Category Archives: Economics

Welcome to the ‘Hotel Seattle’

And you were thinking about moving west…

WSJ 6/22/2020

Seattle’s City Council prides itself on being an early adopter of new business mandates. Seattle was the first major U.S. city to adopt a $15 minimum wage and one of the first to require businesses to provide paid sick leave. The City Council achieved another first last week, when it unanimously enacted an ordinance requiring food-delivery app companies to provide gig workers “premium pay” for deliveries in the city, on top of their usual compensation, and prohibiting the companies from raising fees or leaving the city in response, even if the new rule causes them to lose money.

Instead of erecting a wall to keep people out, Seattle is attempting to create a legal wall to keep businesses in.

The ordinance was first suggested by Working Washington, a Seattle labor organization backed by the Service Employees International Union. On-demand delivery workers in the city—think Instacart shoppers and DoorDash couriers—must be paid a premium of $2.50 a stop in the city for the duration of the Covid-19 emergency declared by Mayor Jenny Durkan.

With thousands of homebound Seattle residents in need of grocery deliveries, the costs add up. The City Council expects the companies to eat it: The ordinance states that gig companies may not “reduce or otherwise modify the areas in the City that are served,” “reduce a gig worker’s compensation,” or “add customer charges to online orders for delivery of groceries” in response to the new premium. If a company violates the ordinance, the city can pursue it with penalties beyond the city limits.

To understand how unprecedented this is, imagine if Seattle’s $15 minimum-wage law restricted restaurants from closing their doors or adjusting their prices in response, effectively forcing them to continue operating at a loss.

If that sounds illegal, it probably is. In a detailed memo sent in May to Mayor Durkan, the trade group TechNet described how the ordinance would violate the Takings Clause of the Fifth Amendment.  By “forcing a business to continue unprofitable operations, the City would be extracting payments from an unwilling person and thus taking private property without any—let alone just—compensation.”

That isn’t the only problem. The ordinance may also thwart the will of Washington state voters, who in 2018 approved an initiative under which “a local governmental entity may not impose or collect any tax, fee, or other assessment on groceries.” Charges and exactions on the transportation of groceries were specifically precluded.

Seattle’s City Council has a history of legally questionable legislation. In 2017 it passed a “wealth tax” on the income of wealthy households, even though the city attorney had advised that it would be illegal under state law. The courts agreed, and in April the state Supreme Court denied the city’s bid to review the decision. The city also recently walked away from a long legal dispute over a 2015 law that gave Uber and Lyft drivers, who use apps provided by the companies to work as independent contractors, the right to bargain collectively.

Seattle may believe it has the budget to back another costly legal fight, but other municipalities—whose budgets are strained as a consequence of the coronavirus crisis—will think twice before imitating the ordinance.

Even without mandates, gig companies are providing Covid-related benefits to workers who contract with them. Shipt is providing up to two weeks of financial assistance to its shoppers if they get Covid. DoorDash is offering financial assistance to “Dashers” who test positive or are told by a medical professional to self-isolate.

There may be merit to offering additional pay during the current crisis, but it’s a policy best handled voluntarily, in cooperation with gig companies, not in opposition to them.

Mr. Vernuccio is a senior fellow at the Mackinac Center for Public Policy. Mr. Saltsman is managing director at the Employment Policies Institute

https://www.wsj.com/articles/welcome-to-the-hotel-seattle-11592865795?mod=opinion_lead_pos7

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Do Lockdowns Save Many Lives? In Most Places, the Data Say No – WSJ

Do quick shutdowns work to fight the spread of Covid-19? Joe Malchow, Yinon Weiss and I wanted to find out. We set out to quantify how many deaths were caused by delayed shutdown orders on a state-by-state basis.

To normalize for an unambiguous comparison of deaths between states at the midpoint of an epidemic, we counted deaths per million population for a fixed 21-day period, measured from when the death rate first hit 1 per million—e.g.,‒three deaths in Iowa or 19 in New York state. A state’s “days to shutdown” was the time after a state crossed the 1 per million threshold until it ordered businesses shut down.

We ran a simple one-variable correlation of deaths per million and days to shutdown, which ranged from minus-10 days (some states shut down before any sign of Covid-19) to 35 days for South Dakota, one of seven states with limited or no shutdown. The correlation coefficient was 5.5%—so low that the engineers I used to employ would have summarized it as “no correlation” and moved on to find the real cause of the problem. (The trendline sloped downward—states that delayed more tended to have lower death rates—but that’s also a meaningless result due to the low correlation coefficient.)No conclusions can be drawn about the states that sheltered quickly, because their death rates ran the full gamut, from 20 per million in Oregon to 360 in New York. This wide variation means that other variables—like population density or subway use—were more important. Our correlation coefficient for per-capita death rates vs. the population density was 44%. That suggests New York City might have benefited from its shutdown—but blindly copying New York’s policies in places with low Covid-19 death rates, such as my native Wisconsin, doesn’t make sense.

