The political and religious musings of a Right-leaning, libertarian, formerly Orthodox Jew who emphasizes rationalism, pragmatism, common sense, and free, open-minded thought.
2021 seems like it would be a better year than 2020. In spite of a Delta variant, we have safe and effective vaccines that have helped COVID become more manageable. One would think that as we get closer to the end of the pandemic, the economy would be getting significantly better. On the one hand, the recession did not last long. According to the National Bureau of Economic Research (NBER), the COVID recession lasted less than a quarter. On the other hand, the pandemic has really thrown the economy into disarray. A couple of weeks ago, I analyzed the main causes of the supply chain crisis that we are experiencing.
Today, I would like to talk about a different abnormality occurring in the economy: a shortage in the labor market. As of the end of August, the Bureau of Labor Statistics (BLS) found that there were 10.4 million job openings. During the same time, there were 7.4 million unemployed (BLS). The labor shortage is perplexing because there are about three million more job postings than there are workers in the labor market. With more job postings than ever, you would think people would get back to work. Yet there seems to be a fair amount of reluctance to reenter the labor force. So what gives? I plan on covering the main theories as to why people are not entering the labor market.
The COVID-19 pandemic. I understand that the counterproductive and harmful lockdowns caused businesses to be shut down, thereby creating a labor shortage. I can even understand how in 2020, people were afraid to take a job or go back into the office for fear of COVID. After all, the media was peddling fear throughout this pandemic (Sacerdote et al., 2020). But along came the vaccines in a record time previously thought impossible. In spite of the vaccine effectiveness, many people are still reeling from the aftermath of so much COVID fear. Ironically enough, a AP-NORC September 2020 poll found that the vaccinated are on average more fearful of COVID than the unvaccinated. This fear is so potent that I wrote a piece earlier this month about how this pandemic will come to an end when we as a society reach a point when we surmount fear and learn to manage risk once more. While hard to quantify, I think this residual fear will be in the background of the labor markets in the upcoming months.
Unemployment Insurance (UI) Benefits and Other Welfare Benefits. Unemployment benefits normally have been given to temporarily help those who lost their job. My concern at the beginning of the pandemic was that if the benefits were so large that they were either comparable to or exceeded one's previous salary, it could provide a disincentive for people to return to work. Given that the UI benefits delayed economic recovery during the Great Recession, I was naturally worried. The Mercatus Center found that expanded UI benefits have discouraged unemployment (Farren and Kaiser, 2021). Analysts at Goldman Sachs measured the main causes for the labor shortage. What was at the top of the list? As we see below, the answer to that question is "Unemployment benefits."
There was certainly a fair amount of politicking when the federal UI benefits expired. But let's keep a few things in mind. One is that only the expansion that expired. The expiration did not apply to base UI benefits. Two, there has been the addition of the expanded child tax credit. Three, there are other welfare benefits that are available, including food stamps and TANF. Four, the economic stimulus payments received in 2020 gave householdsextra disposable income to save. This extra cushion in cash, whether it be used for savings, consumption, or to pay off debt, reduces the incentives to return to the workplace.
Lack of Childcare. With the increase of remote work and childcare closures, parents had to deal with juggling their childcare duties and remote work duties. Intuitively, one would think that this lack of childcare would make it harder for parents (especially mothers) to reenter the workforce. However, economists from the Council of Economic Advisers found that parents generally did not lower their work-hours during the pandemic (Furman et al., 2021). That finding suggests that lack of childcare played a negligible role in the labor market shortage throughout the pandemic. With more schools opening up, the "lack of childcare" explanation becomes even less plausible.
Low Immigration. One of the unfortunate remnants from the Trump administration was the low levels of immigration. In spite of Trump's fears, immigration has not shown to lower employment. If anything, higher immigration levels can increase employment. As the libertarian Cato Institute brings up, we can raise legal immigration by addressing the administrative processing delays and the low immigration caps. The Left-leaning Vox also provides an argument for increasing immigration to help deal with the labor shortage.
Early Retirees. Retirees are becoming a larger portion of the U.S. population. After all, U.S. population is slowing in growth and the Baby Boomers (commonly defined as those who were born between 1946 and 1964) are opting not to work anymore. Some of this retirement was bound to happen, but much like we saw with remote working, the pandemic served to accelerate that trend. The Federal Reserve Bank at St. Louis brings up two main reasons for the acceleration of excess retirements in its research on the topic (Faria e Castro, 2021).
The first has to do with danger to one's health. COVID-19 disproportionately affects those who are older, especially those in the sixty-plus crowd. It is understandable that in the worst pandemic in about a century, those who are close to retirement age (i.e., mid-to-late sixties) would rather avoid getting infected with COVID if they can help it.
