faster. Worse, the debt approaches $120 trillion when unfunded obligations are reflected in the balance sheet, as private corporations are legally compelled to do.

It's unclear how much danger these responsibilities entail.

There's a school of thinking that says these loans aren't a big deal. After all, a government may theoretically keep rolling over its debt indefinitely. However, economist David Andolfatto pointed out in a recent piece for the Federal Reserve Bank of St. Louis that the government does not ultimately decide how much debt is acceptable. That is what the market does.

“There is presumably a limit to how much the market is willing or able to absorb in the way of Treasury securities, for a given price level (or inflation rate) and a given structure of interest rates,” Andolfatto wrote. “However, no one really knows how high the debt-to-GDP ratio can get. We can only know once we get there.”

A Dangerous Level of Debt?

Andolfatto is correct in asserting that no one truly understands the debt tipping point. However, the US debt-to-GDP ratio, which measures a country's debt in relation to its yearly economic production, was 129 percent by the end of 2020. To put it another way, the official US debt was roughly a third the size of the US GDP.

That's a lot higher than Greece's debt-to-GDP ratio in 2010, when it got a bailout from the International Monetary Fund to avoid defaulting on its debts.

The United States is not Greece, of course. Its economic potential is far greater, and it is operating under a currency it controls. But there’s no denying that the US is in uncharted territory. Today, the federal government debt-to-GDP ratio is higher than it was at the conclusion of World War II, when the nation assembled one of the largest armies the world has ever seen. Perhaps even worse, the government is piling on debt faster than ever.

Eventually, as Andolfatto notes, the market may very well decide enough is enough, and the demand for Treasury securities will dry up. Indeed, this is likely one reason cryptocurrencies are suddenly flourishing.

Cryptocurrencies have gone from being debated in the corners of Reddit communities and university lounges to a market worth more than $2 trillion in what seems like the blink of an eye. It's no exaggeration to say that cryptos have gone mainstream, with hedge firms and high-profile sportsmen signing multi-million dollar deals.

It's not difficult to understand why. The stock market is hedging its bets. Many people are looking for a way out, as if they're rats on a sinking ship, recognizing that the dollar's time is running out as its value is destroyed by massive pumping.

Ignoring History?

Author Richard Ebeling studied how central planners in ancient Rome ruined the economy in a famous 2016 piece.

To modern ears, much of what Ebeling describes—debt, enormous expenditure, inflation, and price controls—sounds uncannily familiar. And, of course, Ebeling delves into the age-old conundrum of why Rome failed.

As every history lover knows, philosophers ranging from Edward Gibbon to Peter Heather and beyond have pondered this subject for ages. The responses are diverse. Barbarians are blamed by some, while immigration is blamed by others. Some blamed Christianity, while others blamed sickness or the deterioration of Roman legions.

All of these theories are interesting and worthy of examination, but I’ve found no single better explanation than the one offered by economist Ludwig von Mises who concluded Rome’s decay stemmed from its rejection of individualism and free markets.

“The marvelous civilization of antiquity perished because it did not adjust its moral code and its legal system to the requirements of the market economy,” Mises wrote.

He continued:

“A social order is doomed if the actions which its normal functioning requires are rejected by the standards of morality, are declared illegal by the laws of the country, and are prosecuted as criminal by the courts and the police.

The Roman Empire crumbled to dust because it lacked the spirit of [classical] liberalism and free enterprise. The policy of interventionism and its political corollary, the Fuhrer principle, decomposed the mighty empire as they will by necessity always disintegrate and destroy any social entity.”

The American president and statesman John Adams once reportedly said there are two ways nations are destroyed.

“One is by the sword and the other is by debt,” Adams reputedly said. (Though the quote is widely attributed to Adams, it's not supported by written documentation.)

Debt is without a doubt a severe issue. (Ask the ancient Romans or the current Greeks.) If Mises is accurate, however, the debt explosion may be simply a symptom of a much broader problem: the breakdown of the spirit of liberty and the establishment of a regime opposed to free enterprise.

We should take note of one thing the Romans lacked: their gloomy example.

While economist Milton Friedman is often credited with popularizing the concept—that free lunches don't exist since someone always pays—the proverb first appeared in Robert Heinlein's 1966 science-fiction novel The Moon Is a Harsh Mistress, nearly a decade before Friedman's 1975 book. (The phrase is really the title of Heinlein's third novel, for which he won the Hugo Award in 1967.)

Historians, meanwhile, say the phrase had been around for decades prior to Heinlein’s book. Whatever its origins, the idea that there’s no free lunch—that everything has an opportunity cost—is one author David Bahnsen says humans have not learned very well.

As a result, Bahnsen—chief investment officer of The Bahnsen Group, writer to the National Review, and FEE supporter—included the notion in the title of his own economics book, There's No Free Lunch: 250 Economic Truths, which was released on November 9.

Q: Many of the difficulties plaguing economic education today, you claim in the beginning of your book, come from a faulty conception of what economics is. Let's begin there. What exactly is economics?

I define economics as the study of human action around the allocation of scarce resources. I think you get two components that are both individually well regarded as part of economics. There’s obviously a strong relationship between human action out of the Austrian tradition. And the idea of the allocation of resources being fundamental to what we mean as far as household management has a tradition going to Plato and Aristotle.

I like to blend those two ideas together. It captures the humanity of economics and the incentives in economics. In this definition you won’t find anything that can be reduced to a formula or a mere econometric analysis. The focus is much more on the human person, and much less on mathematics.

Q: Plato and Aristotle are mentioned. You compiled some of the most enduring economic truths in human history—250 quotations to be exact—in your book. How current are these concepts?

I personally believe that they are more important now than they ever have been. There is a certain timelessness to a lot of the wisdom that some of the great classical economists shared. Obviously you can go back to scholastics and the ancients from Aquinas to Augustine to Aristotle and Plato. There are certain nuggets of wisdom and truth there, but I mostly focused my attention on the classical economists.

There’s a lot on Adam Smith, a little from David Ricardo and Jean-Baptiste Say and some highly regarded 19th-century economists. But even as you come into the 20th century, whether it’s Milton Friedman or the supply side contemporaries like Art Laffer and Bob Mundell who recently passed away—even guys like Mises and Hayek haven’t been gone that long—there was a time when these guys were all winning Nobel Prizes in economics.

Now the Nobel methodology has changed completely away from praxeology and the logic of human action to model-driven economics. I think it’s bad for the profession of economics, it’s bad for the academic discipline, but it’s even worse for the laymen and their understanding of how economics affects the real world because it strips out the wisdom of the masters.

And that’s why I wrote the book and centered it around some of their foundational truths.

Q: Barron's, Forbes, and other publications have named you one of America's greatest financial counselors. What are your thoughts on the current state of the financial markets?

I definitely believe that we’re living in a time—we have been for a while and likely will for some time—that we’re going to have to deal with the good and the bad of the Federal Reserve playing such a prominent role in the economy.

This was always one of the dangers of the monetarist school. Fundamentally, the monetarist always invited a higher role for the Fed into the economy, and we kind of have gotten it. More than just their administration of the money supply by their control of the interest rate, the Fed now has become a sort of mitigator of business cycle risks. When I look at financial markets now, I think that’s mostly what we’re dealing with.

Why are equity market multiples at 22x or 23x earnings? Why is the 10-year bond rate at 1.5 percent, and why are investors totally okay with that? Why are real-estate investors willing to buy very significant real-estate investments for a 3 percent cap rate?

These things all seem quite expensive. But they are all done with a repricing of risk, and that repricing of risk is a byproduct of a Federal Reserve put [a “put”, referring to a put option, is a financial contract that allows the owner to mitigate risk]. We used to talk about a Greenspan put in the stock market, but I don’t think that’s adequate anymore. I think it’s become much more comprehensive. There is an expectation the Fed will be there to smooth out any disruptions that take place in the business cycle.

I think that’s something investors have to understand. They’re not getting the price discovery F.A. Hayek wrote about. They’re not getting the clean allocation of capital I’d like to see as an investor.

Now, I also don’t want to bet against the Fed. I don’t say this to take a blindly pessimistic position. We have to invest for what is, not what we want it to be. But we also have to recognize this is inviting a high degree of malinvestment and misallocation of resources. This requires us to be more prudent and more diligent in the projects we choose to invest in on behalf of our clients.

Q: You claim that there are big economic tendencies that should be opposed now. One is the growing popularity of collectivism as a strategy of reducing poverty and inequality. Could you please elaborate?

The left-wing risk is relatively well known. A greater invitation into socialism or quasi-socialism. A higher role of the central planner in the economy. But right now a lot of the right-wing populism we’re seeing is inviting a certain amount of authoritarianism. I think it’s doing it out of frustration. There’s a culture war issue, as well as cronyism and the way things are playing out in the economy.

Rather than attack subsidies and the regulatory apparatus, many have said if you can’t beat ‘em join ‘em. That we need Big Government to work for us instead of them. I’m concerned about that approach. When you have a good aim in mind and go about it with bad means, it usually doesn’t work out very well.

My fear right now is that the populist economic ethos is going to embolden and empower the central planner. It’s going to embolden and empower the collectivist.