Sweden is fighting coronavirus with common-sense guidelines that are much less economically destructive than the lockdowns in most U.S. states. Since people over 65 account for about 80% of Covid-19 deaths, Sweden asked only seniors to shelter in place rather than shutting down the rest of the country; and since Sweden had no pediatric deaths, it didn’t shut down elementary and middle schools. Sweden’s containment measures are less onerous than America’s, so it can keep them in place longer to prevent Covid-19 from recurring. Sweden did not shut down stores, restaurants and most businesses, but did shut down the Volvo automotive plant, which has since reopened, while the Tesla plant in Fremont, Calif., was shuttered by police and remains closed.

How did the Swedes do? They suffered 80 deaths per million 21 days after crossing the 1 per million threshold level. With 10 million people, Sweden’s death rate‒without a shutdown and massive unemployment‒is lower than that of the seven hardest-hit U.S. states—Massachusetts, Rhode Island, Louisiana, Connecticut, Michigan, New Jersey and New York—all of which, except Louisiana, shut down in three days or less. Despite stories about high death rates, Sweden’s is in the middle of the pack in Europe, comparable to France; better than Italy, Spain and the U.K.; and worse than Finland, Denmark and Norway. Older people in care homes accounted for half of Sweden’s deaths.

We should cheer for Sweden to succeed, not ghoulishly bash them. They may prove that many aspects of the U.S. shutdown were mistakes—ineffective but economically devastating—and point the way to correcting them.

Mr. Rodgers was founding CEO of Cypress Semiconductor Corp.

Source: Do Lockdowns Save Many Lives? In Most Places, the Data Say No – WSJ

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what are you in favor of?

Another interesting perspective.

WSj  4/10/2020  

I have no idea whether Sweden’s more modest approach to the Covid-19 pandemic— keeping schools and restaurants open while restricting visits to retirement homes—will be a success or a colossal and deadly mistake. No one else will know either, probably for months. But while we wait, the most interesting political fact about Sweden has gone largely unremarked: The prime minister resisting an authoritarian national lockdown and appealing instead to individual responsibility, Stefan Löfven, is the leader of the country’s main center-left party.

Surprise, surprise. Those most enthusiastically cheering on Sweden’s experiment from abroad—especially in America—hail from the political right. They believe that if it succeeds, Stockholm’s resistance to draconian measures would constitute a rebuke to the statist instincts of most other world leaders.

The oddity is that the left in most of the world has been so intensely critical of Sweden’s experiment. If this model works, it would hold out some hope that the coronavirus could be managed without putting millions of members of the left’s own blue-collar base out of work. Yet the prevailing attitude is less “let them try” and more “excommunicate the heretics.”

This column has previously argued that “the science” political figures claim to be following actually offers little practical guide to policy makers. In the fast-moving global effort to unlock the secrets of a new disease, competing studies are readily available to justify almost any approach a politician wishes to adopt.

As a consequence, the political and policy responses to this disaster are more revealing than politicians want to admit. They are not hewing to objectively tested theories. They are following their ideological predispositions to whatever science bolsters prior beliefs.

Politicians on the right made a pragmatic political calculation: A media incapable of sophisticated thought would never forgive them if they made a reasonable bet in favor of policy modesty and it backfired.

Conservatives aren’t wrong about the media’s general inability to process multiple variables, to judge from the way President Trump is scored for a national death toll primarily attributable to New York, whose Democratic governor somehow has managed to emerge from this situation as a hero. Hence the right has uncomfortably embraced draconian interventions, especially in Mr. Trump’s America and Boris Johnson’s U.K.

Meanwhile the left in most developed countries has settled on an embrace of progressive authoritarianism over the interests of what used to be its electoral base among normal working people. This manifests itself in three ways.

 

Progressives world-wide disdain workers and deride Sweden’s moderate liberals for resisting a lockdown.

 

One is enthusiastic support for mass shutdowns of economic activity that wreck the lives of lower-paid factory, construction and service workers while leaving lefty urban can-work-from-home creatives only moderately inconvenienced.

Left-wing parties that find themselves in opposition, as in the U.S. and U.K., have engaged in a bizarre game of competitive immiseration with their right-leaning governments. Joe Biden called for a national lockdown last month, rather than demanding a more granular deployment of the least intrusive measures possible in each region. Shortly before Mr. Johnson announced Britain’s lockdown on March 23, Keir Starmer, now Labour Party leader, demanded “further compliance measures.”

Another is the prioritization of the needs of public-sector employees over those private-sector workers who still have jobs. Witness how London Mayor and Labour Party star Sadiq Khan demanded that construction workers be put out of their jobs so that the Underground rail network could run less frequently for the benefit of its staff instead of having to carry all those builders to their job sites.

The third is an aggressive expansion of the welfare state as a substitute for productive work. A looming disaster in the U.S., as writers on this page have warned, is that the coronavirus stimulus bill creates incentives to receive unemployment benefits rather than return to work once the lockdowns are lifted. The left used to think of itself as the movement of empowered working people. Now it’s trying to become a movement of the dependent lockdown poor.