The Fed brings up a second reason: rising asset values made retirement more feasible. Although it is wise to diversify one's retirement account, it is also common practice that there is a large percentage invested in the stock market because of its high potential rate of return. This is where the monetary policy of quantitative easing (QE) comes in. QE keeps interest rates low and more money flowing through the economy. This expansionary monetary policy signals to the stock markets that the Fed is not afraid to continue to buy assets to keep interest rates low. Setting aside that QE can cause inflation or asset bubbles for a moment, one of its effects is increasing the value of the stock market. The fact that we are seeing historic highs in the stock market (e.g., NASDAQ, Dow Jones) gives those in their sixties more confidence to retire early. The silver lining is that the vast majority of those who are not of retirement age intend to look for work within the next twelve months (Goldman Sachs).
"The Great Resignation." Coined by psychologist Anthony Klotz, the "Great Resignation" refers to the phenomenon in which a multitude of employees are quitting their jobs. This "Great Resignation" is in part due to the burnout caused by the pandemic. Others are rethinking how work plays a role in their life, reassessing their career choices, and reevaluating their working conditions, whether it is compensation, benefits, work-life balance, promotional potential, or overall working environment. It seems have less tolerance for "sticking it out at my current job" than it did previously. As we see in labor data from the BLS, labor retention is becoming a greater problem that employers need to address if they want to keep their staff for the long-term.
Vaccine Mandates.One of my concerns behind Biden's vaccine mandate was that there would be a significant (or non-negligible) number of unvaccinated employees that would rather quit their jobs than be vaccinated. Preliminary survey data from the Kaiser Family Foundation suggests that 5 percent of the unvaccinated have quit their jobs rather than get vaccinated. While there is already anecdotal evidence of this trend taking place, it is too soon to tell what sort of impact the mandates will have on the labor market.
Postscript
Before writing this piece, I would have guessed that the unemployment benefits were the primary cause. Looking at the Goldman Sachs analysis, it seems to be the number one cause. In that sense, I was correct. At the same time, there are other factors that play into this labor market shortage, such as declining birth rates, a skills mismatch, and the list of multiple factors that I made above. What I will conclude with is that there are some issues with the labor market that will get resolved as this pandemic comes to an end. Hopefully, the Biden administration can lower the backlog of immigrants so we can increase the labor force that way. Conversely, there are other trends that signal that some of the people who left the labor market did so on a permanent basis. In any case, we are looking at a tight labor market for the foreseeable future.
It is no secret that comedian Dave Chappelle has a mix of observational humor, black humor, insult comedy, and satire that he enjoys using to get under people's skin. He gets off on offending people by being blunt and crass. In his latest Netflix special, The Closer, he takes it to a whole different level. He talks about discrimination against the African-American community relative to the LGBT community. He jokes about getting COVID-19. He explores the textbook definition of feminism and realizes that he is a feminist after he refers to women as "bitches." What got him the most flak was his comments about transgender individuals.
There was considerable anger from the trans activist community, ranging from angry Tweets to threats to boycott Netflix and pleas to pull the special from Netflix. How did Netflix respond? They did not cave into pressure. Instead, Netflix co-CEOs Ted Sarandos and Reed Hastings defended Chappelle in internal communications: "In his special, Chappelle makes harsh jokes about many groups, which is his style and a reason his fans love his comedy and commentary. Stand-up comedians often expose issues that are uncomfortable because the art by nature is highly provocative. As a leadership team, we do not believe that 'The Closer' is intended to incite hatred or violence against anyone."
My Criticisms of "The Closer"
There is a lot I would like to cover today, but I want to start off this analysis by saying there were parts of Chappelle's sketch that I found distasteful. I say this as someone who has a high threshold when it comes to humor. I appreciate black humor. When done correctly, it can be great because laughing at some of the darkest aspects of human existence can be therapeutic. If we don't laugh at those dark moments, they will bring us down...or at least that is how I view it. I find raunchy or crude humor funny. South Park's mix of the crude and political satire had me laughing out loud on multiple occasions. I also think a number of controversial comedians are funny, including George Carlin, Richard Pryor, Tracy Morgan, and Lenny Bruce. What I am about to say has nothing to do with a low tolerance for controversial or "inappropriate" material.
But within the first ten minutes of his stand-up, Chappelle does a bit that I thought went too far. Chappelle thought of an idea of a movie: There is a discovery of a group of aliens that are originally from Earth. They come from an ancient group of people that achieved interstellar travel and left Earth thousands of years ago. They go to another planet and things go bad. They decide they come back to Earth and reclaim it as their own." What does Chappelle call this movie idea? Space Jews.
Why should the Space Jews bit be offensive? After all, at the end of The History of the World, Part I, Mel Brooks does a bit called Jews in Space (see below). I agree that no group of people should be exempt from being the butt of a joke. As Mel Brooks shows, you can make Jew jokes while still being tasteful and spot-on. Dave Chappelle crosses that line from a good joke to a bad one. I don't say that simply as a Jew. I say that since part of Chappelle's style is based on observational humor. Content and delivery are the two main ingredients for good comedy. In the case of observational humor, part of that content is making sure that it at least remotely resembles reality.