My hope is that some of the principles I’m inviting people to rediscover in the book can be persuasive. What we need to do is dig in our heels more around the principles of a free society we believe in, and not concede by just trying to switch the uniform of authoritarianism.

Q: I currently reside in the Twin Cities. Like many other cities, Minneapolis and St. Paul recently increased the minimum wage. They both passed rent control legislation as well. Minimum wage legislation are in place. Control of the rent. Are these methods of poverty eradication effective?

No, they are horrible ways to fight poverty. And the reason is explained through the principles that I believe need to be at the foundation of our economics. The knowledge problem leads to a significant distortion in the economy because we ask someone who doesn’t have full knowledge of time and place circumstances to set prices.

When we set prices in a transaction, we take what could take place on a voluntary basis under a precondition of freedom, and we make it happen on an involuntary basis. That takes away clarity. It takes away price discovery. It takes away freedom. It takes away incentives for further developers. It could give false signals to produce.

If one believes that prices, including the price of rent, are packets of information, then rent controls take away information. And because I believe the greatest wealth-building activities in history come about by us adding information and knowledge and ideas to raw materials—that’s where I believe wealth creation comes from—by distorting knowledge I think we effectively suppress the creation of wealth.

I believe that the intent of a lot of the policymakers is good, but I believe that free exchange in the economy will lead to the right calibration of supply and demand to set prices in a way that meets the needs of humanity. The government intervention is not just unnecessary, but counterproductive.

Q: Isn't this what Economics 101 was like once upon a time? So, why are these policies reappearing? Is it economic ignorance, or is it more tied to the populism you mentioned?

The danger of populism is that it lacks a limiting principle. When you’re content to work off a playbook of real principles in the way you develop an economic worldview and structure the scaffolding of what you believe as far as social organization, then I think you’re less exposed to the arbitrariness of populism, less exposed to the potential abuses.

You say there was a time when this was considered Economics 101. I think it’s still Economics 101. It’s just that some people have decided they don’t need Econ 101. They’ll overlook the economic principle on behalf of a desired political aim and what feels right in the moment. That’s by definition what populism is.

Q: You claim that in the United States, class conflict is at an all-time high. What makes you believe that?

If I’m giving a gracious and empathetic answer, I think some of it comes down to the cultural ethos in the post-financial crisis. So many did an atrocious job of identifying the players in the financial crisis and providing proper and comprehensive cultural, political, and economic commentary as to what took place in what was the defining economic event of our lifetime.

Because we let others define that moment, we’re stuck with a narrative of the oppressor and the oppressed out of the crisis. The only difference is many on the right will claim the oppressor was the Fed or Fannie Mae or the government. Many on the left will claim the oppressor was Wall Street or the big banks.

The fact of the matter is we have this environment now where people believe these narratives. If you’re 30 years old, your entire adult life has been bookended by the financial crisis and COVID. People see a system that has not worked for a lot of people but does seem to work for others. It exacerbates class aggravations.

Rather than digging our heels in against cronyism, against a relationship between Fannie Mae and K Street, against bailouts, against a monetary policy that serves to boost asset prices, against the subsidization of student loans that gives college administrators a blank check on how they move tuition prices, we saw more of the same.

A lot of frustrations young people have are frustrations I have. But their emotional intuition is to default to something that makes those problems worse, not better.

We have solutions that address what they’re frustrated about. We need to show that human flourishing is enhanced by free enterprise, but that message is not getting through. I blame those of us on the right who do defend free markets; we’re not defending them well enough.

Q: You are the one who raises children. They're in a very different situation than you and me. Do you have any financial or lifestyle recommendations for them?

I do believe ideologically that young people have been deprived of the ability to learn basic economics, basic finance. I want young people to have a strong self-determination, to believe in self government and the character traits and virtues that are necessary to have a fulfilling and rewarding life.

But when you get to practical finance and engagement with these circumstances, tenacity is the non-commoditized virtue. Young people can’t be replaced by a robot who works harder than them. You can always have a work ethic that will make you desirable in the marketplace.

If I can talk to people before they go to college, I’d say half of the people spending a quarter-million dollars on an overrated bachelor's degree from an overrated college could rethink that decision. Or at least have a little more specific strategy behind it.

For people who are already graduated or are already in the workforce, I say wealth creation comes from creating more than you consume. That is a tautology that is never going away. That will always be the story of economics, and that’s the best way they can apply it to their own lives.

Q: The high level of inflation we've witnessed in 2021, along with supply chain and labor market concerns, has created a lot of economic instability. What is the current state of affairs?

I am of the opinion that a lot of the inflation we’re seeing right now is heavily supply chain oriented. I think the velocity of the money in supply right now is so low and going lower that we do face a lot of Japan-like deflationary risk.

It’s hard to feel that way when prices are doing what you see now, I know. But I think QE and low interests and other distortive measurements of the Fed have a diminishing return for their policy goals. And the excessive government spending has served to take away future growth, so it ends up putting downward pressure on velocity. But then you have an increase in demand for goods and services coming out of COVID, combined with a woeful capacity for production—from port disruptions, labor shortages, to the semiconductor problem, which is quite underrated as a problem.

So I’m a little less concerned about Milton Friedman-like monetary inflation than I am of voluntary supply-driven inflation because we as a society are not producing the goods and services we need.

I’m hopeful some of those things will start to correct. But I’m not hopeful that the economic stagnation that they’ve created through excessive doses of fiscal and monetary policy is treatable.

We’re blessed to have somewhat better demographics, and somewhat better economic organic growth, than Japan. But if we’re going to continue at half—half!—of our real GDP growth rate average for another 15 years, like we have the last 15 years, I think it’s totally unacceptable—both economically and morally. Yet that seems to be in store for us.

I’m hopeful we can somehow get back on track, but right now we’re not even trying to get back on track. We’re just debating how much worse we want to make it.

Q: Do you have any opinions on the subject of cryptocurrencies? Are they a form of inflation protection? Is there a revolutionary new kind of money on the horizon? Is this a pyramid scam based on speculation fueled by the Federal Reserve's money printing?

I fear that I’ll inevitably lose some part of the audience here, because it’s not a very popular viewpoint right now. But obviously I can’t defend it as an inflation hedge when it has no intrinsic value. The argument many of us have made about money and currency for some time has been it has to be a stable medium of exchange. Anything that goes from $60,000 to $30,000 because of a tweet from Elon Musk is probably not a stable medium of exchange.

I think something whose primary utility is for ransomware criminals is probably not a stable medium of exchange. It will grow in its utility, I don’t deny that, but fundamentally it doesn’t have an intrinsic value. Therefore the question becomes how long regulators will allow it to function the way it does. I don’t think that will be very long.

From an investment standpoint, whether or not one believes in the utility of the medium of exchange, why would the value of a coin inevitably go higher? The only answer for that is speculation.

That does make it more pyramid-like in my mind. Never in my investing life have I seen something end well when the majority of people doing it don’t know why they’re doing it.

Q: Some of the greatest economic philosophers of all time are quoted in your book. Mises, Hayek, Friedman, Sowell, Bastiat, and Hazlitt are just a few of the economists who have influenced me. Do you have a favorite of your own?

I’ve actually been asked this question in other interviews and I have to say the same thing: I just can’t pick one. Hayek at some periods of my life was so instrumental in my development. At other periods of my life Milton Friedman was.

In terms of my own sort of anthropology of economics, the way in which I view the human person and how central my belief about humanity is to economics, I’m grateful to people like Father Robert Sirico at the Acton Institute. There are contemporaries like that in the book who are at the top of my list.

As far as the subject matter in the book that is nearest and dearest to my heart, it is about human flourishing and establishing our aim in economics. The material and spiritual flourishing which includes abundance, but also peace and balance and joy that the human person can have.

What is the economic structure that can most facilitate that? That’s an entirely different question than saying how can we get everyone to make the most similar amount of money to each other, this obsession with equity and wealth and income inequality. In trying to do economics as social justice, we’re trying to do something that is neither economic, nor social, nor just.

Q: That brings me to my next question. You remark that today's culture is dominated by a materialistic concept of poverty reduction that accomplishes little to reduce poverty. Is there a better way?

I believe that the number one thing we need to do when we look to alleviate poverty is, first, we need to define poverty and wealth. If poverty is the opposite of wealth, how do you create wealth?

As I said earlier, you create wealth by creating more than you consume. So do we solve poverty by having no supply-side solution, but only think about wealth redistribution?

My view is we need to focus on wealth creation. In a free society of free exchange where there is true respect for the dignity of the human person, we’d never tolerate an approach that treats half of society like they're incapable of being productive, incapable of being creative, incapable of being innovative—and have them live off the largesse of the other half. I think it’s insulting and dehumanizing.

We want a system that creates more and more wealth creators. That is the solution to poverty. I want more people who produce more than they can consume.

*This interview was condensed and edited for clarity

CNN last week reported that price increases recently hit a three-decade high and 25 percent of Americans say their standard of living has fallen. Speaking on CNBC’s “Squawk Box,” Home Depot founder Ken Langone noted that “inflation is a regressive tax [that] hits poor people hardest.” On CNBC’s sister network, MSNBC, host Joy Reid noted that “unless you’ve been living under a rock your money isn’t going as far as it used to, with higher prices on gas, food and your energy bills.”

Even the late night comedy show hosts are talking about inflation.

