[00:00:08]: My name is Drew Benson, and I service private wealth clients as the president and founder of Benson Wealth Management and senior wealth adviser with Raymond James. I'm also the co managing partner of True North Wealth Management Group, which is a platform for independent wealth advisors. I'm a formerly trained macroeconomist and a veteran in the industry. Now the goal of this podcast is to take complex financial and economic topics and make it accessible for the everyday listener. As a firm believer in free speech and a promoter of open dialogue, this podcast is a space where unorthodox opinions are discussed, and much is said that others are too afraid to say. We touch on financial, economic, cultural, and even political matters, And I know you will find this professionally different and nonpartisan. There are no agendas, just open conversations. This is Drew Benson and the Benson Wealth Podcast. [00:01:01]: Keep listening, and my hope is that you will learn along the way. Today, I interview Don Boudreaux, who's a professor of economics at George Mason University And holder of the Getchell chair at George Mason's Mercatus Center. He is the author of, among other books, Globalization and the Essential Hayek. He blogs at Cafe Hayek. This week, you will hear the second half of my interview with Don. Don and I discussed the devastating economic impacts of government lockdowns During COVID, Don actually cowrote an important piece in The Wall Street Journal with Stanford professor Jay Bhattacharya. Jay was one of the coauthors of the great Barrington Declaration that at the time was warning about the dangers of draconian lockdown measures during COVID. So let's switch gears to to COVID, to the unintended consequences of government lockdowns. [00:01:54]: We you know, we're now if you can believe this, We're almost 4 years in the rearview mirror. I know. Wild because the the virus, you know, who knows when it actually started, but conceivably started in the fall of 2019. And here we are 2023, there's still a lot of madness, by the way, masking and testing and vaccinations that are still happening. I wanna I wanna go back though, and and I'm just curious from your from your standpoint. When it all started breaking out. Right? So Back in February of 20 what was it? It was February of 2020. [00:02:26]: Yeah. 2020. Right? I just remember because I'm you know, I work in the capital market, so I'm looking at the S and 500 and everything just literally fall off a cliff. Yeah. [00:02:34]: Yeah. It was one of the the quickest and steepest declines With the stock market in American history, by the way. It was also one of the quickest recoveries recoveries in American history. But let's go back nonetheless. [00:02:46]: So Thank Global Musician for that, by the way, but go ahead. [00:02:48]: Yeah. Amen to that. Amen to that. So so what were you thinking At the time, if you can recall, when they said, alright, let's lock everything down, and let's take 2 weeks to flatten the curve. People probably forget that, but that's what the rhetoric was at the time. Don't worry. It's gonna be a short little thing. Let's lock it all down. [00:03:07]: As an economist, What was running through your mind when we started talking about locking an economy down? [00:03:13]: This is madness. [00:03:15]: Even then, you felt that way. [00:03:17]: Even then. I mean, there there may have been a point, and it's so small. It may have been a point where Where I was very worried about the consequences of the the COVID virus. [00:03:29]: Sure. [00:03:30]: But, the it would have had to be far more magnitude's more lethal than it was, and I was I was quite conscious of this Even in early 2020, to justify locking an economy down. Economies are astonishingly complex Mechanisms of human cooperation, and communication. [00:03:53]: It's not a simple machine that you can turn on and off at will. [00:03:57]: Yeah. Like, the Keynesians wanna tell us that it is. What what you know? You know, here's a connection to the trade part. I spend my life observing what people say about the way the economy works, and most of what I observe, unfortunately, indicates that that people have A far too naive few Mhmm. Of the way the economy works. And these are the same people who are saying, oh, we're gonna solve we're gonna protect ourselves from the virus just by the economy down. We're gonna make everyone stay at home. We're gonna shut down, schools. We're gonna shut down workplaces until the virus To be flatten the curve, of course, as you know, that that that that excuse rapidly changed. [00:04:37]: It wasn't just 2 weeks to flatten the curve. It's more like 2 years to flatten humanity. [00:04:41]: What I don't know if you remember this. They were saying things like the the hardest part about 2 weeks to flatten the curve is the 1st 9 months. [00:04:49]: Well yeah. So so the the the very early on, I was worried that, well, wait a minute. The The people do not they're playing with real fire here. You just can't shut down an economy and expect to turn it back on, and and everything is gonna be Fine. I I will say this, I am pleasantly surprised at how well the economy has rebounded From the COVID COVID madness. Same. But in my view, there was never a justification for the lockdowns. I I think it was certainly I'll put it this way. [00:05:30]: In in On September 11, 2001, that night, I remember thinking, okay. This is the this is the worst Calamity that I'm gonna live observe in my life. [00:05:42]: Mhmm. Same. [00:05:44]: Unfortunately, that