Chappelle's joke takes on multiple anti-Semitic tropes that are categorically untrue, including that Jews are "other," Jews want to take over the world, and that Jews are oppressors. If Chappelle were to base the joke in historical fact, he would have known that the Romans came into Judea and Samaria, took over the land, oppressed the Jewish populace, and ultimately expelled the majority of the Jews. The Jews were subsequently exiled and oppressed by various governments for nearly the next two millennia. Jokes, especially ones that are based in observational humor, are funnier when they are at least somewhat based on historical accuracy. So to recap this part of the analysis: Jews in Space is funny, Space Jews is anti-Semitic.
There were some other parts of Chappelle's special I took issue with because of a lack of accuracy. One is that Chappelle treats oppression like a zero-sum game. This is especially pronounced when he jokes about discrimination against African-Americans in comparison to discrimination against LGBT individuals. He oversimplifies it by assuming that all gay people are white (i.e., Chappelle said that "gay people are minorities until they need to be white again"), and frames it in a way as if the African-American and LGBT communities were two separate entities without any overlap.
He also implies that the only discrimination that really matters is that against African-Americans. On the one hand, I am not here to say that African-Americans historically have had it easy. On the contrary! As recent as last June, I brought up how African-Americans have dealt with more than their fair share of discrimination in the United States. Plus, I understand that Chappelle is speaking from his personal experience. On the other hand, Chappelle asked the LGBT community to not "punch down" at him, after he spent a decent part of his show minimizing the discrimination of LGBT individuals. It is disingenuous to ask something of someone that you yourself cannot do, much like it is disingenuous for a millionaire with a large fan base trying to play the victim. Plus, there have been multiple minority groups that have been oppressed, including Jews, Hispanics, Asian-Americans, Muslims, gays, Gypsies, and the disabled. As the Left-leaning Slate brings up, Chappelle narrowly has focused on Black pain, but "fails again and again when his attention turns toward other marginalized groups."
The Funnier Parts of "The Closer"
For all that I found faulty with his special there were parts that I agreed with or at least found funny and/or to be good social commentary. Here are a few of those highlights from Chappelle's special:
"Is it possible that a gay person can be racist?" To Chappelle, I respond that it is possible. I think it is possible for anyone, whether they are gay or straight, black or white, religious or not, to be racist. Humans from all backgrounds have the potential and ability to discriminate against others.
"Of course it's possible [that a gay person can be racist]. Look at Mike Pence." Aside from the rumors that the former Vice President is gay, what makes this funny is that Chappelle calls Pence "a sad gay...one of those gays that prays about it." What makes this bit funny is that being gay is not a choice although there are people that still believe it is, conversion therapy is a bunch of bullocks, and it's sad that it's 2021 and people are still in the closet. Again, black humor!
"I'm jealous of gay people." After talking about "how well that movement is going," Chappelle proceeds to say that "I don't hate gay people at all. I respect the shit out of you." If Chappelle were an actual homophobe, he would not revere or laud gay people. I'm not here to say that every one of Chappelle's remarks on the gay community are accurate, but a bona fide homophobe would have a different take on gay people than one of respect.
Describing an altercation he had with a lesbian, Chappelle ended with the punch line of "I whooped the toxic masculinity out of that bitch." That punchline is a jab at the woke Left's take on how all masculinity is toxic, as opposed to distinguishing between toxic and healthy masculinity.
DaBaby is a rapper that made homophobic comments at a concert in Miami, implying that all gay people have HIV or AIDS. While that is wrong, a point that Chappelle brought up is that DaBaby also shot a fellow black man in a Wal-Mart in North Carolina. His self-defense argument was good enough to get him a misdemeanor, but that doesn't change the fact that DaBaby still shot a guy and that got less flak than his homophobic remarks. Chappelle is criticizing an assumption on the Far Left that incendiary words are just as bad as physical assault or murder. We'll talk about this topic more later.
Chappelle was perplexed as to why women think he's misogynisitic, asking "what could I possibly be saying that would make these bitches think that I hate women? I couldn't figure it out." Non-rhetorically, using a derogatory term to describe women might be why, but I digress. Chappelle then said he Googled the dictionary definition of feminist to make sure that he wasn't misogynist. Webster's defines feminism as "the belief that men and women should have equal rights and opportunities." Chappelle then declared that by that definition, he was indeed a feminist.
When trans activists were criticizing him on Twitter, Chappelle's response was "I don't give a fuck because Twitter is not a real place." I found that to be interesting commentary on how we view social media in our society.
Chappelle and Transgenderism
He spent much of the second half of "The Closer" on transgender issues. He started that part of the sketch by asking "What is a woman?" He then said that as much as women, gay men, or lesbians have a problem with him, transgender individuals want him dead because "I went too far, I said too much." He jokingly (or possibly half-jokingly) called himself transphobic multiple times in the sketch. He relays a story in which he allegedly was tricked into calling a transgender woman beautiful. He also compared transgender women to white people wearing blackface. He also said that "I'm not saying that to say that trans women aren't women," followed by comparing the genitalia of transgender individuals to such plant-based "meats" as Impossible Burger. His take on it was "that it's close, but not quite there." Those were some of the cruder parts of his coverage on transgender issues.