“Right now inflation is the one thing people hate even more than Jake Gyllenhaal,” Daily Show host Trevor Noah quipped. “It seems like everything is more expensive these days. Groceries are more expensive. Cars are more expensive.”

Noah wasn’t done.

“I went to a gas station today,” Noah joked, “and for a gallon of regular, it just said ‘kill yourself.’”

Inflation: How Worried Should We Be?

Most people are familiar with the term "inflation," but just in case you aren't, let's explain it. Inflation is defined as a rise in the amount of money available. That's basically it, and economist Joseph Salerno points out that this has been the conventional definition of inflation for centuries. Inflation was eventually given a second definition by economists, who defined it as "a broad and sustained increase in prices."

According to polls, Americans are concerned about "persistent price hikes." As FiveThirtyEight recently observed, some surveys show 87 percent of registered voters are “very” or “extremely” concerned about inflation.

Some are less worried. MSNBC's Stephanie Ruhel recently said the “dirty little secret” was that Americans can afford inflation.

“You’ve got the families of over 60 million kids on average getting $430 a month. For people on fixed incomes, older people on social security, they're getting those fixed payments adjusted next year up 5.9 percent or inflation. And the dirty little secret here, Willie, while nobody likes to pay more, on average we have the money to do so. Household savings hit a record high over the pandemic. We didn't have anywhere to go out and spend. And as we said a moment ago, we're expecting retail sales this holiday season to break records. For those who own their homes and the value of our homes are up. And while the stock market isn't the economy, you have over half of American households with some investment in the markets and the markets have hit record highs.”

Inflation affects certain people more than others, as Ruhel points out. Homeowners and Americans who invest in other assets such as equities, land, cryptocurrency, gold, and other commodities are often protected from the worst consequences of inflation to some extent. However, this simply emphasizes the fact that lower-income Americans, who rely more heavily on cash, bear the brunt of inflation.

Another important lesson from history concerning inflation is that it may increase very quickly.

Hyperinflation Starts as Inflation

We’ve already tackled the definition of inflation. So what’s hyperinflation?

Hyperinflation is essentially rapid inflation. Technically, it’s inflation that exceeds a 50 percent growth for a month. While there’s some talk among highly influential people that hyperinflation “is happening,” the reality is that the US is nowhere near hyperinflation right now. Inflation may have hit a 31-year high in October, but the 6.2 percent annualized rate is still far below hyperinflation.

It's also crucial to recognize that hyperinflation is usually preceded by regulation inflation. This isn't to say that inflation always leads to hyperinflation; rather, if the money supply continues to rise, inflation can lead to hyperinflation.

One of the most famous examples of hyperinflation happened in Germany during the Weimar era. Many of us have seen the images of women carrying laundry baskets full of marks to buy bread, or rooms plastered with useless money.

Inflation can spiral into hyperinflation just that fast.

Check out Oct. 1923. pic.twitter.com/qMtjdvS7GB

— Jon Miltimore (@miltimore79) November 24, 2021

People frequently forget that Germany's hyperinflation began after a period of steady inflation that began in 1914, when the German government began to raise the money supply to pay the war effort, as Salerno points out. Hyperinflation didn't start until 1922, some years after the Treaty of Versailles and the official end of World War I, and it started slowly (if hyperinflation can ever be described as such).

Here's an example from Salerno: In June 1921, the cost of a daily newspaper was.30 marks. The price had climbed to 1 mark by May of the following year. A daily newspaper cost 8 marks just five months later. In February of the following year, I received 100 points. In September, there were 1,000 people.

Things began to spiral out of control in October 1923. A daily newspaper cost 2,000 marks at the start of the month, which was 2,000 times more than a year and a half before. By the 15th of October, the price had risen to 20,000, a ten-fold gain in just two weeks. What about at the end of the month? A newspaper cost one million marks in Germany.

Of course, this is only one example of hyperinflation. But the lesson is the same in each case: inflation may quickly escalate into hyperinflation.

The Only Path to Sound Money?

In one of his less known works—Denationalisation of Money—the Nobel Prize-winning economist F.A. Hayek noted that perhaps the greatest lesson of human history is that governments debase currencies. From Diocletian in Ancient Rome to Weimar Germany and beyond, Hayek saw that great powers, almost without exception, manipulated currencies and eroded the value of money.

This is why Hayek believed the only way to have sound money again was to take it “out of the hands of government.”

“[S]ince the function of government in issuing money is no longer one of merely certifying the weight and fineness of a certain piece of metal, but involves a deliberate determination of the quantity of money to be issued, governments have become wholly inadequate for the task and, it can be said without qualifications, have incessantly and everywhere abused their trust to defraud the people,” Hayek wrote.

Twice in its history, the United States has killed its central banks. The first national bank of the United States, signed into law in February 1791, died in 1811 when it’s charter expired. The second national bank, created five years later, was effectively killed by President Andrew Jackson in 1833 when he removed all federal deposits and let its charter eventually expire. Not until the twentieth century, following the Panic of 1907, was a third central bank created, which culminated in the Federal Reserve System we have to this day.

Considering the nation’s soaring inflation, $29 trillion debt, and rampant spending—all of which spawn from the Fed’s reckless monetary policies—it may be time to take Hayek’s advice.

Gosar recently shared on social media an anime video where he appeared to be shown attacking Rep. Alexandria Ocasio-Cortez (D-N.Y.) with a sword and poised to attack President Joe Biden, and Rubin took use of the occasion to draw attention to the worrying growth of aggressive speech in American politics. (The video has since been withdrawn by Gosar.) Rubin, a former conservative who has written for PJ Media, Commentary, Human Events, and The Weekly Standard, blamed Republicans in particular, including Gosar, former President Donald Trump, and House Rep. Marjorie Taylor Greene (R-GA).

“The Republican Party has for a while now been tacitly encouraging and rationalizing violence,” Rubin said. “This is fascistic behavior. This is what fascist regimes do...They intimidate and use the threat of violence. It’s absolutely intolerable.”

.@JRubinBlogger calls for "rules" that would prohibit media outlets from treating Republicans as "normal" pic.twitter.com/iZVgMOd81I

— Tom Elliott (@tomselliott) November 13, 2021

A Chilling Trend

Rubin is correct in stating that there is an alarming surge in political violence in the United States. The summer of 2020 was the most violent since the 1960s, and the Capitol riots on January 6 were the culmination of it.

Rubin is also incorrect in his assessment of Trump's frequent refusal to categorically denounce the use of violence as a viable political strategy. For example, shortly before the 2020 election, during a debate with Joe Biden, Trump was given the opportunity to denounce the far-right Proud Boys by moderator Chris Wallace. Instead, Trump said the group should “stand back and stand by.” In 2016, Trump also said he’d consider paying the legal fees of a man charged after punching a protester at a Trump campaign rally.

Such rhetoric is not responsible, and it may explain one of the most disturbing trends I've witnessed in my lifetime: the number of Americans who believe violence is a valid way of political change has skyrocketed in the last five years, according to a survey conducted by Newsweek and Statista.

Few trends in the US are more troubling than this one.

We'd do well to remember the words of MLK.

“In spite of temporary victories, violence never brings permanent peace,” Dr. King said. “It solves no social problem; it merely creates new and more complicated ones.” pic.twitter.com/L3mTnKz1ex

— Jon Miltimore (@miltimore79) January 7, 2021

This is deeply troubling, but one thing quickly becomes clear after looking at the results of the survey: the embrace of violence is bipartisan.

‘All Punches Are Not Equal’

You wouldn't know it if you saw Ms. Rubin on CNBC, but the surge of violence and harsh speech is nonpartisan. Like a prosecutor at a trial, the former right-wing blogger argues vehemently that Trump, Greene, and Gosar are to blame for the rise in violence.

Rubin, like many other partisans, chooses to forget the summer of violence in 2020, which included left-wing organizations like Antifa and Black Lives Matter. Furthermore, she overlooks the reality that in many cases, politicians, the media, and intellectuals aided and abetted such organizations.

Following the police killing of George Floyd, for example, Congresswoman Maxine Waters urged protesters to "stay on the street" and "get more confrontational" if a Minneapolis jury acquitted Derek Chauvin of Floyd’s death.

As Minneapolis burned, Kamala Harris urged followers to “chip in” and donate to a non-profit dedicated to bailing out people charged with crimes to get them back on the streets. Time and again Harris voiced support for those in the streets during violence, stating “we must always defend peaceful protests and peaceful protests; we must not confuse them.” But confusing them is precisely what Harris often did, and she was aided by a media that insisted police protests were “mostly peaceful” despite visual evidence to the contrary.

University professors, meanwhile, defended looting and talked about the utility of violence as a means of social progress.

If you want to understand why America is getting more violent, listen to this Oberlin prof.

She cooly advocates violent protests because, as she explains, violence works.

She never mentions what will happen once the other side adopts the same tactic.

pic.twitter.com/IDybxsAtSV

— Jon Miltimore (@miltimore79) July 28, 2020

One Oberlin College professor noted, "What we know in political science is that protest matters." "We actually see stronger response by elected leaders when we witness building devastation, when we see violence—either by police or by demonstrators themselves."

Such rhetoric did not begin in 2020. Many Democrats utilized fiery rhetoric against Trump's policies (choose one) to energize the progressive base in the run-up to the 2018 elections.