has changed. I think the COVID calamity was worse. I couldn't agree more with you. [00:05:52]: Worse for what it did and worse for what it portends. I worry that if we have another, I saw I was shocked at the willingness of people to obey these lockdown Orders. Restaurant shut down. Human life. School shut down. Supply chains as they're called were disrupted, and people went along with it. And and listening to these experts like Anthony Fauci Who caught who was forever changing his tune about what we should do. And now, of course, the many of the people who push the lockdowns or or We're backtracking. [00:06:34]: I thought then, and I still think today, that it it was a A tremendous case of of of collective insanity. [00:06:44]: It it it was. It was like a it was a mic I think it was a McCullough. I'm spacing on his first name. He went on the Joe Rogan podcast, and he said it was, like, mass human what what did he describe it as a, Mass psychosis was was the phrase he kept using, Peter McCullough. And it it was it was frightening. It was frightening the fact People were so willing to walk into what felt like an authoritarian regime and that the government engaged in what appeared to be Soviet style government, like, management of the economy. I mean, it made me think of when Lenin took over after the the reds beat the whites, and it's just It was basically the purest or closest thing to a socialist, you know, attempt, and here we are basically taking a Leninist playbook here. The the other thing to to go back here, I remember when the Imperial College and I might be a little off on this statistic, but I remember the Imperial College was saying, alright. [00:07:40]: Well, the death rate is at, You know, the case fatality rate is at 3.6%. And then there was an article, and and and you've definitely talked and written about Jay Bhattacharya. There's an article in the Wall Street Journal by this guy named Jay Bhattacharya, who I'd never heard of, but he's got a PhD in economics, And he's got it and it and it and empty. Right? And he says, no. I've studied I've studied a few I studied, I think he studied Wuhan, specifically. He studied the NBA, and he Northern Italy. Is it based on my research, it appears that the the case fatality rate is potentially magnitudes lower. And I forget the exact statistic, But I just remember at the time, I think the lower end of his rage, he was saying somewhere around a quarter of 1% was closer to what maybe the reality was. Now I put that article on Facebook, and I got so much hate this is why I got in into this. The amount of hatred I got, especially from people on the political right that supposedly don't like government intervention, The amount of hatred that I got, I actually end up just taking it down because it just wasn't worth the the chaos around it. [00:08:49]: And and and and and and I and I heard this again and again, and curious on your opinion on this, Don, is a lot of people said to me, well, you you just don't understand this. You're not smart enough. There's experts that understand. And listen. I don't have a PhD in economics, but I have worked in the Wall Street world for over a decade. I have a master's economics, And I used to work for 2 firms that dealt with statistics, and I personally dealt with statistics and worked on statistical, spreadsheets. So I remember thinking, Listen. Am I a professional PhD statistician? No. [00:09:20]: But I probably know more about stats than the average American person. And what Jay Bhattacharya is saying seems so much more rational than what the Imperial College was saying. Do do you have any thoughts on on just the way we screwed up statistics back then? [00:09:35]: Too too many thoughts. It would take us well beyond the allotted allotted time. [00:09:38]: I know. Yeah. I may I may just have to have you back on, by the way. So so, One of the silver linings around the pandemic episode for me was getting to know Jay Bhattachary. He and I wrote a piece together in the Wall Street Journal. I've since Madam, he's just a wonderful, wonderful, charming He seems awesome. Fantastic human being. Wonderful. And, he, of course, Was one of the 3 coauthors of the great Barrington declaration. [00:10:05]: Oh, those kooks? Those, like, fake scientists Yes. [00:10:07]: Who as they're being portrayed? [00:10:09]: Yeah. Fringe epidemiologists, I think they were called, and the US government tried to organize with including Anthony Fauci. And Francis Collins. And Francis Francis Collins, I think it was his idea. They tried to organize a smear campaign against them. Disgusting. [00:10:27]: If you Read the great Barrington declaration. It actually advises nothing more or less than what was the public health, consensus of how to deal with respiratory viruses, pry prior to to COVID. It was not It was very conventional advice as of, say, December 2019. As of October 2020, when the great Barrington declaration was written and promulgated, it had suddenly become fringe and and and bizarre advice. We we Mhmm. We start we we began that by then, we were thinking that Neil Ferguson at the imperial at imperial college was the great genius, because, inspired by what China did, he, you know, he had he admitted. Neil Ferguson admitted. Well, okay. [00:11:18]: But China did it well. Well, we we can shut down shut down society as well. And so the So so the great barrington declaration simply advised that we use focus protection, which is what any economist Would recognize. Right? So you have Mhmm. You have you can identify certain