Chappelle made a statement that was not crude, but nevertheless controversial when he stood up for J.K. Rowling when she said that biological sex was a thing. He made fun of how certain transgender activists called Rowling a trans-exclusionary radical feminist, or TERF for short. Chappelle said that TERFs feel about transgender women how black people feel about blackface. Chappelle says he is "Team TERF," saying that gender is a fact. If you are looking for analysis on what Rowling said in 2020 and a nuanced take on transgenderism and biological sex, you can read what I wrote in 2020.
Then there were some of the more endearing moments he had when it came to transgender issues. Chappelle also said that "I am not indifferent to the suffering of someone else." He reflects on when was first called transphobic sixteen years ago and how he evolved since then. Chappelle made fun of transgender bathroom bans. At the end, he conveyed a story about a trans woman named Daphne Dorman. He asked Dorman to open up a sketch for him. During this opening, Chappelle and Dorman were having a conversation. Chappelle said, "I have no idea what you're talking about," to which Dorman responded, "I don't need you to understand me. I just need you to believe I'm having a human experience." For Chappelle, he believed it because "it takes one [a human] to know one." Sadly, Dorman committed suicide shortly thereafter. Chappelle set up a trust fund for Dorman's daughter. When Chappelle met the daughter, he said, "I knew your father, and he was a wonderful woman." What is noteworthy is that Dorman's family is standing up for Chappelle and calling him an ally to the LGBT community.
Does Chappelle make off-color jokes? Yes. Are his jokes offensive? That matters on personal taste, to be sure, but I can at least understand why some people would take offense. Do I think he is being transphobic? I do not. I watched the special twice to make sure I got a grasp of the content of the special. Yes, Chappelle made jokes about transgender individuals. However, the thing is that Chappelle is an equal-opportunity offender. In that special, not only did Chappelle make fun of trans individuals, but he made fun of Jews, white people, the Chinese by blaming China for COVID-19, gay men, lesbians, and women, not to mention his constant usage of the n-word. His content oscillates between the irreverent and the humane. That is what Chappelle does. With regards to trans individuals, what I think Chappelle is trying to say in his own way was "I respect you as human beings, but I disagree with this definition of gender."
The Value of Comedy and Free Speech
Going through Chappelle's comments in detail reminds me of the complexities of comedy. There were parts I liked about Chappelle's special and there were parts that I truly did not care for. Does that mean I am going to join the trans activists and ask that Chappelle's special be pulled? Of course not! I brought this up back in March when giving my take on the Dr. Seuss controversy in which some of his books got pulled from publication. Just because something is offensive does not mean we should discontinue it or censor it.
The last thing we need if we are to have a free society is to have a small minority of prudes decide what content is acceptable for the rest of us. Frederick Douglass, the famous abolitionist who was once a slave, said that "Liberty is meaningless when the right to utter one's thoughts and opinions has ceased to exist. That, of all rights, is the dread of tyrants. It is the right which they first of all strike down." Or to quote comedian John Cleese, "Laughter is a force for democracy."
We do not have the right to not be offended. If anything, freedom of speech implicitly involves the right to offend. People are bound to hold different beliefs on a multitude of topics, whether that be religion, politics, or philosophy. This is especially true when talking about comedy. Comedy is an art form that is meant to be edgy and push boundaries. The good comedy often holds up a mirror to us and to society and asks us to look at who we are. Comedy is meant to provoke. There are times it will insult your sensibilities, especially if you have a thin skin.
The Art of Agreeing to Disagree Versus Woke Fragility
I have learned to get less offended as time passes. I have realized that not everyone is like me. Not everyone thinks like me, observes religion like me, or has the same tastes or preferences as me. I don't expect people to conform to my way of life. For the vast majority of people, I can agree to disagree, sometimes vehemently. I have found that those on the Far Left or those who identify as woke are incapable of doing that. Why am I pointing out the woke crowd specifically? Because it is most relevant to this discussion. I agree that there are closed-minded and authoritarian individuals on the Right. In U.S. history, much of the prudishness and censorship came from the Religious Right. However, the ones that are most gung-ho in our society to cancel comedic work because it offends their nature is coming from woke individuals on the Left. This is not a criticism of everyone on the Left because not everyone on the Left is woke. This criticism, much like previous criticisms I have made on this blog, are of a woke subset on the Left.
As I detailed in July 2020, the woke mindset is a fundamentalist mindset reminiscent of those on the Religious Right. For the woke or the social justice crowd (whatever you prefer to call them), the Dave Chappelle controversy (or any controversy) is more than mere disagreement; it is a moral deficiency to disagree and not see things exactly the way they do. It does not matter that Chappelle criticized transgender bathroom bans or recognized the human experience of being trans. If Chappelle (or anyone, for that matter) doesn't agree with the woke on everything, the proper punishment is labelling said individual a transphobe and attempting to strip them of a livelihood. This woke mindset, especially when it comes to comedy, manifests itself in a few problematic ways.