"I just don't even know why there aren't uprisings all over the country. And maybe there will be, when people realize that this is a policy that they defend," the Minority Leader Nancy Pelosi lamented in 2018.

“Go to the Hill today,” US Senator Cory Booker said in July 2018. “Get up in the face of some Congress people.”

‘When they go low, we kick them. That’s what this new Democratic Party is about,” former Attorney General Eric Holder said during a campaign stop in McDonough, Georgia.

In the leadup to the November 2018 elections, many progressives—much like Trump—were coy when they fanned these flames in that they didn’t quite call for or defend violence. CNN commentator Chris Cuomo, however, didn’t see the need to mince words.

“I argue to you tonight all punches are not equal, morally," Cuomo said on CNN in an August 2018 segment defending Antifa. “When someone comes to call out bigots and it gets hot, even physical, are they equally wrong as the bigot they’re fighting? I argue no.”

And just last week a Black Lives Matter leader promised “riots,” “fire” and “bloodshed” would follow if New York City Mayor-elect Eric Adams brings back plainclothes officers to battle the city's surge in crime.

‘A Huge Warning’

Ms. Rubin is correct that America has a violent issue, but she is incorrect in implying that it primarily affects her political opponents.

Democrats and activists, like Trump, regarded the inflammatory rhetoric of "uprisings" and "getting in the face" of political opponents as beneficial in energizing their supporters. They've used such language in previous campaigns to fuel racial tensions and incite hatred.

When an angry mob surrounded Sen. Rand Paul and his wife Kelly on the streets of Washington, DC in late August 2020 chanting “SAY HER NAME!”—a reference to the police shooting of Breonna Taylor—protesters could genuinely say they were only doing what political leaders had told them to do. It didn’t matter that Paul had sponsored the Justice for Breonna Taylor Act, legislation designed to ban police from using no-knock warrants.

Rubin, who curiously asked for new "laws" prohibiting media from presenting Republicans as "normal," contributes into this culture of strife, even if she isn't aware of it.

Andrew Sullivan, a conservative writer, said on Sunday's 60 Minutes that tribalism and political intolerance are undermining a vital component of the American fabric.

“The American Constitution was set up for people who can reason and argue and aren’t afraid of it,” Sullivan explained to Scott Pelley. “If you’re in a tribe and all that matters is the victory of your tribe, and you have all the truth and the other tribe has none of it, and you have all the virtue and the other side has none of it, you can’t behave this way.”

Rubin regularly engages in the sort of tribalism mentioned by Sullivan, and one example is when she implies that political violence is only an issue because of those weirdos on the right who shouldn't even be allowed to talk on TV.

Political violence is simply too serious and deadly to be dealt with in such a cynical and politicized way. As I wrote last year, Americans must categorically reject political violence or they will be consumed by it. Unfortunately, too many political leaders refuse to do just this.

On August 27, 2020, as Kenosha, Wisconsin was still reeling from riots that ended with the Kyle Rittenhouse shootings, candidate Kamala Harris gave a speech saying it was “no wonder people were taking to the streets” because of police brutality.

The mother of Jacob Blake—a 29-year-old black man shot seven times by police days earlier during a standoff outside his girlfriend's car, which prompted the protests and riots—took a very different approach.

“If Jacob knew what was going on as far as that goes, the violence and destruction, he would be very unpleased,” Mrs. Jackson said. “Please don’t burn up property and cause havoc and tear your own homes down in my son’s name. You shouldn’t do it.”

Mrs. Blake shows how one unequivocally condemns violence. Many politicians (and many Americans) on both sides of the political aisle could learn from her example and the wisdom of Dr. Martin Luther King Jr.

“In spite of temporary victories, violence never brings permanent peace,” King said in Three Ways of Meeting Oppression. “It solves no social problem; it merely creates new and more complicated ones.”

In Forbes, Adam Andrzejewski writes that a provision in the $1.9 trillion House bill—“the American Rescue Plan Act of 2021”—would allow federal employees to make up to $1,400 a week without working.

Buried on pages 305-306 of the legislation, the provision creates a $570 million fund for disbursements to federal employees who are not working because they are caring for others because of the coronavirus.

“Among those eligible are those who are ‘unable to work’ because they are caring for school-aged children not physically in school full time due to Covid-19 precautions,” writes Andrzejewski, the CEO and founder of OpenTheBooks.

Under the legislation, full-time federal employees are eligible for 600 hours in paid leave through September, receiving up to $35 an hour.

“That’s 15 weeks for a 40-hour employee,” he writes.

If you're wondering how federal employees were able wangle a $570 million paid leave fund (on your dime!) into that House bill so they can stay home and get paid while junior does remote learning, look no further.

The union $$ went in the right direction. pic.twitter.com/UWn0woFCmr

— Jon Miltimore (@miltimore79) February 25, 2021

The Fine Print

In some ways it might seem perfectly reasonable to allow employees to be paid while staying home. The circumstances are unique, after all, and many of us can empathize with parents struggling to work while schools are closed.

There are serious problems with this proposal, however. First, the legislation doesn’t distinguish between a school that is closed and one that simply allows children to learn remotely. As a result, federal employees could simply choose to have their child learn remotely and be eligible for benefits.

“Even if a federal employee’s child could be in school five days a week, if the school ‘makes optional’ virtual or hybrid schooling, it appears the parent can keep the son or daughter at home and still qualify for paid-time off under the bill,” Andrzejewsk writes.

Second, the legislation places no restrictions on a child’s age.

“An open question is whether parents of college-aged children could take paid time off?” Andrzejewsk writes. “Certainly, some colleges are virtual and there is no definition of son or daughter in the bill and no age parameters.”

The biggest problem, however, is that this provision takes money from taxpayers and then hands it out to a specific constituency.

Stop the bill. Take action here --> https://t.co/0hTxVm9sC3

— Phil Kerpen (@kerpen) February 25, 2021

Union Cronyism

Essentially, the $570 million is a special perk for a select segment of the US workforce: federal employees. According to the Congressional Research Service, there are roughly 2.1 million civilians in the federal workforce, many of whom are represented by labor unions.

The largest union representing federal workers is the American Federation of Government Employees (AFGE), which represents some 700,000 federal and DC government workers. Then there is the National Federation of Federal Employees (NFFE) and the National Treasury Employees Union (NTEU), which represent 110,000 and 150,000 government employees, respectively.

These organizations spent heavily on political causes in 2020. The AFGE alone spent $2.3 million in political contributions and $1.9 million in lobbying. The NTEU spent $760,000 and $1 million on contributions and lobbying, respectively. The political contributions flowed in the same direction (see below).

If you're wondering how federal employees were able wangle a $570 million paid leave fund (on your dime!) into that House bill so they can stay home and get paid while junior does remote learning, look no further.

The union $$ went in the right direction. pic.twitter.com/UWn0woFCmr

— Jon Miltimore (@miltimore79) February 25, 2021

Purchasing influence and perks—like 600 hours of paid leave—might sound crass or even seedy, but it's one of the primary purposes of unions.

As the economist Hans F. Sennholz observed, governments and unions are essentially “allies in interventionism.” They seek to circumvent free markets to seize and consume the wealth of others through coercive means. And in exchange for votes and influence, unions are rewarded by the politicians with special privileges for their members.

“Labor unions deliver political votes to administrations that promise to be friendly and cooperative,” wrote Sennholz, a longtime teacher of economics and former FEE president. “The administrations in return create legal privileges and immunities for labor unions so that they may be more effective in their economic struggle.”

If you think that sounds a bit like a quid pro quo, you’re not wrong. Unions have made it clear, even publicly, that they expect returns for all those dollars and door knocking.

“Those who would oppose, delay or derail this legislation, do not ask us—do not ask the labor movement—for a dollar or a door knock,” AFL-CIO union leader Richard Trumka warned lawmakers before a key House vote last year. “We won’t be coming.”

All workers like job perks, of course. And here is nothing wrong with receiving perks from an employer. But they should pass the test of the free market—not be mandated by the government or subsidized by taxpayers.

The economist Percy L. Greaves Jr. once explained the difference between how unions operate compared to free markets.

“The free market operates according to the Golden Rule. The higher values one contributes to the marketplace, as valued by consumers, the more one receives in return,” wrote Greaves Jr., a longtime writer for US News and World Report. “Free market operations are always voluntary transactions by which all parties exchange something they have for something on which they place a higher value.”

Many parents would no doubt desire having 600 hours in paid leave to stay home while their children do virtual learning—especially since newly issued CDC guidelines would keep 90 percent of schools at least partially closed.

Few of us will have that option, however. Because the action doesn’t make economic sense. It only makes political sense. But that's what matters when Congress spends trillions of our money. FEE’s Brad Polumbo recently highlighted 10 provisions in the $1.9 trillion stimulus bill that appear to be little more than “partisan kickbacks.”

Sadly, you can make this one number 11—and we’ve only just started looking.

Because Cuomo’s mandate prohibited nursing homes from screening residents released from the hospital for COVID-19, many have suspected it needlessly contributed to the death of elderly New Yorkers.

Now, a new report from the nonpartisan New York think tank the Empire Center found that Cuomo’s policy is correlated with higher nursing home death rates.

