Streetwise Professor

Especially if it’s lumber. Not so much if it’s timber or logs.

Lumber prices have been on a tear recently. The CME lumber futures price has risen inexorably for weeks:

The softwood lumber PPI has increased 73 percent from April of last year, when Covid cratered all markets (including all commodity markets in particular) to March of this year. As the graph above shows, the price increase in the last month alone will add almost 100 precent to that. The plywood PPI is up 43 percent. The PPI for logs, timber, and pulpwood has not risen nearly as much over the April 2020-March 2021 period–only 7 percent.

So what’s going on? This podcast has a pretty good explanation, which comports with the analysis that follows. My main objection is that it repeatedly refers to the market as “broken.” No. A market is broken when it sends the wrong price signals. It is not broken if it sends the right signals, even if you don’t like them. That’s what’s going on here. Prices are signaling a major change in demand patterns that is straining a productive capacity oriented to the old patterns.

The podcast claims that log and timber prices are down. That’s not consistent with the PPI data, which does demonstrate some uptick in log/timber prices. I have also seen reports that timber/log prices are firm in western Canada. But it is obvious that the spread between lumber and timber has widened dramatically.

Which provides a perfect opportunity to apply what I teach in my commodities classes: Find the bottleneck. In a reasonably competitive market, the spread between two commodities, one that can be transformed into the other, equals the cost of that transformation. Sawmills transform logs into lumber, so if the spread between the prices of these things blows out, that shows you where the bottleneck is–at the mills.

The podcast largely confirms that. The sawmill sector has contracted and consolidated in recent years for a variety of reasons. The Covid-induced economic shock of last year also led to the idling of capacity. Now demand has come roaring back. There is a building boom, driven by an exodus from cities and a substitution of things for services. The turnaround has been so abrupt that sawmill capacity has not been able to adjust to keep up. It of course takes a long time to build new mills, and the decision to do that depends on expectations about long-term demand. It is quicker and more economical to restart idle mills, and to add shifts, and that is happening. But it can’t happen overnight.

A transportation bottleneck is exacerbating the problems. Shortages of railcars and trucks are limiting the ability of sawmills to satisfy demand. These shortages reflect in part a commodities boom generally. Chinese demand for US ag products (which has sent corn prices soaring) is contributing to that, but the transportation sector has been robust generally since its doldrums of a year ago. In that time the Dow Jones Transportation Average is up 128 percent off its Covid bottom, and is 40 percent above its pre-Covid collapse level.

Transportation bottlenecks tend to widen spreads at all levels of the value chain, from timber farm to mill, and from mill to lumber yard.

Lumber inventories are at barebones levels, as one would expect in such circumstances. When the supply-demand balance is tight today relative to what is expected in the future, the efficient thing to do is to draw down inventories and to consume everything that is being produced. This is leading, exactly as theory would predict, to a pronounced backwardation in lumber prices:

Note there’s an almost 30 percent backwardation going out six months. That’s very steep. Very Although I wouldn’t put too much weight in the distant deferred prices (given the absence of volume and open interest) one, it appears that the curve flattens out after the six month point.

So what’s going on is commodity economics 101. A surge in demand after a sharp fall (which led to reductions in transformation capacity) caused the lumber market to hit constraints–constraints in the amount of available inventory, and constraints in the capacity to transform a raw product (timber) into a consumable one (lumber). This in turn caused spreads (calendar spreads and the spread between finished and raw prices) to blow out. Market participants are responding to these price signals. The backwardation suggests that the constraints will ease by the end of the year. That of course is a forecast based on current information. Things could change.

So things ain’t broke. Indeed, what is happening in the lumber and timber markets is a symptom of a robust economic recovery, at least in the housing and goods sectors. It also reflects an apparent ongoing structural shift post-Covid (and post urban disturbances of the last year), namely, a desire to move out of cities driven by the recognition that more people can work remotely, and the declining amenities of cities (largely the result of lockdowns and their aftermath, and an upsurge in crime). Such an abrupt and seismic shift inevitably bumps up against constraints determined by past investments tailored to accommodate the old consumption patterns. That affects prices, and prices signal the need for new investments to alleviate the bottlenecks. This too shall pass, and within some months the bottlenecks will ease, as. participants all along the value change respond to the extraordinary price signals we see today.

Under Federal law, a pharmaceutical intervention must be proven safe and effective before it is marketed to the public. If after introduction it proves unsafe or ineffective, the Food and Drug Administration can rescind its approval.

Note the burden of proof: the manufacturer must prove safety and efficacy. Safety and efficacy are not rebuttable presumptions.

Would the same be true of non-pharmaceutical interventions (NPIs). This neologism (neoanacronym?) is used to describe the policies that have been imposed during the Covid Era–most particularly, lockdowns and masks.

Neither had been proven safe or effective prior to their wholesale–and I daresay, indiscriminate–use. Lockdowns in particular had never been subjected to any clinical experiment or trial. Indeed, the idea had been evaluated by epidemiologists and others, and soundly rejected. But a policy first introduced in a police state–China–spread just as rapidly as the virus to supposedly non-police states despite it never having been proven efficacious or safe.

A year’s experience has produced the evidence. Greetings, fellow lab rats!

And the evidence shows decisively that lockdowns are NOT effective at affecting any medically meaningful metric about Covid. This American Institute of Economic Research piece provides an overview of the evidence through December: subsequent studies have provided additional evidence.