The first is that those who are different, those who are not part of the "in-group," are viewed on an adversarial level. At the very least, it leads to more divisiveness, much like we see with Critical Race Theory. How are we supposed to have comedy, never mind a pluralistic democracy built on tolerance and diversity, when differences are not acceptable by this vocal minority? Also, is it realistic to expect to change their minds if you treat them as an adversary? When was the last time you were convinced of something because someone yelled at you and berated you?
The woke like to argue that "words are violence." Forget that Webster's Dictionary defines violence as "the use of physical force so as to injure, abuse, damage, or destroy." While certain words can inflict emotional or psychological damage, harsh words are not bullets, knives, fists, or fires set to property. If the woke Left were concerned about the impact of words, they would be concerned about how it impacts everyone, and not just certain individuals that are part of the woke in-group. If it is not about legitimate harm caused by words, why use the argument? As I brought up in 2017 when discussing political correctness, political correctness is not a synonym for "politeness." It is thought and speech control under the guise of brotherhood and unity. When someone says "words are violence," what they are really doing is deflecting criticism while attempting to control language.
If you shield yourself from criticism, how do you grow intellectually or spiritually? When I talk with people I disagree with, not only do I learn about their arguments and perspective, but I learn about myself. By shutting down conversations, those on the woke Left are missing on a true growth opportunity not only for themselves, but for people that they might have otherwise persuaded.
I'm not saying nothing should offend us ever because that would make us a society of sociopaths. But I will say that U.S. society has taken the concepts of fragility and victimhood to a whole different level, and not in a good way. If Stoic philosopher Epictetus was right in saying "It's not what happens to you, but how you react," then that would mean people can exert greater control over their response to how something such as The Closer makes them feel. If that is the case, then people choose the story and narrative that they hear when listening to comedy, which means that in many instances, they choose to be offended by such comedians as Dave Chappelle. When talking with woke people over the years, I get the sense that they are on the lookout for things that are offensive. In this mindset, everything is a slight, regardless of intentions.
Those who complain about "white fragility" basically have no threshold for a comedian telling jokes that are outside their worldview. If they don't like something, they try to tear it down or censor it. There is no attempt to converse with, empathize with, or even understand someone who is different. If the tolerance for those who are different is so low in the woke crowd, how can you ever expect woke people to understand comedy? To channel comedian John Cleese: "A good sense of humor is a sign of a healthy perspective, which is why people who are uncomfortable around humor are either pompous (inflated) or neurotic (oversensitive)." Hear, hear!
Concluding Thoughts
Even with my gripes about some of Chappelle's content, I think that his special represents the importance of freedom of speech generally, but also about the value of comedy specifically. Chappelle's special reminds us that good comedy means that no topic or no group of people is off limits. We recall the fact that life is the opposite of a safe space, not to mention much more complex than a series of talking points. Chappelle has the right to offend, much like we can respond with our freedom of speech by calling him out on inaccuracies or problematic statements. I believe that Chappelle can improve both on his content and delivery while still keeping within the overall comedic style he has developed over time.
But trying to prohibit comedians from having a platform or censoring content because it does not agree with your sense of right and wrong? How un-American, how undemocratic, how authoritarian! If you don't like Chappelle's comedic style, don't watch Chappelle's specials. Netflix provides plenty of LGBT movies and TV series for you to watch. I'm glad that Chappelle was able to withstand the naysayers. To see a comedian with notoriety with content on a famous platform as Netflix is encouraging because it means the Thought Police are less likely to win the cultural battle, that "we, the people" will have enough of the politically correct overreach in our lives. We shouldn't be reenforcing values of fragility or victimhood. Rather than making people emotionally "safe," we should make people emotionally strong. I hope that this victory is the first step towards reinforcing the values of anti-fragility, emotional resilience, freedom of speech, and the art of agreeing to disagree.
I was shopping at the grocery store this week, and I noticed something peculiar: empty shelves. It felt like the beginning of the pandemic when there were food shortages and people were scurrying around trying to find toilet paper. Those empty shelves acted as a reminder that there are not just supply chain disruptions in food production. We have found ourselves in a bona fide supply chain crisis. The reason why our current predicament should be called a crisis is because it exists across borders and across industries. It affects consumers, including you and me, in various aspects of life. Goods and services, including electronics, clothing, food production, toys, and appliances will become harder to come by. Even those goods and services that we do acquire will become more expensive as a result, as we will see shortly. With a holiday shopping season quickly approaching, the effects of this supply chain crisis will be all the more evident.
International trade is a complex web of markets, companies, market players, inputs, and outputs. Given the interconnectedness of the global economy, it should come as no surprise that there are multiple factors contributing to the supply chain crisis. My goal here is to analyze the primary contributors to this supply chain crisis.