“The admission of coronavirus-positive patients into New York nursing homes under March 25 guidance from the New York State Department of Health was associated with a statistically significant increase in resident deaths,” the report found.

According to the report, data show each new admission of a COVID-positive patient was correlated with .09 additional deaths and associated with an average of 4.2 additional deaths per facility. Both figures fall outside the margin of error.

“Statewide, the findings imply that COVID-positive new admissions between late March and early May, which numbered 6,327, were associated with several hundred and possibly more than 1,000 additional resident deaths,” the report says.

A Reversal and Accusations of Coverup

As of Wednesday, more than 47,000 New Yorkers had died with or of the coronavirus, according to official statistics, which is more relative to population than any state with the exception of New Jersey.

Unlike many states, New York was hit particularly hard early in the pandemic. Following devastating outbreaks in March and April, New York suffered roughly 20,000 deaths by early May. Roughly 5,300 of these were classified as nursing home deaths, according to the Associated Press.

On May 10, under increased scrutiny and political pressure, Cuomo announced he was reversing his controversial order.

"We're just not going to send a person who is positive to a nursing home after a hospital visit. Period,” Cuomo said. “If there's any issue, the resident must be referred to the department of health which will find alternative care.”

Shortly after New York’s order was rescinded, however, it was revealed that the New York State Department of Health had changed the way it was recording nursing home deaths. Sometime in late April, nursing home residents who died of COVID-19 were no longer being counted as “nursing home deaths” by the state if they were transported to the hospital and died there rather than at the actual nursing home.

“[New York’s coronavirus tracker] currently does not include out of facility deaths,” NYSDOH spokeswoman Jill Montag told the Daily Caller. “Deaths of nursing home and adult care facility residents that occurred at hospitals is accounted for in the overall fatality data on our COVID-19 tracker.”

Though FEE and other publications wrote about the matter at the time, the apparent effort to conceal or minimize nursing home deaths drew little mainstream media attention for months. That changed in January when New York’s state attorney general Letitia James released a damning report that concluded “a larger number of nursing home residents died from COVID-19 than DOH data reflected.”

How large a number? As ProPublica reported, we know: 12,743.

That is the Cuomo’s administration’s own count, which was updated after the state attorney’s report was released, and it’s “roughly 50% higher than any loss of life previously acknowledged by the administration,” ProPublica’s Joe Sexton observed. (Subsequent reporting alleges that the Cuomo administration is still underreporting nursing home deaths.)

The fallout was severe.

On February 12, the New York Times reported that Cuomo was facing “allegations of a coverup” and “lawmakers from both parties have called for stripping the governor of the emergency powers that he has exercised during the pandemic.”

Bipartisan calls for an official inquiry gained steam, including from popular Queens Democratic Rep. Alexandria Ocasio-Cortez.

“I support our state’s return to co-equal governance and stand with our local officials calling for a full investigation of the Cuomo administration’s handling of nursing homes during COVID-19,” Ocasio-Cortez announced in a statement last week.

AOC calls for 'full investigation' into Cuomo nursing home scandal https://t.co/QVzac0kllv pic.twitter.com/lFo2McUbTI

— New York Post (@nypost) February 19, 2021

On Monday, Democrat state Assemblyman Ron Kim called for Cuomo’s impeachment, stating the governor threatened him and pressured him to lie about his administration’s activities.

“On a private phone call, the governor berated me, threatened my career, and demanded that I issue a fabricated statement,” Kim wrote in Newsweek.

A Warning Unheeded and the Folly of Hubris

Whatever Cuomo’s political fate, the nursing home scandal has all the markings of a Greek tragedy.

As the Empire Center’s report makes clear, hundreds (if not thousands) of New Yorkers died because of Cuomo’s order, which may prove to be the governor’s undoing. This would be calamitous in itself, but the tragedy is deepened by the fact it was all born of hubris; Cuomo’s great arrogance.

The governor was warned by trade industry leaders and health experts that his policy carried the seeds of disaster.

“We are deeply concerned with the recent New York State order,” the American Health Care Association and the National Center for Assisted Living said in a joint statement when Cuomo issued his order over their objections. “Based on what we currently know about how this virus can spread in institutional settings, the hospitalizations and case fatality rate, this action by a state will put the many frail and older adults who reside in nursing homes at risk.”

Weeks later, at an April 23 press conference, Cuomo was asked about objections over his policy, which some warned was resulting in excess deaths in nursing homes. 

“They don’t have the right to object,” Cuomo answered before the reporter finished his question. “That is the rule, and that is the regulation, and they have to comply with it.”

This is hubris on a massive scale, a trait that for millennia humans were warned against.

In the classical works of Greek literature, hubris (excessive pride) is the character flaw that causes the downfall of many heroes, including Oedipus, Antigone, and Achilles. In many cases, the tragedy is compounded by the hero’s failure to heed a warning, explicit or implicit.

Cuomo’s actions constitute hubris on several levels, but in one sense it’s a character flaw common among politicians who believe they possess the knowledge and foresight to replace individual decision making with their own. The economist F.A. Hayek saw this tendency as “the fatal conceit” of mankind: the idea that "man is able to shape the world around him according to his wishes.”

Cuomo and indeed other governors responsible for similar policies are guilty of Hayek’s fatal conceit.

“In their hubris, they presumed to know enough to centrally plan a complex society’s response to a complex pandemic, and to know more than individuals with local knowledge, industry expertise, and skin in the game,” I wrote back in May, “like the elder care experts and businesspeople who tried to warn policymakers about the disastrous effects the policy would have.”

The antidote to this conceit, Hayek understood, is humility before our infinitely complex world “which should guard him against becoming an accomplice in men’s fatal striving to control society.”

With a bit more humility, Cuomo could have avoided political scandal and—more importantly—not jeopardized the lives of thousands of elderly people in nursing homes.

It’s a lesson we’d all do well to learn to avoid such a tragic ending.

This is a tad embarrassing to admit because I’m pretty familiar with shooting statistics, having written several articles on gun violence and the Second Amendment. Below is a basic overview of gun violence in America. While gun homicides have been steadily declining for decades in the US, mass shootings have indeed been trending upward.

This fact alone probably would not have led me to believe that the US leads the world in mass shootings, however. An assist goes to the US media and politicians.

The Dominant Narrative

"Let's be clear,” President Obama said in 2015 after a shooting in North Carolina. “At some point, we as a country will have to reckon with the fact that this type of mass violence does not happen in other advanced countries."

Sen. Harry Reid echoed this sentiment. "The United States is the only advanced country where this kind of mass violence occurs.”

Media headlines have left little doubt that the US leads the world in mass shootings. In fact, according to CNN, it isn’t even close.

The comments and data seem to conclusively say that the US leads the world in mass shootings and the violence is unique, a product of “America’s gun culture.”

It’s a slam dunk case except for one thing: it’s not true.

The Root of the Myth

Statistics on global mass shooting incidents from 2009 to 2015 compiled by economist John Lott of the Crime Prevention Research Center show that the US trails many other advanced nations in mass shooting frequency and death rate.

As Investor’s Business Daily noted on these findings, “Yes, the U.S. rate is still high, and nothing to be proud of. But it's not the highest in the developed world. Not by a long shot.”

If this is true, how did the narrative that the US leads the world in mass shootings become the conventional wisdom? The myth, it turns out, stems from University of Alabama associate professor Adam Lankford.

Lankford’s name pops up in a montage of media reports which cite his research as evidence that America leads the world in mass shootings. The violence, Lankford said, stems from the high rate of gun ownership in America.

“The difference between us and other countries, [which] explains why we have more of these attackers, was the firearm ownership rate,” Lankford said. “In other words: firearms per capita. We have almost double the firearm ownership rate of any other country.”

Lankford’s findings show that there were 90 mass public shooters in America since 1966, the most in the world, which had a total of 202. But Lott, using Lankford’s definition of a mass shooting—“four or more people killed”—found more than 3,000 such shootings, John Stossel recently reported.

When findings do not mesh, scholars, in pursuit of truth, generally compare notes, data, and methodology to find out how they reached their conclusions. After all, who is to say Lankford doesn’t have it right and Lott is wrong? There’s just one problem: Lankford isn’t talking.

Lankford refuses to explain his data to anyone—to Stossel, to Lott, to the Washington Post, and apparently anyone else who comes asking, including this writer. (I emailed Lankford inquiring about his research. He declined to discuss his methodology, but said he would be publishing more information about mass shooting data in the future.)

“That’s academic malpractice,” Lott tells Stossel.

[Editor's Note: Lankford has since published his research. It can be found here.]

Indeed it is. Yet, it doesn’t explain how one professor’s research was so rapidly disseminated that its erroneous claim quickly became the conventional wisdom in a country with 330 million people.

Truth versus Narrative

For that, we must look to the era of narrative-driven journalism and the politicization of society, both of which subjugate truth to ideology and politics. Media and politicians latched onto Lankford’s findings in droves because his findings were convenient, not because they were true.

This is an unsettling and ill omen for liberty. As Lawrence Reed has observed, the road to authoritarianism is paved with a “careless, cavalier, and subjective attitude toward truth.” Yet that is precisely what we see with increasing frequency in mass media. (Need I reference the Covington debacle and the Smollet hoax?)