Furthermore, lockdowns have been proven to be unsafe. Unsafe to incomes, especially for those whose jobs do not permit working from home. Unsafe for physical health, in the form of inter alia deferred cancer diagnoses and treatment for heart attacks and strokes and greater substance abuse (with higher incidence of overdoses), as well as delayed “elective” surgeries that improve life quality. Unsafe for mental health. Unsafe for children, in particular, who have experienced debilitating social isolation and profound disruption in their educations. (Although given the trajectory of American public education, especially post-George Floyd/Derek Chauvin, feral children might be better off than those subjected to the tortures of a CRT-infused curriculum and CRTKoolAid drinking “educators.”)

Masks are not as devastating as lockdowns, but they have also been shown to be ineffective and also unsafe, especially for those who must wear them for extended stretches–which includes in particular children at school.

(Remember “For the children”? Ah, good times. Good times.)

Drug regulation was one of the first major initiatives of the Progressive Era, and the 1962 FDA Amendments that imposed the efficacy requirement were also driven by progressives. My assessment of the economic evidence (especially the literature spawned by my thesis advisor, the great Sam Peltzman) is that the efficacy requirement in particular has been harmful, on net, because it delayed and in some cases prevented the introduction of beneficial therapies.

But even if–especially if–you accept the progressive-inspired conventional wisdom regarding pharmaceutical intervention regulation, you should be dismayed and even furious that the same logic that has NOT been applied to NPIs. The underlying principle of drug regulation has been “show me”: show me something works. The underlying principle of Covid Era ukases has been: “Evidence? Evidence? I don’t have to show any stinkin’ evidence.” Indeed, it’s been worse than that: those who demand evidence, or even politely point out the lack of evidence, are branded as heretics by the very same “progressives” who believe religiously that requiring proof of efficacy of drugs is a good thing.

How to square this circle? How to explain this seeming contradiction?

I think it is as plain as the nose on your face. Power. In particular, power exercised by progressive technocratic elites. The FDA acts empower a progressive technocratic elite. Lockdowns and mask mandates empower a progressive technocratic elite–far beyond the wildest dreams of the most zealous FDA bureaucrat. (They also empower idiot politicians who imagine themselves to be part of some elite.) They are both premised on the belief that individuals are incompetent to choose wisely, and must be coerced into making the right choice. Coerced by credentialed elites who are better than you proles.

So an apparent logical inconsistency–proof of efficacy for thee, but not for me–is in fact no inconsistency at all. They are both who, whom. A soi disant elite (ha!) always pushes the alternative that gives them the most power, and deprives you of the most choice. Who (the progressives): Whom (you).

In the Time of Covid, numerous liberties, and indeed Constitutional rights, have been sacrificed in the name of “public health.” The ruling class has learned this lesson well: these enemies of freedom realize that claims of “public health” are the perfect Trojan horse to achieve their dreams of subjugating the proles.

Now everything is a “public health” crisis. Guns–“public health” issue. Racism–“public health” issue. CO2–“public health” issue. The Supreme Court–“public health” issue.

I kid you not!:

“There’s growing recognition that the Supreme Court poses a danger to the health and well-being of the nation and even to democracy itself,” said Aaron Belkin, the director of the group Take Back the Court. “A White House judicial reform commission has a historic opportunity to explain the gravity of the threat and to help contain it by urging Congress to add seats, which is the only way to restore balance to the court.”

Appeals to health are particularly seductive in this era of safetyism, when ironically most of the true health scourges of humanity have been eliminated, or at least greatly reduced, and marginal risks have been transmogrified into horrific threats. Moreover, by appending the term “public” to the emotive word “health”, the ruling class denies individual responsibility or insinuates the abject irresponsibility of individuals, and asserts the necessity of controlling you. For your own good, you know, and that of “the public.” You are a selfish bastard if you resist, right?

The public health profession has always attracted statist control freaks. There are indeed limited circumstances in which external health effects of individual decisions are so damaging that some constraints on individual choice are justified, and it would be acceptable if public heath authorities stayed within that small box. But the profession has striven mightily to expand its authority to wider and wider spheres of personal behavior. And particularly in the midst (would that it be in the aftermath) of covidmania the totalitarians among us, who presume to rule us, have found public health claims to be a powerful weapon in their relentless campaign to destroy freedom and rights.

Which is why unless proven otherwise, subject to a very high burden of proof, we should view any assertion that something is a public health issue as a mask for fascist assaults on our liberties.

After languishing in the doldrums in the Covid era, and at times touching historic lows, the price of LNG delivered to Asia skyrocketed in recent weeks before plunging almost as precipitously:

As always happens with such big price moves, there has been an effort to round up suspects. Here, since the visible price increase occurred in the spot market, the leading culprit is the spot market–something that has been growing rapidly in recent years, after being largely non-existent prior to 2014 or so.

For example, Reuters’ Clyde Russell writes:

What is more likely is that some buyers misjudged the availability of spot cargoes, and when hit with a surge in demand found themselves unable to secure further supply, thus bidding up the prices massively for the few cargoes still available.

Frank Harris of Wood Mackenzie opines:

“Buyers are going to become aware that you may not always be physically able to source a cargo in the spot market regardless of price,” Mr Harris says. “The most likely outcome is it shatters some of the complacency that’s crept into the market over the last 12-18 months.”

It is incorrect to say that a shortage of spot cargoes per se is responsible for the price spike registered in the spot market. It is the supply of LNG in toto, relative to massive increase in demand due to frigid weather, that caused the price increase. How that supply was divided between spot and non-spot trades is a secondary issue, if that.

The total supply of LNG, and the spatial distribution of that supply, was largely fixed when the cold snap unexpectedly hit. So in the very short run relevant here (days or weeks), supply in Asia was extremely inelastic, and a demand increase would inevitably cause the value of the marginal molecule to rise dramatically. Price is determined at the margin, and the price of the marginal molecule would be determined in the spot market regardless of the fraction of supply traded in that market. Furthermore, the price of that marginal molecule would likely be the same regardless of whether 5 percent or 95 percent of volume traded spot.