Let us start off with the catalyst of this supply chain: the COVID-19 pandemic. You would have to be living under a rock to not know that we are still undergoing the worst pandemic in a century. At the beginning of the pandemic, millions of people were under lockdown. Those who could not work remotely or did not have an "essential job" had to stay home in order to "flatten the curve." Many past recessions have been due to demand shocks. The Niskanen Center correctly pointed out in March 2020 that the pandemic recession was worse because this recession dealt both a supply shock and a demand shock (see below). You can also read this paper from the Federal Reserve Bank of St. Louis to understand the difference between a demand shock and supply shock in the context of this pandemic.
Consumer demand for many services and goods plummeted due to greater unemployment, lower disposable income, and the closure of numerous businesses. The worker absenteeism caused by the lockdowns also caused issues on the supply side, as well, mainly in the form of major supply chain disruptions. Since pandemic lockdowns greatly limit economic activity in attempts to minimize the spread of a virus, it would make sense that lockdowns adversely affect supply chains, at least in the short-run (Guan et al., 2020). While the lockdowns played their role in reducing aggregate supply, past pandemics show us that a reduction in aggregate supply would have been inevitable due to fear of infection and actual illnesses (Inoue et al., 2021; Turner and Akinremi, 2020).
Unemployment racked up in a way that we have not seen since the Great Depression. The U.S. government was proactive in fiscal and monetary policy with the intent of making sure a bad situation did not become worse. While there were multiple policy interventions, two are worth mentioning at this time. The first is that of quantitative easing (QE). QE is when "a central bank purchases longer-term securities from the open market in order to increase the money supply and encourage lending and investment." The second policy iseconomic stimulus payments. These payments in this context refer to tax rebates or tax credits issued by the U.S. government to spur consumer demand. Let's forget for a moment that we did not see the intended result of boosting the economy. Why do I bring up quantitative easing and economic stimulus payments? Because they both contributed to a greater money supply. Initially, this increase in money supply did not have a great impact on the economy because money velocity (i.e., the rate at which money is exchanged in an economy) was slower due to the pandemic and the COVID restrictions. Once COVID restrictions became less strict and businesses were opening up again, people had money burning a hole in their pockets, or in economic-speak, the pent-up nature of consumer demand caused demand to spike. What we are seeing in multiple markets is that demand has considerably outpaced supply. As a result, there are shortages and a rate of inflation that the United States has not seen in years.
Part of what makes demand greater than supply is the shortage of workers. Companies that run ports, warehouses, railways, and trucking are operating with fewer workers although demand has never been higher. This gets into the unemployment debate that has been raging. In spite of businesses opening and the vaccines, there is still a struggle with unemployment rates and labor force participation. Some would like to attribute that issue to the pandemic itself. The argument for not working because of fear of catching COVID was stronger at the beginning of the pandemic. However, as we accumulated more data on the severity of COVID (especially in comparison to past pandemics) and with the rollout of the vaccines, the argument of people staying unemployed due to COVID diminishes. Anyone using COVID as an excuse to keep people home are participating in fear-mongering that only serves to prolong the pandemic. There is another argument that is commonly used to try to explain the return to a normal unemployment: lack of childcare. However, recent research from former Council of Economic Advisors shows that parents generally did not reduce their work hours during the pandemic, thereby undermining the argument that lack of childcare was a major contributor to unemployment (Furman et al., 2021).
As such, I would contend that the unemployment benefits during this pandemic have been exacerbating the unemployment issues, as research from the Mercatus Center suggests (Farren and Kaiser, 2021). When unemployment benefits are comparable to or exceed one's previous salary, which was the case for a majority of those receiving the benefits throughout the pandemic, it should come as no surprise that many are disincentivized to find work. After all, why have a job when you are paid the same amount or even more to not work? Normally, supply and demand would have more workers enter the shipping and trucking industries. However, as we saw in the Great Recession, lavish unemployment benefits slow down economic recovery. As long as these unemployment benefits continue, it will become harder to close the gap on that worker shortage. You can go here and here to read more of my analysis on the economic effects of unemployment benefits.
There is not only a shortage of workers in the transportation industry, but there is also a shortage of shipping containers. As the American Institute for Economic Research illustrates, the increase in COVID-related demand resulted in fewer shipping containers, which also resulted in a skyrocketing of shipping container prices. The Howe Robinson Container Charter Index shows that the cost chartering a giant container ship has increased ten-fold since the beginning of the pandemic! In its analysis, the Cato Institute brings up how tariffs on the chassis, which are the trailers and undercarriage used to transport shipping containers via truck, are increasing global shipping prices and increasing transportation bottleneck. The chassis tariffs are one example of how Trump's trade war has not helped this shipping crisis since these tariffs were the result of an investigation towards the end of the Trump administration. Trump's trade war caused a shortage in semiconductors that has been made worse by the pandemic. The reason I bring up semiconductors specifically is because those are the chips that are in multiple devices, including computers, smartphones, and automobiles. As nice as it would be to only blame Trump, it's even worse because President Biden is continuing a blander version of the harmful protectionism of "America First" and the trade war with China, a war that has reduced consumer well-being (a.k.a. welfare) by 7.8 percent (Amiti et al., 2021).
