There are no solutions, only trade-offs

This morning, I woke up to up to this story:

It’s a stark reminder of two years ago, when governments an media focused with monomaniacal attention on the outbreak of Covid-19 — spreading fear … and claiming to have solutions: namely lockdowns and masks.

But in economics, that is, in human action, there are no absolute solutions. In economics, that is, in human action, every purchase, every decision, every action has a cost. And that cost is not truly the energy or money spent on the thing, but what could have been, the counterfactual.

Hazlitt, in Economics in One Lesson, states that economics consists not only in seeing the effect of a policy on a particular group of people for a short time, but also in tracing the effects on all people in the long term.

To be a good economist doesn’t mean to see the obvious — to point out the benefits of a particular policy to the particular group it is meant to help.

It means to point out what isn’t obvious — the second order effects, the long term effects, the effects on other groups, and the costs, not in terms of money (especially considering certain policies), but in terms of the counterfactual.

Turning back to Covid, with the masking and lockdowns and monetary inflation— good economists (and others) did point out the costs. They did point out that supply chains would be interrupted and the effects this would have in the future. They did point out that masking has limited effectiveness and that it has costs in social interactions, emotional interaction and language development. They did point out that monetary inflation (together with the lockdowns) would lead to huge price inflation down the road.

They were silenced. They were shouted down or even kicked off social media.

Short-sighted thinking — seeing only the obvious, won out.

It’s also true that there are occasions where one has to take emergency action. If a friend in going into anaphylactic shock, one doesn’t much count the costs of driving fast to the hospital.

And, in the early days of the pandemic, it was understandable to have some fear. It made perfect sense for those in vulnerable populations to limit contact with others. It made perfect sense for businesses that could go remote to do so. It made perfect sense for each person to make the best decisions they could regarding their own lives.

What didn’t make sense was mandated lockdowns, government handouts and mask mandates.

There are never solutions, only trade-offs. Now we are beginning to see some of the costs we have to pay. And since they were mandated, rather than freely chosen, the costs will be even higher, as they also include the violation of our personal liberties.

What trade-offs are you making? What are the actual costs of your decisions, not the time or energy or money, but the counterfactual?

Best,

ihaphleas