Postponed Preventative Healthcare: Another Cost of COVID Lockdowns (November 2022 Edition)

Pandemics have been a natural part of human part of history. While COVID-19 wreaked havoc, there have nevertheless been multiple pandemics that have caused higher death rates and had a higher death toll, whether it was the Spanish Flu (1918-1920), the Black Death (1346-1353), or the Plague of Justinian (541-549). Pandemics are not unprecedented, but the use of lockdowns to isolate the healthy and asymptomatic has been historically unprecedented. 

      Source: Visual Capitalist

The Lockdown Lovers who advocated to shut down large swathes of the economy were so focused on creating a zero-COVID world. Part of their skewed and one-sided approach was slow down or eliminate the spread of COVID while ignoring all other healthcare costs. If you recall, all "non-emergency" healthcare was suspended in multiple countries. In my May 2020 analysis of why we need to end lockdowns as soon as possible, I explicitly stated that implementing lockdowns meant ignoring non-COVID healthcare at our own risk. While I cited a few studies on the topic, the one that is most relevant here is a study from The Lancet showing that the sharply higher unemployment from the Great Recession caused an excess of 260,000 excess cancer deaths in OECD countries (Maruthappu et al., 2016).

This study from The Lancet is doubly important because we created economic decline with the lockdowns and we made sure to delay various forms of "non-emergency" healthcare. Preventative care comes in many forms, whether that would be cancer screenings (e.g., mammograms, colonoscopies); tests for blood pressure, cholesterol, and diabetes; and counseling on such topics as losing weight, alcohol use, or smoking. The purpose of preventative healthcare is in its name. We have preventative care in order to prevent deadly occurrences that could have been avoided if diagnosed and treated beforehand. The extreme repurposing of healthcare in the name of defeating COVID is now coming home to roost. 

A couple of weeks ago, The Lancet released a report entitled European Groundshot - Addressing Europe's Research Challenges: A Lancet Oncology Commission. This report details the impact that the lockdowns have had on cancer-related services in Europe:

"To emphasize the scale of this problem, we estimate that about 1 million cancer diagnoses might have been missed across Europe during the COVID-19 pandemic...There is emerging evidence that a higher proportion of patients are diagnosed with later cancer stages compared with pre-pandemic rates as a result of substantial delays in cancer diagnosis and treatment. This cancer stage shift will continue to stress European cancer systems for years to come. These issues will ultimately compromise survival and contribute to inferior quality of life for many European patients with cancer."

About 1 million cancer diagnoses. Let that number sink in. That is not an insignificant figure by any means. To think that this number only covers Europe. Europe accounts for about 748.7 million out of the 8.001 billion, or about 9.4 percent of the global population. If we assume that the rest of the world has the same rate of missed cancer diagnoses, that would be an estimated global 10.7 million missed cancer diagnoses. 

10.7 million missed cancer diagnoses is astounding. First, let us keep in mind what The Lancet report said when this will continue to stress the European cancer systems for years to come. If it is going to stress Europe's health systems, it is more than plausible that such delays will stress other healthcare systems throughout the world for years to come and further contribute to the non-COVID death count. 

Second, this report from The Lancet only covered cancer. There is more than cancer that can kill people. There are various forms of cardiovascular disease, diabetes, stroke, and other respiratory diseases aside from COVID, to name but a few. And let's not forget that researchers at the University of Southern California and RAND Corporation found that lockdowns actually caused increased excess deaths. 

All of this to say that we will not understand the full cost of the COVID lockdowns for years to come. This report from The Lancet is but the tip of the iceberg in terms of the considerable harm that the lockdowns caused to public health. That is why this is a "November 2022 edition" of figuring out how postponing non-COVID healthcare caused its own healthcare costs. I hope to cover this topic at a future date when we have more data. In the meantime, I will say that as we collect more data on the effects of lockdowns, it becomes more evident that lockdowns were never the appropriate response to dealing with COVID.

Biden's Student Loan Repayment Pause Is a Short-Sighted and Costly Manipulation of Power

In August 2022, the Biden administration attempted to enact a multi-billion-dollar student loan "forgiveness" program to help families with the financial strain caused by the pandemic. In response to this terrible idea, I came up with a list of 13 reasons as to why we should not have student loan "forgiveness." Thankfully, a federal court in Texas ruled in a 26-page opinion that the student loan "forgiveness" program was a "complete usurpation of congressional power" and "not correctible." Whether or not Biden was using student loan "forgiveness" to garner votes seems to be immaterial because he continues to support shoddy policy when it comes to student loans. 

While the Biden continues to fight the student loan "forgiveness" ruling with the appeals process, Biden decided to extend the student loan repayment pause through June 2023. This pause has been in effect since March 2020 in response to the pandemic vis-à-vis the CARES Act. Essentially, what the policy does is three-fold: 1) set interest rates on government-held federal student loans to 0 percent, 2) suspend all due payments, and 3) suspend collection efforts against borrowers in default. While this sounds fine and dandy on paper, do not mistaken Biden's supposed benevolence for shoddy and problematic policy. 

