An Inflation Enigma: Herding Cats, Dogs & Jackasses

 

If you haven’t seen or heard the idea of “herding cats” you’ve missed an amusing notion about futility. So, I hope you can appreciate the incomprehensible complexity of trying to manage a herd/group composed of cats, dogs, and jackasses. Unfortunately, that is what our national leaders are expected to be able to do while simultaneously being members of that selfsame herd. Now imagine having to move this immiscible population and not being one of the cats or dogs but being one of the jackasses.

 As difficult as this fanciful task would be, it would also be simplicity itself compared to managing the problem of inflation in the US. Just as the above imaginary herd is composed of different groups whose members would not all get along well with members of the other groups; the US’s population is both more varied and more immiscible. Normally we extol the diversity and differences of the American population as a source of strength, vitality, and incongruently unity. Just consider our national motto: “E pluribus unum”; that is “out of many, one.” Of course, we struggle with rising to that credo across many facets of our society. Facets that often display deep and problematic fissures threatening to disrupt, divide, and destroy the social fabric of the nation.

Inflation is an economic force which operates through and because of human actions. Of course, that does not mean that most of the actions or the humans acting have any appreciation of or understand of how what they are doing is altering the course of inflation. That’s part of the magic of economics, it operates through the ‘invisible hand’ that Adam Smith explained about the market. While Adam Smith saw inflation as something beneficial to society, he may have underappreciated some aspects of how the processes of inflation play out through people’s lives. Nevertheless, the connection between how people act and how inflation progresses is inseparable.

Since inflation can be harmful to a society’s economic wellbeing, nations’ leaders endeavor to keep it under control. Leaders can try to control inflation via many methods. Most of which do not work especially well nor result in less harm to an economy, and some methods will make things worse. The US has established the Federal Reserve (aka, the Fed) to expressly act to manage and hopefully avoid inflation levels which create risks to the stability of the US’s economy. The primary tool available to the Fed is to raise or lower the discount rate that banks are charged to borrow money form the Fed. This rate flows through the financial systems and raise or lower the costs for anyone to borrow money. If inflation is increasing and is determined to be producing problems for the economy, then the Fed will raise their rate. If the economy is at risk of stalling or contracting, then the Fed and lower the rate and encourage spending. The Fed’s goal is to keep the economy in a ‘sweet’ spot that keeps the economy on track.

The Fed’s ability to control inflation is premised upon the principle that when they raise or lower interest rates that the financial system will respond in predictable, and thus manageable ways. This has proven to be generally true for recent decades because the financial system and its processes do respond to those changes. Therefore we should expect the Fed’s reaction to the current US inflationary surge will be effective in driving it back down. Except, that expectation comes with some caveats and requirements, and is based upon some assumptions that need to be applicable.

The efficacy of the Fed’s decisions to raise interest rates going forward until the increasing inflation rates are driven down will work, eventually. That is one of the caveats. Raising interests rates doesn’t immediately stop inflation. Even if the Fed raised rates very high or very rapidly, there is no requirement that inflation stops at the moment, in a day or two, a week or two, a month or two, or well in any definite time interval. To make this more problematic, raising interest rates can produce other impacts upon the economy that can be disruptive to the US’s and the world’s economy in other ways, and can do more harm to the US and its citizens than the inflation would do. This unpredictability and capability to have both positive or negative impacts is another caveat.

There is also the assumption that the Fed’s interest rate methods that apply to the Supply and Demand model are consistent with the conditions on the ground. There is little about the current inflationary causes that are producing the inflationary effects. If your model doesn’t reflect the variables that are at play, then the model is fundamentally flawed and highly likely to fail to produce the results that the model expects. This is the problem that the Fed has with their efforts to control Inflation. It is also directly related to the problem that the Administration has in controlling inflation. They lack not just the controls that can enable them to manage inflation, but their skills and understanding of what their best strategies should be are not in their toolkit.

The US’s inflation is being caused by many factors, most of which the government can’t do much to change under current conditions. A major reason that the government lack such controls is that they are looking at a direct and even predictable product of economic theory that doesn’t fit within their established controls, procedures, and processes. Everything that they thought they needed to be able to manage did not include institutional mechanisms for the factors and variables that they now need to use and to depend upon. A key dimension to this economic conundrum is the extreme dominance of the US being a Consumer Economy on both the products and services front.

The problem with the Consumer Economy is the ‘consumer'. The consumer is not one variable but a multifaceted composite of things. Consumers are not homogeneous. They vary along income levels, wealth levels, and financial conditions. The environments that they live in differ from state to state, region to region, rural/suburban/urban communities, political affiliation & composition, business & employment types, and costs that arise from where they live; and of course, there are numerous other factors that are affected by inflation and conversely affects inflation. This complexity of the ‘consumer’ is one reason why the normal institutional-based tools don’t directly factor in these attributes.

That doesn’t mean that the ‘consumer’ can’t be an effective tool in managing and directing inflation, just that it requires more sophisticated strategies and policies. Given inflation has a component of consumer “fear” which can feed upon itself, one aspect of managing inflation requires addressing the “fear”. This can only be accomplished by engaging with the public beyond just what the current inflation data is, or explaining what other variables are contributing to inflation are and why. It requires that the consumer can be shown that there are actions and decisions that they can take to help themselves and the country in reigning in inflation. If the public is passive or feels helpless toward inflation then they are more likely to fall prey to acting in ways that increase inflation.

