Paid Sick Leave and Schelling Focal Points

04/23/2020 Rick Weber Comments, Culture, Current Events, Economics, Law, Liberty benefits, compensating differentials, coronavirus, COVID-19, morality, paid sick leave

Paid sick leave is something I want more people to have. Of course it’s a good thing. Sick leave is valuable, but it’s not free so we have to ask it it’s worth it.

Right around the 11:30 mark is a tragic and hilarious line: “Dildos are not essential items. Books for kids, yes, but dildos? … No!” Good for John Oliver noting that deciding what is essential isn’t straight forward–apparently frivolous things might keep people inside and so serve the public health.

This is a classic Austrian point: prices (are supposed to) communicate information about how urgently people want a product. We run into trouble trying to prevent prices from reflecting the underlying economic crappiness of a crisis. Price gouging should be allowed for toilet paper and especially for grocery/Amazon workers. And the price of grocery workers should be passed on to consumers.

What we’ve got now requires each of us to not only ask “am I willing to pay this price?” but also engage in a moral calculus that is hard. I have to ask (as a person striving to be moral) if it’s really worth ordering X, Y, and Z from Amazon. But as a person who has to strive to be moral, it’s entirely too easy to fall for bad rationalizations.

So how do we help these essential-yet-replaceable* workers? Paid sick leave sure sounds good. And given the externalities involved in a pandemic, there’s a strong argument for mandating it.

But it’s worth remembering (particularly as a long run policy) that if we push on one part of a compensation bundle, something’s going to give. If we require employers to provide a company car (or simply encourage company cars through preferential tax laws), we shouldn’t be surprised to see monetary compensation fall. The same logic applies to paid sick leave.

But I’m my own devil’s advocate, so let me make a counter argument. I rarely use my sick days. I think I’ve taken 2 or 3 in the last 6 years. (I’m absolutely reevaluating that position now!) There’s this idea floating around in the back of my head that tells me to just tough it out and keep working. This isn’t because I carefully weighed pros and cons, it’s just received “wisdom” picked up by osmosis from the broader culture.

American culture values work over value. There’s no shortage of bullshit work because we’re in a work-too-hard equilibrium. This is not to say that hard work doesn’t have benefits. I’m happy when ambitious entrepreneurs work “too” hard to provide greater value. But there are a lot of cases where we create work for its own sake (especially in the higher ed racket, but apparently we’re not alone).

Essentially, we’re all playing a coordination game where we choose between “[appear to] work to make things better” and “stay home instead of passing your illness to other people.” Given American work culture, the Schelling focal point is <work, work>.

On the compensation end of things employers have to decide between offering more sick leave or some other compensation (like money). In this end, there is some benefit to zigging where other employers zag. If I’m running the only business to offer paid paternity leave, I get my pick of the best family-oriented workers while my competitors have to outbid each other to get the best of the other workers. But any mid-level HR manager is more likely to play the risk-averse strategy of following “best practices.”

So we’re in an equilibrium that underrates sick leave. We want to be in an equilibrium where it’s just good business sense to offer sick leave during a global pandemic. But coming from our current equilibrium, offering sick leave is a costly decision to privately provide a public good; it’s unlikely to happen unless the culture already promotes it.

I think we can get that equilibrium. I think we’re already moving towards it (ask yourself: would the board of the East India Company be more likely to offer sick leave than Amazon?). But we’re not there yet.

Paid sick leave should be good business sense right now**. But it depends on a culture where such behavior is widespread. I’m not convinced we could flip a switch and get that culture over night. Given that, I’m at least somewhat okay with contradicting my libertarian priors and calling for emergency mandates for paid sick leave. 2020 America isn’t likely to coordinate on the “right” short-term solution and coercion is probably the most efficient*** way to deal with this common pool problem. But outside of a public health emergency we shouldn’t allow top down mandates about the mix of compensation offered in markets (certainly not with the sort of people we elect to be on top).