The initial rationale for the pause is long past. Remember that Biden instituted the pause in response to the pandemic. In September 2022, Biden said on 60 Minutes that the pandemic is over. That does not stop Biden from using the pandemic as a so-called "rationale" to pass whatever he feels like. It is not only the pause that he has done this. Biden pulled the same stunt when trying to justify the student loan "forgiveness." There is still a ban on unvaccinated international travelers entering the United States, a policy that almost every other major country has already lifted. Biden also extended the COVID emergency declaration another 90 days earlier this month, even though he declared the pandemic over two months earlier. If that is not enough to make your blood boil, the federal government recommended this past Monday to bring mask mandates back to purportedly protect people from "long COVID," even though there is or never was a basis for mask mandates (see here and here). Apparently, the pandemic is over except when it is politically convenient to say it is not. As I brought up in April with the mask mandates, the policies are not about public health or about helping the plight of the common man; it's about power and control. 

Then there is the price tag of the student loan repayment pause. The bipartisan Committee for a Responsible Federal Budget (CRFB) estimates that this new extension will cost $40 billion. This $40 billion will be on top of the $155 billion that the pause has cost between March 2020 and August 2022. If Biden keeps extending the pause through his presidency, it will end up costing a pretty penny (see below). 

Much like with the student loan "forgiveness," the student loan repayment pause is regressive in nature. Who benefits the most from interest forgiveness within the student loan repayment pause? According to the CRFB, it is not the lower-income households, but doctors and lawyers that disproportionately benefit.   

The regressivity argument gets more irksome when you see that it is those with the higher amounts of student loan debt (almost always those with graduate degrees) that account for most of the student debt (see below).

As I illustrated earlier this month, fiscal policy has played its role in contributing to the high levels of inflation that the United States is experiencing. The student loan repayment pause also contributes to inflation. The CRFB found that Biden's student loan repayment pause will add 15 to 20 basis points to inflation. It is ironic that Biden wants to help with alleviating financial pressures of households when all he is doing is adding fuel to the economic issues that he is claiming to fight. 

In summation, the student loan repayment pause cannot be justified for a few reasons. Using the pandemic rationale is nothing more than a politically convenient excuse for the Biden administration to spend more money and pander. Regardless of whether you think the pandemic should have ever been a justification for such a pause in the first place, the pause is costly, regressive, and inflationary.  Similar to many overreaching pandemic policies, the student loan repayment pause should not be extended. 

On top of that, this reminds us that the student loan repayment pause is part of the greater federal student lending scheme that has had many negative consequences to higher education, including "skyrocketing college prices, to enabling credential inflation, to confusing the heck out of [lenders], borrowers, and the American public." A recent Government Accountability Office (GAO) report shows that federal students have not made $114 billion in profit that was initially projected, but have actually cost $197 billion since 2010. This is a difference of over $300 billion, and the student loan repayment pause was contributed $102 billion to this $300 billion differential. What does all of this show us? Not only should the student loan repayment pause be lifted posthaste, but the government should do the right thing and get out of the student loan business all together. 

2022 Ballots Eliminating Prison Labor in Four States is a Moral and Economic Victory

Prison labor, alternatively known as penal labor, is labor that is performed by incarcerated or detained individuals. While it is true that not all of prison labor is forced labor, much of it is. In June 2022, the American Civil Liberties Union (ACLU) released a report entitled Captive Labor: Exploitation of Incarcerated Workers. There are 1.2 million incarcerated individuals in the United States (ACLU). The World Prison Brief shows that United States as having a higher prison incarceration rate (505 per 100,000) than such authoritarian regimes as Russia (324), Saudi Arabia (207), Venezuela (199), and China (119).

65 percent of the 1.2 million incarcerated individuals (or 791,500 people) are compelled to work (ACLU). A lot of these individuals hold such positions as cooks, dishwashers, plumbers, or barbers. The labor accounts for $2 billion in goods produced and $9 billion worth of services rendered. The difference here is that incarcerated individuals are deprived of the right to refuse to work. You would think that after fighting a Civil War on slavery, we would not force U.S. citizens, even if charged with a crime, into involuntary servitude. Yet it is plainly permitted in the Thirteenth Amendment of the Constitution: 

Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist in the United States, or any place subject to their jurisdiction. 

As of October 2022, there were 20 state constitutions that allowed for enslavement or indentured servitude as criminal punishment or a form of debt payment. In the recent midterm elections, five states proposed ballot initiatives to remove prison labor: Alabama, Louisiana, Oregon, Tennessee, and Vermont. Four out of five states succeeded. The reason why Louisiana did not pass its initiative was because of poorly worded ballot text. While these ballots will not immediately abolish compulsory prison labor in these states, it provides a pathway for future legal challenges on how to use prison labor. The fact that prison labor is still a practice in 2022 baffles me. 

For one, there is a moral argument that slavery is wrong. To mandate that someone works for little to no money should be unconscionable, especially in a country that is called "The Land of the Free." The ACLU report mentioned earlier points out the many issues with such indentured servitude as is practiced. Individuals are stripped of basic rights. They work in unsafe working conditions. They make anywhere from 13-52¢ an hour, which is lower than the minimum wage in Afghanistan, Bolivia, or India. If incarcerated individuals do not comply, they are threatened with solitary confinement, loss of family visits, or denial of sentence reductions. None of this accounts the fact that because slavery is widely seen as ethically unacceptable, it can undermine the legitimacy of the criminal justice system.

Then there is the economic cost. It might seem like a cash cow to get prison labor at a fraction of the cost to help reduce taxpayer burden or that their contribution is recompense for the crime the individual committed. However, I have to wonder if this view is shortsighted and does not take the whole economy into account. After looking at this detailed report from the Prison Policy Initiative, I ponder about mass incarceration and how many people actually need to be in prison. For example, 81.3 percent of people in jail (as opposed to prison) are not convicted. Not only are 1 in 5 incarcerated locked up for drug charges, but there are also all the misdemeanors. Also, most youth are incarcerated for non-person offenses. 