Since Demand (by consumer) promotes inflation when Supply does not match it, the economic equation tells us what can produce a difference. For some items which are in demand, consumers have the option to choose a substitute, to defer a purchase, to forego the purchase entirely. If an item is increasing in cost, then if you don’t buy it there will be an economic response. If someone else buys it, then they are spending more of their money for less value, and this increase the funds that you have for a later time (low cost) or a different choice (better value). Depending upon the nature of the Supply-side problem that made the item scarce, the reduced demand eventually brings the price down because of other economic principles.

Not all Demand items can be avoided, at least not easily. If you need fuel for heating, cooking, transportation, production, or other essential purpose then you can’t just choose to not buy fuel. But does that preclude any other options? Are any of the following options available to some consumers?

• ·   Reduce heating level even one degree creates a cost reduction.
• ·   Shorter showers reduce costs.
• ·   Large washing and/or dryer loads (frequency) will reduce costs.
• ·    Activities that use fuel and which can be reduced or whose efficiencies can be improved reduce costs and lowers demand which reduces price.
• ·    Fuel for transportation can be reduced by some consumers through options like car-pooling or more organized outings that combine two or more trips into one trip that uses less fuel.

Similarly, increasing food costs do not submit easily to a decision to not buy food. However, food is a very nebulous area of supply. We don’t all eat the same foods any more than are the foods that we do choose to eat the only choices available to us. Consumers who see the costs of their food items rising can be competing with each other and contributing to some part of the cost increase. Now, those costs can be rising from other factors as well; but does that mean that there are no other food items which would be as nutritional and less costly? Once, again each purchase decision is trading a quantity of your money for a value of the goods you purchase. If you pay a lower cost for another item then you gain additional funds for your other demands. It is the very ‘invisible hand’ of economics.

It is along these and other lines of action that consumers can engage and act toward inflation and help themselves. As much of a problem as inflation is, it can be transformed from a ‘fear’ into an advantage or even an opportunity. Remember, your economic situation is relative to that of the other consumers in the population. If inflation in a Consumer Economy is dependent on the consumer then the consumer is not powerless unless they choose to be, don’t understand the connection, or are afraid.

The enigma regarding our COVID Inflation is that it is mostly a willful unknown. The complexity of the puzzle might succumb to something as simple as choosing not to be afraid; and our shortcut out is to choose to see the answer in our choices.

A Supremely Questionable Supreme Court Ruling

 On Jan. 13, 2022, the Supreme Court issued its ruling on the COVID-19 Vaccine Mandate case. This ruling is historic and may turn out to be fatal error on the part of the Court in the future and as viewed and assessed by history. As a ruling it was quite bifurcated. The ruling recognized the federal government’s right to establishing a vaccine mandate and simultaneously the federal government’s over-reach on establishing a vaccine mandate.

A cursory reading of the introductory paragraph should certainly cause you to think, either the person writing this is an idiot or the Justices on the Supreme Court are. As the potential recipient of the ‘idiot’ judgement, I want to point out that there is no requirement that either of those attributions is required to be true, nor is it necessary that the idiot condition might not be true for both parties. Given the uncertainty of whom the appellation may apply to, it is appropriate to consider if what we have here is a “Who’s the Idiot” equivalent of the Schrodinger’s Cat concept. Just as determining whether the cat is alive or dead requires that one look, determining who’s an idiot may also require that we look. So, let’s open the box on SCOTUS’ vaccine mandate decision, decisions, or quagmire of reasoning.

The reasoning on the healthcare workers mandate grants that the federal government has the authority to impose a mandate based on the federal government providing Medicare and Medicaid funding to healthcare entities. Federal funding in concert with other rationales for protecting the public’s interest in the necessary functioning of the nation’s healthcare system and personnel seems odd contortion of criteria. I suppose that the Justices may have recognized that just citing the authority based upon the use of federal funding alone would be fraught with unintended consequences. However, while I may think it is possible the Justices considered the funding basis alone to be too risky for them; I do not actually think it is likely that they have foreseen nor thought about the implications which come from it. Time will tell is any smart lawyer or advocacy group can see the potential here.

Now onto the other side of Supreme Court’s decision coin, the Vaccine Mandate for large businesses. SCOTUS reasoned that the federal government through OSHA did not have the authority to establish a vaccine mandate for large businesses’ employees. The reasoning here was different. Here the federal government was ‘over-reaching’ based upon some of the Justices’ interpretations of how they viewed what was important, or true, or applicable. This is probably true in general and I suspect applied in the healthcare workers case as well, but that isn’t something the Court wants you think about how they reach their judgements. The Court seeks to have their ruling ‘based’ upon the Constitution, legal precedents, and the intentions of what legislators had in mind when they passed legislation. In other words, on many things that are not firm and immutable concepts like those of the Laws of Physics or other scientific knowledge.

The majority decided that OSHA’s establishing legislation did not include (or more accurately intend) for that federal agency to have. Of course, this is opinion and interpretation; because there is no way to ‘know’ what the intentions of the politicians who created and authorized OSHA intended. It is not explicitly written into the legislation because such enumeration of ‘authority’ is not just impractical and impossible, it is definitely beyond the abilities of politicians, their staffs and advisors. There is no way to define the scope of authority for conditions which may arise in the future that are not contemplated or even comprehended by those creating the text of legislation.

