Did 10 percent inflation happen during 2020 without us noticing?

One of the miracles of 2020 was that the U.S. government could borrow/print money like crazy in response to coronapanic and yet inflation, as calculated by the U.S. government, did not go up.

But what if inflation did happen and we just didn’t notice because we were locked down and prevented from leaving the U.S.?

Here’s the USD versus the Euro:

A dollar was worth 0.92 euro a year ago. As of February 15, 2021 it is worth 11 percent less, 0.82 euro.

How about versus the yen?

The USD is down from 110 to 105 in yen.

The USD is down against gold and silver. On February 15, 2020 they cost $1583 and $18. On February 15, 2021 it took $1819 to buy the same ounce of gold and $28 to buy the same ounce of silver.

Is it fair to say that we’ve had 10 percent inflation over the last 12 months?

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Rich white Americans help themselves to subsidies from Black Americans

“Complacency and wasteful spending blight US higher education” (ft.com):

The push by American progressives to have Joe Biden’s incoming administration forgive $50,000 of student debt per borrower is deeply stupid, but at least clarifyingly so.

More polite language fails to capture the absurdity of singling out college attendees for an unprecedented $1tn transfer of wealth — equivalent to the total spent on cash welfare in the last 40 years. The top sources of US student debt are professional business and law degrees. [Brookings]

(The comparison to “cash welfare” is misleading because nearly all U.S. welfare spending is officially “not cash” and, for Democrats, “not welfare”. A person who gets a free “means-tested” house, a free “means-tested” health insurance policy, free food via SNAP/EBT, and free phone service via Obamaphone is not “on welfare” and is not receiving “cash welfare”.)

The article contains some other fun facts. College here costs 2X what it costs in Germany or France. Only one quarter of the folks who sign up at two-year community colleges earn a degree within six years. And the author points out that young people would be stupid not to take the opportunity to enjoy “sports and parties, sex and alcohol” for four years at taxpayer expense.

What the author doesn’t mention is that Black Americans will be paying for this while white Americans will be the ones primarily enjoying the sports, parties, sex, and alcohol.

If 2020 was the year that old white rich Americans stole a year of life from young healthy slender Black Americans (by locking them down to “protect” them from a disease from which they faced minimal risk), maybe 2021 will be the year that young white rich Americans steal massive quantities of cash from Black Americans via student loan forgiveness?


  • “Who owes the most in student loans: New data from the Fed” (Brookings): The highest-income 40 percent of households (those with incomes above $74,000) owe almost 60 percent of the outstanding education debt … The lowest-income 40 percent of households hold just under 20 percent of the outstanding debt. … education debt is concentrated in households with high levels of educational attainment. In 2019, the new Fed data show, households with graduate degrees owed 56 percent of the outstanding education debt—an increase from 49 percent in 2016. The 3 percent of adults with professional and doctorate degrees hold 20 percent of the education debt. These households have median earnings more than twice as high as the overall median.
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American central planners tackle vaccine scarcity

The problem with socialism is that it was never given a fair chance or a proper technocratic implementation, e.g., in the Soviet Union. Once President Harris or President AOC appoints properly credentialed agency heads, American Democratic Socialism will serve as a City on a Hill-style demonstration to countries around the world.

My Facebook feed is alive today with Bigger Government enthusiasts decrying the fact that state health departments (New York’s has more funding than the entire Russian military, but our media characterizes these departments as “chronically underfunded”) are not managing to distribute the vaccines that the Feds shipped to them. Presidents Biden and Harris will fix the problem starting on January 20, according to my friends, but we are still left with three weeks of what is, in their view, incompetent and slow distribution (at current injection rates, the U.S. is on track to lose 40% of the paid-for vaccines to expiration).

Stats from the NYT:

(Note that New York and New Jersey collect more in state/local taxes, as a percentage of residents’ income, than 47 other states, but they’re still on track to have expired vaccine doses.)

An interesting aspect of this is that the failure of central planning for vaccine distribution has not dimmed anyone’s enthusiasm for more central planning in other parts of the economy. The solution for dealing with scarcity is not a market and prices, but rather more and better technocrats.

