Patrick Horan and I produced a new Mercatus policy brief on improving the Fed’s toolkit.

I did a long interview on money with John Papola. (He did that famous rap video of Hayek debating Keynes.  And a Mises/Marx video as well.) Unfortunately, my interview is likely to be considerably less entertaining. But if you’re stuck at home . . .

Last year I thought that whatever happened would be good for market monetarism. If NGDP growth slowed and we had a recession, we could say “We told you not to let NGDP growth fall.” If it kept going at 4%/year then we could say “We told you that stable NGDP growth would prevent recessions.”

Instead we have a very unusual real shock recession, where monetary policy is not the cause. Even worse, my new book on market monetarism will probably come out at the worst possible time—when everyone’s focused on a crisis that MM doesn’t help us to understand. Just my luck.

Not to beat a dead horse, but did you see this:

When the coronavirus outbreak first hit in the U.S., public health officials urged most people to forego wearing a face mask. Not anymore: Experts are calling for masks or other facial covering in public as confirmed cases in the U.S. increase.

“I do think we need to have facial coverings for folks, so everyone has to wear one and we are protecting others from us,” Dr. Dena Grayson, an infectious disease specialist, told Yahoo Finance (video above). . . .

Jospeh Allen, the director of the Healthy Buildings Program at Harvard University’s T.H. Chan School of Public Health, wrote a Washington Post op-ed arguing for Americans to wear masks.

“The debate is over,” Allen wrote. “You should be wearing a mask when you go out.”

He added that doing so would “prevent the user from infecting others by acting as a physical barrier that will block large droplets from coughs and sneezes… protect you from others around you who might be sick… serve as a reminder not to touch your face… [and serve] as a vital social cue. You are sending a signal to others that there is a real threat out there.”

Given the mask shortage, Allen suggested that people make their own. . . .

Desai noted that the U.S. is likely going to start seeing government support for everyone wearing masks, due to the number of asymptomatic individuals. 

“By wearing a mask, what it really comes down to is: Does that help prevent you from touching your face?” he said. “And I think overall, the answer’s gonna be Yes. Generally speaking, when you have a mask on your face, it prevents you from touching your face.”

Wait, aren’t those the points I was making when the experts were arguing against average people wearing masks?

My current view is this:

Right now we need social distancing. But in a month or two we need to start thinking about getting people back to work with strong personal protection for employees and widespread testing to figure out who is infected and who is not. Over at Econlog, I suggest we may reboot the economy too slowly.

I don’t have any axes to grind on coronavirus (except perhaps on masks), so some of my posts may seem to conflict. But they probably conflict less than you assume. Earlier I did a post questioning whether summer would make the problem go completely away, pointing to a rapid rise in coronavirus cases in many tropical countries. Today, I’ll present three pieces of evidence that warm weather will help at least somewhat:

1. Warm weather in the US seems to help. The three big warm states (CA, TX, FL) have (per capita) caseloads well below the national average. The same is true of Arizona, Hawaii and Puerto Rico. And this is mostly true even if you exclude New York from the sample, as it biases the national figures.

2. A few weeks ago, I noticed that Australia and Canada had tracked each other very closely for a considerable period of time. But in the past few weeks they’ve strongly diverged, to the benefit of Australia. Perhaps the first cases were mostly imported, and now that community transmission is the key factor we see Canada doing much more poorly. You might wonder why I don’t compare Canada to the US, but I actually regard Australia and Canada as the more similar countries.

3. The tropical countries continue to have strong growth in caseloads, but it doesn’t seem as explosive as the previous growth in Europe and the US, especially given their huge populations. Of course there may be a delayed reaction, or perhaps flawed data. But as of today they seem to be doing better than I would have expected.  India and Luxembourg?!?!?

In an earlier post I suggested that this is becoming a white man’s disease. If anything, that tendency has since become even stronger. South and East Asia have most of the world’s population, but only about 80 of the roughly 6000 coronavirus deaths today will be in that huge region. Africa is also mostly unaffected. Of the 26 countries with the highest active caseload, 25 are mostly white or mixed white (i.e. Brazil.) South Korea is 20th, and falling.

But a few weeks from now I might have a completely different view.

