The CDC Sees a Great Covid Light

The shorter isolation period balances public health and the economy 

WSJ editorial.

"‘Tis the season for epiphanies, even at the White House. President Biden on Monday said there’s no “federal solution” to the pandemic, and now his Administration is acknowledging that protecting public health requires balancing social and economic considerations.

The Centers for Disease Control and Prevention this week even revised its isolation guidelines. Praise be. Airlines have cancelled thousands of flights because so many workers were having to self-isolate after testing positive or being exposed to someone who had. As the Omicron variant spreads, businesses are struggling to operate.

Studies show that people are most contagious in the first couple of days before they develop symptoms and a few days afterwards. The incubation period for Omicron appears to be on average three days, shorter than with other variants. Thus the CDC shortened its recommended isolation for most people who test positive or who have been exposed to the virus to five days from 10.

The new guidelines will reduce economic and social disruption and shouldn’t endanger public health, though they won’t eliminate the risk of transmission by people who follow them. Government’s job is to manage public-health risks as best it can while allowing society and the economy to function. It can never eliminate all health risks. 

Even the lockdown loving Anthony Fauci is acknowledging as much. “There is the danger that there will be so many people who are being isolated who are asymptomatic for the full 10 days, that you could have a major negative impact on our ability to keep society running,” he said Tuesday. “So the decision was made of saying let’s get that cut in half.”

CDC Director Rochelle Walensky told the Washington Post on Tuesday that the agency revised its guidelines because there “were starting to be limitations in society” due to the extended worker quarantines. She added: “This guidance is only as good as society’s willingness to follow it.”

Translation: CDC’s previous guidelines were becoming unsustainable, like government lockdowns. Americans are ignoring them because they’re too onerous.

This has upset some of the usual public-health sages whose default is always government coercion. One told the Washington Post that the new CDC guidelines do “not seem to be based on science and data and what’s best for the public unless they’re accounting for the complete breakdown of society.” If government did what these experts want, society and the economy would break down.

Unions are also lambasting the Administration. The Association of Flight Attendants-CWA International griped that the guidelines align with “the number of days pushed by corporate America.” The National Nurses United union claimed the revisions were “motivated by the employers wanting workers back on the clock fast, regardless of whether it’s safe, to maximize their profits.”

As long as we’re talking motives, longer isolation periods mean more overtime for union workers. Some on the right are also accusing the Administration of ignoring science, perhaps as payback for similar Democratic attacks against the Trump Administration.

But two unfair charges don’t add up to the truth. The Administration in this case is marrying science with economic reality. We’ll take its epiphanies as they come."

November’s Jobs Message to the Federal Reserve

The labor market is healthy enough to take higher interest rates

WSJ editorial. 

"Friday’s jobs report for November was stronger than Republicans and many in the media are saying. While the U.S. added fewer jobs than expected, the labor force swelled with new workers. What do you know? More Americans are looking for work now that the pandemic enhanced unemployment benefits have lapsed.

The Labor Department’s establishment survey showed the U.S. added 210,000 jobs, which is significantly fewer than the 534,000 on ADP’s private payroll report. But the unemployment rate on the government household survey fell 0.4 percentage points to 4.2%, which is 0.2 percentage points below where it was in March 2020 before lockdowns started.

Employment increased by 1.1 million while the labor force grew by 594,000—the biggest increase since October 2020. Labor force participation rose 0.2 percentage points to 61.8%, the highest it’s been during the pandemic, though still 1.5 percentage points below February 2020. The establishment survey was less buoyant, though it showed big gains in construction (31,000), manufacturing (31,000) and transportation and warehousing (50,000). This should help with supply-chain problems.

The household and establishment surveys converge over time, and November’s jobs numbers could later be revised up. Yet the U.S. is still short 3.6 million workers and 3.9 million jobs from before the pandemic. Businesses still say finding the right workers is their main concern. NFIB, the small business lobby, reports that 29% of owners say employee quality is their top problem—a 48-year high.