More than a hundred years ago Mark Twain noted, "A lie can travel halfway around the world while the truth is putting on its shoes."

Twain’s quote remains true even in the age of the internet. Lankford’s erroneous research had free rein for two years and was disseminated to tens of millions of viewers and readers before the truth finally got its shoes on.

If you ask most Americans today which country leads the world in mass shootings, I suspect a vast majority would say the US. And there’s always a price for the erosion of truth.

A new paper from the National Bureau of Economic Research found important correlations between sales losses and lockdowns across counties in California.

Economists Robert W. Fairlie and Frank M. Fossen used state data from all taxable sales in California during the first two quarters of 2020, finding a drop of $152 billion in the second quarter alone, a 17.5 percent decline from the previous quarter.

Not all businesses experienced losses, of course. Some businesses deemed “essential” saw gains, such as pharmacies, liquor stores, supermarkets, agriculture, and building material & garden equipment stores.

Many economic sectors were not so lucky, the authors found.

Leading the way in sales losses was the accommodation sector (91 percent), followed by bars (86 percent). Entertainment venues saw sales drop 83 percent, while full-service restaurants saw a decline of 61 percent.

“Small shops selling Gifts and Souvenirs, Clothing, or Books also experienced large losses in the second quarter of 2020,” the authors concluded..

None of these results are particularly surprising. But the authors also identified something else important. Namely, they found that the decline in sales during the pandemic stemmed primarily from government lockdowns and other restrictions, not voluntary social distancing.

"The results (of our research) suggest that local implementation and enforcement of lockdown restrictions and voluntary behavioral responses as reactions to the perceived local COVID-19 spread both played a role,” the economists state, “but enforcement of mandatory restrictions may have had a larger impact on sales losses."

Did the Virus Kill the Economy or Government?

There’s no question the US experienced an economic recession unlike any it had ever seen before, highlighted by a 33 percent GDP drop and 22 million jobs lost.

“The economic crisis is unprecedented in its scale,” Brookings Institution scholars wrote in a September paper, “the pandemic has created a demand shock, a supply shock, and a financial shock all at once.”

Few would deny the first claim—that the economic crisis is unprecedented in scale—but the second half contains a point of contention? Did “the pandemic” create the economic destruction or the collective response to the pandemic?

For months, the New York Times and others have implied it was the former.

“It will take years for the global economy to recover from the jobs taken away by the pandemic,” the Times reported in July.

Taken away by the pandemic. Numerous other examples by the Times and other media can be found espousing similar language.

This is not a question of simple semantics. Whether the greatest economic collapse in modern history was caused by a virus or the government’s response to the virus is not an inconsequential distinction. So did the pandemic take jobs away?

A recent Washington Post article says yes.

“...pandemic-related economic research shows the shutdowns aren’t killing jobs,” data journalist Andrew Vann Dam wrote, “the virus is.”

Vann Dam cites research from Indiana Indiana University economists Sumedha Gupta, Kosali Simon, and Coady Wing that analyzed dozens of pandemic and social distancing studies.

“Most of the economic damage we’ve seen is produced by people’s reaction to the virus,” Wing said. “Social distancing policies mattered, too, but they were layered on top of a major change in personal behavior.”

In this scenario, lockdowns weren’t the destroyer of economies. Fear and social distancing were.

Vann Damm also cites a study by economists Chad Syverson and Austan Goolsbee of the University of Chicago Booth School of Business who compared cell phone data to areas locked down to areas that were not.

“Business fell by more than half (53 percent) regardless of whether a place shut down, as people everywhere were trying to not to leave their homes,” Vann Dam writes.

This conclusion would seem to run counter to evidence from the NBER paper, which suggested government restrictions were primarily responsible for the economic damage.

Who’s Right?

Over the last year, the US economy and most others around the world were devastated. Who is ultimately held responsible for that destruction is not a trivial matter.

For nearly nine months, we’ve pointed out many of the unintended consequences of government lockdowns, which have included surging global poverty, mass job loss and business closures, spikes in depression and suicide, excess deaths, and other adverse social consequences..

As mentioned above, however, the Post would have you believe the damage was not the result of lockdowns.

“Governors shutdowns did not cause the pandemic jobs crisis,” the headline declares.

To arrive at this claim the paper relies primarily on two key points: 1) humans were social distancing even in the absence of mandatory restrictions, which resulted in a decline in economic activity; 2) jobs data do not show a wide divide between blue states and red states.

The first point is a non sequitur. It’s no revelation that people were social distancing and avoiding travel in the absence of mandatory restrictions. This fact was pointed out in many FEE articles, and it was used to demonstrate that lockdowns weren’t necessary because people were voluntarily modifying their behavior to lower the risk of exposure to a strange and deadly virus.

It simply does not follow that because people voluntarily adjusted their behavior, such actions would result in similar economic consequences. The foot traffic data the Post cites offers no clues about how humans prioritized travel or made purchases; it just shows they traveled less. This is a far cry from the research provided by Fairlie and Fossen, which analyzed the actual sales data of “essential” and “non-essential” businesses, and found mandatory restrictions had a much larger impact on sales losses.

The second point the Post provides is equally weak.

Vann Dam notes that, on average, red states have recovered faster than blue states. But he correctly notes that “even the simplest analysis shows job losses don’t depend solely on the governor’s party. Some red states struggled, some blue states thrived.”

One reason for this, he notes, is that many Republican-led states also enforced lockdowns. Despite this admission, Vann Dam proceeds to compare states based on red state and blue state criteria, offering numerous charts exploring differences in rural and urban areas.

But for the reasons Van Damm states, comparing red states and blue states doesn’t tell us very much. A far more helpful analysis would compare states with the most restrictive COVID policies with the states with the least restrictive policies. And that data is readily available, though you’ll not find it in the Post’s story—perhaps because the conclusion this data set reaches.

Data from Oxford University and the US Bureau of Labor and Statistics show that states with the most restrictive policies had substantially more unemployment than states with the least restrictive policies.

What about cases? The free states appeared to be doing worse over the Summer and early Fall, but the authoritarian states have seen dramatic increases since early November while the the free states have plateaued: pic.twitter.com/jeEchReZwg

— PLC (@Humble_Analysis) December 21, 2020

Nor is this the only evidence that suggests lockdowns, not the virus, were the primary economic destructor. A brief look at history shows there was no massive economic collapse in previous pandemics that were similarly deadly (or more deadly).

Early in 2020 Ryan McMaken of the Mises Institute pointed out that the 2020 pandemic was starkly different from the pandemics of 1918 and 1957-58, both of which were incredibly deadly.

“Yet we will see that neither produced economic damage on a scale we now see as a result of the government-mandated lockdowns,” McMaken observed. “This thoroughly undermines the claims that the lockdowns are only a minor factor in economic destruction, and that the virus itself is the real culprit.”

The Horror of a Command Economy

Last June, I observed that in their zeal to use force to protect humans from a deadly virus, “experts” may have subjected Americans to a blunder greater than any since the Iraq War.

Following that blunder, experts and defenders of the conflict spent years attempting to deny they were actually wrong. The lockdowns, which have been shown to be far less effective at protecting lives than destroying economies, will be no different.

David Mamet, the critically acclaimed playwright and screenwriter, observed in a November Wall Street Journal article that history is replete with examples of central planners who ruined economies through coercive policies.

The Holdomor. The Bengal Famine. Cambodia’s “killing fields.” Mao’s Great Leap Forward. Trofim Lysenko’s mad war on genetic science.

As horrifying as many of these examples are, their catastrophic results don’t capture the full terror of collectivism.

“The horror of a command economy is not that officials will make mistakes,” Mamet observed, “but that those mistakes will never be acknowledged or corrected.”

This is why the research in the NBER paper—which is based on actual state revenue data, not foot traffic at businesses—is so important.

If we are to avoid in the future the pain, suffering, and destruction experienced in 2020—pain which many of us still carry today—we must be honest about its causes.

The story is a powerful one. It explores how Dube went from a 16-year-old burger flipper earning $3.85 at a McDonald’s in Seattle to a leading authority on the minimum wage.

With federal legislation proposed to increase the national minimum wage to $15 per hour, it’s no surprise that Dube was asked about the proposal in his interview, specifically whether it would destroy jobs or cause businesses to close their doors.

“My reading of the evidence is that those risks are probably not very high,” he says. “There’s also a lot of rewards—lowering poverty.”

Dube is entitled to his opinion, of course, and overall the profile is rather good. But what the Bloomberg article does next warrants scrutiny (and reproach).

Bloomberg economics editor Peter Coy, the author of the profile, states that historically economists tended to agree that minimum wage laws increased unemployment. But he adds that the consensus among economists has shifted in recent years.

“In 1978, 90% of respondents to a survey of members of the American Economic Association (AEA) agreed that minimum wages substantially reduce employment among low-wage workers. By 2015, only 26% of top economists surveyed by the University of Chicago Booth School of Business’s Initiative on Global Markets concurred that raising the floor to $15 by 2020 would “substantially” lower employment. (An IGM survey released on Feb. 2 found 45% nevertheless agreed that a $15 minimum “would lower employment for low-wage workers in many states.”)

Anyone who read this paragraph would likely presume that economists now agree with Dube that the risks of increasing the minimum wage are low. But if you look at the actual IGM survey Coy cites, this is not the case.