(A couple rhetorical points: First, John Oliver isn’t speaking the language of those on the right. They won’t even be convinced that the issues he’s talking about are important. I think that’s a shame. Second, this is a tough time to try to argue against paid sick leave. In 2020 America, mandatory paid sick leave is probably required because we’re at the wrong Schelling point. Again, I don’t think conservatives or right-libertarians will find Oliver’s motivations convincing, but I believe that they could be persuaded. But that’s another blog post.)

(Two important counterpoints to the above: first, price increases hurt the poor. The way to solve that is to give charity money to the poor, not to try to make markets communicate information about relative scarcity and act as charity–that’s half-assing twice and it’s bound to be more inefficient than the charity would be costly. Second many people categorized as “essential” aren’t in a position to demand higher wages*. I don’t have an easy solution to this issue. Let’s talk about it in the comments.)

*Which is to say, workers who are in the same position as water in the diamond-water paradox.
**Not to say it would be cheap or easy.
***There you go. Now my friends on the left can accuse me of being a bloodless economist for opposing paid sick leave in general, and my friends on the right can accuse me of being a bloodless economist for supporting

Nightcap

04/22/202004/22/2020 Brandon Christensen Links bureaucracy, coronavirus, crisis, lockdown, virtue

Catholicism, America, and the fascist temptation James Patterson, Law & Liberty
The greatest financial bailout of all time is underway John Cochrane, Grumpy Economist
Whither the precautionary principle Thomas L. Knapp, The Garrison Center
Steel-manning lockdown socialism Arnold Kling, askblog
What will the political outcome of coronavirus be? Niall Ferguson, Spectator

Nightcap

04/20/202004/20/2020 Brandon Christensen Links coronavirus, ethnicity, reading, torture

Why women read more than men Lucy Scholes, Times Literary Supplement
Avenging the humbled and humbling the proud Fretwell & Kiland, War on the Rocks
Redrawing ethnic boundaries in Tang and Song China Bryn Hammond, Asian Review of Books
#coronasomnia Wang Xuiying, London Review of Books

Nightcap

04/19/202004/19/2020 Brandon Christensen Links civil liberty, coronavirus, memory, Roman Empire

Nobody knows anything (Singapore and South Korea) Scott Sumner, Money Illusion
The cholera riots and the coronavirus revolts, compared Jesse Walker, Reason
Climate, disease, and the end of the Roman Empire Jaspreet Singh Boparai, Quillette
On trying to solve the paradox of memory Emina Melonic, Modern Age

China versus the Communists; American civil liberties

04/19/202004/18/2020 Brandon Christensen Current Events China, Chinese diaspora, civil liberty, Communist Party of China, coronavirus, crisis, diaspora, pandemics, Taiwan

I don’t know about you but I’ve come across my fair share of anti-Asian bigotry over the past few weeks. This is not a good trend.

Here is my public service announcement for the week: China is not the Communist Party. Billions of Chinese citizens are lorded over by a Communist Party. Singapore, Hawaii, California, Taiwan (see this great article), Sydney, Malaysia, Hong Kong, and Jakarta have all managed to avoid repressing data and silencing scientists.

You’re welcome.

Jacques has been subtly prodding me to write an essay complaining about the loss of civil liberties in the United States due to coronavirus (“every true libertarian is doing it”), but I just can’t muster up the willpower. I realize that civil liberties will be attacked by governments. Covid-19 is a crisis, after all, but I don’t think the attempts so far are unjustified. Hear me out:

There is a global pandemic and the virus causing all of the mayhem is one we know little about. It’s a deadly virus. It’s highly contagious. Governments have attempted to protect lives. They’ve done a terrible job, and factions are trying to use the crisis to push their agendas.

Predictable, but what about the pandemic? I don’t want to get the plague. I don’t want my small children or my wife to get the plague. And I certainly don’t want to be responsible for passing the plague on to family members who are most susceptible to the virus (my children’s grandparents).