If anything, the growing prevalence of spot contracting in recent years mitigated the magnitude of the price spike. Traditional long term contracts, especially those with destination clauses, limited the ability to reallocate supplies efficiently to meet regional demand shocks. The more LNG effectively unavailable to be reallocated to the buyers that experienced the biggest demand shocks, the less elastic supply in the spot market, and the bigger the price increase that occurs in response to a given demand shock. That is, having less gas contractually committed, especially under contracts that limited the ability of the buyers to sell on to those who value it more highly, mitigates price spikes.

That said, the fundamental factors that limit the total availability of physical gas, and constrain the ability to move it from low demand locations to high demand locations in the short time frames necessary to meet weather-driven demand changes (ships can’t magically and instantaneously move from the Atlantic Basin to the Far East), mean that regardless of the mix of spot vs. contract gas prices would have spiked.

Some have suggested that the price spike will lead to less spot contracting. Clyde Russell again:

The question is whether utilities, such as Japan’s JERA, continue with their long-term vision of moving more toward a spot and short-term market, or whether the old security blanket of oil-linked, but guaranteed, supplies regains some popularity.

It’s likely LNG buyers don’t want a repeat of the recent extreme volatility, but perhaps they also don’t want to return to the restrictive crude-linked contracts that largely favoured producers by guaranteeing volumes at relatively high prices.

The compromise may be the increasing popularity of short-term, flexible contracts, which can vary from a few months to a few years and be priced against different benchmarks.

Well, maybe, but color me skeptical. For one thing, contracts require a buyer and a seller. Yes, buyers who didn’t have long term contracts probably regretted paying high spot prices–but the sellers with uncommitted volumes really liked it. The spike may increase the appetite for buyers to enter long term contracts, but decrease the appetite of sellers to enter them. It’s not obvious how this will play out.

I note that the situation was reversed in 2020–buyers regretted long term contracts, but sellers were glad to have them. Ex post regret is likely to be experienced with equal frequency by buyers and sellers, so it’s hard to see how that tips contracting one way or the other.

This conjecture about the price spike leading to more long term contracting also presupposes that the only way of managing price risks is through fixed price contracts (or oil-indexed) contracts for physical supply. But that’s not true. Derivatives allow the separation of who bears price risk from the physical contracting decision. A firm buying spot (and who is hence short LNG) can hedge price risk by purchasing JKM swaps. This has the additional advantage of allowing the adjustment of the size of the hedge in response to more timely information regarding likely quantity requirements, price projections, and risk appetite than is possible with a long term contract. That is, derivatives permit unbundling of price risk from obtaining physical supplies, whereas long term contracts bundle those to a considerable degree. Moreover, derivatives plus short term/spot acquisition of physical supplies allows more flexible management of supply, and management of supply based on shorter term forecasts of need: these shorter term forecasts are inherently more accurate than forecasts over contracting horizons of years or even decades.

So rather than lead to more long term contracts, I predict that this recent price spike is more likely provide a fillip to the LNG derivatives market. Derivatives are a more flexible and cheaper way to manage price risk than long term contracts.

This is what happened in the pipe gas market in the US post-deregulation. Spot/short term volumes grew dramatically even though price spikes were a regular feature of the market: market participants used gas futures and swaps and options to manage these price risks, and benefited from the greater flexibility and precision of obtaining supplies on a shorter term basis. This shifted a lot of the price risk to the financial sector–which is the great benefit of the much bewailed “financialization” of commodity markets.

The same is likely to occur in LNG.

Once upon a time, a tribe dwelled on the slopes of a volcano that towered over their tropical isle. When the volcano began to smoke and rumble, and lava started to flow down its slopes, the natives ran to their shaman. “Oh wise one, what shall we do to appease the volcano god?” they beseeched the wizened old man. “Sacrifice 10 virgins to the volcano god, and he will be appeased!”

Encouraged by the hope of sparing the multitude by dispatching a few, the tribesmen seized 10 virgins, and duly sacrificed them with great solemnity.

Yet rather than quieting, the volcano became more violent then ever. Massive rivers of lava were now flowing, and great plumes of ash were erupting from its crater.

So the natives again ran to the shaman. “Oh wise one, we did as you said, and sacrificed 10 virgins to the volcano god. But look–he is not appeased! He seems angrier than before! What shall we do?”

“Sacrifice more virgins, of course!” replied the shaman, who was angry at the natives’ temerity in questioning his awesome knowledge of matters supernatural.

This is a silly story, and fictional, of course. But it echoes a story the world is living out today, which is not at all silly, but is instead deadly serious. Namely, the responses of government shamans to the Covid-19 virus.

The world has experienced waves of lockdowns of varying intensity since March, lockdowns imposed by government authorities claiming to be acting on the basis of science and unquestionable expertise. The lockdowns are intensifying over the Christmas season, descending with particular ferocity in Europe, where the UK, Italy, and Germany have or will soon impose restrictions as draconian, or more so, than they did during the previous peaks in the outbreak.

Prior to 2020, lockdowns were NEVER the recommended response to a pandemic. Indeed, the WHO and other public health bodies recommended against them. Further, the evidence gained to date on these extraordinary interventions indicates that they have had no effect on the course of the pandemic, or at best a minor effect dwarfed by their adverse economic, social, and health (physical and mental) consequences. The course of the virus proceeds independent of the futile interventions of authorities and experts.