Another argument used in the majority opinion was that the authority for such mandates ought to reside with the states and local authorities. This is a good example of how the Justices’ can use a sound principle, even precedents from some prior decisions, to attain a decision which is legally defensible but not logically sound and which could be easily overturned based upon other legally defensible and authoritatively established precedents. This may be an instance of a jurisprudence equivalent to the Heisenberg Uncertainty principle, where Justices cannot know what is Constitutional and what is intended by the law simultaneously (though in the legal context there is no requirement that Justices be able to know either one). Consider that the federal government provides funding directly and indirectly to many of the businesses which are protesting the mandate. Is the ‘funding’ condition not applicable to some degree here? Does the federal government ‘fund’ the military? So, how doesn’t that criteria apply to the military question of a mandate?

The Court also argued that if the legislature wanted OSHA to have this authority, then they would have explicitly given it to them, either in the original establishment of the authority (this is the interpretation issue) or the legislature would ‘act’ to establish that authority when needed. The naivety of these perspective is quite damning for the Justices, particularly those in the majority. Having to await upon elected officials to ‘act’ promptly, correctly, and in the nation’s interests is an unreasonable and unrealistic expectation for this branch of our government. It may be a utopian vision of what Congress ought to do, but it is not a valid basis upon which to risk the public’s health nor the national interests.

The authority of the states to establish mandates related to COVID seems to be well supported by SCOTUS’s logic and there were cases that the Court upheld would thus support that governmental authority exists. However, the Court ignored the reality of the question and the situation where there is a conflict over authority and which authority and who prevails in given situations. The majority also seems to base their decision upon an ‘either-or’ criteria that there can only be one authorized authority. The classic state versus federal line. But there is no definitive requirement that a government authority must exist only in one or the other. Both have the power to tax. Both have the power to establish laws related to the same legal issue, right or situations on many fronts. Usually the federal laws cannot be countered by a state law, but we are all aware of various federal laws that states have and continue to find ways of adapting via state laws without overtly claiming to ‘overturn’ or ignore the federal laws.

What the recent COVID Mandate rulings demonstrate is that there are many paths that the Supreme Court can take in reaching its decision. Whether the decision is sound, well-reasoned, and consistent with the Constitution, established law, precedents, legislative intent, and national interests and America values is not a given. The Justices are just as likely to apply personal perspectives and even political ideological principles as those on either side of an issue.

The Court also ignored the most salient aspect of this case, which authority is using the most appropriate and relevant knowledge, expertise, and judgement on what is in the nation’s best or essential interests. The Court can say that that is not factor that they can consider, but that is a judgement that they are making and perhaps not founded in or upon the law

Is It Right or Wrong? Societal Choices: #1 Vaccines

 

We all live in some societal construct that we influence and that influences us. In many cases people don’t think about how the rules and norms of their social environment(s) are accepted as ‘just the way things are’ rather than question if the rules or the norms are sufficiently beneficial to their society’s interests. More often than not, our individual behaviors and choices do not have significant, or notable, impacts upon the society. Generally, what clothing styles, fashions, or brands that people choose are of little societal concern or import, except perhaps in terms of their unnoticed implications like economic factors (capitalism, consumerism, profits, …). But “more often than not” is a conditional that has an implicit “sometimes it is” counterpart. Does your personal choice about what sports team you support really matter all that much, compared to your personal choice about what, if any, political party/ideology you align with or what religious belief-system you follow?

I am not implying there are no consequences to who you choose as your favorite sports team, but the effect on your society overall is not likely to have a substantive relevance. Conversely, the political entity or religious group that you choose to identify with, follow, or promote is fundamentally part of the societal context that affects many aspects of how that society operates both in terms of beneficial and malfunctioning ways. America is just as much a product of the societal views that permeate our population as other nations’ societal factors and choices influence theirs. This leads to a ‘frame of reference’ problem in determining what is good or bad, right or wrong, acceptable or unacceptable, and prudent or unwise; if we look at the choice from a different perspective.

America’s dilemma, dichotomy, and differences of opinions regarding COVID vaccines is an example of where a society’s members’ choices have consequences far beyond the individual. The choices of individuals have implications to the health of their own families, not just from transmission but in other areas that effect their lives. On the public-health front, an infected individual can spread COVID to their neighbors, communities, co-workers, fellow commuters, other customers of businesses they visit, and healthcare workers with whom they interact. Transmissions in these areas can lead to illnesses, hospitalizations, and deaths beyond the individual or their family. But the ripples in a society don’t stop there. There are economic ripples. We have all seen the disruptions to businesses and public entities which resulted from the COVID pandemic. To curtail infections businesses were forced to alter their operations or even close. Employees lost incomes and in some cases jobs. Hospitals were forced to focus on COVID patients to an extent that prevented patients with other illnesses to postpone their treatments, some at a risk to their lives.

In another area, the individuals’ choice regarding vaccination has a political dimension to it. There is a clear and definitive difference between an individual’s choice to vaccinate or not according to their political alignment. For Republicans, approximately 60% are vaccinated, while for Democrats 86% are vaccinated. This notable difference has predictable consequences to each of these self-selected demographic groups. Those consequences play out as each COVID variant’s infection wave washes across the nation. The unvaccinated showing up as the majority of the infected who are hospitalized, and as the dominant portion of patients dying from COVID and has been reported on regularly. This is where the unasked question(s) become relevant. Is it wrong to look at COVID in contexts which set aside the traditional medical perspective expected in America? Note: I am less sure how prevalent this view is elsewhere in the world.