China’s active caseload has been steadily falling for many weeks. But the internal composition is interesting. The active caseload in China’s big cities (and some border regions) has been rising fairly rapidly, but the effects are masked by an even more rapid decline in Hubei province. At some point something will have to give. Either travel restrictions will slow the number of imported cases, or the total caseload will again begin to rise.

PS.  Don’t confuse official national policies with reality.  Governments in Brazil and Sweden have not adopted strong social distancing policies.  But Brazilian state governments have done so and in Sweden I’d guess that at the individual level people are doing much more social distancing that if the epidemic did not exist.  Someone correct me if I’m wrong in that assumption.

Here’s the Financial Times:

On Tuesday night, the health authority in the Grand Est region said two-thirds of its 620 old people’s homes had been affected by the coronavirus pandemic and 570 residents had died.

Those 570 people are not recorded in France’s official coronavirus death toll, which reached 4,032 on April 1, but so far counts only those who have died in hospital. Eastern France, which has had 1,112 hospital deaths, was the first region in the country to be badly hit by the pandemic.

Recent studies in Italy comparing recorded Covid-19 deaths with overall death rates in specific regions also suggest the country’s death toll is far higher than the official total of more than 13,000, already the world’s highest.

In an Italian retirement home in Mediglia, outside Milan, 52 of the 152 elderly staying there had died from Covid-19 infection by last week.

In the province of Bergamo, 2,060 deaths were attributed to the virus in March. However L’Eco di Bergamo, a local newspaper, found that a total of 5,400 deaths occurred in the province in March, up from just 900 in the same month in 2019.

Based on the Bergamo data, it seems possible that the actual Italian death total is already well over 20,000, not the 14,000 official total.  China’s not the only country where coronavirus deaths are somewhat undercounted.  Yet I continue to believe the death rate data is superior to caseload data, once adjusted for demographic factors such as age.  Caseloads have likely been grossly undercounted almost everywhere, with a few possible exceptions like Iceland.

I also continue to believe that the Chinese data showing a dramatic decline in the epidemic between February and March is broadly accurate, despite an undercount in level terms.

Many people have trouble understanding my view of China.  I believe the censoring of Wuhan doctors was the single worst mistake of the entire epidemic, and have said so repeatedly.  If China had been ruled by a Western government, those doctors would not have been censored and the epidemic would have been addressed more quickly (by a few weeks).  However the epidemic would also have been addressed much more incompetently by a Western-style government, and today the epidemic would be totally out of control in China, with far more deaths.  The optimal solution would have occurred if the Nationalists had won the Chinese civil war, as Taiwan has one of the few governments that has handled this crisis with any degree of competence.

And Tyler Cowen points out that the CCP is making hay out of the fact that we also censor our doctors when they issue warnings.  Can this country get any stupider?

PS.  People talk a lot about Italy, but Spain’s been hit just as hard, albeit a few days behind Italy. Roughly 24,000 of the 50,000 global deaths are in Italy and Spain, not even accounting for unreported cases.

PPS.  Alex Tabarrok points out that plenty of masks are available, but the FDA won’t allow them into the country.  Yeah, “globalization” is to blame.  And don’t bother donating your extra masks to your hospital; they won’t take them.  You can’t make this stuff up.

PPPS.  Ten days ago, I pointed to California (and should have mentioned Washington as well) as a place that was doing somewhat better due to getting a head start on social distancing.  Since then, their share of cases and especially deaths has dropped further.  California has nearly 12% of the US population but 4.4% of cases and 4.0% of deaths.  It’s fallen to number 6 in deaths, whereas Washington (once number one) has fallen to 5th in deaths and 10th in cases.  Both states continue to see deaths climb much more slowly than the national average.  Outside of the NYC area, Michigan and Louisiana have done extremely poorly.  Within my area (Orange County) the rich areas were hit hardest, although perhaps that’s now changing a bit.  I recall that AIDS started as a mostly white disease in America, then shifted to minorities.

Updated figures:

Ray Lopez (or perhaps the blogger that recently stole Ray’s name) directed me to this:

Hong Kong (CNN) In the coming weeks, if they have not already, your government is likely to begin advising you to wear a face mask to protect against coronavirus.