The studies claiming to demonstrate the beneficial impacts of lockdowns disproportionately rely on comparing model forecasts to outcomes. But the model forecasts have been proven wrong again and again. These studies are therefore just another indictment of the models, rather than an endorsement of lockdowns.

The current Cancel Christmas hysteria follows hard on the heels of the Cancel Thanksgiving panic, accompanied by dire warnings of a post-Thanksgiving spike due to the failure of people to sacrifice their family gatherings to appease the virus. This spike has not occurred. Indeed, in many states (e.g., the upper Midwest) infections and deaths have been on a downward trajectory since before Thanksgiving, and that trajectory has continued post-holiday.

Yet experience be damned. Sacrifice more holidays!

The economic, psychological, spiritual, and health havoc wreaked by the lockdowns is large, and clearly evident. Yet rather than recalibrate, let alone admit error, our supposed betters who pompously declare their fealty to Science!, ignore these costs, ignore the utter inefficacy of their past ukases, and issue more diktats instructing us to sacrifice yet again. And again. And again. They are indistinguishable from the shaman of the parable.

Lockdowns are one example of this phenomenon. Masks are another. The evidence on the effectiveness of masks in controlling infection that was accumulated before 2020 was largely negative, and equivocal at best: masks offer little or no protection. A recent Danish study, grudgingly published after months of lingering in peer review purgatory, shows a trivial reduction in susceptibility to Covid infection by those wearing medical-quality masks, not the type that most of the world actually uses. And the recent (almost certainly seasonal) resurgence in Covid-19 prevalence refutes the efficacy of masks, since it has occurred despite near universal mask mandates, and high rates of compliance therewith.

I am at something of a loss to explain this fetishism with lockdowns and masks. The enthusiasm with which politicians embrace lockdowns, in spite of the ravages they impose and in spite of the lack of evidence of efficacy (and the existence of evidence of inefficacy) is more than a little disturbing. What explains it? I think that any explanation is unlikely to be flattering to them–or the people who enthusiastically agree with them.

The most charitable explanation is that it is a hope born of desperation: people want to believe that there is a solution that humans can devise and implement, and their desire to believe blinds them to evidence that contradicts their beliefs. Failure actually feeds the desperation, which leads to doubling down in the absence of any ready alternative.

Less charitably, perhaps it is opportunism in the political class. The pandemic has presented politicians with an opportunity to exercise plenary powers this Christmas that they could not have even imagined last Christmas, even after overindulging at the annual holiday party. Power is an addictive drug to politicians. Once hooked, they will not give it up.

The most ominous examples of this are those who push the Great Reset or massive social transformations similar thereto. Many of these (e.g., Justin Trudeau, Klaus Schwab, Bill Gates) have been quite open in expressing their belief that Covid-19 presents a great opportunity to reorganize society on leftist utopian lines. Because those efforts have always worked out so well, right?

We are ruled by fools, knaves, and devils. And we are fools as long as we consent to let them rule us. We would be far better off pitching our shamans into the volcano, rather than following their commands to sacrifice ourselves.

Raghuran Rajan is a smart guy who has done excellent and rigorus work, and is a gentleman to boot. But even such as he are capable of saying dodgy things, as in his comments to the FT on Friedman’s social responsibility article, in which he said the covid pandemic has exposed flaws in Friedman’s argument:

First, Covid-19 has threatened some companies with the extinction of shareholder value, subjecting businesses to a shock that, despite government intervention, has put their existence in question. “At this point,” Prof Rajan told me, “the best thing [a company with thin resources] could do is focus those resources on survival, because in surviving, it provides a decent job for its workers, it continues making that widget which people buy. It lives for the future.

Not all companies came into the crisis with thin resources. For the tech companies, nursing war chests replenished by tech-hungry consumers in lockdown, this should be a chance to go beyond bare Friedmanite requirements

Amazon, for instance, could “do more for its various suppliers, some of whom may be struggling small and medium business units”, said Prof Rajan. “It could find ways to provide them more credit to last through the pandemic that will get it more loyalty, because people will know it can be a source of insurance, rather than just a platform.”

. . .

This sort of action exposes the “missing part” of Friedman’s thesis, said Prof Rajan. He failed to recognise that “implicit equity stakes” — such as the commitment of a company to the partnership with its workers, suppliers or customers — are “as important, sometimes, as the explicit equity stake”

These things are missing how, exactly? Essentially Rajan is arguing that there are gains from trade to be realized to a corporation from adjusting explicit and implicit contractual terms with “stakeholders” such as workers, suppliers, and customers, in response to an economic shock like covid. But note: such adjustments would enhance the corporation’s profits, by allowing it to capture some of those gains from trade.

Indeed, according to the Friedman norm, such companies, acting as profit maximizers, would benefit not just themselves, but their workers, suppliers, and customers. Thus, rather than being some lacuna in Friedman’s framework, what Rajan emphasizes is precisely why profit maximization in the price system should be encouraged, as Friedman did. It provides an incentive for corporations to engage in mutually beneficial transactions, regardless of the underlying circumstances. That is, profit maximization guides optimal responses to circumstances, even crappy circumstances. Nay, especially crappy circumstances.

Or perhaps I should say “in the contractual system.” For what is involved here is negotiating contracts that maximize joint surplus. As Coase tells us, absent transactions costs, firms and their counterparties will do just that, and profit maximization (or utility maximization by workers, say) is exactly the engine that powers that result.

So the only way to make this critique coherent is to argue that transactions costs could somehow be reduced by reshuffling organizational forms or control rights. This Rajan does not do. Nor has anyone who burps up the term “stakeholders” and proclaims “QED!” Not that I have seen anyways.