Separately, I’m wondering how anyone who has recently gotten a flu shot in the U.S. thought that this would go quickly. From Do they still line up kids at school and give them shots? (2018):

The other day I was waiting for a friend at CVS so decided to use the time to get my “free” (i.e., included in my $10,000/year Obamacare policy) flu shot. Ten minutes later my friend showed up. It took roughly another ten minutes before the shot was “ready.” It turned out that three health care professionals had to process various forms on a computer screen, get a one-page questionnaire from me, and finally deliver the shot with a simple needle (less than one minute). A licensed pharmacist was required as part of the paperwork pipeline.

I wonder if something more like a market economy could have done this better. The bureaucrats can send free vaccine doses to hospitals, medical and dental offices, and nursing homes. Whatever is left over goes to whatever clinic or facility bids the highest. The bidding process is necessary to ensure that clinics that have the most streamlined and efficient procedures are the ones who will get the vaccine and also to ensure that clinics won’t let doses get spoiled or expire.

The auction-winning clinics and facilities can then use conventional web-based services to let people book slots and pay for vaccines at whatever prices they want to charge. Presumably the people who are at highest risk will recognize their risk and be willing to pay the most.

The obvious objection to the above is fairness. Rich people who aren’t scared of the barely tested vaccines will happily offer their Platinum cards. But maybe this is actually good from an epidemiological and economic point of view. Rich people tend to travel a lot (via private jet, of course, and including internationally throughout all of 2020) and, if the vaccines do stop transmission, vaccinating them will slow down the pandemic. Those rich people who are vulnerable and/or especially fearful and who have therefore been hiding in oceanfront bunkers will go out and spend a lot more money once vaccinated.

We could deal with the unfairness by simply sending out money to the people whom we want to get vaccinated. Use payroll data to send out checks to essential workers. Use Social Security data to send our checks to old people. Use insurance claim (including Medicaid and Medicare) databases to send out checks to those with BMIs over 30 (goal!) or other health conditions. The check recipients could decide whether to stay bunkered, N95-masked, bathed in hand sanitizer or to use the check to pay the going rate for the vaccine.

At least to judge by my Facebook feed, there are a lot of suburban white and Asian Americans who feel that the cost of lockdown is negligible. They’re happy to work from home (4,000 to 6,000 square feet), order deliveries, refrain from socializing in person. These folks don’t need a vaccine because if the government recommends that they stay home for the next 5 years they will cheerfully comply. But, on the other hand, there is no central database of the Happily Shutdown. Thus, the market would be the best way to keep these folks from clogging up the vaccine line. They know that they’ll be home for another year or two, so why should they pay $500 for a shot? They’ll wait for the price to come down to $100.

Update… We can watch the needle sticks unfold in real time:

Universal health care is plainly way better than whatever we want to call our system, since Israel, Bahrain, and the UK are well ahead of us. Also, universal health care is plainly way worse than the U.S. system: Denmark, Canada, Germany, Italy, and France are way behind us.

Second Update: We could also run this as a bounty-based system. The government gives away the vaccines to existing state-licensed clinics, such as CVS MinuteClinic, etc. Then the government says “You get $500 for every person over 80 whom you inject, $250 for every person over 70, and $100 for anyone else. There is a bonus of $200 for every shot in a person with a BMI over 40 and $100 for everyone with a BMI over 30.” Would we have vaccines expiring in freezers? The FAA did this with pilot briefings back in the 1980s. They let two contractors compete to offer computer-based weather information to pilots so as to discourage pilots from calling human briefers. The two contractors ran advertisements, enhanced systems, built web versions at around the same time as Amazon launched, etc. Other than writing checks, the FAA never had to do anything to get people to switch to briefing via computer system other than open up an API on their mainframes.


  • “Here’s Why Distribution of the Vaccine Is Taking Longer Than Expected” (NYT): Health officials and hospitals are struggling with a lack of resources. [18% of GDP is not sufficient to run a health care system] In Puerto Rico, last week’s vaccine shipments did not arrive until the workers who would have administered them had left for the Christmas holiday. [Coronaplague is an emergency, but not such a serious one that people should work through traditional vacation periods] In one notable blunder, forty-two people in Boone County, W.Va., who were scheduled to receive the coronavirus vaccine on Wednesday instead were mistakenly injected with an experimental monoclonal antibody treatment. [18% of GDP is not sufficient to run a system in which people get the intended shots]
  • Roughly half of the front-line health care workers whom the central planners targeted for #1 priority don’t want to be early adopters of these vaccines and are refusing to be injected: NBC
  • Update: a reader pointed me to “Free Market Vaccines”, a December 7, 2020 post by the always interesting John Cochrane: economics should start with “to the highest bidder,” and come up with some well documented market failure, and a public allocation system that mimics the highest bidder allocation. … In India, meanwhile, that bastion of… informal.. if not free markets, it appears you can sign up to buy the vaccine, for about $8.”
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Immigrants versus Black labor circa 1900

