It is a miracle anyone ever listens to us. Honestly, sometimes they shouldn’t. Other than the theory of comparative advantage, I can’t think of any correct economic insights that defy common sense. Economists, or experts in any field, are meant to offer a framework to weigh costs and benefits, help us see risks, and understand how the economy and people respond to shocks and policy. This helps people make choices that are right for them. If someone is pushing something totally counterintuitive, whether in economics or public health, we should be skeptical.
The same goes for debt. I heard someone say MMT has become an accepted theory – that is simply not true. And there is nothing new here. If you look at the history of debt cycles and financial crisis, they often featured some convoluted justification for why taking on tons of leverage isn’t so risky after all because this time was different – we are so much more clever now. Guess what, you might use some big words that tell you otherwise, but debt is always risky. Sure, some of the time it works out and juices higher growth, but when it doesn’t, things get really nasty.
Author(s): Allison Schrager
Publication Date: 15 March 2021
Publication Site: Known Unknowns on TinyLetter
Perhaps most damaging, however, has been the idea arising in the last few years that people simply can’t be trusted to make sensible risk assessments—that they must be guided or even manipulated into making smarter choices. The idea that we need to be “tricked” into good behavior was pervasive throughout the pandemic. First, we were told masks weren’t effective, in what turned out to be an attempt to protect supplies for health-care workers. Last spring, we were told that coming into contact with others in just about any environment was unsafe, despite data showing the risk of outdoor transmission was very low. Over the holidays, rather than telling people that they should reduce their risks at holiday gatherings by taking steps like getting a test beforehand, public-health officials said that we should all just stay home, because tests can’t guarantee safety. Even today, the FDA refuses to approve cheap, at-home rapid tests without a prescription because the government doesn’t trust individuals to assess risks based on good, albeit imperfect, information.
The worst, most consequential failure in risk communication concerns the current vaccine rollout. The media constantly instruct us that, even weeks after receiving the second shot, it’s still not safe to socialize without masks. President Biden and Anthony Fauci have warned that we may not be able to resume “normal” life for another year. Fauci recently counseled against vaccinated people eating in indoor restaurants or playing mahjong together. Public-health officials today gave the green light for vaccinated people to gather together—but only after weeks of confusing and contradictory guidance.
Author(s): Allison Schrager
Publication Date: 8 March 2021
Publication Site: City Journal