As I said in my earlier post: if you are so smart, why aren’t you rich? Why haven’t you–or anyone else–come up with an alternative organizational form that allows the creation and capture of gains from trade that corporations leave on the table?

Indeed, the most coherent restatement of the “stakeholder” argument is that corporations have failed because they aren’t maximizing profits because they are failing to structure transactions with stakeholders that exhaust all gains from trade.

I’m tempted to cut Raghuran some slack because his remarks are impromptu statements made to reporter, rather than in an academic article–or even a blog post. But the fact that something in an FT article is far more likely to resonate than a weighty academic tome or even a not-so-weighty academic blog post arguably cuts the other way: one should be on particular guard against expressing flabby thoughts, when said thoughts may be read by millions–and hence mislead millions. And, to be honest, Raghuran’s thoughts about the errors of Friedman’s thought during times of pandemic are very flabby indeed.

In reading all these critiques of Friedman, 50 years on, I’m reminded of something George Stigler said. “It’s easy to win an argument against Milton when he isn’t there.”

It’s more than fair to say that we are experiencing a pandemic, but not the one you hear about ad nauseum. No, the pandemic is not a virus, it is a pandemic outbreak of Munchausen’s Syndrome by Proxy which focuses its obsessions on the virus.

Munchausen’s Syndrome by Proxy is a mental illness in which the sufferer fantasizes that others–usually people in their charge, such as children–are suffering from serious illness and require drastic medical intervention.

Observe what has happened over the last 7 months, and what if anything is increasing in intensity today. The obsession with Covid-19. The monomaniacal focus on “cases” (usually the result of hypersensitive tests prone to false positives), with the belief that people who test positive are sick, and huge numbers of those who become sick will die.

Given the actual experience over the last several months, these beliefs are wildly exaggerated–imaginary, fantasized illnesses, with fantasized severity, just the kind of thing that a sufferer of MSbP does.

And there’s more to the diagnosis. MSbP sufferers subject the people whom they imagine are ill with suffocating attention and unnecessary, and often harmful, health-related interventions. You know, like lockdowns; draconian restrictions on movement, social contact, and other features of everyday life; the shutting down of schools and colleges; and strident demands to wear masks–even between bites of your meal if you are in California.

Look at so many governors and mayors, e.g., Gretchen Whitmer of Michigan, Gavin Gruesome–excuse me, Newsom–in California, J. B. Pritzker in Illinois, or Tim Walz in Minnesota. (I could go on. And on. And on. Believe me.) They constantly invoke their power over you. But it’s for your own good! Trust them! Mommy is protecting you! And if you object, you will be punished! How dare you defy Mommy’s tender mercies, you ungrateful brats? If you do, you will be punished! To get your minds right and realize just what danger you are in, and why you need to listen to Mommy and do exactly as she says!

And if it were only limited to “authorities” who make Cartman look pleasant. You probably have neighbors or co-workers who have the Syndrome. Or you run into them in the grocery store. Or maybe it’s the fatso in the pharmacy checkout line. (Yeah, that’s an allusion to a personal experience, but no worries: I doubt said fatso can read.)

It was already bad enough before Trump was diagnosed with Covid. Then a super-virulent strain of the Syndrome appeared, through some Darwinian mechanism apparently. As soon as I saw his first remarks from the hospital–that he had learned a lot about Covid, and he was going to share that information and experience with us–I knew he would say exactly what he did say: it can be a serious illness, but the vast majority of people can beat it, and we shouldn’t let it dominate our lives.

And I knew that this would kick the MSbP crowd into apoplexy. They want a narrative of doom and gloom. They want people to be afraid. They want people to defer to them, and to depend on them, and most importantly to obey their commands. You could get really sick–ALL OF YOU! You could die–ANY OF YOU! Don’t listen to anyone who tells you otherwise! They don’t have your best interests at heart, like Mommy does. And put in your earplugs (so you don’t hear the Bad Orange Man), put on your eye shades (so you don’t read the Great Barrington Declaration), you know where to put the cork (aka the mask that makes it impossible for you to speak intelligibly).

So anything that contradicts the narrative triggers a mass attack of the Munchausens.

Is Covid like the seasonal flu, as Trump said? Well, the more data that comes in, the more it appears that yes it is a danger on the order of magnitude of a bad seasonal influenza strain–the kind we have endured multiple times in the past without draconian measures that cratered economies. And ironically, the data strongly suggest that it is less of a danger to children than the garden variety seasonal flu.

But it is beyond cavil that it is nothing remotely like the last great pandemic disease, Spanish Influenza of 1918-1919. But that doesn’t stop severe cases of MSbP like Gov. Gretchen Ratched from justifying their actions by reference to that episode, and invoking laws passed during that real pandemic to control your life today.

In normal times, most of the objects of MSbP sufferers are children, who have limited power to resist. Often medical professionals are the ones who identify a MSbP situation, and intervene to protect the object.

But today, adults are overwhelmingly the objects. And too many medical professionals enable MSbP (and may indeed be sufferers themselves–just look at the lunatic Twitter timelines of many medicos FREAKING OUT over Trump’s remarks and behavior, i.e., acting like someone suffering the flu, or a cold).

Given the coercive powers of the most important MSbP sufferers, the said governors, mayors, bureaucrats, etc., this pandemic–the MSbP pandemic–is wreaking untold havoc. We need more people to say we aren’t going to take it. We need more people to push back. We should not be in the thrall of the mentally ill.

But alas, we are. Because there are so goddam many of them, and they infest the executive branches of government at every level.