portions of the population that are at risk. Resources are scarce. Let's Let's protect them rather than wasting resources by, shotgun style trying to protect everyone. We knew early on. [00:11:51]: There was a piece in March of 2020 by David Katz, who's, at Yale Medical I forget exactly what department is. [00:12:02]: An another fringe institution. Another fringe in March 2020, David Katz Rights in the New York Times, fringe publication, we knew then that COVID posed a risk Only or chiefly only to very old people and a handful of other people who were severely immunocompromised. It was not a risk to the general to the general population. So so we we knew early on Who the risk group was, they were old people. Let's focus attention on them and let society go about its business. But that's not what we did. We pretended that everyone was at risk, everyone from 2 year olds to a 102 year olds. It was simply false. And if if for most of that time early on, if you pointed out that a 32 year old is at much less risk than an 82 year old. [00:12:56]: You were demonized. And, you know, you wanted to you wanted to kill people. You were a murderer. You hated grandma. You wanted to throw grandma under the bus. You hated humanity. The the phrase I got all the time is we're not loving our neighbors. That's right. Mike, how am I not loving my neighbor by wanting children to have a good education when it has almost no risk to them? [00:13:17]: Look. The greatest, Single greatest source of health and improved life expectancy is material prosperity, Economic growth. When you shut governments when you shut when governments shut economies down, you reduce Economic growth. You reduce prosperity. We're we're back on track now, but who knows? I don't know if we can possibly be measured accurately. Who knows how much Wealth and prosperity we've lost because of the insanity that reigned from from early 2020 through 2022. I don't know what it is, but it's substantial. And and that reduction in material prosperity It could cause people is gonna have consequences going forward. [00:14:03]: And it it is it was just worth pointing out what a lot of your listeners I know are aware of. The not the the the notion became that COVID was the only illness worth Protecting against. So people were not getting, tested for cancer. They were not getting regular health check checkups. I know. And and and so they were counting COVID fatalities and COVID deaths. This is a seen and unseen. Right? Alright. [00:14:33]: So even if let's assume that the lockdowns and the other COVID mitigation measures did reduce the number of people who Died or suffered from COVID. Let's grant that. That doesn't make the case for the lockdowns. You have to look at the other health effects, And you have to look not only at the other health effects, you have to look at the effects on quality of life, not just today, but going forward. This is still not Mental health. By by a lot of people. The New York Times, a week or two ago, had this, I forget who wrote it. This major, essay on what a calamity, the school shutdowns were. [00:15:16]: Well, duh. I was just gonna say that. [00:15:19]: Well, duh. [00:15:20]: And other people were saying this in 2020, and and The New York Times say, oh, no. No. No. No. No. That's not that that that's not that's not that's not true. And now they say, oh, look. It was a calamity. [00:15:32]: Sensible people understood in 2020 what the consequence of this of this mad madness would be. Look. You you look I couldn't believe it. You you had people getting arrested for walking in the park. [00:15:49]: I know. It's frightening. Just terrible. And I I I can't think of it to this day without getting almost too angry to speak about it in polite company. [00:16:06]: I'll I'll share a story, and I'll I'll be careful to protect the person's identity because unlike other people during COVID that were trying to ruin people's lives, my intention is not to hurt or harm anyone's reputation. But I did have a run-in one time where the person's perception of the way I handled so someone within my office got sick, And my response was to send that employee home or to send that that that person home and to send the rest of my staff home. Okay? Now my job is not a job that you just shut down. Like, the markets don't just Close all the time. Right? They're open every day from 9:30 to 4. [00:16:42]: Yep. [00:16:43]: And so I have to have some level of presence. So I thought, alright. What's the most logical thing I could do? What I can do is send everyone home, and I'll mask, which I didn't even believe in it, but I I I masked I didn't believe in the efficacy of masking all that much, but I did mask at a goodwill so that I didn't make people feel uncomfortable. So I threw a mask on, and I'd go from the front door to my office door, and I'd shut the door. Right? This is a building with multiple businesses. Well, someone found out, And they didn't like the way I handled it. They waited for me. I don't know how long they were sitting outside my door. [00:17:18]: They waited for me for a long time. When I got to my door, this person jumps out and starts screaming at me. I mean, Don, spit was pouring out of the side of his mask [00:17:29]: May I ask who they didn't like precisely? [00:17:32]: They felt that I didn't properly protect People within the building at the time, this individual, and that I had put everyone at risk. And I thought, I'm masking. I'm going to my office, and I'm I sent my whole staff home. I don't know what else you