In terms of trade policy, we can go back further than even the Trump administration. I was also thinking about the Merchant Marine Act of 1920, which is also known as the Jones Act. As I describe in my 2017 analysis of the Act, this 101-year-old piece of legislation increases the cost of shipping. How so? By mandating that any goods carried between U.S. ports must be done by ships constructed by U.S. companies, that are owned by U.S. citizens, and manned by U.S. citizens. This law limits supply of the ships and shipping containers available in the United States, thereby driving up shipping costs.
I would like to address another issue with this supply chain crisis: unions. In Europe and Asia, major ports are open 24 hours, seven days a week. In the United States, ports are only operating at 60 to 70 percent capacity because they are closed on weeknights and on Sunday. Why is that? Union contracts prohibit operating at such a capacity, according to AIER. AIER also points out that the unions oppose automation. Normally, my gripe has been with public-sector unions. However, it turns out that the International Longshore and Warehouse Union is a private-sector union. Conversely, the Los Angeles Port, which is the largest port in the United States, is run by the government. Take it either as a reminder of the rigidities of unionism or that the government is not the only entity to screw up because to err is to be human. In any case, the Los Angeles Port is going to be open 24/7 after some pressure exerted from President Biden, which will hopefully help with the large amounts of port congestion in the future.
Another market failure worth pointing out is that over time, businesses have relied onjust-in-time inventory (JIT) systems. While JIT is great for keeping costs down, it has also resulted in lower inventories. Having multiple industries start off with lower inventories to begin with does not do any favors in terms of making sure that consumer demand can be met because the run-down inventories means the global economy has less slack. This shortage is going to have consumers panicking, especially during the upcoming holiday season. In anticipation of delays, we are going to seemore hoardingreminiscent of the beginning of the pandemic, which will worsen already-existing shortages.
To conclude, the fact that I have covered multiple topics, whether it is monetary policy, unemployment benefits, tariffs, unions, or the pandemic, shows how just interwoven supply chains really are. Labor shortages, increasing shipping costs, and a congested transport system show how complex this issue is...so complex that I am certain that I have not covered every cause of the supply chain crisis here. The domino effect we are seeing play out in real life shows that there is not going to be one simple answer. Much like with the inflation, this is a problem that unfortunately is not going away anytime soon.
Nothing has been the same since the World Health Organization (WHO) declared COVID-19 a pandemic on March 11, 2020. Not only have we seen the worst pandemic since the Spanish Flu, we have also seen the worst economic downturn since the Great Depression. The recession is officially over, yet we are dealing with issues of unemployment, inflation, and out-of-whack supply chains. On top of that, we have managed to politicize the pandemic, whether it has been lockdowns, masks, the vaccines, or the severity of the disease itself. Throw the social unrest and mental health issues caused by the pandemic and you realize how much of a train-wreck the past nineteen months have been. People are fed up. I am sure we are all wondering "When will this pandemic end?"
As I see it, there are four ways a pandemic could plausibly end. One is extinction of the human race. I bring up the most dire example, not to placate the fear-mongering portion of our society, but to rule it out in the case of the COVID-19 pandemic. The COVID-19 data we have on the existing strains do not support such an outcome in this pandemic, although a future pandemic could theoretically make that a possibility (also, the Bubonic Plague wiped out 30 to 60 percent of Europe, so it is possible to have such a deadly disease....but again, that is not COVID-19...not by a long shot). Moving on, the second possible outcome is eradication of the disease. Historically, the only human-borne disease we have eradicated is smallpox. Our track record on the matter makes eradication unlikely in the case of COVID. The third possibility is that of herd immunity. Herd immunity is the combination of natural immunity and vaccine immunity that greatly reduces the probability of transmission of a disease. Given the rate of transmission of the Delta strain and the levels of vaccine hesitancy, I would surmise that herd immunity is out of reach, at least in the short-term.
This leads to the fourth possibility: endemicity. What is mean when a pandemic becomes endemic? This is tricky to define. The Centers of Disease Control and Prevention (CDC) defines it as "a constant presence and/or usual prevalence of a diseases or infectious agent in a population within a geographic area." So when it is endemic, it could be construed as constant, lower levels with occasional outbreaks. One could think of the transition from pandemic to endemic is when a disease becomes more manageable. In that sense, herd immunity is a subset of endemicity because herd immunity means it is more manageable or exceptionally manageable. In the cases of herd immunity and endemicity, the disease does not disappear. Take the Spanish Flu as an example. The virus did not disappear. The virus mutated enough times, became weaker, and it faded into the background as the seasonal flu. As that happened, the human race went on with life. Survivors of the Spanish Flu have even been shown to still have strong immunity upwards of about ninety years after the pandemic (Yu et al., 2008). The fact that there have been multiple pandemics and the world eventually came out on the other side should give us hope.