In what perhaps may become a new feature, in response to a Twitter request by @Esq_SD, here are my thoughts regarding (a) the new Woodward book, and (b) the Israel-UAE (and now Israel-UAE-Bahrain) peace deals.

With respect to the Woodward book, I wouldn’t read his has-been droning on a dare, a bet, or for a date with Gisele Bündchen. So all I can do is respond to the alleged bombshell in the book, namely that “Trump lied [about COVID] and people died!”:

“To be honest with you…I wanted to always play it down. I still want to play it down, because I don’t want to create a panic.”

This is a completely defensible, and indeed laudable, course to take. Panic makes bad situations worse. Panic kills. Always.

Historically, those in authority who have panicked, or more importantly through intemperate word or deed, caused those who they led or governed or ruled to panic, have created disaster. Those who contributed to maintaining calm even in dire straits have often proven instrumental in overcoming those circumstances.

I’m so old that I can remember being taught in school about a president who said “the only thing we have to fear, is fear itself”–and that he was admired for saying so.

But now, that president’s political heirs are saying in effect “the only thing we have to sell is fear.”

I am reminded of the first lines of Kipling’s If:

If you can keep your head when all about you   
    Are losing theirs and blaming it on you,

Kipling thought this was admirable. It’s now apparently worthy of contempt.

And ain’t it an accurate description of the situation Trump faces?

My criticism–more of a lament, actually–is that Trump did not succeed in stemming panic. Even before Trump spoke to Woodward on 19 March, I had started to call the policy response to COVID-19 a “panicdemic.”

And it only got worse from there. And in certain quarters, the panic continues unabated. This is particularly appalling, given that perhaps, given the ignorance of the early days, there were grounds for fear in March. But given all of the evidence amassed in the past six months, it is now beyond obvious that those fears were vastly overblown.

Yet the fear mongers keep mongering. Just look at the UK, where BoJo (whose erratic behavior makes Trump look like Seneca the Younger) has clamped down again. Or Victoria, in Australia (I’m being specific as an acknowledgement to Ex-Global Super-Regulator on Lunch Break’s admonition that there is more to Australia than Melbourne), or New Zealand, both of which have adopted the insane eliminate-the-virus strategy

The panicked policy responses have wreaked havoc, and inflicted far more damage than the virus itself. So would that Trump’s efforts to tamp down the panic been far more successful. But I certainly will not join the baying chorus attacking him for going against character, and choosing understatement over hyperbole.

As for the Mideast peace deals. What? You haven’t heard about them? Well, that’s understandable, because the media has been speaking sotto voce on the subject. And that tells you just how epochal the deals are.

They obviously can’t say the deals are a bad thing. They clearly are a good thing, but they can’t say that, because that would be a boon for Trump, and we can’t have that, can we? Especially with an election in 7 weeks. So the media silence (and the silence of the Democrats) is as ringing an endorsement as one could imagine.

You can bet your bottom dollar that if Obama had shepherded such a deal to completion, the media would be singing his praises from the rooftops. (As if Obama ever could have achieved this, given his inveterate hostility to Israel and his obsession in consummating a deal with Iran.) But since Trump’s fingerprints are on it, the most substantive diplomatic realignment in the Middle East in decades is all but ignored.

As is the deal in another allegedly intractable conflict, between Kosovo and Serbia. Richard Grenell’s scathing takedown of the press for its indifference to and palpable ignorance of the the importance of the rapprochement was fully justified. (Ironically, Grenell would check various intersectional boxes, but one box that he checks–Trump Republican–puts him beyond the pale of the pale.)

These two achievements also give the lie to the oft-repeated slander that the Trump administration is isolationist, withdrawing America from the world, and in particular, abandoning the Middle East.

Letting Syria go to shit–stay shit would be more accurate–is not abandoning the Middle East. It is prudent to avoid getting involved in . . . what’s the word that Democrats always used to throw around? . . . ah . . . quagmires, that’s it. Drawing down in Iraq–after largely vanquishing ISIS–is prudent. Economy of force and concentration on strategic priorities is prudent: getting involved and staying involved everywhere is strategic idiocy.

It is particularly ironic that Trump has been routinely savaged as a war monger, yet he–in the teeth of furious opposition from the Pentagon and the State Department apparatchiks other elements of the Deep State–has steadfastly–and patiently–whittled away at American military presence in fruitless conflicts, and used diplomacy to advance American interests and reduce conflicts, thereby avoiding additional military commitments.

We are well into a new era of great power rivalry, specifically with China. Prudent strategy focuses on those arguably existential conflicts, and avoids peripheral ones, or attempts to mitigate them through diplomacy. The peace deals, the drawdowns in Iraq and Afghanistan, and the waging of asymmetric conflict against China (cf., TikTok, Huawei, visas to Chinese students, prosecuting academics who whore for China) are all elements of such a prudent and foresightful strategy. Trump’s adoption thereof is more likely instinctual than intellectual, but his instincts are correct and he has had the fortitude to pursue them despite the inveterate opposition of the idiots in the Establishment. These policies do not represent an abandonment of American influence, but a concentration on The Objective.

Clauswitz–and Sun Tzu–would understand, even if the DC Mandarins are clueless.

Two big covid-related stories have come out in the past few days. The first is that the CDC announced that only about 6 percent of those counted among the covid-19 death toll had no other cause of death listed. The vast majority of those counted as covid casualties had other co-morbidities, notably respiratory problems, diabetes, and obesity. Indeed, the average number of co-morbidities was 2.6 across the 150,000 or so deaths.

Some, like Trump, immediately seized upon this as evidence that only 9000 people had died from covid. We can’t have that, now can we? So immediately the usual suspects, notably Fauci and the media, pushed back, claiming that no, 150,000 is the true death toll. Media outlets in particular began “fact checking” the claim. (Quis custodiet ipsos custodes?)