want. Screaming. Don, shaking, Screaming. You know? He he this individual even accused me. I, like you, am a relatively critical of Donald Trump. [00:18:02]: He accused me of being part of the Capitol Hill riots. It got so looney toothed and bananas and unhinged that I I I I kept thinking, Why do you think I'm, Kev? Like, I don't even think much about that. Like, what is your problem? And that in that moment, I realized, this is scary, The intensity that people feel. I think what this individual wanted is he wanted me to completely lock my life away and go home and not put anyone at risk. And I thought, I've gotta run my job, but I'll do the best that I can. I think that type of hysteria is Really terrified. [00:18:37]: The the the level of illogic and what you described is is A great example of that. It it was it was rampant. I remember, seeing something online. I think it was when, and one of the one of the new variants, arose. Someone said some of the, If I recall, someone who said he had a p an amtasia, an MD, a doc medical doctor. So this new variant is so dangerous That every the governments around the world should compel everyone to stay at home for At least 2 weeks, I think it was, everyone, and so they can have their food delivered. And I think Josh Barrow [00:19:21]: Who's gonna deliver the food. [00:19:23]: And Josh Barrow saw this too and said replied to the person and said, well, yeah. Can you can you explain the Exactly how this is going to happen, but but it it it I relate it to show how unthinking It was. I mean, it's easy to say, we're all gonna we're all gonna sit at home and not go out, and, yes, it'll be inconvenient. We're sitting at home, and have our food delivered to us and then people at the factory that yeah. People don't understand. Food has not only delivered. It has to be cooked. It has to be produced. [00:19:53]: It has to be grown. It has to be transported. It takes human beings to do this. You cannot shut an economy down. You you can put this is a tri point, but I'll mention it. You can take the laptop class of which I am a member, And we can stay home. From The elites. From a pure narrow self interested standpoint, I didn't have to go to campus. I got to teach from where I am now, from home, online. I didn't have to deal with pesky students. I don't have to worry about parking, and, I could have food delivered, which which I did. My I didn't lose my job because I can teach. I can do my job online through Zoom. Well, it said I'm doing my job, it's not really teaching, but I'm going through the motions. I didn't suffer economically. [00:20:51]: People who people who who have to be at work to do tasks, They're not gonna get paid if they're not at work not doing those tasks, though they lose income. And then people say, oh, well, that's not a problem. Just have the government pay them. Okay. The government can print money to pay them Which they did. Which they did. And we we we we're bearing the consequences of that now, But but printing money to pay someone does not produce the goods that those people who are being paid to stay home are not producing. And so that's what's not that's one of the things that aren't seen. [00:21:26]: That's not seen, the the the the reduction in in the output that happened because of the Shutdown. And so we in the laptop class were safe and protected and we fell high and mighty that we were Not hurting grandma. We're advising people to to to stay steer clear of this of this of this virus. I I called it COVID derangement syndrome. I'm sure a lot Yeah. [00:21:52]: It really was. [00:21:53]: Had it. And and and that the the this and by that, I meant The notion that there is only 1 risk worth guarding against, and that is COVID. Every other risk, that doesn't exist or is so low in importance that we we We shouldn't worry about it. Of course, that's just nonsense. This is not the the there there there are many other risks and many other values in life that we were instructed to ignore and focus laser like on this 1 virus. Again, as if everyone was equally subject to the virus' ravages, which we knew early on wasn't true. [00:22:39]: So I understand why the public was manipulated. Right? I I can kind of get my head around that they were trusting public officials. Right? And so they were kinda led into this mass hysteria. But but the but the Anthony Fauci's, the Francis Collins, People high up within, I'd say, that the the government, and we know this now from some of the leaks that came out. Mhmm. Particularly some of the Twitter leaks. The people high up knew, though. They knew a lot more of the truth around this than they were letting on, and now we know that there was a lot of public line. [00:23:16]: I know that's a controversial statement to make, but it's just a it's just a fact. Yeah. [00:23:19]: If you care about the truth, it's a fact. Yeah. Why? Like, I just Why? What do you think happened with some of these, elite politicians within the within the government? [00:23:30]: Well, I mean, one one possibility, this is the least Generous, but I I don't think wholly impossible. [00:23:36]: What's the truthful? Right? Like, I don't I don't care if it's mean. Is it truthful? So we we we'll never really know, but one one possibility is that people like Francis Collins and Anthony Fauci understood that they would become more prominent, more powerful, if if the public were frightened because then they they would they'll they'll just listen to whatever we say. When people are scared, You know? They don't wanna lose their lives. They certainly