In the survey, economists were asked to respond to the following question: “A federal minimum wage of $15 per hour would lower employment for low-wage workers in many states.”

Coy isn’t wrong that 45 percent of economists agreed with the statement. What he doesn’t mention is that just 14 percent of respondents disagreed. The poll shows a substantial percentage of economists responded that they were not sure (33 percent ) or failed to respond at all (7 percent).

What this means is that of the economists who responded unequivocally on the matter, an overwhelming percentage of them (76 percent) agreed increasing the federal minimum wage to $15 an hour would have adverse effects on employment.

The caveat is that an oddly higher number (40%) either said they were unsure or declined to answer the question.

— Jon Miltimore (@miltimore79) February 4, 2021

That this important context was omitted from the article is both unfortunate and egregious; it distorts the reality of the survey and is sloppy journalism. But of course, the realities of minimum wage laws have nothing to do with how economists respond to surveys. Economic laws are not subject to change, even though humans (and political climates) are.

And recent events, common sense, and basic economic theory tell us there would be adverse effects in employment.

Days ago a pair of Kroger-owned grocery chains announced they were closing 25 percent of their stores in Long Beach, California, after local lawmakers passed a “Hero Pay” ordinance mandating certain companies pay an extra $4 per hour to workers (on top of the $14 minimum wage). The company specifically cited the pay floor as the reason they were closing.

Common sense tells us that America is a large country and diverse in many ways, including economically. While a national minimum wage floor sounds fair and simple, a one-size-fits all approach has obvious problems. For starters, a $15 minimum wage is a $15 effective minimum wage in DC, California, New York, and New Jersey. In Puerto Rico, that same minimum wage is an effective minimum wage of $68 (i.e. when adjusted for cost of living). This would have serious consequences for Puerto Ricans, just as a $20 effective minimum wage would for Americans in West Virginia, Ohio, Iowa, Arkansas, Kentucky, and beyond.

Finally, basic economic theory tells us that increasing the price of labor reduces the quantity of labor demanded; this results in less employment. It’s Econ 101, as even Paul Krugman once observed.

Sure, you can find ubiquitous studies to support or deny what basic economics teaches. There are also caveats. Some wage floors may have no impact at all (if it’s below the market price of labor, for example); while others can have severe impact.

But as a recent National Bureau of Economic Research paper shows, a “clear preponderance” of academic research shows the job-killing impact of minimum wage laws.

“[The] body of evidence and its conclusions point strongly toward negative effects of minimum wages on employment of less-skilled workers, especially for the types of studies that would be expected to reveal these negative employment effects most clearly,” write economists David Neumark and Peter Shirley.

But perhaps the most important thing to remember is that wage laws infringe on voluntary associations. People choose to work for many reasons, and wages are just one of them.

Many people, especially those trained to see the world through the lens of oppressor and oppressed, tend to see work as an exploitive act. But is it truly?

A couple of years ago I looked back on my own work experience as a teen. Only years later, as an adult, did I realize how valuable it was to me. In my first real job (as a groundskeeper on a golf course) I learned how to wake up early, punch a clock (on time), drive a stick-shift, operate light machinery, and much more. Making $5 an hour, I took home a couple thousand dollars (after taxes) that summer and improved my slice, but those were not the most valuable things I received.

We often forget that jobs are much more than a paycheck.

“[A first job] can mean a connection to a lifelong mentor, the ability to envision a career path, a boost in self-confidence, an appreciation for the value of education, an off-ramp from a life on the streets, a belief that you can be something,” wrote Bethany Henderson and Danielle Gray, two Obama administration officials who worked on youth job initiatives.

There’s a lot of truth and wisdom in that simple observation, though many fail to see it.

In his Bloomberg interview, Arin Dube recalls working at McDonald’s in 1989 and “feeling privileged” that he was going to go on to college while many of his colleagues would not.

It’s unclear if it occurred to Dube that such a privilege may never have been realized if he had not had the opportunity to earn experience and $3.85 an hour working at McDonald’s. It’s something he should consider.

“They are in their Hamptons homes, or Hudson Valley or Connecticut,” Cuomo said at a press conference. “I talk to them literally every day. I say, ‘When are you coming back? I’ll buy you a drink. I’ll cook.”

Cuomo’s generous offer to buy cocktails and cook doesn’t appear to be solving New York’s economic woes.

On Sunday, news broke that the multinational financial services company Goldman Sachs, one of the largest companies in the US, is considering a plan to move its headquarters to the South.

“Goldman Sachs Group Inc. is weighing plans for a new Florida hub to house one of its key divisions, in another potential blow to New York’s stature as the de facto home of the U.S. financial industry,” Bloomberg reported. “Executives have been scouting office locations in South Florida, speaking with local officials and exploring tax advantages as they consider creating a base there for its asset management arm, according to people with knowledge of the matter.”

According to The Street, the Fort Lauderdale area and Palm Beach County are the most likely destinations, though Goldman is also considering Dallas as a possible alternative.

The news comes on the heels of several other investment firms—Elliott Management, Blackstone, and Citadel—that have boosted their presence in Florida. The Sunshine State is attracting companies because of its low costs, warm weather, and friendly tax climate. (Florida has no income tax).

Goldman’s announcement could not come at a worse time for New York City, which currently “has the most office space available since the aftermath of the Sept. 11 attack,” according to Bloomberg.

Goldman Sachs has an estimated market value of $71 billion and employs more than 38,000 people worldwide. So, its departure would further erode New York City’s standing as the financial capital of the world even as the state struggles with the broader challenges of the COVID-19 pandemic and the economic damage wrought by lockdowns.

Business Climate Matters

Some may point to the coronavirus as the culprit for Goldman Sachs’s pending exodus. A November CNBC report showed that some 300,000 New Yorkers have bailed on the Big Apple since the lockdowns began, despite the largest decline in rental rates in almost a decade.

While it’s certainly true that New York City, which has had one of the strictest lockdowns in America, has seen some of its most attractive draws neutralized by COVID-19—its top notch dining, entertainment, fashion, and networking—a closer look shows the exodus predates the pandemic.

As Hannah Cox pointed out last month on FEE.org, about a million people said goodbye to New York City and the tri-state area over the last decade. Similarly, other financial companies, such as AllianceBernstein Holding LP fled New York long before lockdowns and social distancing arrived.

The reality is the coronavirus exacerbated New York’s economic plight, but it’s not the source of it. The city’s fundamental problem is an open hostility to markets and freedom.

From policies such as universal pre-K and mandated paid sick leave to the city’s $15 minimum wage, rent-controlled housing, and oppressive tax climate, New York’s political class has shown a disdain for capitalism, private property, and business concerns, and a troubling affinity for central planning.

You don’t have to take my word for it. Listen to New York City Mayor Bill de Blasio, who told New York Magazine this in 2017.

“What’s been hardest is the way our legal system is structured to favor private property. I think people all over this city, of every background, would like to have the city government be able to determine which building goes where, how high it will be, who gets to live in it, what the rent will be.

I think there’s a socialistic impulse, which I hear every day, in every kind of community, that they would like things to be planned in accordance to their needs. And I would, too.

Unfortunately, what stands in the way of that is hundreds of years of history that have elevated property rights and wealth to the point that that’s the reality that calls the tune on a lot of development….

Look, if I had my druthers, the city government would determine every single plot of land, how development would proceed. And there would be very stringent requirements around income levels and rents. That’s a world I’d love to see…”

Did you catch that? The mayor of the world’s financial capital believes the primary obstacle to prosperity is private property. He thinks city officials should get to determine where buildings go and “who gets to live in [them].”

As one observer noted at the time, de Blasio is not the first political leader to thirst for such power.

“Other leaders have had such power, in the Soviet Union and China and Venezuela, and those systems did not produce progress. Or even toilet paper,” David Boaz wryly observed in USA Today.

Unfortunately, neither Cuomo nor de Blasio seem aware of this history. Prior to and throughout the COVID-19 pandemic, the pair have embraced the heavy hand of big government instead of free markets. New York’s oppressive climate has yielded a batch of bad fruit—surging violence (shootings were up 112 percent in November), injustice, economic depression, joblessness, and general despair.

Voting With Feet

Considering the current troubling state of New York and de Blasio’s open hostility to private property, one has to wonder what any financial services company or investment bank is still doing business in the Big Apple.

Fortunately, the American system of federalism means neither individuals nor businesses have to put up with it. New Yorkers feeling trapped can easily move to South Carolina or Utah, where they can actually have a social life and make a living. And financial companies can hit the road for Fort Lauderdale, Nashville, Dallas, Las Vegas or wherever their fancy takes them.

Should individuals or companies feel guilty over leaving? Quite the contrary.

As legal scholar Ilya Somin observed, “voting with your feet” is one of the best ways to help a struggling community and historically has been a key tool for upward mobility in America.

“Those who have been fortunate enough to achieve a measure of success thanks to mobility should not feel guilty about it,” Somin wrote in the Washington Post. “We can help society best by being productive citizens and–where possible–working to ensure that the foot voting opportunities that benefited us become more available to others.”