The backlash against government stabs in the dark have already begun. Small businesses and many, many workers have been screwed. If the trade-off, though, is between small businesses/lower wage workers going broke or my family members dying unnecessarily, bye Felicia.

In politics, sometimes it’s good to play offense and sometimes it’s better to play defense. Libertarians can play offense here and there, such as when the economy is roaring, or when wars are unjustified. In a crisis like this, though, it’s best to wait and see what happens. It’s best to play defense and wait for a good place to counterattack. It’s bad enough that crackpots and racist frat boys claim the mantle of Libertarian (we wouldn’t want to be intolerant, after all), but when our leading lights start downplaying this plague before anybody really knows what’s going on, it just gives liberty a bad name.

Nightcap

04/18/202004/18/2020 Brandon Christensen Links benevolent hegemon, China, coronavirus, free banking

Between Scylla and Charybdis Mark Helprin, National Review
Protest and pandemic at sea Irfan Khawaja, Policy of Truth
Scottish nationalism and free banking George Selgin, Alt-M
What to do about China Samuel Gregg, Law & Liberty

The World Health Organization Revisited; Individual Rights

04/17/2020 Jacques Delacroix Current Events, Liberty authoritarianism, civil rights, coronavirus, US constitution, WHO, World Health Organization

Two things today (4/17/20). First, there is a vast misunderstanding of the World Health Organization around the US. (WHO) It’s been promoted unwittingly by the President’s own seeming ignorance.

WHO operates on two different gears. In times of crisis, like now, it’s usually found wanting. That’s because the top of its hierarchy takes over at such times and the top is composed of political appointees. Their appointment is the object of backroom negotiations between various Third World tyrants, China, and others, included the US, who are usually distracted. The current head is an Ethiopian communist. How did that happen?

Most of the time, the work of WHO is performed by professionals with no strong or visible political inclinations. With them, WHO managed to practically eliminate the scourge of small-pox, to reduce greatly the reach and danger of malaria. WHO has also been the main force behind campaigns of vaccination, including in areas where strong resistance exists. (No, I don’t mean loopy Santa Cruz, where I live; I was thinking more of Pakistan.) The pennies WHO costs me personally each year are undoubtedly one of the best investments I have ever made, its recent missteps notwithstanding.

I think, and I hope, that the president’s suspension of the major American contributions to WHO is only a pleasantly devious way to get the head of its head.

Second topic. For what it’s worth, here are the two things that triggered me to make the C-virus second fiddle in the concert in my mind. First was, the prohibition on surfing in Santa Cruz. Now, I am a water man but I never surfed and my surfing days would be quite behind me anyway. That prohibition demonstrated the sheer irrationality presiding over such decisions. And the panic among officials. Alternatively, as several FB friends have pointed out, the prohibition might have been a hypocritical way to keep “outsiders” out of Santa Cruz. That would have been a gross abuse of power: Punish me for the evil others might do which the authorities probably don’t have the right to repress anyway. (Go ahead, speak it aloud.)

The other thing that turned my head around was the growing impression that governments at the state and local levels were demonstrating a royal contempt for civil rights. The prohibition of surfing in my town was a first signal. (See above.) Then I began to realize that denials of civil rights were happening all over this great country. This very morning, Rush Limbaugh played a recording of the governor of New Jersey declaring that questions about civil rights were “above his pay grade,” a governor of a large state. (And his political affiliation is…?)

What worked most into the deep recesses of my lazy mind were the mention of several prohibitions of religious gatherings in different parts of the country. Yes, they sounded reasonable, sort of, in health terms. And, yes I am an atheist (even though I actually am in a foxhole). But look, the First Amendment does not say, ” …except when there is a risk of sickness.” And, if you disagree you should openly ask for a suspension of the Constitution and let those who ask for and implement it eventually pay the political price.

There can be no unspoken exceptions to the constitutional democratic order. Can there be?