I could go on, but it brings up a bigger question surrounding cost, especially since the Prison Policy Initiative found that the annual cost of imprisonment is $182 billion in 2017 dollars. When accounting for such indirect costs as foregone wages, adverse health effects, and the effects of incarceration on families, a study led by Washington University of St. Louis found the annual cost of the prison system to be nearly $1.2 trillion in 2016 dollars (McLaughlin et al., 2016). 

Let's make a back-of-the-envelope estimate and use generous assumptions for the pro-prison labor side to see if the labor savings are worth it. Let's assume that the effective average minimum wage is $11.80 per hour when factoring in state and local laws. Let's take the lowest estimate from ACLU of 13¢ per hour for prison labor. That is a savings of $11.67 per hour that each prisoner works. Let's also assume that the 791,500 prisoners are working a grueling 60-hour work week, which is higher than the national average of 40.5 hours a week; and that they are working every week of the year. When you do the math ($11.67 of hourly savings* 60 hours * 52 weeks * 791,500 prisoners), the aggregate savings of paying prisoners pithy wages comes out to $28.82 billion. The savings in paying prisoners pittance does not even balance out the direct costs of incarceration, never mind the indirect costs.

With this huge price tag of mass incarceration, I have to ask if is there a more cost-efficient way to punish or rehabilitate individuals than throwing them in prison or jail. How much money would we save if we imprisoned fewer people and focused on the more serious crimes? 

I also ask this in the context of how imprisonment affects earnings. A study from the Richmond Federal Reserve Bank shows how incarceration reduces lifetime earnings for black men by 33 percent and 43 percent for white men (Gordon and Neelakantan, 2021). The Brennan Center found that being imprisoned reduces annual earnings by 52 percent (Craigie et al., 2020). In 2017, this translated to an aggregate annual earnings loss of $55.2 billion, which does not include the $317.1 billion loss for those convicted but not imprisoned (ibid.).  

The Brookings Institution points out how there is some evidence to show that prison labor has a modest, but significant effect on recidivism (Duwe and Henry-Nickel, 2021). The National Institute of Justice found that the Prison Industry Enhancement Certification Program (PIECP) helped reduce recidivism (Moses and Smith, 2007). The catch with PIECP was that it was a voluntary program, as opposed to the forced labor we see in many U.S. prisons. I can see how the effects would be modest. On the one hand, prison labor gives the incarcerated work experience where there would otherwise be an employment gap. On the other hand, the truly menial wages makes it basically impossible to save up money for the the many immediate costs (e.g., housing, food, healthcare) that these individuals face once released from prison. 

While it does not solve everything, I believe that eliminating forced prison labor is a step in the right direction for criminal justice reform. Not only do we stop dehumanizing people, but we also make our criminal justice system more economically efficient. I agree with the Brookings Institution that there needs to be an emphasis on better training for prisoners. Any prison work should be voluntary, including fair market value wages, and train them with transferable skills so that the incarcerated can make a smooth transition back to society after incarceration. 

Paul Krugman's Misinformation on Florida COVID Deaths Deflects Harm of Lockdowns and Ineffective COVID Restrictions

Once upon a time, there was an economist called Paul Krugman. He was a man who pursued a PhD in economics from MIT, wrote 27 books, taught economics at MIT and Princeton, and even won a Nobel Prize in 2008. Similar to Robert Reich, Paul Krugman went from being a well-respected economist who understood nuance to a de facto talking head for the political Left. His political leanings are no secret. In 2009, he wrote a book called Conscience of a Liberal. 

I am not faulting Krugman for having a certain set of political beliefs. I know my Weltanschauung and where I stand when it comes to political philosophy. I consider myself a pragmatic, consequentialist libertarian. At least I do my utmost to follow solid research methodology, read analyses from all sides of the political spectrum, and let logic and the data guide and inform my political opinions, not the other way around. Krugman makes no such attempt at objectivity. As I have pointed out before on this blog, he has manipulated statistics or conveniently left out facts to paint a one-sided, partisan picture. 

In 2000, Krugman wrote an opinion piece in the New York Times about how to identify a political hack. He said that one way that you can identify a political hack is by someone who uses "surprisingly raw, transparent misrepresentation of facts." Who knew 2000 Krugman would be writing about 2022 Krugman? Here is what he had to say on Twitter about Governor Ron DeSantis (R-FL) this past Sunday:

Can Ron DeSantis effectively challenge Trump? I have no idea. But one thing I hope doesn't get forgotten in the horse-race coverage is DeSantis's major achievement as governor: the unnecessary death of around 20,000 Floridians 1/

— Paul Krugman (@paulkrugman) November 13, 2022

Krguman blames DeSantis for the death of 20,000 Floridians due to "COVID disinformation and anti-tax propaganda." On his tweet (see tweet below), he said that a population-adjusted death toll (aka a mortality rate) puts Florida way higher than California and New York. 