If you are unsure or unclear about what the traditional medical perspective is, I must admit that I also struggle to define it even as I suggest that most Americans share a generally common sense of it. This leads to the following fleeting attempt to define this medical perspective view. So, here is my rather futile and limited definition of America’s traditional medical perspective.

In the US, we believe, we expect that we are entitled to the ‘best’ medical care available. Well, within your affordability class. The general principle is that the healthcare system provides good, competent, and appropriate care to the public. This principle is of course constrained by many factors, not the least of which is affordability and availability. Under this perspective, the goal is to keep you alive, to enable you to return to work or your home, and to keep you healthy enough to be less of a burden on society. This perspective operates within a healthcare industry that is a complex and amorphous conglomerate formed from public, private, and other social entity-types. Our healthcare view is that the healthcare industry and the nation (that includes the public) will work diligently to protect the individuals in need of healthcare and the nation from the ravages of threats to our individual and collective health.

Given that healthcare perspective, we expect the nation to work to protect everyone’s health. It is that perspective and that goal which I am suggesting that we set aside and not apply to what is or isn’t the right, proper, or appropriate way in which the nation should respond to the COVID pandemic issues. This will be a hard perspective to set aside because some will see it as a violation of their professional code/ethics (like healthcare workers). Some will see this as a violation of their religious beliefs. Others may consider it a violation of their oath of office to serve the nation’s interests (I will note here that I don’t have much faith or confidence in politicians actually caring about what the ethical or moral principles are that they apply to their actions or decisions). But despite the difficulties that some may face, we can at least try to examine questions and options that are not considered because the traditional medical perspective preemptively dismisses the questions from even being conceived of, let alone considered as better policies and strategies than the ones that are naively seen as adhering to the mythical belief that America’s aspirational healthcare perspective would advocate.

Let’s try the COVID vaccine issue. If we ignored the ‘goal’ of preventing people from dying unnecessarily from a COVID infection, or even from being hospitalized unnecessarily, would it be right or wrong to make decisions and policies about COVID infections or about being vaccinated versus unvaccinated? Other ways to ask this question are:

A.      Do I have a right to be protected from you?

B.      Can a business treat vaccinated individuals differently than unvaccinated?

C.      Are public policies (even mandates) appropriate for reasons besides people dying or requiring hospitalization? [Remember, we don’t care if you die or not.]

D.      What factors might be ok to use in deciding if a given state or community can be treated differently than others because of the consequences obtained?

These are just a few of the ways that one could look at the issue of being vaccinated or being unvaccinated.

The first two questions actually have been addressed before but are still fought over and of course have their own degrees of complexity. You do have a right to be protected from me and vice versa. Not even the most conservative Supreme Court Justice would argue that an individual (or individuals) who have a highly contagious disease with a high mortality rate warrants a society or ‘the government’ from imposing restricts, requirements, and mandates. With COVID the issue is thus what is a ‘mortality’ rate which is unacceptable? Remember, it’s not a question of the healthcare goal we aspire to. We have set that aside. There is a point where your or my risk threat if infected is unacceptable to others, and it’s their right to not die that is relevant. Your or my death is not relevant, since we have the disease, and it is too late to act to prevent our being infected.

Can businesses treat their vaccinated customers or workers or unvaccinated customer or workers differently? Yes, they can. Can the government impose requirements on public entities? Yes, it can. Like question A, the rationale and criteria for both would be seen differently depending upon the severity of the risks and the consequences. For example, differential treatments must directly relate to the biology of the disease not to an unrelated factor which could be used to some nefarious intent. This of course makes it not just possible but likely that there will be different sides taken on any given policy or requirement. Of course, if the mortality rate of the disease was anywhere over 33%, such opposition would quickly die out.

Regarding Question C, the answer here ought to be rather obvious but let’s suppose there are some who do not see it. The risk to the nation’s economy and thus to all aspects of society would not just warrant governmental actions including vaccine mandates but would be required under the Constitution. An existential threat to the public and thus the nation would fall within the responsibilities of all governmental entities. Even the Supreme Court, assuming any are still alive under such conditions, would be hard pressed to find any precedent which contravened such actions by our elected executives. This principle has even been demonstrated under the COVID pandemic by both Republican and Democratic Presidents, governors, mayors, and federal and state agencies. And these actions were for a disease which has only killed less than 1 million Americans. Now, remember we are putting aside any consideration of wanting to protect people’s lives as it colors our decisions. The problem here is that the deaths and illnesses are the threats to the proper functioning of the society, economy and nation.

Question D is a very different question. It opens the door to a much broader range of factors and considerations that could be made. Is it acceptable to establish or allow policies which advantage one group over another or even at the expense of another? Is it right or proper to designate some workers as essential and not provide any proactive considerations for protecting their health? Can we require someone to work and not require those whom they work with to be vaccinated? This situation can devolve into some very convoluted considerations. If someone decides not to be vaccinated and they are an ‘essential’ worker would that not imply it is ok to expose them to others whether those others are vaccinated or not. How about the governors of individual states that set public policies which prohibit restrictions on unvaccinated individuals in areas like schools, public events, even businesses? If those policies resulted in more hospitalizations and deaths in some communities than others, or in one politically aligned segment of the population than another would that be acceptable? What if the group of individuals who are negatively affected by those policies are members of the governor’s own political party? Yes, the governor would have to be pretty stupid in this latter case; but then we are talking about politicians. How do we properly consider whether the equivalent results benefit or disadvantage such groups depending upon a factor like whether the governor’s politics / party aligns with the affected group(s) or not? This same issue can be turned around by asking: Is it acceptable for a President allow a governor’s policies to stand if the consequences are less detrimental to his supporters than to those of the other party? Consider, if the other party is losing voters at 10, 15, or 20 times the rate that your party is then there is a predictable benefit in letting the policies remain unchanged or unchallenged.