Grocery shopping in Texas

04/16/202004/16/2020 Brandon Christensen Current Events coronavirus, grocery shopping, H-E-B, lockdown, Texas

This past weekend I finally got to go to the grocery store and, like Rick, I was hoping to catch a glimpse of what my neighbors valued.

All of the shelves were fully stocked, except for the toilet paper aisle. Diaper wipes are being limited, too. The grocery store I shop at, H-E-B, actually opens the boxes of diaper wipes and sells the packs in singles. (A box will usually have 6 to 8 packs in it.) I got the maximum number of single packs allowed (2), just in case.

For diapers and wipes, we have a pre-paid automated thing with Amazon, and it has worked smoothly, but we’ve also tried to stock up just in case.

I tend to buy in bulk, so we still don’t need any toilet paper. The last time I bought butt paper was in January, and we’re still pretty stocked. But being a bulk buyer has made me anxious in the grocery store. I don’t like it when some of the stuff I always buy in bulk is being limited because some people want to hoard.

The pasta sauce and pancake mix is mostly gone, too. Texas has the best food and the best amateur cooks in the republic, but when you’ve got 4 or 5 or 6 people crammed into the house all day, ain’t nobody wanna cook.

The surgical masks don’t bother me. I lived in west LA for years (Go Bruins!) and people shopped in those masks all the time. The gloves don’t bother me. The employees are friendly, as usual, but I would have quit. I know some of them feel the same way.

Last Time You Heard of “Flattening the Curve”?

04/16/202004/15/2020 Jacques Delacroix Current Events, Liberty civil liberty, coronavirus, crisis, fascism, poverty, work

We were told that many or most Americans workers had to be idled to “flatten the curve” of contaminations. This means simply that it was desirable to avoid having a sudden upsurge of people infected so that hospitals would not be overwhelmed. Officials – including the president and the Gov of California, Nancy’s nephew – never gave us any other reason for confinement.

Notably, limiting the total, final number of contaminations was not the reason. Instead, and since no vaccine is in our short sights – herd immunity will save us. But the slower the rate of contamination, the later we will enjoy herd immunity. Thus, a policy of confinement may cause more deaths that it avoids. I am not saying it’s the case; I don’t know. It’s just plausible based on the info I am given, including by my government(s).

Well, I am reasonably sure that to-date, C-virus patients have not overwhelmed American hospitals except in New York City. How do I know? The end-of-time loving, Trump-hating media would make sure I would know it if any American hospital were in a catastrophic situation caused by an unexpected influx of patients. That main danger seems past. It does not mean that individuals should not take common sense precautions, including social distancing. I know I do (but I am old).

In the meantime, the American economy is undergoing an unprecedented disaster; I mean, unprecedented in my lifetime. No mystery: When people don’t work, wealth is not being generated. The solution to this problem is as obvious as it seems: More people have to go back to work. In this connection, I think it’s time to discuss something that should also be obvious: Working at close quarters leads to contamination, and thus, for some categories of the population, to death. Economic contraction leads to sectorial poverty which also kills people. Panic also kills people: surgeries and other medical interventions are being re-scheduled all over the country. No doubt, patients are dying as a result, indirect victims of the pandemics. (And many doctors are complaining of loss of income.)

Who should go back to work? A is always the case, this issue must be resolved as close as possible to those most directly concerned. In this case, it’s the employees themselves and their employers. This principle does not necessarily lead to the wisest decisions; it makes bad decisions less consequential than would be the case for decisions taken by government at the federal level. It makes rolling back bad decisions more likely.

During all this confinement period, my fellow-citizens’ general submissiveness horrified me. (I had two postings on this.) It seems that submission is over. There is a mass automobile protest going on in Lansing, Michigan as I write. It’s directed at the governor of that state, an extreme example of schoolmarmism gone mad. (“Why do I have to do it?” “Because I say so!”)

By the way, if you fear the rise of America fascism, don’t look for guns, look for ballpoints.