Adjusted for population, the Florida-equivalent death toll was

FL 59,170
CA 39,217
NY 39,551

So states that didn't have governors promoting Covid disinformation and anti-tax propaganda lost far fewer people — the equivalent of ~20K excess in FL 4/

— Paul Krugman (@paulkrugman) November 13, 2022

He concluded by saying "it's not about freedom. We're not talking about lockdowns and restrictions at this point, just about lifesaving shots that DeSantis deterred people from getting." I want to delve into the aforementioned comment in a moment. But first, I want to take a look at vaccination rates to see if Krugman's main gripe is legitimate. These are data that I am pulling from the CDC's Vaccination Distribution and Coverage database. I encourage you to look at the data for yourself and adjust the timelines as you would like, but first are the trends for the United States as of November 9.

  

Below are the data for the state of Florida. Yes, the numbers for 18-24 yrs and 25-49 yrs are slightly lower than the national average. Here is the catch: Not all age strata are created equal when it comes to COVID. There is wide variation of COVID mortality rates when it comes to age demographics. I pointed this out in June when I showed that children are way less likely to die from COVID than the rest of the population. Those who are over the age of 65 are at the highest risk of dying from COVID.   

If you look at COVID death data from the CDC [as of 11/9/22], you will see that 75 percent (or 800,351 out of 1,067,539) of those who died from COVID in the U.S. were age 65+. This is important considering that people 65 and over only account for 16.3 percent of the overall U.S. population (Census). An additional 18.3 percent (or 195,374) were from the ages of 50 to 64. This means that the remaining 6.7 percent of COVID deaths were for those under the age of 50. 

What you see in the above infographic is that Florida's vaccination rates for the 65+ crowd is currently at around the national average. More to the point, the graphs above show that the state of Florida vaccinated its 65+ population slightly more quickly than the national average. Rather than be derelict in his duties, DeSantis moved fast to protect the most vulnerable populations with the vaccines. 

My second issue with Krugman's so-called assessment has to do with the age factor. He is technically correct to say that the unadjusted death rate in Florida is higher than California or New York (CDC). However, it is particularly careless of Krugman to not provide age-adjusted death rates, especially with all of his economic training. Why? The purpose of using age-adjusted rates is to provide an apples-to-apples comparison when analyzing health statistics between population groups and geographic areas. This is because almost all diseases and health outcomes occur at different rates in different ages, and as already illustrated, COVID is no exception. 

Age is the single largest factor in COVID mortality. This demographic finding is nothing new. We have known since the beginning of the pandemic that the elderly and immunocompromised are going to be the hardest-hit by COVID. Data from the Kaiser Foundation show that 21 percent of Florida's population comprises of those who are 65+, which is higher than California (15.3%) or New York (17.5%). What happens when you use age-adjusted deaths rates for COVID? How does Florida rank? 

In September 2022, biology research company The Bioinformatics CRO made those very calculations by using CDC provisional death data (also see quarterly death rates here). When adjusting for age, Florida ranked #31 on the list at 292 deaths per 100,000 which is below the U.S. median of 316 deaths. This puts Florida in better shape than such blue states as New York, New Jersey, and Pennsylvania. This does not ignore the fact that the top ten states of this list are red states, but it does help at least vindicate the Sunshine State.

I have a bigger issue with Krugman's manipulation of the story, which is that he says that "We're not talking about lockdowns and restrictions at this point." He had no problem tweeting about lockdowns during July 2020 when he tweeted that "many states, especially in the South, rushed to resume business as usual." In that same tweet, he referred to lockdowns as "annoying, but sustainable." I wonder why Krugman suddenly does not want to talk about lockdowns or restrictions. 

A comprehensive study from the National Bureau of Economic Research released in April 2022 ranked all 50 states based on COVID mortality, economic performance, and educational outcomes (Mulligan et al., 2022). One of the major findings of this paper is that there was no clear pattern in which states had high or low mortality. Another was when looking at excess deaths, Florida ranked below California. Even better was when the authors looked at the death rates when adjusted for age and metabolic health (i.e., diabetes and obesity). Once factored in, it turns out there is no correlation that showed that lockdown stringency resulted in better health outcomes. 

When using the Stringency Index from Oxford to factor in multiple restrictions (e.g., school closures, workplace closures, closing large events), the good people at the Bioinformatics CRO concluded that an age- and obesity-adjusted death rate does not correlate with the Stringency Index. In other words, we see that the more stringent states did not have better COVID-related health outcomes than the more lax states.

While this might seem shocking or revelatory for some, this is hardly news for those of you who have been following this blog throughout the pandemic. Here are some of my favorite pieces on the topic of the failure of multiple COVID restrictions:

• June 2022: Lockdowns, School Closures, and Mask Mandates Negatively Impacted Children
• April-May 2022: Unmasking Maskaholism - Why All Mask Mandates, Including the One for Public Transit, Need to Go (Part I and Part II)
• February 2022: Johns Hopkins Meta-Analysis Is the Latest in Showing Why Lockdowns Are Ineffective and Horrid
• December 2021: Fauci Is Dead Wrong About Indefinitely Needing Face Masks on Airplanes
• December 2021: Travel Bans Are Nothing More Than Harmful Public Health Theater
• June 2021: The Evidence Base Against Lockdowns Grows - Why Lockdowns Are Ineffective and Very Likely Cause Deaths
• April 2021: When "Follow the Science" During the Pandemic Meant Not Following the Science (includes scrutinizing of lockdowns, travel restrictions, cleaning surfaces, social distancing, face masks, and school closures)
• May 2020: Why We Need to Start Lifting Coronavirus Lockdowns Sooner Rather Than Later

There were some restrictions that did very little to nothing to slow down COVID, such as the mask mandates. There were other restrictions that remind us that the cure can be worse than the sickness. For example, a study from economists at Rand Corporation and the University of South California show that an increase of shelter-in-place by one week translated into excess death of 2.7 persons per 100,000 (Agrawal et al., 2021). 