“Effects of Immigration on African-American Employment and Incarceration” (NBER, 2007):

For white men, an immigration boost of 10 percent caused their employment rate to fall just 0.7 percentage points; for black men, it fell 2.4 percentage points.

That same immigration rise was also correlated with a rise in incarceration rates. For white men, a 10 percent rise in immigration appeared to cause a 0.1 percentage point increase in the incarceration rate for white men. But for black men, it meant a nearly 1 percentage-point rise.

How was it different in the early 20th century? I’m reading Rising Tide: The Great Mississippi Flood of 1927 and How it Changed America and the chapter on cotton plantations along the Mississippi has some relevant passages:

[Senator LeRoy] Percy declared: “The South must not be dependent for its prosperity upon the negro. There is not enough of him, and what there is is not good enough.”

Immigrants were then pouring into America by the millions, filling northern cities and factories, providing cheap, good, white labor. Percy decided to recruit Italians. In the 1870s, Delta planters had made a concerted effort to bring in Chinese from Hong Kong and from the labor gangs of the intercontinental railroads. The Chinese had left the fields, many opening tiny grocery stores, over fifty in Greenville alone.

in 1904 Percy boasted to the Manufacturer’s Record that Italians were “in every way superior to the negro…. If the immigration of these people is encouraged, they will gradually take the place of the negro without their being any such violent change as to paralyze for a generation the prosperity of the country.”

So far I recommend the book, most of which is about the efforts to understand and control the river.

Some photos taken from a Robinson R22 helicopter that I was ferrying from Los Angeles to Boston in December 2005, four months after Hurricane Katrina came through New Orleans. These include the FEMA trailers.

the Superdome…

the low-lying neighborhoods:

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Rent control is keeping rents high in San Francisco

A friend owns a three-unit building in San Francisco, occupying the top floor himself. The two tenants underneath have fled. One lost a job and the other kept the job, but decided to lose the California tax rates and mask/shutdown protocols. Both units are now vacant.

I asked how much rents have fallen and he responded with “30 percent.” Why not rent the units out at the current market rate? “If you ever rent to someone in San Francisco,” he replied, “you can never raise their rent more than about 2 percent per year after that. You’re locked it at whatever rate you start with. So I am waiting until the shutdown ends, hoping that market rents will come back closer to what they were when I bought the building.”

(Why not turn the vacant units into AirBnBs? San Francisco limits AirBnB to 90 days per year, requires them to be part of the owner’s residence, requires a variety of registrations and taxes, etc.)

If his experience is typical, there are a lot of landlords withholding supply and therefore the true market rents should actually be lower than what we’ve heard.

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Will Black Americans have more spending power after receiving reparations?

Suppose that President Kamala Harris writes every American who identifies as “Black” (including Rachel Dolezal and, everyone’s new favorite Black American, Jessica Krug) a fat reparations check. Will Black Americans have greater spending power as a result?

Some Blacks are on means-tested welfare programs, such as public housing, Medicaid, or SNAP. If they receive a reparations check, maybe their “means” will now be greater and they’ll have to pay more for housing, health insurance, and food. A 2015 Census report:

At 41.6 percent, blacks were more likely to participate in government assistance programs in an average month. The black participation rate was followed by Hispanics at 36.4 percent, Asians or Pacific Islanders at 17.8 percent, and non-Hispanic whites at 13.2 percent.

The Son also Rises (Clark 2014; Princeton University Press) contains a survey of the academic literature regarding the effect of family wealth and unearned cash transfers on children. In 1832 there was a land lottery in Georgia where winners received a parcel of land roughly equal in value to the median family wealth at the time (i.e., the typical winners ended up with twice as much wealth, about $150,000 extra in today’s money). How did the children of the winners do?