I think there could be some agreed upon figure of when hospitalization or death rates are low enough to consider COVID-19 as endemic. However, I think there is a component during this pandemic that was not as rampant as in past pandemics. In the case of the COVID-19 pandemic, it has nothing to do with the properties of the disease itself. It has to do with the fear.
From the onset of the pandemic, politicians and media peddled fear. Even as we learned more about COVID-19 and found that the disease was nowhere near as deadly as early models predicted, the fear was propagated. This was especially pronounced in U.S. media. According to an Ivy League study published by the National Bureau of Economic Research, "Ninety-one percent of stories by major U.S. media outlets are negative versus fifty-four percent for non-U.S. major sources and sixty-five percent for scientific journals (Sacerdote et al., 2020)." Even when we were making progress on treatments and vaccines, the media spin continued to be decidedly negative.
What happens when people are consumed by fear? As we have seen throughout this pandemic, reason goes out the window, panic ensues, and life becomes dystopian. Let's start by looking at what happened to the goalposts and metrics throughout the pandemic. We started this pandemic by saying "two weeks to flatten the curve." We then said "wait a little longer to help out the hospitals with capacity." The mantra then became "let's hold off until we have vaccines." We then miraculously produced a vaccine within a year, but then Fauci said that we need at least 60 percent vaccinated. After looking at survey data, Fauci, upped that number to 85 percent. Last month, Biden continued to shift the goalposts by saying we need up to 98 percent vaccinated to go back to normal. Nothing beyond the fantasy of perfection seems to satisfy the fear-mongering politicians.
This mentality of trying to shift towards the delusion of zero-COVID played out in behavior, as well. People are viewed as vectors of disease instead of fellow human beings. Parties and celebrations were cancelled. Children in the United States were forced to do online learning, although children in multiple European countries went to school (especially primary school) during the pandemic without causing super spreader events. Many developed a compulsion to fastidiously clean surfaces, an ineffective practice I am confident that will go down in history books as a superstition akin to using leeches as a cure-all. Travel bans still dominate the friendly skies, even though they only, at best, slow the spread at the onset of a pandemic to give hospitals a bit of more time to prepare for the inevitable. Onerous lockdowns that deprive millions of a livelihood and cause considerable mental health issues are implemented. Forget that there was no rationale for lockdowns before the pandemic and they have since been shown to be ineffective and harmful.
We have readily-available vaccines, and yet Montgomery County, Maryland and Dane County, Wisconsin, which are some of the most vaccinated counties in the United States, still have mask mandates. In July, Iceland's leading epidemiologist said that COVID restrictions in Iceland could last for another 15 years, even in spite of vaccination rates being over 85 percent and a fatality rate that was at 1 in 11,000 at the time.
This is the sort of thinking and policy that take place when fear becomes the predominant value in our society. I'm not here to say that COVID was a hoax or was "nothing more than the seasonal flu" because neither one of those statements is true. Throughout this pandemic, I did my utmost to make sure I neither under-exaggerated nor over-exaggerated the disease burden or severity of COVID. I always expressed concern about COVID, but at the same time, I thought that the fears were overblown. I thought that last year, and I think that it is even more the case now that vaccines are readily available. While not 100 percent effective, the vaccines have remained very, very effective at preventing severe COVID and COVID-related deaths (Scobie et al, 2021). According to an analysis of CDC data from the Right-leaning Heritage Foundation (Dayaratna and Michel, 2021), the vaccines have been so effective that a vaccinated individual is more likely to die from a bee sting than they are from COVID (see below).
From the beginning of the pandemic, one of my major gripes has been how governments did away with standard risk management. For those in power, the only thing that mattered was COVID, damn everything else. That is not a proper risk assessment or cost-benefit analysis. The existence of vaccines makes the one-sided calculus even more foolhardy. For one, COVID vaccines are very effective. The flu vaccine was 45 percent effective in 2020. In the past decade, the flu has killed anywhere between 12,000 and 52,000 annually in the United States (CDC), yet people did not feel unease participating in daily life during a flu season like many of the vaccinated have felt even after being vaccinated (Morning Consult).
In previous pandemics, a pandemic ended when it became endemic because our ancestors knew how to accept the fact that life is not risk-free. On an individual level, I got over whatever fears I had early on in the pandemic because I knew if I didn't, fear would consume me and it would take a long while for me to adjust back to something resembling a pre-pandemic normal. At the same time, I realize that too many people internalized fear during the pandemic. They have been conditioned to fear COVID above all else. As such, it is why I strongly believe that this pandemic will continue after the pandemic technically becomes endemic because people have clung to a mentality of overblown fear. The pandemic will end when people stop being scared. It will end when "we, the people" have had enough of the fear-mongering and learn to live with it, such as Singapore's strategy shows. It will end when we abandon the idea that we can eliminate the inevitable, much like zero-COVID poster child New Zealand did when it recently abandoned its zero-COVID policy. It will end when we realize the risk of being scared of COVID is actually greater than COVID itself, much like Denmark did. Only when we surpass the fear and learn to live our lives once more will this pandemic come to an end.