With all the damning evidence against lockdowns and other COVID restrictions that were illiberally enacted, I have to hypothesize that Krugman's current reluctance to talk about lockdowns and other COVID restrictions is because in spite of his cognitive dissonance, he knows that deep down that the COVID restrictions he advocated for at the beginning of the pandemic did not work. 

Krugman would rather not be known for contributing to the most devastating public policy choices inflicted upon humankind during peacetime. Who wants to be known for being on the side that took a sledgehammer to our institutions and our way of life only to do next to nothing to stop an airborne pandemic from happening? I know I would not, and I could see why Krugman and his ilk would distance themselves from the lockdowns and other COVID restrictions.  

If history has taught me anything, it is that we should not forget our past. If we forget our past, we are doomed to repeat history. To quote Cicero, "to be ignorant of what occurred before you were born is to always remain a child." We cannot undo the damage done by lockdowns and other COVID restrictions. Nevertheless, we can be sure that we remind future generations of this generation's mistakes for when the pandemic arrives because there will almost certainly be another pandemic. What lessons will we help future generations learn from this travesty? Will we let lockdown lovers like Krugman get away with writing a revisionist version of history or will we use data and facts in proper context to inform future generations of what happened between 2020 and 2022? That decision will be up to us and I hope that we impart the right lessons from this pandemic.

2022 State Ballot Hodgepodge: My Take on the Results Regarding Taxes, Pot, Civil Liberties, and Other Topics

Another Election Day is behind us. When November takes place, it is not only about which party gains control of Congress or whether there are more governors of one party versus another. I relish the state and local ballots to see what issues matter to the people. It comes with a wide variety of topics and multiple implications for peoples' lives. In 2020, I wrote a hodgepodge of analysis on state ballot initiatives that covered such topics as taxes, the gig economy, marijuana, and minimum wage. Instead of looking at many of these prior to Election Day, I decided to do this year's ballot hodgepodge after the elections so I can reflect on some of the decisions voters made across the United States. Below are some of the notable results. For additional information on the given ballots, you can go to Ballotpedia for excellent coverage. 

Recreational Marijuana Legalization: It should be no surprise that I am for marijuana legalization. That is why last Tuesday was a mixed bag in this category. There were two states that voted in favor of legalizing marijuana in their states: Maryland and Missouri. This brings the count of states that have legalized recreational marijuana to 21 states plus the District of Columbia. The downside of the ballot results is that three states rejected legalizing recreational marijuana: Arkansas, North Dakota, and South Dakota. Even so, I remain optimistic that the United States is heading toward the path of legalizing it across the nation so we do not have to have this debate anymore. 

Decriminalizing Psychedelics: Oregon was the first state to legalize psychedelics. This past Tuesday, drug legalization had another victory. The state of Colorado voted to decriminalize psychedelics. You can read my 2019 piece on why psychedelics should be legalized. 

Millionaire Taxes: California proposed enacting a 1.75% individual income tax on those making over $2 million. This tax revenue would have gone towards providing incentives towards purchasing electric cars, charging infrastructure, and wildlife prevention. Thankfully, California rejected Proposition 30. Given that California ranks 46th on state-local tax burden (Tax Foundation), I'm both surprised and relieved. I wish I could say the same for the Commonwealth of Massachusetts. The Bay State voted to create an additional 4 percent income tax on those making over $1 million. This 4 percent is on top of the 5 percent in state income tax they already pay. As I pointed out in my analysis on Massachusetts' millionaire tax, this is going to have considerable and negative impact on the Bay State's economy. 

Flavored Cigarette Ban: California passed a ballot initiative (Proposition 31) to uphold its ban on flavored cigarettes, which includes menthol cigarettes. In June, I compiled a list of eight reasons as to why we should not have menthol cigarette bans, which included economic, public health, and criminal justice explanations.

Sports Betting: Another reason to be irritated with California voters. California proposed two initiatives on the topic: one to allow for sports betting on Native American lands (Proposition 26) and one to legalize online sports betting with platforms that have agreements with Native Americans (Proposition 27). Both propositions got shot down by the California populace. Setting aside how this affects the Native American population and an ability to make greater revenue off an activity for which there is clear demand, I made an argument a couple of years ago in favor of sports betting. 

Minimum Wage: Nevada will set its minimum wage to $12/hour by July 2024. Nebraska is set to raise its minimum wage to $15/hour by 2026. I have written on the topic of minimum wage multiple times, and I am unhappy with these outcomes to say the least. 

Data Privacy and Due Process: Through Measure C-48, Montana amended its constitution to include electronic data and communication in search and seizure protection. Montana joins Michigan and Missouri as the only states with explicit protections in their state constitutions. As far as I am concerned, this is a victory for due process.

Abortion: Three states voted to enshrine abortion rights in their state constitutions: California, Michigan, and Vermont. Kentucky rejected enshrining the illegality of abortion in their constitution, although it is de facto illegal in Kentucky. Montana rejected a law that would require medical care to infants born alive, which would have included those born in botched abortions. If we look at abortions strictly from ballot initiatives (without factoring in pro-life governors that won their elections), then it looks like a good night for those claiming abortion to be a right. I am a pro-life libertarian, which puts me in an atypical position for a libertarian. I also view Roe v. Wade as shoddy constitutional law, which means that states navigating the topic at least removes the legal and constitutional concerns I previously had. 