The drumbeat has become so insistent it’s easy to forget there was another way. The left could have chosen to be the political side that would rigorously interrogate whether governments have a reasonable base of evidence on which to halt entire economies, and that would demand lighter and shorter interventions.

Instead the virus disaster has crystallized like almost nothing else could the divide that has opened on the left between blue-collar and lower-paid voters on one side and urban progressives on the other. No wonder the urban progressives are rooting, perversely, against Sweden.

By Joseph C. Sternberg

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Lockdowns won't stop it now

We are where we are; we need to live with our decisions to-date. Dr Ladapo has perspective worth consideration.

The pandemic crisis now rests on a fulcrum. On one side is Covid-19 and every possible action that might prevent people from contracting and dying from infection. On the other side is everything else that matters: livelihoods that allow people to feed and shelter their families; civil liberties; the education of children; social well-being, including the prevention of loneliness, isolation and domestic violence; and all other medical conditions, from cancer and heart disease to dental emergencies. The belief that it is worth sacrificing anything and everything at the altar of flattening the coronavirus curve is foolish. But many leaders are behaving that way. We need a clearer picture of all that is at stake before those at the helm burn down the village to save it.

Examples of bad actions, often by well-intentioned leaders, are proliferating. The mayor of Chicago warned joggers that a stay-at-home order means they may not go on long runs without risking arrest, a flagrant disregard for the American values of liberty and prudence, not to mention the common-sense benefits of exercise. A city in Texas threatens to fine residents up to $1,000 if they (and their children) don’t wear masks in public. New Jersey Gov. Phil Murphy recommends a policy of social distancing within your own household. “Keep your distance between yourself and other family members,” he cautioned recently. More broadly, governors have ordered shutdowns to slow the coronavirus without acknowledging what these shutdowns cost.

Encouragingly, this has also been a time of extraordinary action by private citizens. The largest volunteer network in New York, New York Cares, decided that instead of closing up shop, it will press on to serve the community. Grocery stores have created special shopping hours for seniors and healthcare workers. The New England Patriots used its team plane to fly a million N95 masks from China to Boston. The list of courageous acts is lengthy.

To help set the right course for our country, we must grasp some simple—but tough—facts. The novel coronavirus is highly contagious and tragically lethal to many. There is no guarantee of a vaccine within the next 18 months. We have taken measures to slow the virus, but these can’t stop it. The only thing that can stop the virus at this advanced stage of community transmission is a complete lockdown, which can happen in authoritarian countries like China, but not in the U.S.

Are shutdowns enough? No. Despite the efforts, there is still enough human contact to ensure the virus will spread. Take a look at the long list of “essential” services and exemptions on California’s Covid-19 website, for example. Shutdowns will cause the virus to spread more slowly, but it will spread nonetheless.

When shutdowns end, the virus will spread and Covid-19 deaths will increase. Without a vaccine and community immunity—often called “herd immunity”—this outcome is all but guaranteed.

 

Stopping Covid-19 and protecting the economy are one and the same, but it is too late to do either.

 

A closed beach in Long Beach, Calif., April 2. BRITTANY MURRAY/ORANGE COUNTY REGISTER VIA ZUMA WIRE

 

The only thing that will temporarily quell it in the near term, short of a miracle treatment, is another shutdown. But states will get only one pass at this. Once lifted, the appetite for a repeat shutdown will be tepid at best, even in left-leaning states. The reality of the shutdown’s costs—the upheaval caused by school closures, economic hurt, social isolation and lost lives and livelihoods—will be fresh. Some argue that stopping Covid-19 and protecting the economy are one and the same. Although this is true, it is too late to do either.

Accepting this reality will help us make better decisions. The modeling predicts that the number of sick patients is likely to be profound and exceed anything seen in generations. It’s therefore clear that building health-care capacity—adding hospital beds, converting and building coronavirus-only treatment facilities and sourcing ventilators—is the right step to take.

Embracing reality also makes other things clear. If we can’t shut down for 18 months on the gamble that an effective vaccine will arrive, how long will it be worth committing millions of families to poverty and uprooting lives, education and every other part of the economy? Politicians have largely dodged this question.

Already, ethicists are helping us think about how to allocate ventilators when hospitals run short. And how many older doctors and nurses have to die before we seriously discuss allowing older health-care workers—say, above 59—to opt out of dangerous settings like emergency departments and hospital wards? My experience caring for patients with suspected or diagnosed Covid-19 infections at UCLA has made it clear to me that treating them in the same setting as patients with other diagnoses is unsafe, even with personal protective equipment.

Many difficult decisions lie ahead. We stand the best chance of making good decisions if we consider everything at stake, and not only the singular goal of reducing Covid-19 deaths.

Dr. Ladapo is an associate professor at UCLA’s David Geffen School of Medicine

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