Streetwise Professor

May 2, 2020

You Will Respect My Authoritah: Destroying the Healthcare System to Save It

Filed under: CoronaCrisis,Economics,Politics — cpirrong @ 9:55 am

I think it’s fair to say that I was one of the early lockdown (AKA Karentine) skeptics. In one post (19 March) I asked rhetorically whether we were destroying society to save it. Evidence accumulates daily that the lockdowns were indeed wildly costly compared to the benefits, and in the case of the healthcare industry in the US in particular, it is only slightly rhetorically excessive to say that yes, we destroyed it to save it.

Recall that the primary justification for lockdowns was to prevent the healthcare system from being overwhelmed. With a few very localized (and highly publicized) exceptions, it never was, nor was it in any danger of being so. (And for those who claim this was the result of the lockdowns, there is mounting empirical evidence both within the US and internationally that variations in lockdown policy in terms of stringency and timing have trivial impacts on the trajectories of the epidemic.)

But to “save” the healthcare system, the non-coronavirus-targeted system was almost completely shut down. One major effect of this has been financial: hospital systems and individual physicians and nurses have been financially devastated. I can’t put my hands on the citation right now, but I read that something like 40 percent of the large decline in US GDP in March was due to reduced output in the healthcare sector.*

And there will be severe health consequences as well. “Elective” procedures are not unnecessary ones: avoiding or even delaying treatment of many conditions increases the risk of death, and the number of deaths. Such avoidance or delays can also lead to serious declines in quality of life.

These effects are part of the “unseen” that I mentioned in my earlier post. People will die because of the lockdowns, but there are no Lockdown Death Trackers. And those responsible for the lockdowns, or for cheerleading for them (which includes most major media outlets), have absolutely no incentive to create them. Because you can’t handle the truth, apparently.

It is sickly ironic (deliberate word choice) that many of the most strident defenders of lockdowns were, in normal times, almost equally strident in their insistence that the lack of adequate government provided or funded health care caused people to receive too little care, thereby leading to increased mortality and greater incidence of debilitating ailments. And no, don’t bother trying to reconcile these positions: it’s impossible.

I also note that the persistence of the lockdowns, especially in places like California, Michigan, Illinois, Wisconsin, and Minnesota gives the lie to the “flattening the curve to save the healthcare system” justification for them. In California in particular, but also in the other states (outside of perhaps Detroit, which has its own pathologies decades in the making), there has been a yawning gap between ICU capacity and utilization. Yet despite these what should be welcome data, and increasingly restive citizenries in these states, their governors refuse even to countenance relaxation. So it wasn’t really about the healthcare system, was it? Or if it was, it’s now about something else.

And what is that something else? Power.

Gavin Newsom’s tirade against those who dared to go to beaches is a particularly odious example. He basically treats the 40 million people of his state as would a control-freak father incensed at the audacity of his children in defying his authority. This is not a statewide lockdown. This is a statewide grounding–and if you break the rules again, sonnie, the grounding will be extended! Indefinitely! Not because it has any public benefit. But because you dared to challenge Governor Cartman’s–excuse me, Governor Newsom’s–authoritah.

And, of course, Google and Facebook in particular are willing–nay, eager–accessories to these mass deprivations of rights. They have become censors in chief, extirpating (sorry, “deplatforming” and “removing” are too weak) content that crosses the authoritahs’ official line.

The logic behind the lockdowns was always dubious, and they were NEVER based on reliable data. (And don’t get me started on the models.). But whatever logic there was, it is non-existent now. They have become self-perpetuating. Or rather, they are being perpetuated in order to perpetuate the powers seized by governors and local officials.

And if it destroys the healthcare system (not to mention the livelihoods of tens of millions of Americans)? Well, as a man who is apparently the role model for many governors once supposedly said, you can’t make an omelet without breaking some eggs.

*Here are the data. (See p. 9.) GDP fell $234b in the first quarter. Since GDP was rising rapidly–about 3.5 percent annualized–in Q4, and the lockdowns didn’t kick in until March, virtually all of this likely occurred in the last half of March. A pretty staggering decline in a few weeks.