Ranked Choice Voting: As of June 2022, only Alaska and Maine have had ranked choice voting on federal or state-level voting. Nevada has become the third state to do so. I understand the appeal of having more options and to have your vote more accurately reflect your preferences. I also understand how this could make counting ballots more complicated. I would need to look further into this topic before having a more defined opinion. 

Enslavement and Indentured Servitude: I am working on a separate piece for this particular topic. Since that analysis is pending, I do not want to say too much at this time. However, there were five states that were looking to modify their state amendments to not allow for forced prison labor. Four of the states succeeded: Alabama, Oregon, Tennessee, and Vermont. The fact that there are fewer places where slavery or indentured servitude is a punishment for a crime is a win for civil liberties.

Greenpeace Admits that Recycling Plastic Is Feel-Good Folly

Reduce, Reuse, Recycle. 

This environmental adage became popular in the 1970s. I remember it being reinforced multiple times throughout my childhood. It was a way of developing an environmental ethos. What I noticed is that more emphasis was being put on recycling, perhaps because recycling is the easiest of the three to accomplish in a consumerist, throwaway society. Reducing one's consumption when bombarded by advertisements and using material consumption to fill a void is difficult. Reusing involves forethought and planning. Recycling involves some labor, especially when cleaning recyclable goods. Even so, throwing away goods in the recycling bin is easier than the other two R's. 

Recycling also happens to be the most feel-good of the three R's. Less than a month ago, the environmentalist nonprofit Greenpeace released a report entitled Circular Claims Fall Flat. In the report, Greenpeace points out why recycling plastics fails:

Mechanical and chemical recycling of plastic waste has largely failed and will fail because plastic waste is: (1) extremely difficult to collect, (2) virtually impossible to sort for recycling, (3) environmentally harmful to reprocess, (4) often made of and contaminated by toxic materials, and (5) not economical to recycle. Paper, cardboard, metal, and glass do not have these problems, which is why they are recycled at much higher rates. 

While this is a step towards a more rational dialogue on environmental policy, Greenpeace is late to the party. In 2013, I went through the economics of recycling and how recycling plastics did not make sense. I did point out that recycling cardboard, paper, aluminum, asphalt pavement, iron, and steel was a more sensible practice. Not only has recycling has become more expensive to sort and transport, but single-sort recycling has increased contamination rates. These trends have made it more difficult to find buyers of recyclable goods, which was something I pointed out last year.

Furthermore, the Greenpeace report proceeds to call for phasing out single-use plastics. That does not seem practical, particularly with public health. Single-use plastics are especially useful for syringes, applicators, drug tests, bandages, and wraps. This does not consider plastics usage in other sectors. Yes, we need to consider our consumption patterns for the long-run. Much like with renewable energy, we need to be realistic and take a more gradual approach to ensure that both economic and environmental considerations are taken into account. 

How Fiscal and Monetary Policy Greatly Contributed to the 2021-22 Inflation Spike

A couple of weeks ago, I illustrated how profit margins and corporate greed were not ultimately responsible for the inflation spike in the United States. I also covered other plausible causes that could be attributing to the unusually high inflation, ranging from labor shortages and supply chain shocks to the pandemic and COVID-related restrictions. Today, I would like to cover two types of government policy that played their major role in our current round of inflation: monetary and fiscal policy. 

Monetary policy is the set of actions set by the monetary authority, typically a central bank, to control money supply and spur economic growth. In the United States, that authority is exercised by the Federal Reserve Bank. While it is one of their mandates to keep inflation at 2 percent, the Fed has contributed to the inflation. The Federal Reserve's role in inflation can be expressed with the quantity theory of money (QTM). QTM posits that "the general price level of goods and services is proportional to the money supply in the economy." The formula looks like the following: 

MV=PQ

As the St. Louis Federal Reserve illustrates in its primer, M stands for money supply. V stands for velocity, or the rate at which people spend money. P is the general price level, whereas Q is the quantity of goods and services produced. One of the Fed's main policy decisions during the pandemic was to expanding monetary supply (FRED).

Not only did money supply skyrocket, the money velocity started to increase in the fourth quarter of 2020 (FRED).

Going back to the formula MV=PQ, the left side of the equation increased. That means the right side of the equation has to increase in order to match the left side, whether it is from either price increases or an increase of quantity of goods and services produced, or a combination of both. It theoretically could be caused by an increase of both P and Q. 

In practice, we have been dealing with and are still dealing with a supply chain crisis. This bottleneck makes it a lot more difficult for the quantity of goods and services to grow. The inability to expand output (Q) means that the increase of aggregate demand puts upward pressure on prices. In other words, expansionary monetary policy in an economy with constrained economic output results in inflation. 

Researchers at Johns Hopkins and the Federal Reserve Bank of Chicago admit that tightening monetary policy could have averted the inflationary pressures (Bianchi and Melosi, 2022). On top of this mess, the Fed kept interest rates at historic lows through 2021, which only seemed to boost consumer demand and keep prices increasing. 

To read more on how expansionary monetary policy caused high inflation in 2021 and not in 2008, you can read this report from the Fraser Institute (Globerman, 2021).