The view from New Delhi: Pakistan and the coronavirus

04/15/202004/15/2020 Tridivesh Singh Maini Current Events China, coronavirus, foreign aid, Imran Khan, International Monetary Fund, multilateralism, Pakistan

Introduction

The number of cases arising out of coronavirus in Pakistan continues to rise steadily. As of April 14, 2020, there were well over 5,000 cases (5,716) and deaths due to the virus totaled 96. China is providing assistance to Pakistan in dealing with the virus, and apart from medical assistance in the form of materials (including ventilators, masks, test kits, protective clothes), a team of medical experts reached Pakistan on March 28 for a period of two weeks. The team of Chinese medical experts argued for the extension of the lockdown in Pakistan (especially the province of Punjab, which has been hardest hit by the epidemic), arguing that one of the factors which helped China in controlling the further spread of the outbreak was the lockdown.

While the Chinese delegation laid great emphasis on extending the lockdown, and greater ‘social distancing’, one of the major challenges for the Pakistan PM, Imran Khan, has been the state of Pakistan’s economy. It is for this reason that he was reluctant to go in for a lockdown, but eventually pressure from opposition parties (the province of Sindh went for a lockdown even before the Federal Government) and, more importantly according to some, from the Army was what finally compelled Khan to go in for the lockdown.

On April 12, in an appeal on social media to the international community, the United Nations Secretary General, and the world’s international financial institutions, Khan appealed for ‘debt relief’ to developing countries.

Khan also pointed to the fact that the challenges faced by developing and developed countries were markedly different. Said the Pakistan PM:

While in the developed world, the main dilemma is containing with the coronavirus through lockdowns and then dealing with the economic impact, in the developing world, apart from containing the virus and dealing with the economic crisis, our biggest worry now is people dying of hunger.

He also pointed to the need for an initiative with a thrust on ‘Global Debt Relief’, one where all stakeholders are brought on board for coming up with a well-thought out economic and health response to the pandemic.

Welfare measures by the government

As the number of cases has been rising continuously, Khan has warned people to take the necessary precautions, saying that the country’s hospitals may not be able to cope with the rising number of cases. The Pakistan PM – who had earlier announced a stimulus package (to the tune of Rupees 1.2 Trillion Pakistan) to provide relief to labourers, businessmen, as well as the middle class – also stated that the government would start distributing cash to poor families through a program: ‘Ehsas Emergency Cash Program’. According to this program, Rs. 144 billion (Pakistani) would be distributed amongst 12 million low income families.

Chinese Assistance

While Chinese assistance to Pakistan has been drawing attention, with both countries laying emphasis on the point that the bilateral relationship is an all weather one and that the ‘Pakistan-China All-weather Strategic Cooperative Partnership’ has grown under the leadership of Chinese President Xi Jinping and Khan. Pakistan Foreign Minister, Shah Mehmood Qureshi, while receiving the team of Chinese medical doctors which arrived in Pakistan on March 28 stated:

Chinese have once again shown to the world that they are friends of Pakistan. They care for us. We stand with each other in difficult times. This is a unique relationship and such testing times tell us how close we are to each other.

China on more than one occasion has thanked Pakistan for the assistance, which it had provided when the coronavirus outbreak had begun and has assured full support to Pakistan. Pakistan’s President, Arif Alvi, had also undertaken a trip to China in March, in order to show solidarity with it’s ‘all weather’ ally (he was the first head of state to visit China after the outbreak of the deadly epidemic). Alvi’s China visit took place days before the lockdown was initiated in Pakistan, and a number of MOU’s were signed between both sides to counter the deadly epidemic. While Pakistan wanted to extend its solidarity with China, something which was acknowledged by Beijing, it also got assurance regarding its own fight against the coronavirus.

Commenting on his China visit, Alvi said:

China trip was very beneficial to show support & counter propaganda. We also need to get technical help from them for biggest health crisis Pakistan is going to face. Their experience is unique. Six hours of exhaustive meetings took place. Signed many MOUs for #iFightCorona.