For those living in Asia, such announcements will be a vindication of a tactic that has been adopted across much of the region since the beginning of the crisis and appears to have been borne out by lower rates of infection and faster containment of outbreaks.

In other parts of the world, this message may be confusing, coming after weeks of public health authorities, politicians and media figures [but not me!!] confidently claiming masks do not help and urging people instead to focus on washing their hands and maintaining social distancing.

The tone of such claims ranged from condescending to frustrated, with the US Surgeon General Jerome Adams tweeting in late February — in all caps — “STOP BUYING MASKS!”

And it looks like Fauci’s in a foxhole:

While speaking with Dr. Sanjay Gupta during a taping of CNN’s “Coronavirus: Fact vs. Fiction” podcast to be released in full on Wednesday, Fauci signaled he would “lean toward” recommending that the general public wear facemasks “if we do not have the problem of taking away masks from the health care workers who need them.”

I may have underestimated this crisis a few months ago, but at least I was right about one thing.

BTW, I stole the title of this post from a wonderful Sam Bowman tweet:

PS. The CIA should start reading my blog. Today they blamed the Chinese for our lack of preparedness, even though for months experts have been saying that a large share of entire world’s population could catch the disease. The CIA said the Chinese underreported the number of cases (as do all countries) and also that they underreported the number of deaths. Perhaps the CIA should have paid attention to my February 5 blog post:

The Chinese data is somewhat unreliable, as some deaths from coronavirus are listed as other causes, such as “heart failure”.  . .

Within Hubei, the facilities are overwhelmed and there may be far more infections than reported, as many patients have not been tested. 

So that’s going to be our excuse? The Chinese are to blame? Funny that the Taiwanese (our allies) don’t need any excuses, as Taiwan has only 5 deaths, vs. our 4100 (and counting). Or are the Taiwanese also faking the data?

I won’t comment on the CIA report, as the public is not allowed to see it. I guess it’s not only the Chinese who censor information about coronavirus.

This caught my eye:

President Donald Trump called on Congress to provide $2 trillion for U.S. infrastructure, seizing on the coronavirus outbreak to try once again to advance one of his longest-standing priorities.

Sorry, but when did we switch from talking about spending bills in the billions to spending bills in the trillions? When did trillions become a “thing”?

Right now, we are losing lots of jobs because people are unable to work. Fiscal stimulus won’t change that. When the coronavirus crisis is over, monetary policy will determine the level of employment.

This is madness.

Then consider this Bloomberg headline:

Economists Are Losing Hope in a ‘V-Shaped’ Post-Virus Recovery

Notice how March came in like a lion, with most economists (including me) predicting boom times ahead, and it’s going out like a lamb that’s stricken with coronavirus, with many economists (including me) worried about a sluggish recovery.

This is the most bizarre thing I’ve ever seen. As of yet, we don’t have a single monthly data point indicating any sort of recession (although I am pretty sure we are in one, and a deep one) and we are already speculating on the recovery! How is that even possible?

Maybe market monetarism has won. Maybe economists no longer rely on computer models fed with macro data, and now look to financial market indicators to predict the future path of the economy. If not, what’s your explanation? How are people already able to predict a slow recovery from a recession that is only just beginning?

PS. A sliver of good news?

China’s official manufacturing index rebounded to record an unexpected expansion in March, government data showed on Tuesday, after falling sharply in February as the coronavirus epidemic brought work to a halt across most of the country.

The official manufacturing purchasing managers’ index rose to 52.0 during the month, according to the National Bureau of Statistics, from February’s record low figure of 35.7. The 50-point level separates contraction from expansion. The March reading came in well above economists’ forecasts of 45 compiled by Reuters.

At least good news for decent people; not sure how anti-Chinese bigots regard the news.

PPS. Ten days ago I predicted that Switzerland would have 5 times as many active cases as China by the end of March. It ended up being 6 times as many. Very soon it will be 10 times as many.

PPPS. In East Asia, bigotry against Westerners is on the rise.

PPPPS. For those interested in looking beyond burial urns, a scientific study looks at the extent of the undercount in Wuhan.