The disputes and contention over vaccination policies and mandates and even that of masks can appear to be quite different questions if you look at the questions through different lens. The assessment of the impact on what is or is not a good public policy may depend upon how competently the issue is examined. It’s easy to take a political stance, or some ideological perspective; but the more appropriate way to assess policies and requirements may be to recognize that the most visible dimension of the issue isn’t the most important. Keeping people alive, healthy, and safe from a disease may be obvious as a desired goal; but perhaps understanding the consequences beyond the obvious are even more substantive and important than the attention-getting gesture used to distract your attention.

Vaccinations are important because they create different outcomes. How you use that information and what strategies you select to take advantage of that knowledge to achieve can be the most important aspect of what you do. To make the right selection thus implicitly involves asking whether the policy that the aspirational goal produces the best outcomes given the reality of the problem that is actually operating on the ground the battle is being fought upon. If you can set policies which serve both the aspirational goal and simultaneously achieve what is better for the nation overall, it may be the case that you have to find the solution paths that thread both needles.

 Open Letter: The Fed Needs to Provide the Public Some Perspective

To: Federal Reserve Chairman Jerome Powell

Dear Chairman Powell,

The Fed is in an unenviable position today having to contend with problematic inflation, the economy’s restoration, employment disruptions, and the rather unpredictable interactions of the COVID pandemic with all aspects of life and economics. The uniqueness of the situation cannot be easy if one considers there is no reason that the normal understanding, theories and tools which economists would apply to helping sustain and guide the nation’s economy along a viable path can have the intended impacts expected. Add to this situation the normal or even heightened level of different opinions and perspectives that you share with the other Board members, the increased opinions and views of other economists, the always well-informed politicians, and the astute coverage which the news media provides on economic matters; and given those unusual conditions what could possibly go astray. Though the Fed’s tasks are neither easy nor often appreciated or understood, those efforts may be more important now than in recent memory.

The Fed’s decision to advance its “tapering” and accelerate interest-rate increases is just a reflection of the rapid dynamics that the US’s COVID-Consumer Economy is producing.

The unusual and extraordinary circumstances are changing daily and may call out for something even more unusual than the events causing them. The US “Misery Index” is high even though most economic indicators are remarkably in good territory. Inflation of course being the pernicious outsider, and chief factor threatening the recovery and the economy.

Given the economic risks to the current situation, the nation and the public need more than a calm and measured hand(s) on the economic tiller. The country needs someone to provide a more informative context in which the public better comprehends and recognize how our behaviors and reactions in these conditions may not act in our own best interests. America desperately needs a little grounding in economics. If the public does not connect the reality of the economic situation to their daily lives, their individual actions and choices are not just likely to cause the nation to suffer worsening impacts simply because we do not recognize how they are contributing to it by “being part of the problem”.

In a Consumer heavy/dominated economy, the aggregate behaviors of the consumers can easily overpower any other force(s) attempting to move the economy. Archimedes’ apocryphal quote: “Give me a place to stand and I will move the world” doesn’t just provide a lesson on mechanics or some salient life-lesson about the influence you can have by being in the right place and acting to some purpose. His “moving of the world” perspective can also inform our understanding about what moves the world; and how it is moved intentionally or moved without recognizing our own contribution to the ‘push’ on the lever. Ending ‘tapering’, raising rates, and other moves by the Fed are prudent steps but those steps may not exert enough leverage in time to counter the effects of the “800-pound” Consumer pushing on the economy and Inflation. Perhaps the Fed should consider using a tool that it has ready access to but may not recognize or feel is theirs to use.

The Fed should talk to the public about the Economy. I don’t mean talk to the financial industry, the banks, the Market, our political leaders, or the media. The Fed already does that. I mean talk to the public. Talk to the people who are the economy. The Fed needs to “inform” the public about how people ‘are’ the economy; and about how if you don’t understand the rules you are playing by you suffer the consequences, whether you like them or not. Perhaps you / the Fed think this is not your place or job; but you may be missing the most powerful lever and place from which you can ‘move’ the economy in these aberrant times.

This ‘informing’ goal cannot be done by ‘teaching’ economics 101; rather, the economic conditions operating in the public’s daily lives needs to be used to connect economic “cause” to economic “effect’. The reasons the Fed needs to do this are many. You want to increase confidence in the US’s economy, increase public belief in the Fed’s efforts to counter the conditions threatening them and the economy, and instill confidence in their own ability to act to help themselves. There are probably other reasons, but the above should be sufficient to justify the Fed acting to serve and inform the public’s need to know. If they act out of ignorance or fear, we already know the likely outcome. The current obsession, concern and focus on Inflation alone is indicative of where the public would benefit from understanding how their actions are moving multiple levers, each of which move inflation in the wrong direction.

There’s another reason the Fed needs to improve the nation’s understanding of how the economy depends upon the public understanding the economy in their own terms. Just knowing that the economy acts on multiple timelines simultaneously would be helpful. Does the public understand the Fed can only act in advance of a concern that is projected or in reaction to an unforeseen crisis after it has occurred? These disconnects between the forces that constantly drive the economy based on its underlying processes and the delay required for Fed interventions to work helps demonstrate why acting now is a corrective and not an immediate solution. Enabling the public to participate in moving the economic levers within their reach can help adjust the processes effecting their concerns. This knowledge is key to building the public trust and reducing their fears.