Anyone who has done serious science, especially social science, knows that proving causation is difficult. Even defining what is meant by “to cause” is difficult to pin down. So arguments about how many deaths covid has caused are more likely to generate heat than light. In particular, in common parlance the idea of causation is zero/one, on/off: X caused Y, or it didn’t.

It’s better to think in terms of probability, e.g., what is the impact of covid the probability someone dies. A fair reading of the CDC report is that covid increases materially the probability that an aged, unhealthy, and especially aged unhealthy person dies prematurely, but it has a minor impact on the probability that an otherwise healthy person dies. (Even that conclusion is dicey, due to the lack of control groups, but leave that aside.)

Even though such a characterization could support an assertion that covid “caused” 150,000 deaths in the US, it is a devastating indictment of past, present, and likely future covid policy, in the US and elsewhere. Why? Because it means that one-size-fits-all-shut-everyone-in policies are grotesquely costly.

If covid is a very slight risk to healthy individuals, but a big risk to unhealthy ones (especially the elderly) then measures should be targeted at the at-risk population, leaving the rest of us to go about our daily lives pretty much normally. The indiscriminate, draconian measures involve huge pain for little gain, and arguably no gain relative to targeted policies.

As death rates–even based on the dubious policy of categorizing the death of anybody with covid as being from covid–have fallen, the bondage fetishists in government and the media have pivoted to another metric: covid cases, i.e., positive test results.

And that brings me to the next big story, one from the NYT no less: because of the nature of the standard testing method, polymerase chain reaction (PCR), it is possible to return a positive test when you are not presently sick, and/or not contagious–and never were!

According to the Times:

The PCR test amplifies genetic matter from the virus in cycles; the fewer cycles required, the greater the amount of virus, or viral load, in the sample. The greater the viral load, the more likely the patient is to be contagious.

This number of amplification cycles needed to find the virus, called the cycle threshold, is never included in the results sent to doctors and coronavirus patients, although it could tell them how infectious the patients are.

In three sets of testing data that include cycle thresholds, compiled by officials in Massachusetts, New York and Nevada, up to 90 percent of people testing positive carried barely any virus, a review by The Times found.

Think of it like distillation: the tests aren’t making wine, they’re making 199 proof stuff.

In other words, the case numbers are bullshit, if they are intended to measure how many sick, or more importantly, how many contagious people there are. A large fraction of the positives are in no danger, and pose no danger to others. (In previous posts, I outlined other reasons why case numbers are bullshit, e.g., the nature of the test regime, and changes therein over time.)

Put this together with the first story–that the risk of death from from covid among the healthy is small–and the one-size-fits-all policies that are currently justified based on the number of positive test results look even more insanely destructive. If you are healthy and get it, you are unlikely to die: if you have a positive test result, you are highly unlikely even to be sick or make anyone else sick. So why continue highly restrictive policies imposed on virtually everyone (particularly in places like California, let alone Australia and New Zealand which have descended into police states) based on something (a positive test result) that indicates negligible risk?

Thus it is particularly insane that very low risk populations (primary and secondary students, college students, professional athletes, college athletes) are subjected to severe limitations on their normal activities based on “spikes” in positive tests. The hysteria among college administrators is particularly idiotic: they are freaking out and cracking down over such spikes. University life has not returned to anywhere resembling normal even at universities, which, like mine, are formally “open” and offering some in person classes: on what are usually the busiest days of the year, the first couple of days of the semester, the UH campus is still a ghost town. (Not that I am surprised about the idiocy of administrators, mind you. Thirty years in academia means that I am anything but surprised.)

The bullshit nature of death coding–if someone tests positive for covid and dies, it is coded as a covid death–raises another serious question when combined with the hypersensitivity of the test results: the incremental impact of covid positivity on mortality may be smaller than the official numbers suggest, even among at-risk populations, because the “dose” of virus that generates a positive test may be far too small to have a meaningful health effect even on the sick.

Here’s where things get even more interesting. It is clear that there have been large numbers of excess deaths (i.e., deaths above historical averages) during the covid period. Indeed, the number of excess deaths exceeds the number of official covid deaths, leading some to conclude covid deaths have been undercounted.

But the ubiquity of testing in hospitals, plus the extreme sensitivity of tests, makes it highly likely that covid did not materially contribute to many of the deaths officially counted as covid casualties. Presumably a lot of the people who died after testing positive had too little viral load to suffer from the virus.

Which would mean that the difference between excess deaths and covid deaths is likely an underestimate of excess mortality attributable to the “non-pharmaceutical interventions” (e.g., lockdowns). Indeed, if deaths counted as covid are overstated because of the hypersensitive tests, excess deaths minus covid deaths undercounts the deaths attributable to lockdowns, including the deaths for which the economic collapse was a materially contributing factor.

In other words, if covid is listed for some as a cause of death, for others “government policy” should be. (And of course, for some, e.g., nursing home residents in NY, “both” would apply.)

In one of my early posts, where I was among the first to raise serious doubts about the prudence of lockdowns, I said that it was a matter of trade offs. Trade-offs not just between death and income/wealth, but between deaths from one cause and deaths from another. It is now becoming clear that tens of thousands, and perhaps over 100,000, of the excess deaths are not the result of covid infection, but from the policy responses to covid.

Yet throughout the country, and indeed throughout the world, with a few exceptions, these realities regarding the true risks and the meaninglessness of tests are not causing those in power to slacken their grip. States of emergency continue throughout the US, especially in places like California, Michigan, New York, Illinois, and Rhode Island. Travel quarantines exist worldwide. (Though why the Europeans are keeping out Americans but letting in Chinese is totally beyond my comprehension.)