don't want their children to die. That's right. And so That's right. Let let let's allow people to be scared, and that will increase our power. A slightly more generous interpretation is that people like Collins and and Fauci in the US and in other public health Bureaus in other countries, they understood that, there are other dangers other than COVID. But because COVID was the one that's in the news, that's the one people are gonna focus on. [00:24:29]: And so, they they Went along with with that. I'm not being very articulate here in in explaining it. They under as bureaucrats, they understood that If people die of of cancer because of delayed cancer screenings, that's not going to Be held against the and the of the world because people are focused on COVID. And so alright. So let's Let let's be good bureaucrats. Let's focus on our bureaucratic incentive. Let's respond to bureaucratic incentives and and, COVID is the thing in the news, so we'll we'll just focus on COVID. We'll that that's the thing people wanna be protected against. [00:25:14]: So we're that we're we're all in on COVID. We're gonna pretend as if Risks other than COVID don't exist. So I I story is very flattering, by the way. [00:25:26]: No. And and I think maybe even a slightly more credible perspective, and I think you're sort of stabbing at this is I often think of what incentivizes people. Right? So Being trained in economics as well, I often think of what motivates human actors to act in certain ways. Right? So Right. As as a as an entrepreneur and as a business owner and as a as a wealth adviser, I'm I'm motivated by the profit and loss system As are all entrepreneurs and all people that participate in the economy. But politicians are driven by a different set of incentives. And one of those incentives is the perception that they are doing things on behalf of the public's goods. And what that looks like is If doing nothing is actually the best outcome, it may not incentivize the politician, though, Because the best outcome for the politician is reelection and power. [00:26:18]: Mhmm. So what incentivizes a politician is power. And so doing nothing feels So feckless to the public. And so if you're in the in the halls of power, and you're sitting there, and you're Donald Trump at the time or Anthony Fauci, or Joe Biden, or any other person, you have zero incentive to do nothing because it looks like you're not taking the risk very seriously. Right? And so I think I think the malincentives that exist within the government has led to this sort of nefarious, Horrible decision making because they don't have a good incentive to act logically or rationally in my opinion. So this this might be a good A a good way to close out our discussion, the the ethos, political ethos of the past several decades has more and more come to embrace the notion That the government is our great protector. The government's almost godlike. If there's a problem, well, let's turn to the government. Why why would we not? Government has got, like, powers, assuming it's not in the hands of of Donald Trump. And so [00:27:19]: Right. Right. [00:27:20]: And and, And so this notion that the government is all powerful led to exactly the outcome, the response that you Quite rightly, I think, identified the incentives that you that you identified. If you win office By claiming to be a savior, a secular savior. You don't really burnish that, reputation When a problem comes along, you say, well, there's nothing really the government can do. You know? Just, you know, we just just you know, do the best you can, people, where there's no government action here. Then you as the politician, you as the career government bureaucrat seem to abandon, the the the very rationale for your Mhmm. Your existence. So you gotta you know, I'm I'm I'm I'm an elected politician. I have a lot of power, and I'm a good person. [00:28:17]: I'm going to act. I'm a longtime government bureaucrat. I have a lot of Knowledge about the way the government works. I'm a scientist. If you criticize me, you're criticizing science. [00:28:27]: Yeah. Terrifying statement. [00:28:29]: Yeah. Yeah. Oh, yeah. It it there's just so much, Drew, to to to talk about, and I think long after you and I We're going from this veil. People will still be looking back on 2020, 2022 [00:28:43]: I think so too. [00:28:44]: And, wondering what the hell happened to humanity. What insanity overcame them? Right. [00:28:52]: Right. This has been a very rich discussion, Don. I'm extremely grateful For your time, I know you're a busy man, but, so glad you're here, and I hope we get to do this again. Thanks for being on here today. [00:29:03]: I hope so. Thank you. Alright. [00:29:14]: If you've enjoyed this content and you're looking for a wealth adviser or if you're a financial adviser and you're looking to make the jump to the independent side, Please message me on LinkedIn, or you can email me at drew.benson@bensonwealthmgt.com. Or, lastly, you can call my us at 603-316-2544. Securities offered through Raymond James Financial Services Inc, member FINRA SIPC. See. Investment advisory services are offered through Raymond James Financial Services Advisors Inc. Vincent Wealth Management and True North Wealth Management Group are not registered broker dealers, and they are independent of Raymond James Financial Services. The foregone information has been obtained from sources considered to be reliable, But we do not guarantee that it is accurate or complete. 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