The value to the Fed of engaging in this effort would be it aligns with their efforts for influencing the future of the economy. The Fed is more likely to succeed in achieving its objectives if the public is engaged in accomplishing those goals. Just as importantly, if the public has a better context to understand their own choices, hopefully they won’t be acting in ways that obstruct the Fed’s efforts or actually worsen inflationary factors.

Just like timing is critical to confronting economic crises, your decision to engage with the public more fully will affect how effectively the Fed’s actions can be in reacting to crises. The Fed can choose to just depend upon the tools it currently has at its disposal, or you can choose to enhance the toolkit by empowering and engaging more forces that can brought to bear to rein in Inflation or whatever economic crisis needs to be dealt with.

If this perspective only provides you something to think about for a minute or two, I wish the Fed success in its endeavors.

No! More Math? Yes, But It's Simple Addition - Rogue Thinking #3

 

If you recall from Rogue Thinking #2, there is presently an enormous difference between COVID infections, hospitalizations, and deaths between vaccinated versus unvaccinated individuals. The difference does not favor the unvaccinated. But besides being a generally expectable outcome, there is more to be learned from this difference.

For one thing, the idea of ‘herd-immunity’ is shown to be more complicated than the simple notion of how a disease spread through a population until that population is either rendered self-protected, decimated, or extinct. COVID isn’t virulent enough to pose an extinction outcome as no totally lethal variant has emerged though that is always a risk. But even should one emerge, it would be highly unlikely to annihilate humanity but rather the current level of modern civilization. In essence, herd-immunity would be achieved by reducing our large civilization herds to small isolated pocket herds.

The COVID variants present today are following the more classic notion of how a disease spread through a population and reduces the herds numbers by some percentage. The way the disease spreads and the ease with which it is transmitted determines how quickly it reaches its herd-immunity state. The current phenomenon where COVID is producing the high differential outcomes between the vaccinated and unvaccinated might seem to be both obvious and puzzling at the same time.

On the obvious side is the basic expectation that vaccinated people either do not get ill when exposed due to their acquired immunity or their illness exhibits much lower severity of symptoms if any at all. Whereas the unvaccinated will results in outcomes expected from infections without any pre-infection acquired immunity. If you have a population evenly divided between vaccinated and unvaccinated that difference become apparent immediately. If you start with a totally unvaccinated population, you get the pandemic results that we saw with COVID. Once vaccines arrived, this created a new grouping within the population and the differentiated results begam emerging. From this ‘obvious’ perspective there is nothing unusual going on here. Except, there is more going on.

In your typical ‘herd’ there is just that transmission process operating according to laws of physics, biological activities, and laws of probability. The disease spreads, produces its ‘natural selection’ outcomes, and eventually creates the ‘herd-immunity’ end-state (of whatever type the particular disease creates). But that is not strictly true for COVID, or more precisely, the processes which are controlling the spread and results for the human herd.

In the US, COVID outcomes have diverged in concert with vaccinated versus unvaccinated as noted above. However, what are the “cause and effect” relationships which account for why someone is vaccinated or unvaccinated? If some people could not get access to vaccinations, then the question would be: “Why not?” But the evidence indicates the vast majority of unvaccinated people have self-selected to not be vaccinated. Is that self-selection just a random decision even distributed through the population? No. The data/evidence tells us that one of the most prevalent factors associated with this self-selection is political alignment. Given that the COVID virus is non-partisan, the connection of spread and outcomes to politics warrants some consideration regarding why.

It could just be that if you are unvaccinated that’s it. If vaccines are 95% effective, then viola! That would say that 1 out of 20 vaccinated people are not adequately protected, while all of the unvaccinated remain exposed. But that is just part of the obvious understanding of the situation and the simple math. Why are the bulk of the unvaccinated aligned with a conservative political party? This doesn’t mean that no conservatives are vaccinated or that no liberals are unvaccinated. It just means that there is numeric imbalance between those two orientations.  To explain the different outcomes, Occam’s razor would conclude that that is the simplest explanation. Your political alignment influences your self-selection choice, and that choice produces the predictable outcome based upon your party.

But there is much more that can be learned and that can be contributing to the excessive hospitalizations and deaths among conservative members of the population. For the simple math to explain it all, the disease must be spreading equally throughout the population which requires physical conditions to be the case. For example, the population of conservatives and liberals would uniformly distributed, the prevalence of the virus has to be uniformly present throughout the population, or method(s) of transmission has to be uniformly operating across the population. None of these conditions are or have been true. Consider how population density can be influential in where and how the virus spreads. Early in the disease it was most prevalent in high population density areas. What might influence key elements of transmission within the conservative population?

