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The Covid-19 Pandemic: A Public Choice View PDF

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Studies in Public Choice Panagiotis Karadimas The Covid-19 Pandemic A Public Choice View Studies in Public Choice Volume 42 Series Editor Randall G. Holcombe Department of Economics Florida State University Tallahassee, FL, USA The Studies in Public Choice series is dedicated to publishing scholarship in the field of public choice and constitutional political economy. The series includes research monographs, edited volumes, textbooks, and reference works in all areas of public choice and constitutional political economy. Theoretical models of political processes, empirical studies, and case studies of political processes and events fall within the scope of the series, as do volumes analyzing the impacts of political decision-making on public policy. Public choice has been well-recognized as an interdisciplinary area of academic interest, but public choice analysis often has been absent in public policy studies. Applications of public choice to subfields such as macroeconomic policy, health policy, income security policy, and other public policy areas are welcome. The target audience of the series is broad, ranging from academics to policy practitioners. Projects submitted to the series undergo evaluation from the series editor at the proposal and manuscript submission stages. Additional rounds of peer review may be required at the series editor’s discretion. Panagiotis Karadimas The Covid-19 Pandemic A Public Choice View Panagiotis Karadimas Athens, Greece ISSN 0924-4700 ISSN 2731-5258 (electronic) Studies in Public Choice ISBN 978-3-031-24966-2 ISBN 978-3-031-24967-9 (eBook) https://doi.org/10.1007/978-3-031-24967-9 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland To my parents and my brother and To my regular interlocutors, the incredible people in Korai square in downtown Athens Preface My initial intuition back in March 2020 was that by viewing through rose-tinted spectacles the pandemic policy responses that were first then implemented could result in being grossly misguided. As public choice theorists have long argued, poli- ticians are not exactly the benevolent individuals that care for the common good and have as their very first priority the public interest, as the public-interest theory sug- gests. Instead, they simply act as everybody else, i.e., in order to increase their util- ity. Given these propositions, seeing politicians implementing policies that were unthinkable until 2019, my intuition was that there must be more than meets the eye, and the panicked population gave an important clue of was going on: The sweeping mitigation measures came in response to voters’ demand for action. Possible inac- tion or even targeted action could have been conceived by the public as ineptitude, and politicians would have ended up worse off. The public was in a state of mass hysteria and failed to rationally assess the dangers of the disease and the dangers induced by the mitigation measures (especially by the lockdowns) and so conceived the policy responses as life-saving. Thus politicians and bureaucrats maximized utility at the expense of the majority of the population who ended up worse off due to the collateral damage inflicted by the measures. This is the central thesis devel- oped in the book. However, to make a convincing case in favor of the application of public choice theory, one needs to compare its predictions with the ones made by public interest theory according to which politicians followed science and acted in favor of the so-called “common good.” The book, therefore, is confronted with the task of testing against the empirical record which of these two theories best explains the pandemic policy responses. The conclusion is that public-interest explanation is rejected, while public choice theory explains very well the policy responses. Politicians acted throughout the pandemic not as public-interested agents but as self-interested ones. Part of the argument presented here appeared in my paper “Covid-19, Public Policy and Public Choice Theory” in the fall 2022 issue of the “Independent Review”. I thus thank the Independent Institute for granting me permission to reuse material from that paper and especially Figs. 5.1 and 5.2 that here appear in Chap. 5. I am also grateful to Chrysostomos Mantzavinos for many helpful discussions vii viii Preface and to Bryan Caplan for illustrations on the applications of his theory of rational irrationality. Last but not least, I thank Lorraine Klimowitch, the publishing editor at Springer, for supporting the project and for the systematic communication we had throughout the publication process. Athens, Greece Panagiotis Karadimas Contents 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1 Public Interest Explanations vs. Public Choice Explanations . . . . . 1 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2 Viral Mitigation: Weak Theoretical Underpinnings . . . . . . . . . . . . . . 9 2.1 SARS-CoV-2’s IFR Speaks Against the Equal Vulnerability Thesis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2.2 There Is More to Immunity Than Antibodies: The Case of Pre-existing Immunity . . . . . . . . . . . . . . . . . . . . . . . . . 13 2.3 Is There Such a Thing as Asymptomatic Transmission? . . . . . . . . . 16 2.4 Wishful Thinking Part 1: Zero-Covid Through Lockdowns . . . . . . 18 2.5 Wishful Thinking Part 2: Zero-Covid Through Mass Vaccination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 2.6 The Fundamental Problems of Lockdown Mechanism . . . . . . . . . . 27 2.7 Lockdown Failure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 2.8 Pre-existing Immunity vs. Shutdowns . . . . . . . . . . . . . . . . . . . . . . . 34 2.9 Modeling Drawbacks: Poor Inputs, Poor Outputs . . . . . . . . . . . . . . 35 2.10 Displacement Effect, Lockdowns, and Focused Protection . . . . . . . 44 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 3 The World Stampeded: From Mass Hysteria to Prolonged Mass Hysteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 3.1 Laying Out Mass Hysteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 3.2 Mass Hysteria Intensified and Drew Out . . . . . . . . . . . . . . . . . . . . . 64 3.3 Mass Hysteria and Social Desirability Bias: Panic Institutionalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 4 Tradeoffs and Knock-On Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 4.1 The Wrong Dilemma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 4.2 Estimating Tradeoffs: Established Knowledge as Guiding Principle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 ix x Contents 4.3 School Closures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 4.4 Economic Devastation Part 1: Deep Recession . . . . . . . . . . . . . . . . 81 4.5 Economic Devastation Part 2: Increased Spending and Inflationary Tolls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 4.6 Isolation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 4.7 Unreasonably (?) High Excess Deaths . . . . . . . . . . . . . . . . . . . . . . . 89 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 5 Public Choice Theory: An Explanation of the Pandemic Policy Responses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 5.1 Can Voters Ever Be Public-Interested Agents? . . . . . . . . . . . . . . . . 97 5.2 Voters’ Ideal Point: A Conglomerate of Expected Utilities . . . . . . . 101 5.3 Politicians as Vote Maximizers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 5.4 Public Choice Theory Applied to Outliers . . . . . . . . . . . . . . . . . . . . 107 5.5 Not Ill-Informed Politicians: Public Choice Theory and the Precautionary Principle . . . . . . . . . . . . . . . . . . . . . . 108 5.6 Public Choice Theory and Mass Vaccination . . . . . . . . . . . . . . . . . . 111 5.7 Bootleggers and Baptists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 5.8 Pandemic Responses’ Popularity: Weak and Hard Data . . . . . . . . . 122 5.9 Budget Maximizing Mechanism . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 6 Epilogue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 6.1 The Sound Scientific Grounds of Public Choice Theory . . . . . . . . . 133 Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134

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