Tuesday , March 31 2020
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Don’t just do something, stand there!

Summary:
The usual suspects are lining up to tell us how government should make plans for the coronavirus. For example, the man unable to tame a bacon sandwich tells us we must tear up the economic rulebook. This is not, you should not be surprised to find out, the correct response.We face not risk but uncertainty. The medical outcome is anywhere between the usual ‘flu season and the majority of the population being afflicted. Sans plans and government action the economic effect is anywhere between shaving a percentage point off GDP for a quarter to 5%-10% for a quarter. We do not have any knowledge here - that difference between uncertainty and risk being that we just don’t know, rather than can assign probabilities - and thus plans are rather difficult things to make.It’s also true that trying to

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The usual suspects are lining up to tell us how government should make plans for the coronavirus. For example, the man unable to tame a bacon sandwich tells us we must tear up the economic rulebook. This is not, you should not be surprised to find out, the correct response.

We face not risk but uncertainty. The medical outcome is anywhere between the usual ‘flu season and the majority of the population being afflicted. Sans plans and government action the economic effect is anywhere between shaving a percentage point off GDP for a quarter to 5%-10% for a quarter. We do not have any knowledge here - that difference between uncertainty and risk being that we just don’t know, rather than can assign probabilities - and thus plans are rather difficult things to make.

It’s also true that trying to get the behemoth that is government to do anything at all in short periods of time is like trying to train an elephant to pole vault. Amusing perhaps but not likely to be greatly effective and probably rather messy if you actually succeed.

The actual solution is to muddle through. Things will happen, we know not what, and we should deal with them as they do. Further, what should be done, what can be done, will be different in each of the 65 million cases among the population. The decisions simply have to be, for we have no other method available to us, devolved down to those 65 million people.

Some would call this using the market. Others muddling through. We don’t mind what it is called even as we insist it’s the only method we’ve got that will actually be useful. There are too many variables for any central plan to possibly cover them all.

There is also the obvious truth that this is what an economy is anyway, the British one being those 65 million people muddling through. Reacting to the incentives and situations faced as they arise - why change what works? We do have good evidence - 1989 and looking east from the Brandenburg Gate only being one revelation of this truth - that this produces the best outcome possible after all.

There is also a rather more parochial point. It’s oft been pointed out that Britain didn’t really have any plan in the late 1930s, that we muddled through the whole war thing. Which, to a great extent, we did too. We also won. Why mess with what we’re obviously good at?

To give just one example from the press. One of the more stupidly statist commentators has insisted that we must have rationing and price controls to beat a possible black market - absurd in itself - using supermarket loyalty cards. The limits on what may be purchased to be set centrally by the state, of course. As it happens each individual supermarket has set limits upon what any individual customer may buy. The state, with its plans, force and centralisation, not being required, obviously enough. Muddling through works.

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Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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