Expenditures on health care fell $110b, almost exactly the 40 percent I mentioned in the original post. This contrasts to a $27b increase over Q4.

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  1. In your PS you give a number on the GDP decline but GDP is reported in terms of seasonally adjusted annual rates. That means you have to divide by 4 I believe to get the actual decline in the quarter.

    Comment by John Hall — May 2, 2020 @ 11:37 am

  2. As Phyrrus said, “a victory over COVID will ruin us all” or was thought to say.

    Comment by The Pilot — May 2, 2020 @ 1:46 pm

  3. Enjoy the fascism.

    Comment by Joe Walker — May 2, 2020 @ 3:15 pm

  4. Prof, bit lazy. “Power”- what are you a Marxist now? 1. A quick look at the UK ONS data on the site you linked to the other week suggests death rates have increase in the order of 20 per cent for prime-aged adults. The absolute death rates are very small, but if you’re interested in lost life years then some of these lives need to be weighted 50 or 60 times the oldies, even more so if you’re interested in QALYs (yes, we could argue about discount rates). 2. Spanish flu – first wave killed oldies, second wave: prime-aged got hammered. 3. True, lockdowns are brutal, economic chemo, all the more reason to (a) invest in public health so you don’t end up here (b) if you do, make them as short and effective as possible. There’s an externality here, dealing with that requires solidarity – pitty your poor governors that need to explain that to the reactard fringe. 4. I agree with you, highly likely that in retrospect lockdowns are not going to pass an economic cost-benefit test. That’s the point, this is playing out in real-time with lots of uncertainty, we know a lot more than two weeks ago, but there’s still a lot we don’t know. I’d cut the govs some slack, they just seem to be following the polls and political logic from what I can see. But it would be good to see some analysis of what they should do based on framework of true uncertainty.

    You will find this juicy, maybe CCP and Fauci are jointly to blame:

    Comment by PJD — May 3, 2020 @ 7:16 am

  5. The (very minimal) silver lining is that many, many iatrogenic deaths have been prevented while the health care system has been shut.

    Comment by Andrew Stanton — May 3, 2020 @ 7:55 am

  6. @PJD. Er, libertarians/classical liberals are deeply concerned about the abuse of power by governments. Or haven’t you noticed? Marxists have a particular theory about power. That’s not what I am advocating. FFS.

    Re prime aged adults. You miss the point of my post. How many prime aged adults will die because of the lockdowns, not the virus itself? That’s exactly what my post is about. And what is the cost imposed per life saved from covid, even ignoring the lives lost due to the response to covid? You are the lazy one.

    Anyone who compares this to the Spanish flu beclowns themselves. It’s not even close. I pointed out all the differences between covid and the Spanish Flu (which almost certainly originated in China, BTW) in an earlier comment.

    I know more about externalities than you ever will. Even taking those externalities into account I was, and continue to be, convinced that the policies are the greatest unforced error in modern history.

    I knew this wouldn’t pass the cost-benefit test in March. I am on the record saying so. The uncertainty was due to crap data (which I have pointed out repeatedly), but it was certain that policies based on crap data would be a disaster (at the risk of repeating myself–I told you so in real time). So I said, and so it has turned out to be.

    And regardless of hindsight, the continuation of draconian policies in California, Michigan and elsewhere deserves zero slack whatsoever. No excuse about uncertainty, or dire scenarios. All of those have been proved wildly incorrect. To double down on discredited theories is evil. So why are they doing it? The most likely explanation: because they like it, and because they benefit from it.

    Re Fauci and China: (1) I am aware, (2) I am not surprised, and (3) I have despised and distrusted Fauci from Day 1. He’s just another government lifer, with a record of failure behind him.

    Remember the Peter Principle: people rise to the level of their incompetence. Fauci proves that in spades. He also proves that in government, that does not result in termination, but in continuing to operate at your level of incompetence for as long as you choose to do so.