While monetary policy contributed to the inflation, the other major culprit is Congress. Fiscal policy is the usage of government spending in taxation in attempts to influence the economy, which is mainly the purview of Congress since it is the legislative branch. During the pandemic, there were multiple spending bills passed in the name of COVID relief. These spending bills were very much demand-side in nature, especially the economic stimulus payments. In December 2020, I expressed concerns of how the payments would spur consumer demand and were ultimately not necessary. It turns out that I was correct. Here is some research and expert analysis showing that the government's spending packages contributed to inflation: 

• Researchers at Johns Hopkins University and the Federal Reserve Bank of Chicago found that while the spending accelerated the economy, it also resulted in fiscal inflation (Bianchi and Melosi, 2022).
• Marc Goldwein of the bipartisan Committee for a Responsible Federal Budget acknowledged that we would still have had 2-3 percent inflation without the American Rescue Plan (ARP) Act. Goldwein stated that the ARP was adding fuel to the fire of inflation. Similarly, economists on the Left and Right estimated that the ARP contributed to 2-4 percentage points in inflation. 
• The Tax Foundation points out how in 2020-21, the United States had the second largest stimulus spending as percent of GDP ratio. To understand how fiscal policy attributed, you can read a draft of "The Fiscal Theory of the Price Level" by Hoover Institution scholar John Cochrane. 
• The Federal Reserve Bank of San Francisco shows that both the CARES Act under the Trump Administration and ARP increased disposable income higher relative to other countries. This led to core inflation (i.e., consumer prices minus food and energy) being higher in the United States relative to other countries (see below). The Bank estimated in March 2022 that the expansionary fiscal policy increased inflation by 3 percentage points (Jordà et al., 2022).

There is a lot going on here, so let's recap. The pandemic was the epicenter for this snafu. There was bound to be some economic disruption caused by the pandemic. COVID regulations exacerbated the economic impacts, especially when it came to economic output and supply of goods and services. Shutting down large swathes of the economy with lockdowns disrupted the ability to work and generated the loss of customers, thereby limiting supply of goods and services. In 2020, the Fed increases money supply in a way that made the quantitative easing of the Great Recession look tame. It miscalculated the supply chain bottlenecks, which put inflationary pressures on prices in the macroeconomy. 

In the meantime, economic stimulus payments boost consumer demand, which is the wrong thing to do when supply is much more of an issue than demand. The stimulus payments were burning a hole in the pockets of American consumers and they were just itching to spend more, in spite of the inflationary pressures caused by monetary policy. This is especially true of the American Rescue Plan since a) there was higher money supply, b) there was the CARES Act, c) more people were getting vaccinated, and d) businesses started to open again. 

Yes, there were multiple factors to create this debacle. But make no mistake: expansionary monetary policy and expansionary fiscal policy were major contributors to the inflation that we have been experiencing for over a year now. 

Massachusetts Millionaire Tax Will Cost the Commonwealth Much More Than a Pretty Penny

An even-numbered year in U.S. politics means it is an election cycle. One of the aspects of the election cycle I enjoy most is the ballots on the state and local level. The variety of topics and the potential impact I find intriguing. This election cycle will bring ballots on abortion, as well as five states determining whether marijuana should be legal. While those are important topics, the ballot that I think is most consequential this election cycle is in the Commonwealth of Massachusetts. 

This month, the citizens of Massachusetts will vote on a ballot called the Tax on Income Above $1 Million for Education and Transportation Amendment (also known as Question 1 or the "Massachusetts Millionaire Tax"). Question 1 asks whether the state government should amend the state constitution to create an additional 4 percent income tax on those making an income over $1 million. For millionaires, this would be an additional 4 percent on the already-existing 5 percent, thereby bringing the total to 9 percent. The Tax Foundation has a nice map of state income tax rates (see below). By New England standards, the Massachusetts state income tax is relatively low. That would change if Question 1 passes.

Fair Share MA, who are the main proponents of Question 1, argue that this will make the Commonwealth better for all, especially since the funds would be directed towards public education, roads, bridges, and public transportation. For public education in particular, this funding would help students in public schools to thrive. This, of course, ignores how the school closures disrupted learning in the pandemic in the first place. Leaving that aside, the premise of the argument is that this tax revenue would help the economy and help the Commonwealth recover from COVID-19. 

I get skeptical when people talk about "fair share" with taxation because it such a subjective concept. I have analyzed multiple attempts at making taxation "fairer," whether that has been the wealth tax, the corporate tax, Illinois' failed attempt to pass a "fair" state income tax, or the marginal tax rate for federal income taxes. An attempt to make taxation "fairer" often leads to negative unintended consequences. I have to wonder whether the tax proposed in Question 1 will have similar, negative effects. 

Tax Revenue

A report from Tufts University's Center for State Policy Analysis evaluates the Massachusetts Millionaires Tax. Tufts calculated that the tax would raise $1.3 billion of revenue in 2023, which is the equivalent of 0.3 percent of Massachusetts state income. A report from the think tank Beacon Hill Institute comes to similar findings with tax revenue (see below). The Tufts study finds that short-term economic impact would be negligible. 

The Tufts study posits that the size of the tax is too small to have any major economic impact. At the same time, it recognizes that the tax revenue from this tax would be 35 percent higher if it were not for tax evasion and cross-border migration. Most of that tax loss in 2023 would be due to tax evasion ($670M), as opposed to cross-border migration ($100M). I appreciate the sense of nuance because I recognize that tax policy goes well beyond the over-simplified argument of "lower taxes = good; higher taxes = bad." 