There are some very likely candidates. While no one candidate needs to be the ‘one’ that is causal, the aggregate affect may account for a significant part of the process producing the disparate results. Consider some of the following population attributes and factors:

·         Parents’ political party/alignment

·         Place of birth or where you were raised

·         Religious affiliation

·         Political orientation of friends, co-workers, neighborhood, community

·         Education: level, quality, region (urban, suburban, rural), economic status, major, …

·         Career / Employment

·         Economic status

·         Other factors which have some influence over your political alignment

Why do these attributes and factors matter in what political party you choose to align yourself with? Well, because each of them is part of the environment in which you grew into who you are. You learned from all the things that made up your environment and that presented you with the ‘facts’ and ‘knowledge’ about the world. If selecting your own political/ideological view were just something that you did and was not connected to these factors, math would say the data we see would be highly improbable. Children are much more likely to be/choose the same party as their parents. Your friends, neighbors, and community are more likely to be of your political alignment. If your religion is aligned to a political party, you are also likely to be. Much of this is due to your exposure to the ideas, values, rules, and behaviors that you experience as you grow from childhood to adulthood. To be a member of a family, a group, a community, or a region and be accepted by the other members puts a heavy burden on following the precepts of those entities. This doesn’t mean that there are no individual differences or rogue members but that there is a tendency toward a common perspective (a convergence toward the average). Being different is acceptable, as long as it is not too different and doesn’t violate an absolute behavior/belief of the ‘group’.

Conservatives (and liberals) are commonly found to live in communities/regions which are mostly concentrations of conservatives (or liberals). To paraphrase the “You are what you eat” concept, “You are where you grew up”. It is very human to be ‘tribal’.

What does all this have to do with COVID and the 20 to 1 disparity between the unvaccinated and the vaccinated? Well, if your ‘tribe’ decides that being vaccinated goes against the tribal values and is a betrayal of your commitment to the tribe; well, then your desire to be a member of the tribe is going to influence your decision. Conforming to the tribe’s position may even provide a strengthening of the bonds and beliefs in the tribe. It’s just human nature.

If conservatives live in communities that are composed of mostly or more conservatives, if conservatives interact with and engage more often with others who are conservative, if conservatives are more likely to choose to be unvaccinated because not getting vaccinated is perceived as following a conservative value then the spread of the virus among conservatives is increased. The consequences of those infections being more severe for unvaccinated individuals will contribute to the known outcomes. The 20 to 1 disparity in hospitalizations and deaths makes perfect mathematical sense. The process of herd-immunity operates locally through the transmission of the virus from person to person. The concentration of unvaccinated individuals due to factors like political alignment just plays into this process. It’s just simple math. It’s the math of epidemics/pandemics. It’s the math of herd-immunity. It’s the math of Darwinian evolution.

It has now also become the math of politics.

What If We Did a Little Math? - Rogue Thinking #1

 Don’t worry, this really isn’t about math that you have to do, so much as math you ought to have already been thinking about. There is no heavy lifting here, but you may have to be able to follow the reasoning.

COVID is on the up-tick again in the US; well, lots of nations. But not every up-tick or ‘surge’ is like the others. Let’s just take a US-centric view. The first surge (Wave) was COVID spreading in a generally pristine population of available hosts but it was also much more geographically limited; it wasn’t everyone yet. It’s growth just reflects a simple power function, it increases as it increases. If this isn’t that familiar to you, perhaps you remember a story about someone, the “hero”, being asking what reward they wanted for accomplishing some task for an emperor/king/ruler. The savvy reward recipient simply asked to receive an item [for example: a grain of rice, a penny, a small plot of land, …] that doubles in number each successive year on the anniversary of their accomplishment. It’s a highly under-valued reward if the hero lives to long life. [You could have the reward double every month, week, or some set number of days instead of yearly if you are not a patience ‘hero’.]

The second Wave came along and still had access to a wide-open population where more people hadn’t been infected than had been. Plus, the number of points from which a transmission can originate was vastly greater as a result of the first Wave. It had carriers in every state. So, even though there were people who had been exposed there were many more who were able to transmit it to all the very many  others who had not been exposed. It’s just a numbers problem. Remember that “hero” story? Consider the implications if there are a lot more heroes and each hero creates more heroes; or in this case the heroes are the viruses and the reward is a punishment and it doubles say every week.

During the second Wave steps were taken to contain COVID and progress was made by states invoking policies for reducing spread by using social-distancing, masks, lock-downs, and the disruption of the easy ways to transmit the virus. It worked, the spread declined. Then summer arrived and we re-opened (or many states did) and celebrated. And of course, another Wave, the third, was upon us as the school year began. I think this Wave ought to have taught us a decent lesson about “cause and effect” but that’s a physics lesson and we are focused on just simple math here right now. The third Wave was the ‘mother of all’ surges. Clearly the opportunities for transmission were excellent. The most likely reason is by this time COVID was everywhere and still most people had not been infected. By this time, COVID and policies regarding it had become political issue. There’s no rational reason for this but then what has reason to do with politics. Two important things happened. We had an election and vaccines became available

By February the terrible third Wave was rapidly abating, vaccinations were increasing, and it looked like the nation was making excellent progress. The effort to vaccinate the population “surged” (I couldn’t help myself) but began to run out of steam. It seems there were a lot of people who didn’t want to get vaccinated. Remember that ‘political’ thing! Still, the incidents of infection continued to decline, but a new COVID variant (Delta) showed up on the scene. By July the fourth Wave had been seeded and would grow; and of course summer was underway and people wanted to get back to ‘normal’. I am not sure that people knew what 'normal’ they were going to be getting back to but there was still a large number of people remaining available to be infected; and the Delta variant was more transmissible.