Why? Well, for one thing, admitting this now would be to confess that the previous measures were unnecessary, cruel, and excessively destructive of life and economic welfare. This is not a good look for politicians:

Not to admit error is human. Especially for the subspecies of humanity (I’m being generous) called politicians and bureaucrats. But I think there is something more sinister going on here.

They like the power over our lives. They are intoxicated by the power over our lives. They revel in the power over our lives. And they are goddamned if they are going to give up that power over our lives.

Especially when so many people ovinely submit to them running roughshod over our lives and our liberties. If Joseph de Maistre was right, and we get the government we deserve, the governments we have now speaks very poorly of us indeed.

The Cancel Klan is going after Tucker Carlson. Again.

His thought crime? This:

“We do know why it happened, though. Kenosha devolved into anarchy because the authorities abandoned the people,” Carlson said. “Those in charge, from the governor on down, refused to enforce the law. They’ve stood back and watched Kenosha burn. Are we really surprised that looting and arson accelerated to murder?”

For which he was accused with advocating vigilantism.

Rather than judging him on the basis of one part of a 7+ minute monologue, watch the entire thing:

Kenosha devolved into anarchy because the authorities abandoned the people. Those in charge, from the governor on down, refused to enforce the law. They’ve stood back and watched Kenosha burn. Are we really surprised that looting and arson accelerated to murder? pic.twitter.com/oul2KUiDi3

— Tucker Carlson (@TuckerCarlson) August 27, 2020

The criticism of Carlson is a classic example of the is-ought fallacy. Carlson was, in essence, saying what is–explaining the reason for what is–by solving for the equilibrium. It’s not rocket science. It’s not game theory that requires elaborate equilibrium concepts or refinements.

It’s very basic: when authorities fail to keep peace and order, people will act in what they perceive to be self-defense. When the civil law breaks down, the law of the jungle–the state of nature, under some theories–takes over.

What’s amazing is that this sun-rises-in-the-east insight is considered an incitement. In fact, it is a lament. It is clear that Carlson is hardly happy at the prospect. Nor am I. He is not advocating it. Nor am I. He is saying, merely: you reap what you sow.

Is that so complicated?

And America’s cities are sowing a grim harvest of violence and despair as the result of two very bizarre and seemingly incompatible failures of the governing classes: the complete abdication of law and order in many major cities, combined with the draconian exercise of government power allegedly intended to achieve the (entirely futile) goal of eradicating covid-19.

That is, the governing classes in myriad states and cities have completely inverted the proper roles of government. They fail to exercise power and authority to perform their proper functions, but exercise the full power of the state to perform functions which are not just improper, but counterproductive. They kneel before the lawless, and crush the law-abiding under their heels.

The signs are everywhere. Look at Portland, which has been devastated by riots for nigh on to three months. Every night. (NB: protests happen during the day; riots happen at night.) The response of Oregon authorities–to shriek at the attempts of the Federal government to protect Federal property, and a complete unwillingness to get the riots under control. The mayor–with a sickly ironic choice of words–says that the riots will “burn out” eventually.

Yeah, Nero of the Columbia (ironic!): they will burn out figuratively because the city you allegedly govern will be burned out. Literally.

Or consider my hometown, Chicago, which has seen spasms of bacchanalia of violence over the past months. The looting has devastated the Magnificent Mile shopping district.

In a richly symbolic act, on several occasions the city raised the bridges over the Chicago River to prevent marauding looters from the South Side easy access to the ritzy north side of the river. Like a besieged medieval town raising the drawbridges over the moat in an attempt to stymie invading barbarians:

The devastation of riots and looting is tag teaming with the devastation wrought by the insane lockdown policies of local governments who compensate for their surrender of the streets by oppressing you, and the myriad restaurants, sellers of personal services (e.g., hair care), and small retailers that you patronize.

It was recently reported that 50 percent of the businesses in San Francisco have closed. Most will probably never reopen. If you live in the various Lockdown Lands–e.g., California, NY–you see boarded up store after boarded up store. 5th Avenue has become a shuttered ghost town. So have many other places.

Homelessness has exploded in many places–again, largely as a result of the abdication of civil authorities. San Francisco and Austin are two prominent examples.

It is so hard to build, so easy to destroy. I first went to NYC in the late-1970s, and traveled there a lot on business in the mid-1980s. It was a dangerous, dirty, dystopian place. In the late-1980s, the rejuvenation began. Notably, the first and crucial step of the process was restoration of public order, a process that hapless administration after hapless administration (crowned by the king of haplessness, David Dinkins) claimed was impossible. But the Giuliani administration started a virtuous cycle that made the city an attractive place to live (for people who like that kind of living) and a major destination for tourists.

And those three decades of progress have been erased, in a little over three months, due to a failure to keep order (e.g., the release of thousands of criminals back on the streets) and the imposition of a crushing order on the law abiding, especially law abiding small businesses. Crime has skyrocketed, and people–productive people–are leaving, almost certainly never to come back.

These are the wages of the most colossal government failure in American history. Failure from coast-to-coast; failure in the large cities on the coasts in particular.

You can cancel Carlson for pointing out the obvious, but you can’t cancel the obvious: when the duly constituted institutions of collective action fail to protect the lives, liberty, and property of large numbers of people, large numbers of people will take individual action, or emergent, unsanctioned, spontaneous collective action, to do what governments have failed to do.

In short, governments ought to protect lives, liberty, and property. When they do not, people will do so themselves. And that’s just the way it is.