They were no more literate than the children of losers. Their occupational status was no higher. Their own children in 1880 (the grandchildren of the 1832 winners) were again no more literate. Worse, they were significantly less likely to be enrolled in school than the grandchildren of the losers. … Wealth is not statistically higher for lottery winners’ children…

(Clark also reviews a study of Cherokee Indians who, starting in 1998, received substantial boosts to their income from casino profits. For children who had not been living in poverty, “there was no measurable change in any educational outcomes, including high school graduation rates…” This was despite the fact that a child who graduated high school would immediately become eligible for his or her own $4,000-per-year payment.)

“Divorce laws and the economic behavior of married couples,” by Alessandra Voena, a University of Chicago economist, concluded that an increased opportunity to obtain cash via a divorce lawsuit reduced reduced married women’s labor force participation rate. Similarly, successful child support plaintiffs generally reduce their working hours so that cash from the defendant is not turned into a higher standard of living for the child, but rather increased leisure time for the adult plaintiff.

See Long-term effects of short-term free cash (guaranteed minimum income experiments) for a reference to a paper regarding how just a few years of free government cash resulted in a lifetime of reduced labor force efforts. Those who got the cash were more likely to end up on disability and, if not Hispanic, to divorce their husbands and wives (additional gender IDs were unavailable in the 1970s).

Readers: What do you think? Will the free government cash result in higher spending power and standard of living or reduced working hours and additional leisure time for Americans who identify as “Black”?


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Will the post-plague world change the work-versus-welfare tradeoff?

Some of my friends were discussing whether adjustments due to coronapanic will make it irrational for more Americans to work, rather than to set themselves up for welfare (means-tested public housing, Medicaid, SNAP, and Obamaphone). As with child support profits, there is a a lot of variability from state to state. From Cato’s work-versus-welfare trade-off 2013:

What’s changed with coronaplague? The desk jobs are less fun: sit at home and stare at a screen all day. The non-desk jobs are more dangerous: work in a supermarket and be exposed to hundreds of people every day, any one of whom might kill you with a breath.

What about spending? An MBA friend’s perspective:

I guess the worst-hit people will be those who earn $80-150k

They used to be able to afford a lot of “near luxury” stuff despite not being eligible for the good welfare gravy train and despite the high taxes that the government hits them with to support the welfare gravy train. but now they will be stuck at home. Near-luxury goods such as restaurant meals, airline tickets, theater tickets, and theme park tickets all go way up in price due to mandated de-crowding measures,

Everything will cost more. so the difference between their lifestyle and a welfare family will become minimal. since they won’t be able to afford meals out anymore. they would be better off not working, playing Xbox and swiping EBT card for food. do some cash labor for luxuries (if cash isn’t outlawed under the pretext that it spreads coronavirus!).

Readers: What do you think? Except for those who can earn well above the median, will working be a completely irrational choice for an American?

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Free rent today leads to higher housing costs tomorrow for America’s poorest?

One good thing about the U.S. response to coronaplague has been allowing our low-income residents, documented and otherwise, to skip paying rent while simultaneously forbidding landlords from initiating evictions (maybe until mid-2021 here in Maskachusetts?). So… the working poor are protected from harm by a benevolent government during this period when they are no longer “working” (probably making more money, though!).

Maybe not!

We’ve been doing a lot of helicopter flying lately with a photographer whose bread and butter is aerial real estate images. A typical mission involves going to a town with a lot of low-skill immigrants and/or multi-generational welfare-dependent native-born Americans and photographing an apartment building from the 1950s.

Why does anyone need these pictures? “All the rental landlords are trying to organize condominium conversions. Since they can’t collect rent, it makes a lot more sense to sell the apartments,” was the answer.

Especially given the high transaction costs of buying and selling real estate in the U.S. (5-6 percent every time someone needs to move!), is it fair to say that the result of today’s policy change will be higher long-run housing costs for low-income residents of the U.S.? With millions of immigrants arriving, plus population expansion from children of already-present immigrants, and a shrinking pool of rental housing, won’t that translate into higher rents?

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Most gunshot wounds are self-inflicted, coronaconomy edition (Sweden v. the Shutdown Karen Countries)

I personally don’t think economic performance is relevant when evaluating coronaplague policy. In a world where people don’t care about anything other than Covid-19 death risk, what difference does it make if they’re getting richer or poorer? That said, unemployment and poverty do lead to poor health outcomes and death. It just takes a while. So there is also a health angle to economics (see this post from March: “If All Lives Have Equal Value, why does Bill Gates support shutting down the U.S. economy?”).