This is where we need to do that ‘little’ math I warned you about. Something interesting started to happen during the fourth Wave or just became much more salient with this Wave. As the vaccinated portion of the population increased the availability of hosts shifted toward the remaining unvaccinated. This is not to say that the vaccinated population didn’t have some individuals who were still going to be infected. We are talking about a large population where the COVID immunity efficacy spectrum will still have some hosts that are exposed to the virus exhibit symptoms and get sick. Just as the unvaccinated population has its own immunity efficacy spectrum. What the COVID new infections data was beginning to show was the unvaccinated were 90% of those infected. The unvaccinated are also more likely to be hospitalized (greater than 95%), and to be the majority of deaths from COVID (greater than 92%).

This is all that has already happened. The math to understand that is simple. Look at the relevant numbers. What is much more important is what would some simple math tell us will happen?

If 71% of the population is vaccinated, then 29% isn’t. For a population of 330M people that 234M vaccinated and 96M unvaccinated. Now more and more people are getting vaccinated, I suspect because slowly the math is sinking in. But there is still a really big part of the herd that is operating under different math than the rest of the herd.

With 110K (average) new cases a day, this is 110,000 cased divided by US population 330,000,000; or 33 people per 100K citizens in a population. But If 90% are due to unvaccinated people than that is 99,000 from the 96M people who have freely chosen to remain unvaccinated. And thus only 11,000 people from the 234M who are vaccinated. Using those numbers: 99,000/96M is 103 people per 100K unvaccinated citizens; and 11,000/234M is 5 people per 100K vaccinated citizens. That’s a 20-fold difference. If all else were to stay the same, then 20 times more people die from just choosing to not be vaccinated. This should have some implications for the herd.

Remember that ‘political’ thing? If the choice to be vaccinated or unvaccinated is determined or influenced by that ‘political’ factor, then over time for every 1 person in the political group who vaccinates dies from COVID there are 20 people in the other political group who die from COVID. I am not sure, but shouldn’t this be a problem for one of our political parties? The amount of a problem it could be for them will depend upon how long the pattern plays out.

This could be the most extensive Darwin Award worthy of being awarded.

What If We Did a Little More Math? - Rogue Thinking #2

 

If you don’t remember or haven’t seen the simple math that was done for the Rogue Thinking #1 article, then hopefully you will be able to accept its basic results. Those results are:

·         COVID infections are running at 33 new cases daily per 100K people as of the first week in December 2021.

·         Between the 234M vaccinated people and the 99M unvaccinated people, a little math will show that the Vaccinated sub-population’s new case rate is 5 people per 100K and for the Unvaccinated sub-population their new case rate equals 103 people per 100K. That is a 20-fold increase.

·         This disparity between the two groups carries forward to hospitalization and death rates (or even increases).

What those numbers tell us does not have to be limited to just how COVID progresses within those two population groupings. With a little more math there are other things that we can learn or be able to forecast.

You might also remember there was a “political” dimension to these results. Whether the connection between political alignment and/or ideology and the decision to be vaccinated or not is an interesting aspect of the results, we can agree that it is what it is. But we can look at what is and use a little math to see where we are going. The relevant view is given these correlated positions: Vaccinated & low new case rate versus Unvaccinated & high new case rate, provides some useful future results that ought to be ‘informing’ us or others about strategies and actions that are being taken (or ought to be taken).

For example, there are the mid-term elections in just under a year. The vaccine mandate issue is already playing out between the political parties. So, what would a little math tell us?

Let us assume that 1/3 of the country is dedicated to one side, 1/3 is dedicated to the other, and 1/3 is not dedicated to either political side. To simplify things lets’ split this last 1/3 into equal parts that are attracted equally to one of the other two groups. Thus, half the population is in each political group. Taking the new case rates would say that over some period of time the two groups cannot stay equal. One group benefits at the expense of the other. Now for the math.

If the new COVID cases run at the current 33 people infected per 100K across the population and this continues for 1, 2 or 3 months. Then we would see 3.3M new case in 1 month, 6.6M new cases in 2 months, and 9.9M new cases over 3 months. Those numbers don’t change anything unless getting infected caused individuals to change their political alignment. We can assume that it does not. So, no impact on the political front.

However, we can’t stop (or should not stop) here. For all those cases there are also deaths (and hospitalizations). Deaths could have an impact in the political sense. For one thing, everyone who dies before the mid-term elections will not be vote for their preferred political party. [I am going to forgo and ignore the inane assertion that one party will have the dead voters vote anyway. This seems reasonable because we have a lot of really stupid people who will be trying their best to find them, and experts who will easily be able to identify them if a state keeps its voting process even moderate effective.] What we need here is a death rate to use. Generally, 1 person per 100 infected dies within the US based on recent data. That means that we can forecast 1% of those monthly projections will die; or 33K in 1 month, 66K in 2 months, or 99K in 3 months. As tragic as this would be, it isn’t equal between the two groups.

Remember that 20 to 1 disparity, this is where it has some importance to our political entities. For one party 31K voters will die in 1 month and only 2K for the other party. Comparably, 62K voters versus 4K for 2 months and 93K voters versus 6K for 3 months. Those voter differences might be important to which party’s candidate wins in some elections. It will also have the potential to carry over into the next presidential election.

It’s not hard math to do. It is even rather obvious that you should not have to do the math to know that the original disparity of 20 to 1 would have implications to our political conditions on the ground.

Now someone might argue that while these loses are regrettable, they will be spread across the entire nation. Well, you ought to be able to do a little simple math and see if that’s true. I am thinking there is a Rogue Thinking #3 coming.

By the way, do they award Darwin Awards to politicians?