Negative Economic Impacts

The Tufts study comes up short because it only asks what the impacts on the tax revenue are. While it mentions other economic impacts, it does not attempt to quantify them. Tax evasion and cross-border migration have economic impacts both in the short-term and the long-term. The Tax Foundation makes this point abundantly clear in its analysis on the Massachusetts Millionaire Tax. 

Declining GDP Output: The Tax Foundation cited a paper from economists Christina Romer and David Romer (Romer and Romer, 2010). Both are Keynesian economists and the former worked in the Obama administration. The Romers found that a tax increase equal to 1 percent of GDP results in a 3 percent decline of GDP in three years. Using that ratio and applying it to this Millionaires Tax, it would mean that the Commonwealth would lose an estimated $5.96 billion in GDP output by the end of 2025. The catch is that the Romer finding is based on federal income tax data. Since it is easier to avoid state-level taxes than it is federal-level taxes, it is likely that this $5.96 billion in lost GDP is a low-bound estimation. 

Labor Fleeing the Commonwealth: Not only will the GDP decrease as a result, but so will the labor market. The Beacon Hill Institute report estimates that employment will drop by 9,329 individuals within the first year due to people leaving the Commonwealth (see below). This is not merely conjecture. A paper from the Journal of Economic Perspectives, which includes economists from Princeton and the London School of Economics, recognizes that high-income individuals sometimes move across borders in response to higher taxes (Kleven et al., 2020). Again, the Tufts study also recognizes there will be at least some outmigration. 

Adjusted Gross Income: What should be more disconcerting is the net outmigration of adjusted gross income (AGI). As the Tax Foundation astutely points out, AGI is an important metric because income levels drive household spending. In terms of tax revenue, 57 percent of Massachusetts state tax comes from the individual income tax. Massachusetts has had net negative AGI since 1993 (see below). 

In 2020, the biggest destinations for net migration Massachusetts AGI were New Hampshire and Florida, which are both states without income tax (see below). This trend largely held true between 2012 and 2020. If this ended up being the case before the Millionaires Tax, imagine how much more migration there will be if the tax is passed. 

Will The Tax Revenue Be Spent on Education and Transportation?

Then there is the matter of how the tax dollars are actually spent. Tufts University believed that long-term economic impact would depend on whether the funds are actually used to increase education and transportation investments. This is because the tax revenue dollars remain fungible, which is to say that other tax dollars could be spent in a way that allows for the overall budgetary state of affairs for education and transportation to remain roughly the same. Plus, the text of the ballot measure clearly states that the revenues are "subject to appropriation," which means that the taxes can ultimately be spent on whatever the Commonwealth wishes.

Is This Additional Tax Revenue Necessary?

This also assumes that there needs to be increased expenditures. In general terms, Massachusetts tax revenue has been growing even in spite of the pandemic and lockdowns. You can see the Commonwealth's tax revenue data, as well as the data from the Federal Reserve Bank of St. Louis (see below). The graph below looks a bit volatile because the Fed collects and reports the data on a quarterly basis, with the fourth quarter being the largest quarter for tax collection purposes. Even so, the overall trend is still an upward one.

While increasing education spending has wide political appeal, Massachusetts already has the seventh highest per capita education spending. What about transportation? In its report on state highway performance rankings, the Reason Foundation ranked Massachusetts 47th in cost-effectiveness and condition. To quote Beacon Hill Institute report, "outside of general repairs and maintenance, the case for higher spending on transportation in Massachusetts is weak."

It Does Not Only Affect Millionaires

In spite of the title "Millionaire's Tax," it will not only affect the super-wealthy. This has the potential to hit middle-class workers who would be deemed "one-time millionaires." A small business owner (e.g., subchapter S-corporation, LLC, partnership) can sell their company, either at retirement or beforehand. This sale counts as "pass-thru income" on their individual tax forms, thereby making it taxable under the proposed constitutional amendment. This tax would diminish an owner's retirement savings. What about someone who decides to sell a home? If someone sells a modest vacation home that they bought 30 years ago, it could push them in this new income bracket that would raise their taxes by 80 percent. Such taxation can adversely impact the investments, including the nest eggs, of non-millionaires who are looking to retire. While this tax policy will not directly affect low-income households, this point serves to illustrate how imprecise tax policy can affect more than the millionaires that the amendment seeks to tax. 

Postscript

Massachusetts has been faced with five previous attempts within the past century to soak the rich with taxes: 1962, 1968, 1972, 1976, and 1994. Each time, this relatively liberal state has been able to avoid such temptation. Given the increased political discourse around income inequality and "tax the rich" that has taken place since 1994, I have to wonder if the Commonwealth can resist such temptation. 

The flat income tax is one of the only advantages of the Massachusetts tax system, according to the Tax Foundation's State Business Tax Climate Index. If passed, it would most likely be a repeat of what happened in Connecticut when it switched to a highly progressive tax system in 1996: lower GDP, higher unemployment, and higher migration to other states. The economy is not some abstraction or mere collection of numbers. Economic climate affects the overall wellbeing of everyone, not just millionaires. 

Massachusetts has struggled with outmigration of economic activity for a number of years. This surtax on millionaires would only exacerbate economic trends in the Commonwealth. I hope that Bay Staters can resist the urge of populist economic policy and vote "No" on Question 1 this November.