“‘Striking’ Crisis Gap Exposed as Swedish Economy Stands Out” (Bloomber, June 16):

In a report on Monday, Capital Economics presented data that give Sweden an irrefutable edge. From peak to trough, Swedish GDP will shrink 8%; in the U.K. and Italy, the contraction is somewhere between 25% and 30%, according to estimates covering the fourth quarter of 2019 through to the second quarter of 2020. The U.S. is somewhere in the middle, it said.

Sweden has kept shops, gyms, schools and restaurants open throughout the pandemic. But the strategy, which the government says wasn’t shaped with the economy in mind, has resulted in one of the world’s highest mortality rates. Sweden’s state epidemiologist recently acknowledged he would have opted for a tighter lockdown with the benefit of hindsight.

(The article is written for American members of the Church of Shutdown, so the journalist points that Sweden has “one of the world’s highest mortality rates” without noting that the U.S. overall, in Month 4 of various degrees of shutdown, is only about 30 percent behind Sweden, that plenty of U.S. states have experienced higher death rates so far than Sweden, and that some countries that did shut down actually have higher mortality rates than Sweden. And, of course, Sweden is not actually planning on a “tighter lockdown” even when the inevitable second wave hits (Sweden’s latest plan).)

A figure from the article:

A gun enthusiast friend is able to say, in response to about 90 percent of news articles about companies or universities, “most gunshot wounds are self-inflicted.” These economic data from the Shutdown Karen countries add some ammunition to his theory!

(Again, since nobody cares about how poor they become, as long as they can be saved from the evil virus, I don’t think the self-inflicted impoverishment of the shutdown nations is relevant except that it will inevitably result in a shorter life expectancy and more deaths in the long run than any conceivable savings of Covid-19 deaths from the shutdown. See the Preston curve of life expectancy vs. per capita income.)

There might be some measurement errors for the U.S. A lot of our GDP for this quarter, for example, is going to be cleaning up cities after riots, the classic broken window fallacy. Also, people have been spending like crazy to try to adapt to the shutdown. Americans would prefer to go to a gym, but they’re buying home exercise gear as an interim stopgap. (Sweden’s gyms never closed, so they wouldn’t have as much of this type of no-added-value spending.) Americans would prefer to meet people in person, but they’re buying webcams for the Zoom sessions that they don’t enjoy. Ordinarily, Americans don’t need everything in the house or yard to be perfect, but as long as they’re locked into their houses why not fix everything up and tell the landscapers to go deluxe? (Anecdote: We had our shrubs mulched for the first time! I wanted to give Joe the Electrician some work, so we had him do a bunch of low-importance fixes (bad news for the Democrats who envision themselves as champions of the working American; like Joe the Plumber, Joe the Electrician is not easy to persuade: “The thing about Trump is that he does what he said he was going to do.”). Maybe all of this will cost $3,000 and add $500 in long-term value to the house?)

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Post-coronaplague world of employment will be even less friendly to older workers?

All of my friends in the new work-from-home economy say that coworkers with newly unskooled children to manage are “useless”. Employers who fire their least productive employees, therefore, in an age-neutral manner, may actually be firing an older-than-average population (and, coincidentally, saving a ton of money on employer-provided health care for both these older adults and their children!).

I’m wondering if the new “wear a mask 8 hours/day” policies will also winnow the older workers out of the U.S. labor force. Older people have reduced lung capacity and muscular strength compared to the young, so they are going to be more impaired by the masks. Already in retail stores I have noticed some older workers struggling and, in some cases, wearing the mask around their necks, even when interacting fairly closely with customers.

Finally, you have the actual risk of coronaplague. As workers get closer to the average age of a Covid-19-tagged death (82 in Massachusetts), they might not want to take the risk of coming into contact with a lot of co-workers, customers, etc.


  • The Age Discrimination in Employment Act of 1967 (EEOC): “The ADEA prohibits employment discrimination against persons 40 years of age or older.” (i.e., employers wouldn’t hire people over 40 without the threat of lawsuits and coercion by the government)
  • “Lung Capacity and Aging” (American Lung Association): “Your lungs mature by the time you are about 20-25 years old. After about the age of 35, it is normal for your lung function to decline gradually as you age. This can make breathing slightly more difficult as you get older.”
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