A major impediment to getting workers has been generous transfer payments, including the $300 weekly unemployment bonus, $300 monthly per child allowances, food stamps, rental assistance and more.

GOP states cut off the unemployment benefit bonus in early summer, which is one reason employment increased by more than one million in July. They finally expired in Democratic states on Labor Day. Continuing unemployment claims have since plunged by 9.6 million, which Democrats are taking credit for though they wanted to extend the bonus indefinitely.

Democrats say unemployment declined because pandemic fears eased. Yet the Labor data showed little change in the number of people who say they were unable to work or look for work due to the pandemic. While the labor shortage continues to restrain hiring, job growth should continue if politicians don’t panic over Covid-19’s Omicron variant.

For the Federal Reserve, the November message is that it is long past time to speed up its bond-buying taper and begin raising interest rates. The economy’s problem now is rising inflation, not unemployment."

Build Back Better vs. Small Business

Wage mandates for green subsidies will squeeze nonunion shops

WSJ editorial. 

"We’ve been telling you about special political favors hidden throughout the Democratic spending bill—subsidies for the press corps, the trial bar and green energy. But the biggest single winner may be Big Labor, and one egregious example is the wage mandate for contractors that would lock out small business.

The Build Back Better Act the House passed last month includes $555 billion in grants, credits and deductions for green-energy projects. It also has requirements for any contractor hoping to line up for that cash. Take the tax deduction for retrofitting commercial and apartment buildings. To qualify for a job installing efficient lighting or windows, contractors must pay employees the “prevailing rates.”  

That doesn’t mean merely the minimum wage or whatever the going rate is for construction in a region. The prevailing wage refers to pay rates that the Labor Department sets for jobs in a given industry. These wages exceed market rates and are generally paid to government contractors or direct recipients of federal loans and grants. But Democrats want to apply them to any job tied to their new raft of green spending.

The pay premium is no pittance. For example, the Labor Department requires that an electrician in middle-class Orange County, N.Y., earn a prevailing wage of $47 an hour. That’s 70% above the national median, according to the U.S. Bureau of Labor Statistics, and it’s well beyond what most local contractors pay.

This is a sop to unions, which have a hard time organizing the smaller companies that dominate the building and repair industry in most of the U.S. Most workers in these industries aren’t unionized. Building-trade unions lobby for prevailing-wage mandates to make sure union contractors don’t have to contend with family and non-union shops that compete on price. The House bill requires prevailing wages for all sorts of subsidized activities, such as building charging stations for electric vehicles and upgrading marine fisheries.

All of this means that non-union contractors will be shut out of much of the spending blowout. Small contractors won’t be able to afford the higher wages. Costs will rise for consumers and many workers will lose their jobs. Democrats are building back more expensively, and only for companies that are their political allies."

Hawaii Is No Paradise if You Need Medical Care

High taxes contribute to a shortage of doctors while certificate-of-need laws crimp capacity

By Keli‘i Akina. Mr. Akina is president and CEO of the Grassroot Institute of Hawaii. Excerpts:

"Hawaii has among the fewest hospital beds per capita of any state and the 10th longest emergency-room wait times. For years it has wrestled with a severe doctor shortage and a lack of specialty care in its rural areas. These shortages are the result of decades of high taxes, voluminous regulations and certificate-of-need laws.  

Certificate-of-need laws require any investors wishing to build a new medical facility to prove there is a “need” for it. In Hawaii, existing medical facilities are given the chance to argue against any potential new kid on the block. This is like letting Burger King testify on whether the community needs a new McDonald’s. Not surprisingly, existing service providers generally oppose the construction of new facilities.

Since 2006, Hawaii officials have denied 24 certificate-of-need petitions, representing $200 million in private healthcare investment. The denied applications include three medical facilities that would have added 206 beds, increasing hospital capacity by 8%. According to the Mercatus Center, Hawaii would have 14 additional healthcare facilities and $219 less annual per capita healthcare spending if not for its certificate-of-need requirements."

