Month: May 2020

Authored by Elizabeth Wilson via The Mises Institute,

[Author’s note: This is my modified version of Frédéric Bastiat’s great work “That Which is Seen, and that Which is Not Seen,” as applied to the current COVID-19 panic and the resulting 2020 Great Lockdown.]

“In the department of economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause—it is seen. The others unfold in succession—they are not seen: it is well for us, if they are foreseen. Between a good and a bad economist this constitutes the whole difference—the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee.”

~Bastiat

Have you ever witnessed the anger of the business owner, Sally B., when her careless government reduces her revenue by 60 percent due to a lockdown? If you have been present at such a scene, you will most assuredly bear witness to the fact that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation: “It is an ill wind that blows nobody good. Everybody must live, and why should we care that businesses are being closed or struggling?”

Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economic and political institutions. Suppose the business makes just enough during this lockdown to keep the doors open and staff employed. You would assume that little has changed, and perhaps the health, economic and social impact was worth the government shutdown—I grant it; I have not a word to say against it; you reason justly. Employees and customers come and go and the rest of the world praises the government for their benevolence. All this is that which is seen.

But if, on the other hand, you come to the conclusion, as is too often the case, that no real harm or loss will come if businesses are forced to close or some happen to lose their livelihood, so that a virus may circulate less and therefore fewer people may die, you will oblige me to call out, “Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen.”

It is not seen that as our business owner has spent a significant part of her life savings and her time investing in her business, and now she no longer has an income or is able to reinvest profit into her business. It is not seen that if she had not been stifled by the bureaucratic shutdown, she would, perhaps, have replaced some broken equipment or added to her down payment for a larger home so that she could foster more children, or hired additional staff. In short, she would have invested, spent, or employed this revenue in some way which this lockdown has prevented—in fact has eliminated as options.

Let us take a view of industry in general, as affected by this circumstance. The government shut down businesses so that a virus might kill less people: this is that which is seen. If businesses had not been shut down, the commercial equipment manufacturer (and connected industries) would have seen an increase in revenue or more children could have been helped in foster care or an unemployed person could have had a job – that which is not seen.

And if that which is not seen is taken into consideration, it will be understood that a shutdown of “nonessential” businesses directly impacts the essential ones and impacts many other lives now and for years to come—with the potential that shutting them down might have had no impact on the deaths from the virus at all.

So then we arrive at this unexpected conclusion:

“Society as a whole loses when revenue and business are uselessly destroyed”; and we must assent to a maxim which will make the hair of quarantiners stand on end—to close businesses may avert a current healthcare crisis but closing businesses will create an economic crisis which we know leads to devastating effects on economic and public health.

What will you say, Mr Governor? What will you say, disciples of good Dr. Fauci, who has modeled how many lives might be saved if businesses are forced to remain closed and all trade unnaturally restricted, but says little related to the economic/social/health harm? What say you my neighbors, the Public, who praise the government shutdown for saving lives while not ever considering the logic of shutting down one business over another or that more lives may be lost to the economic crisis than the virus crisis.

Now Sally B. is not so callous as to not care about the safety and health of her neighbors and therefore demand that her revenue be restored at the cost of lives lost. In fact it is precisely because she cares about the safety and health of her neighbors that she wants the potential health crisis to not turn into an even worse economic crisis. The seen benefit of potential lives saved cannot be correlated to the real unseen costs of lost revenues and jobs. These unseen costs are being sacrificially thrown on the altar of Models without any direct benefit to the health or safety of the public.

I say, if one business remains open does that equate with a life lost? No, there can be no connection made. What if 75 percent of the businesses are closed by the state? Does that mean a 75 percent decrease in lives lost? Fifty percent? Five percent? Again, a correlation cannot be made. And further, why can a bureaucrat—in the name of public health—choose to allow the liquor stores to remain open but keep the public parks closed?

I am sorry to disturb you with these unpopular facts, but as I continue to see the state forcing our marketplaces to remain closed for weeks to come, I beg politicians and bureaucrats to take into account that which is not seen, and place it alongside that which is seen. And giving as much weight and importance to the lives hurt or lost to the virus to those lives hurt and lost to the shutdown and its repercussions.

The reader must take care to remember that Sally B.’s story is just one of many, the long-term implications of which are currently unseen and unknown. Although currently her story is not tragic, the compounding unseen effects might be just as tragic as a virus, as rates of suicide, domestic abuse, poverty, substance abuse, etc., continue to increase the longer that businesses are barred from operating.