    Comment by cpirrong — May 3, 2020 @ 2:01 pm

  7. @Andrew Stanton. Always look on the bright side of life!

    Comment by cpirrong — May 3, 2020 @ 2:02 pm

  8. To point out the Cali stupidity, you can drive to the marina, you sit on your boat, but you can’t take it out. A good friend was stopped by San
    Diego Harbor Police crossing Coronado to San Diego and told to return to the dock.

    SWP, check out the video of the Swedish epidemiologist who is interviewed. It’s great especially when he recognizes the political problem of climbing down from lockdowns.

    Comment by The Pilot — May 3, 2020 @ 2:21 pm

  9. Its deeply depressing that both sides are politicising the crisis for all its worth. 30m+ newly unemployed, protesters armed to the teeth, and an election year. Maybe the virus is the least of your worries.

    PS Being unfamiliar with the workings of the US healthcare I was piqued by Trump’s comment a week or two about allowing elective surgery. Seeing as healthcare is so fundamental to the US economy, perhaps you should look at ways of monetising Covid?

    Comment by David Mercer — May 3, 2020 @ 2:49 pm

  10. Here in the Land of OZ the Wizard has lost his curtain and organ. We went into lockdown on the basis the healthcare system could not withstand a huge influx of patients. So to date we have lost near 100 people to “Covid” within a population of 25 million with ICU and other hospital resources massively under utilised. Most cases and consequently deaths have been attributed to government failure to test cruise ship passengers and letting 30,000 Chinese and other students back in the country at the very worst time. Still our death rate is low BUT we have built no immunity (less than 7,000 cases) for future incursions.

    Our state governments are making the most of the situation especially Mad Dan Andrews in Victoria-stan whose police are out even preventing people visiting their spouses graves would you believe? The federal government which funds education thru the states has said to get the children back to school. The expert medical committee espouses the same however most of our little state dictators are under the control of the teachers unions who refuse to let the teachers go back. Its now an industrial issue, not a health issue.

    I am amazed at how people are rolling over like dogs wanting their tummies rubbed. As a long retired Vet I would not want to be going to war with this lot.

    Comment by Alessandro — May 3, 2020 @ 9:10 pm

  11. @Alessandro: There is no evidence that surviving the virus builds immunity. Intuitively, it seems probable – but it not a wise way of building policy…

    @Prof: “for those who claim this was the result of the lockdowns, there is mounting empirical evidence both within the US and internationally that variations in lockdown policy in terms of stringency and timing have trivial impacts on the trajectories of the epidemic”
    I think you’re being far too harsh: When the lockdown was launched, there was no good way of predicting the necessity. For sure you have a good point that they didn’t even try to build a proper dataset from which to extrapolate, but while America prioritises tax cuts over good governance, then this kind of failure is inevitable. In fact, while Americans insist on voting for the same two parties, year in, year out, I would say that this result (failure to govern in some respects, over-governance in others) is inevitable…

    Comment by HibernoFrog — May 4, 2020 @ 6:29 am

  12. @HibernoFrog,

    You’ll have to show some kind of relationship between “taxation” and “good governance” because I don’t see it. Idiots had spend other people’s money and still muck up the governance.

    Comment by The Pilot — May 4, 2020 @ 9:22 am

  13. HibernoFrog

    “There is no evidence that surviving the virus builds immunity.”

    What are you talking about? There’s ample evidence. Show me all the re-infected people that would have shown up if there were no immunity. Indeed show me evidence of one re-infection that wasn’t subsequently invalidated, cf S.Korea.

    Comment by Recusant — May 4, 2020 @ 10:06 am

  14. To be truly devastating a new disease has to fulfill conditions
    1. Novelty, hard to detect
    2. Long incubation and infectious phase
    3. Lethality
    4. Inappropriate medical and policy response

    The first two were never present. 3 was uncertain but not very high. 4 was our fault

    There will be a devastating plague one day but it was obvious from day1 that this wasn’t it. (And I said so too.)

