William Watson: Listen to the economics

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Listen to the science, people say these days, across any number of issues, from climate to COVID. Well, we should listen to the economics, too.

That’s not to imply economics isn’t a science. We do try for scientist-like rigour in making our various inferences from data. We can’t experiment as much as chemists and physicists do or as much as we’d like to. We don’t just get national economies handed to us so we can try out our pet ideas. Perhaps someone should explain why that is to Justin Trudeau, who is currently experimenting left and right with his national economy, though mainly left.

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But basic economic principles should always be in play. Take masks. You can overpay wildly for designer masks if you want to. I’m sure Nancy Pelosi does: hers always seem carefully co-ordinated with her outfits. (Or maybe lobbyists send them along.) You can get Montreal Canadiens COVID masks for $14.99 a piece online. But those perfectly serviceable light blue masks cost next to nothing. Lots of places you go to these days hand them out for free. Yes, they’re an inconvenience. If you have your mask on for any length of time, your ears begin to hurt, or at least mine do. But for temporary wear while shopping or wandering around in populated spaces, they’re just not that big a deal.

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Being required by law to wear one is clearly an infringement of a person’s liberty. (On the other hand, they probably gum up facial recognition software, so even on the liberty account there may be pluses.) But there’s probably a gain on the medical side, both to the wearer but also to others — even if everything I’ve read about masks suggests “the science” is unclear on exactly how much of a gain. Bottom line? No-brainer: small cost, plausible benefit. Listen to the economics.

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Another thing economics teaches is diminishing marginal utility or product. Though some human processes experience increasing returns many don’t. Government exhortations or journalistic scoldings, for instance. The Quebec government’s COVID website lists 60 orders from the minister of health since March and another 35 orders-in-council. No doubt many were or seemed necessary at the time. But if officials are at all rational, they do the big benefit/small cost things first and then gradually, as interest groups build up on various issues, get sucked into more and more niggling rules with less and less obvious payoffs. Eventually people stop paying attention.

As for the declining value of the daily journalistic scolding, I’m not quite sure why I still watch CBC’s The National. I do know I’m fast-forwarding through more and more of it. Probably because it spends too much time in a bubble with the federal government; its opening COVID segments increasingly consist of not-so-subtle lectures on the overwhelming need for this or that new regulation. Its nightly re-caps of the day’s provincial infection counts project them onto a map as red circles growing at such a rate that each soon will obliterate its respective province. Never are the numbers shown as the tiny percentages of provincial populations that they are. In dystopias, viewers can’t jump to the next segment or even change the channel. So far we’re short of dystopia.

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Another economic rule-of-thumb is to beware the allegedly infinite cost or benefit. “We can’t afford not to spend” on item 17b in the federal wish list, the finance minister tells us, implying its benefit swamps any possible cost in the benefit/cost calculation. Or “one death is too many,” Donald Trump says before arguing (perfectly reasonably) that 200,000 deaths is better than two million, which he claims (not so reasonably) would have been the toll had Joe Biden been president.

Except that we never actually behave as if one death is too many. From road-building to jay-walking to schussing down a ski run or riding a bike to work, we’re constantly making both public and private decisions involving a non-zero probability of death. In most human activities, getting the chance of death down absolutely to zero would be impossibly expensive.

Not everybody accepts or likes economics. People resist the deaths/GDP trade-off our current policy choices impose. One way around that is to note the psychological and physical harm economic slowdowns can wreak, so that health is on both sides of the equation. But lost GDP — lost income, opportunity, experience and so on — involves cost even when it doesn’t threaten people’s health or lives.

Another rule of economics is to try to balance competing objectives at the margin, however roughly. In April, Quebec’s deaths from COVID were running at 128.1 a day on a seven-day moving average. The latest seven-day moving average is 3.1. Yes, 3.1 is too many. Moreover, deaths are a lagging indicator, to use another economics term, and recorded infections have been rising — albeit partly because Quebec is now doing 26,000 tests a day, many more than in March and April.

But in the unavoidable balancing between the economy and the virus, the numbers suggest there’s room for favouring the economy.

I know: call me heartless. Or call me an economist.