Therefore, if you will only go to the root of all the arguments which are adduced in its favor, all you will find will be the paraphrase of this often repeated statement:

“I fear we will restore ‘livelihood’ at the expense of more lives lost.” Although that fear is a legitimate one, there is an equally powerful fear: that more lives will be lost if businesses remain forcibly closed by the state.

Well at least our satanic overlords have a sense of humor.

According to the latest Fed balance sheet, as of April 29, the Fed’s balance sheet increased by 82.8 billion dollars over the past week, rising to a record  6,655,929,000,000 which, of course rounds up to $6.66 trillion (also, who can possibly forget that 666 was also the “generational bottom” on the S&P hit on March 6, 2009).

Whether one uses the rounded or unrounded number, the Fed’s balance sheet has increased by $2.5 trillion in the past two months, and continues to grow as per the following schedule, which sees the Fed purchasing on average $10BN per day in Treasurys and $8BN in MBS, which while still staggering is a fraction of the $125BN the Fed was buying in late March.

Some other observations: according to the latest H.4.1 report, there was a total of $121 billion in borrowings on the Fed’s emergency bailout/alphabet soup facilities – which are separate from QE – of which the largest was the money market mutual fund facility, which had $47.5BN outstanding, followed by the Primary Dealer credit facility with $28.6BN, both of which were down over $2BN on the week. The Discount Window also saw a modest decline in use, shrinking by $3.7BN to $31.3BN as of April 29, and the only facility that actually increased was the Fed’s holdings under the Paycheck Protection Program facility as it appears that banks turned around and resold the loans they made to small businesses, to the Fed almost immediately.

 

 

For many years we’ve been documenting the developments surrounding spy planes over the skies of the Baltimore metro area, monitoring residents as the region has become the testing ground for the surveillance state. 

In early April, under cover of the coronavirus pandemic, Baltimore City’s Board of Estimates approved the contract to resurrect the spy plane program. 

Now it appears three planes have been cleared for takeoff by a federal judge on Friday (April 24). 

According to AP News, US District Judge Richard Bennett in Baltimore on Friday ruled against a grassroots think tank and local community organizing groups. They asked the judge to ground the three planes from taking off, indicating the surveillance program violates the First and Fourth Amendment rights of residents. Flights are expected to begin next week.

“The United States Supreme Court and the United States Court of Appeals for the Fourth Circuit have long upheld the use of far more intrusive warrantless surveillance techniques than the (Aerial Investigation Research) program,” Bennett wrote in an opinion rejecting the plaintiffs’ motion for a preliminary injunction.

The spy plane program will fly the planes equipped with large optical sensors that would be typically mounted on a warplane. Each sensor can surveil up to 32 square miles, effectively covering the entire city and monitor everyone and everything that moves. 

The planes will be used to “investigate murders, nonfatal shootings, armed robberies, and carjackings. Weather permitting, the aircraft will fly at least 40 hours a week and cover about 90 percent of the city,” said AP. 

The American Civil Liberties Union (ACLU) represents the think tank and community groups that filed the federal lawsuit to prevent the spy program from lifting off. They said the planes severely infringe on the rights of residents and could lead to random searches and the proliferation of the surveillance state. 

“It is tragic and unacceptable that the failures of the Baltimore Police Department (BPD), and the city’s long-term unwillingness to address the root causes of crime, have now led to the decision to impose the most far-reaching mass surveillance program in American history here in Baltimore,” said David Rocah, senior staff attorney at the ACLU of Maryland. 

“If allowed to stand, this ruling is a decision that the city, and the country, will come to regret,” Rocah said. 

BPD said sensors on each plane would be limited to one pixel per person or vehicle, basically making each person look like a dot. The resolution will not allow for a person’s race, sex, clothing, or vehicle’s license plate, color, make and model to be identified (calling bullsh*t on this). 

The program will be administered by contractor Persistent Surveillance Systems that will use aerial imagery combined with city-operated street-level cameras, license plate readers, and a gunshot detection system to solve crimes. 

“I take very seriously the utilization of every legal and moral tool to address the unacceptable levels of violence that often besieges our most marginalized communities,” Baltimore Police Commissioner Michael Harrison said in a statement. 

“The program will be submitted to great scrutiny during this pilot phase and I will continue to be cautiously optimistic about the potential. Ultimately, the data will show us the efficacy of this technology as a potential tool for the Department in solving and reducing violent crime,” Harrison said. 

As the pandemic ravages America and crashes the economy into depression, the survivance state is quickly being erected. You’re beginning to get an understanding of what a post-corona world will look like, that is, an environment where Big Brother is watching you from the skies and on street-level cameras.