Assistance from other quarters

While it is true that Beijing has been quick to provide logical assistance to Pakistan, China’s financial assistance would not have been sufficient for Pakistan to provide much-needed relief to the not-so-privileged in Pakistan. In this context, the International Monetary Fund has acceded to Pakistan’s request of $1.4 billion (under the Rapid Finance Instrument for fighting the coronavirus) according to sources. This amount would help Pakistan to increase it’s foreign exchange reserves as well as provide budgetary support at a time when the country faces a serious economic slowdown. The World Bank and Asian Development Bank (ADB) have also provided Pakistan aid – to the tune of $1 billion and $1.5 billion, respectively. The Pakistan PM had referred to the assistance provided by international financial institutions in his social media recording on Sunday.

It would be pertinent to point out that Pakistan is already working with the IMF on a three year program called the Extended Fund Facility Program (EFF). The organization had sanctioned $6 billion and, according to analysts and rating agencies, it is the reform program of the IMF, which had played a key role in Pakistan being able to stabilize its economy (in December 2019, Moody’s Investors Services had raised Pakistan’s credit rating to ‘stable’ from negative). Pakistan has reiterated its commitment to the EFF (due to the current crisis, the IMF will be unable to release the third trance, $450 million, of the $6 billion total loan).

Not only has the assistance from IMF, ADB, and World Bank come as a major relief for Pakistan as it battles the coronavirus, Islamabad will also be heaving a sigh of relief after the review of Pakistan’s greylisting by the FATF (Financial Action Task Force) has been pushed from June to August/September 2020. Pakistan, which was put on the watchdog’s greylist in 2018, was given 27 points to comply with, and it has only been given two extensions after failing to convince FATF on 13 of the 27 points (Beijing has been extending support to Pakistan). While Islamabad was supposed to submit its progress in April 2020, it has now got time till July 2020 to address the points it needs to comply with. In the long run, it will need to address the points raised by FATF if it wants access to international financial institutions and needs to carry out transactions without any problem.

Imran Khan’s dilemma with regard to the lockdown

In the last few months, Pakistan’s economy was beginning to show some signs of a revival, and this was acknowledged by international agencies and a number of countries who had begun to show interest in investing in the country. There is no doubt whatsoever that the coronavirus has come as a sudden setback. With the number of cases steadily rising, Khan’s challenges are only going to increase and the dilemma for the Khan administration will be the length of time of the lockdown. Businesses have been opposed to the lockdown and sooner or later are likely to pressure Khan to lift lockdown orders (a decision has already been taken to open some companies, which supply to brands like Puma and Nike, with only essential employees, while taking key precautions such as ensuring regular disinfection), as well as a more comprehensive package which Khan’s government may not be able to provide. Opposition parties, the Pakistan army (which has not been on the same page as Khan on a number of issues, including the handling of the coronavirus), and China, upon whom Pakistan is dependent, have of course been backing the lockdown. Given the lack of medical facilities, there may not be any other option but to lockdown.

Conclusion

In the midst of all these challenges, there is some relief for Pakistan:

First, while Islamabad may publicly hail China for its assistance, the assistance from multilateral bodies like the IMF, World Bank, and ADB has been what’s helped Pakistan deal with the coronavirus crisis. The assistance provided by these institutions also raises the point of whether the obituary of ‘internationalism’ and ‘multilateralism’ and the relevance of international institutions, with all their flaws, was rather premature.

Second, the delay in the FATF gives Pakistan some more time, though it will have to address the remaining points and can not be evasive in the long run. Turning a blind eye to the activities of terror groups and their financing is not likely to benefit Pakistan in any way.

Islamabad’s task is cut out however, and it remains to be seen how the government deals with the multiple problems arising out of the coronavirus (Pakistan’s growth forecast for 2020 has been reduced from 2.6% to 0.8% for the current fiscal year). In the short run, it may be able to weather the storm, albeit with great difficulty, but in the longer run it is in for some serious problems. Pakistan’s government would however be relieved with the above two developments at this point of time.