    Comment by philip — May 4, 2020 @ 6:27 pm

  15. A couple of nuggets from the UK
    A respected Conservative commentator calls for civil disobedience (!)
    Serum from infected patients is being tested as an antidote. This sounds remarkably like variolation, a procedure that the BMA successfully lobbied to have banned in the nineteenth century.

    Comment by philip — May 4, 2020 @ 6:32 pm

  16. @philip Which commentator is that? Surely not Baker? He’s a bona fide knob.

    As for the serum, it’s only available in small quantities when volunteered, and is only used to treat the sickest patients. It’s hardly a game-changer.

    Comment by David Mercer — May 5, 2020 @ 2:03 am

  17. @Recusant: Well that’s the point, isn’t it? I can’t show you evidence because there is none, unless you wish to interpret absence of evidence (i.e. no known cases of re-infection) as evidence of absence. Like I said, I think it’s likely that immunity will work, but that’s a gamble with one hell of a downside, and if I were a policymaker, I sure as hell wouldn’t be staking everything on it (as you appear to be recommending).

    @The Pilot: It’s true, a government can have huge revenues and waste it all – there’s plenty of examples in the world. Obviously taxation is a necessary but not sufficient condition for good governance. My position on this comes from Europe, where having paid significant taxes causes the population to be much more demanding of their governments (whether they deliver or not is up for debate, but it seems that more people feel that way in Europe than in America). Whereas in the US, people pay less tax (but not that much less, by the time you count healthcare costs, pension costs, indirect taxes, the American love of domestic market cartels, etc.) and all they want from their incoming government is to reduce taxes further – I don’t think it’s a fertile environment for good policymaking or administration.

    Comment by HibernoFrog — May 5, 2020 @ 2:24 am

  18. @Hiberno You’re right in that the whole immunity thing is currently just another example of wishful thinking. Given the virus has only been in circulation for a matter of months, who can definitively state that you get it only once? No one in the know seems to be sticking their neck out. From a policy perspective I would certainly err on the side on caution on this basis.

    Anyhow, if elements of the American right want to rush out and broaden our knowledge of this virus, who are we to object?

    Comment by David Mercer — May 5, 2020 @ 5:13 am

  19. @David Mercer

    And those right wing Swedes can show us, too.

    Comment by The Pilot — May 5, 2020 @ 9:43 am

  20. “Anyhow, if elements of the American right want to rush out and broaden our knowledge of this virus, who are we to object?”. There’s a good comic about this on, I’ll see if a link can get past the spam filter:

    (It’s the mouse-over text that is most applicable).

    @The Pilot: The Swedes have indeed been practicing social distancing, and as a people, can be relied on to follow their government’s advice. From what I see of the anti-lockdown movement in the USA, people want to be free to not follow their government’s advice, which is a significant difference indeed…

    Comment by HibernoFrog — May 5, 2020 @ 10:39 am

  21. I find it interesting that I can walk into Walmart and buy clothing but not go to Kohls and can pickup a toaster oven at Home Depot but not at Bestbuy.

    Comment by Andrew Stanton — May 5, 2020 @ 1:39 pm

  22. @HibernoFtog,

    Well, it’s not that Americans want to be free to NOT follow their government’s advice; it’s that they want sensible advice and not police state lockdowns. Most US citizens started sensible social distancing before the states instituted lockdowns. A friend took his boat out into the harbor at SAN, promptly stopped and nearly arrested. For what? Going out into the open ocean where a corona virus could not possibly be a threat. That’s a prime example of power for power’s sake. Americans will follow their common sense without those tactics.

    WRT taxation, I can spend or save my earnings better than can any USG employee. My financial advisor showed me with numbers that I would have an immensely better annuity using the 12.4% Social Security taxes collected over my career for private investment. Like about twice my current SS pension. And, I would have an asset instead of a political promise which has been reduced in value several ways over my life. Best of all, he showed me a median income person would have done better., too. The USG pays about 1.5% before inflation, the S&P pays, since 1920 6.45% after inflation.