As someone who has personally benefited from this mobility—I bounced around a lot in my 20s—I wholeheartedly endorse this message. It’s one of the underappreciated glories of the American system. But one need not have experienced the benefits of mobility to understand what Somin is getting at: individuals and companies alike should make sure their talents and resources are best utilized.

Sadly, New York increasingly is no longer that place, for many.

A departure from Goldman Sachs would signal that New York City’s days as the financial capital of the world are over.  In some ways, the only surprise is that it took so long.

Jonathan Haidt, a social psychologist at New York University who has researched morality and culture for nearly 30 years, apparently agrees. Haidt has spent the better part of his career attempting to understand and explain the underpinnings of human morality.

What Do We Know about Morality?

During a TED talk a number of years ago, Haidt shared his discovery that contrary to the idea that humans begin as a blank slate—“the worst idea in all psychology,” he says—humans are born with a “first draft” of moral knowledge. Essentially, Haidt argues, humans possess innate but malleable sets of values “organized in advance of experience.”

So if the slate is not blank, what’s on it?

To find out, Haidt and a colleague read the most current literature on anthropology, cultural variations, and evolutionary psychology to identify cross-cultural matches. They found five primary categories that serve as our moral foundation:

1) Care/harm: This foundation is related to our long evolution as mammals with attachment systems and an ability to feel (and dislike) the pain of others. It underlies virtues of kindness, gentleness, and nurturance.
2) Fairness/reciprocity: This foundation is related to the evolutionary process of reciprocal altruism. It generates ideas of justice, rights, and autonomy. [Note: In our original conception, Fairness included concerns about equality, which are more strongly endorsed by political liberals. However, as we reformulated the theory in 2011 based on new data, we emphasize proportionality, which is endorsed by everyone, but is more strongly endorsed by conservatives.]
3) Loyalty/betrayal: This foundation is related to our long history as tribal creatures able to form shifting coalitions. It underlies virtues of patriotism and self-sacrifice for the group. It is active anytime people feel that it's "one for all, and all for one."
4) Authority/subversion: This foundation was shaped by our long primate history of hierarchical social interactions. It underlies virtues of leadership and followership, including deference to legitimate authority and respect for traditions.
5) Sanctity/degradation: This foundation was shaped by the psychology of disgust and contamination. It underlies religious notions of striving to live in an elevated, less carnal, more noble way. It underlies the widespread idea that the body is a temple which can be desecrated by immoral activities and contaminants (an idea not unique to religious traditions).  

Morality and the "Other Side"

What Haidt found is that both conservatives and liberals recognize the Harm/Care and Fairness/Reciprocity values. Liberal-minded people, however, tend to reject the three remaining foundational values—Loyalty/betrayal, Authority/subversion, and Sanctity/degradation—while conservatives accept them. It’s an extraordinary difference, and it helps explain why many liberals and conservatives in America think “the other side” is bonkers.

Liberals might contend, of course, that these values are not proper morals at all but base human traits responsible for xenophobia, religious oppression, etc. Haidt rejects this thesis. And through a series of historical illustrations, psychological studies, and cross-cultural references, he explains that many liberals often fail to appreciate a timeless truth that conservatives usually accept: order tends to decay. (A truth, I’ll add, buttressed by the second law of thermodynamics.)

Now, Haidt is not suggesting conservatives are superior to liberals. He points out that conservatives tend to value order even at the cost of those at the bottom of society, which can result in morally dubious social implications. Liberals, however, often desire change even at the risk of anarchy.

Many people, of course, will refuse to accept Haidt’s explanation of moral reality. This is not surprising. The human inclination is to believe in one’s own understanding of morality, and many people will live their entire lives without seriously attempting to understand their ideological counterparts.  

Trapped in a "Moral Matrix"

These people, Haidt says, reside on both sides of the ideological spectrum. They exist in what he calls a “moral matrix.”

“If you think that half of America votes Republican because they’re blinded… then my message to you is you’re trapped in a moral matrix,” Haidt said. “You can either take the blue pill and stick to your comforting delusions. Or you can take the red pill, learn some moral psychology, and step outside your moral matrix.”

So what to make of all this? I must say, I found Haidt’s explanations pretty insightful. It certainly helps explain our contentious culture. Even many intelligent and reasonable people, after all, will have a difficult time agreeing on anything if they view the moral underpinnings of society through vastly divergent lenses.

It doesn’t seem a stretch to contend that liberals in America have largely abandoned the latter three values (with some exceptions, of course), or that conservatives are highly influenced by them.

I’ll be interested to hear what readers think of Haidt’s thesis. But remember, this is a bit of a catch-22: if one reflexively smashes Haidt’s theory, it may only be evidence that this person is living in a moral matrix himself.

A newly released study in the academic journal Annals of Internal Medicine casts more doubt on policies that force healthy individuals to wear face coverings in hopes of limiting the spread of COVID-19.

“Researchers in Denmark reported on Wednesday that surgical masks did not protect the wearers against infection with the coronavirus in a large randomized clinical trial,” the New York Times reports.

“Researchers in Denmark reported on Wednesday that surgical masks did not protect the wearers against infection with the coronavirus in a large randomized clinical trial.” https://t.co/bKOENjCKVq

— J.B. Handley (@GenRescue) November 18, 2020

The study is perhaps the best scientific evidence to date on the efficacy of masks.

To conduct the study, which ran from early April to early June, scientists at the University of Copenhagen recruited more than 6,000 participants who had tested negative for COVID-19 immediately prior to the experiment.

Half the participants were given surgical masks and instructed to wear them outside the home; the other half were instructed to not wear a mask outside the home.

Roughly 4,860 participants finished the experiment, the Times reports. The results were not encouraging.

“The researchers had hoped that masks would cut the infection rate by half among wearers. Instead, 42 people in the mask group, or 1.8 percent, got infected, compared with 53 in the unmasked group, or 2.1 percent. The difference was not statistically significant,” the Times reports.

Dr. Henning Bundgaard, lead author of the experiment and a physician at the University of Copenhagen, told the newspaper the results of his research are clear.

“Our study gives an indication of how much you gain from wearing a mask,” Bundgaard said. “Not a lot.”

The Times notes that the research “did not contradict growing evidence that masks can prevent transmission of the virus from wearer to others”—but adds that the study’s findings are at odds with the Centers for Disease Control and Prevention (CDC), which just last week endorsed the view that face coverings protect individuals from contracting the virus.

Two important things should be noted here, however.

The Times is correct that the study “did not contradict” evidence that suggests masks can prevent sick people from transmitting the virus to others. But the Danish study didn’t test for this; as the paper notes, only healthy people were tested in the experiment.

Second, there was never much dispute on whether sick people should wear a mask. From the beginning of the pandemic, public health officials agreed that infected people should wear a mask to reduce the likelihood of transmitting the virus to others.

“The masks are important for someone who is infected to prevent them from infecting someone else,” Dr. Anthony Fauci noted back in March on 60 Minutes. “When you’re in the middle of an outbreak, wearing a mask might make people feel a little bit better, and it might even block a droplet. But it is not providing the perfect protection that people think that it is, and often there are unintended consequences; people keep fiddling with the mask and touching their face.”

Fauci would later modify his position, saying he discouraged masks out of concern of a supply shortage. But he was not wrong that mask wearing comes with unintended consequences, such as people touching their faces a lot. (Watch the video below if you doubt this.)

CDC chief Robert Ray Redfield Jr. has gone further than Fauci, declaring in public testimony that “this face mask is more guaranteed to protect me against COVID than when I take a COVID vaccine."

However, Redfield’s assertion is not backed up with scientific evidence. As the authors of the Danish study point out, the World Health Organization “acknowledges that we lack evidence that wearing a mask protects healthy persons from SARS-CoV-2.”

.@CDCDirector Dr. Robert Redfield: "These face masks are the most important, powerful public health tool we have...I might even go so far as to say that this face mask is more guaranteed to protect me against COVID than when I take a COVID vaccine." pic.twitter.com/yPdsSSQAbr

— CSPAN (@cspan) September 16, 2020

The results of the Danish study undermine the assertion from public health officials that wearing a surgical mask can protect individuals from COVID-19 infection, but that’s unlikely to end the mask debate, which has become one of the most vitriolic issues in America today.

It’s worth pointing out, however, that masks were not a divisive issue until governments began mandating their use.

As I’ve said before, reasonable and persuasive cases can be made both for and against the use of masks in the healthy population. But by replacing individual choice with collective mandates, public officials have politicized the issue and polluted the science. For example, scientists have faced retraction demands on research that concluded mask-for-all policies were not based on sound data. Additionally, the Danish study appears to have been delayed because medical journals were wary of its findings.

Few of us—even medical professionals, it seems—are able to answer with any degree of certainty whether masks are an effective form of protection against the coronavirus.

Some see this as a reason to force everyone to wear a mask. Yet in reality, the uncertainty is all the more reason the decision should be left to individuals.

"All rational action is in the first place individual action,” the economist Ludwig von Mises once observed. “Only the individual thinks. Only the individual reasons. Only the individual acts."

Public health officials should not be recommending a preventative measure—let alone mandating it—without knowing it is effective. (In public health, this is known as the principle of effectiveness.)

Governments forcing healthy people into mask-wearing was always an affront to the rights we hold over our own bodies and our basic human dignity.

It’s also beginning to look more and more like an affront to science.