    Comment by The Pilot — May 5, 2020 @ 3:20 pm

  23. I have yet to see any proof of this alleged novel virus passing the Koch’s postulates test. There have been a few clinical papers claiming such but when you read them they do not pass all of Koch’s requirements. So if we are unable to isolate this virus correctly how are we able to test for its presence. Is it any wonder they are getting major false positive and negative outcomes? I understand the current tests simply test for any form of influenza.

    If anyone can point me to a paper proving Koch’s postulates and the alignment of an antidote and/or vaccine I’d be most appreciative.

    Comment by Alessandro — May 5, 2020 @ 7:32 pm

  24. “Well, it’s not that Americans want to be free to NOT follow their government’s advice; it’s that they want sensible advice and not police state lockdowns. Most US citizens started sensible social distancing before the states instituted lockdowns”

    Not much evidence of that in many the protests. I reckon a good portion of them haven’t moved on from thinking its all a giant hoax. I thought it bizarre that the several of the protesters in Lancing were wearing masks. Was it because it made them more gangster, because they were afraid their insurance provider may ID them, or because they were worried about catching something?

    Comment by David Mercer — May 6, 2020 @ 5:19 am

  25. @The Pilot:

    “it’s not that Americans want to be free to NOT follow their government’s advice” – Well, I only have anecdotal media reports to go by, so I’ll take your word for it as an American… But your elected representatives mostly don’t seem to agree, and at least for now, they majority of the population seems OK with the lockdown…

    “A friend took his boat out into the harbor at SAN, promptly stopped and nearly arrested. For what?” – That’s a two-edged sword: If you give the police discretion to decide that your friend’s boat-trip is OK, then certain police and/or authorities will use their discretion in harmful ways too (to be fair, scope-creep really does seem to be a feature of American authorities), or other people will try to invent justifications for all kinds of less-safe activities, and then society is faced with a whole bunch of time-wasting in trying decide exactly where the line is and exactly which exceptions will be tolerated. I’d say it’s better to have clear rules, applied universally and if that means that some reasonable activities are temporarily off-limits, so be it. Your friend can survive without his boat for a month or two…

    “I would have an immensely better annuity using the 12.4% Social Security taxes collected over my career for private investment”. Well, yeah, me too* (here in France I pay 6% in retirement contributions, and my employer pays double that value on my behalf). But that ignores the re-distributive effects (after all, having millions of old people living in poverty isn’t exactly the mark of a civilised society)… and that, like I said, Americans are amazingly tolerant of very poor performance from their governments. It seems that taxes are low enough that you guys will tolerate all kinds of shenanagans. Whereas in France, if anybody tries to touch the (very generous, I think) pension system, the entire country is out protesting… and ultimately rioting if they don’t get their way. I guess because we pay so much tax that the citizens expect the government to do much better (as an immigrant, I mostly just let them get on with it).

    *After a little bit of googling, this statement appears to be false by a factor of 2.4, which seems odd, because I’m a reasonably well paid engineer, and if my lifetime pension contributions aren’t covering more than the cost of my own pension, then I don’t see how the system can possibly work. I must have made a mistake somewhere.

    Comment by HibernoFrog — May 6, 2020 @ 5:32 am

  26. “this statement appears to be false by a factor of 2.4 … I must have made a mistake somewhere”

    Indeed, it was a basic calculation error. If the French state earns more than 3% interest on my pension contributions, of if I live less than 20 years after retiring, then they’re coming out ahead and can use that to top-up the pensions of people who earned less or lived longer. So that seems like it’ll all work out, but I’ve gone way off topic here, so everybody please just ignore me 🙂

    Comment by HibernoFrog — May 6, 2020 @ 5:52 am

  27. The simple fact is the securities markets have returned a good bit, probably double what government bonds have returned over any 30-year time period. Also, the employer’s share (half and half of the total 12.4% in the US) mostly comes out of the employee’s income. It’s not the freebie often thought.

    Comment by The Pilot — May 6, 2020 @ 2:29 pm

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