"Hawaii’s requirements are among the strictest, covering everything from hospital expansions to substance-abuse centers and home healthcare.

"Even before the pandemic began, experts estimated the state needed 800 additional doctors and about 2,200 nonphysician healthcare personnel. Hawaii is a high-tax state, making it difficult to attract talented physicians from the mainland."

"A pyramiding general excise tax adds thousands of dollars to the average doctor’s medical-practice expenses. This tax is especially a problem for private-practice physicians. Under federal law, they can’t pass its costs on to Medicaid or Medicare patients, and have to pay it out of their own pockets."

Venezuela’s Fatal Embrace of Cuba

An oil-rich one-time ally of the U.S. has been quietly colonized by a much smaller, poorer neighbor. Now Venezuela is as wrecked and destitute as a country at war

By Moisés Naim. Mr. Naim, who served as Venezuela’s minister of trade and industry in the early 1990s, is Distinguished Fellow at the Carnegie Endowment for International Peace in Washington, D.C. Excerpts:

"In the first half of 2019, Venezuela began to suffer gasoline shortages. This, on its face, was preposterous. The nation had the world’s largest proven oil reserves—its refineries boasted the capacity to supply the country’s needs many times over. Yet drivers up and down the land found themselves waiting days on end in lines outside gas stations, bringing to mind the old joke about how if communists took over the Sahara it would run out of sand.

At the same time, tanker ships were departing from Venezuelan terminals full of oil. They did so in contravention of U.S. sanctions, turning off their satellite tracking devices to avoid detection and heading north-northwest…toward Cuba. This image tells the fundamental story of Venezuela’s multilevel disaster. Even amid crippling gas shortages that left Venezuela in economic free fall, Caracas’s priorities were clear: Cuba’s needs come first. Always."

"For much of the 20th century, Venezuela was the poster child for the successful South American republic: democratic when its neighbors were despotic, prosperous when its neighbors were poor, and stable all through the vagaries of the Cold War. Venezuela carved out a niche as the country that the U.S. State Department could highlight to make its case that democracy could work in Latin America."

"One out of five Venezuelans has fled the country, a dismal parade of more than six million penniless, frail and desperate people straggling into neighboring countries in search of charity and shelter."

"for many decades, Venezuela certainly appeared to be “developing.” Indeed, from the time that its oil industry got going in the 1920s, Venezuela was a development star, with incomes growing steadily and a strong middle class emerging in a country with no history of any such thing.

Yet starting with the debt crisis of the early 1980s, the process stalled. The country’s politics became bitterly divided. Then, in the last 10 years, the development process slammed into reverse. Today, with incomes in free fall and people literally hiking to the nearest border to find something to eat, to call Venezuela a developing country is an absurdity, if not an obscenity.

At the moment, according to researchers, 95% of Venezuelans are poor in terms of income. More than 3 in 4 Venezuelans live in extreme poverty and food insecurity. At around $3 a month, the legal minimum wage won’t feed a person for a day, let alone a family for a month. There is therefore little point in working: About half of the working age population has dropped out of the labor force, leaving remittances from relatives who have fled as the main survival strategy for about 40% of the population. GDP per capita has plummeted to levels not seen since the 1950s.

Hyperinflation set off this most recent and precipitous descent. Beginning in 2017, unbridled government spending, uncontrolled monetary expansion and a collapse in tax revenues led prices to rise out of control. Money became largely useless: Prices in local currency rose an estimated one million percent in 2018. At 45 months and counting, Venezuela’s hyperinflationary spiral is now the second longest in history, bested only by Nicaragua’s in the 1980s.

No part of life is spared the chaos. Water shortages are endemic in all major cities. Blackouts are common. Chronic gasoline shortages have ground public transport to a halt in many places: Bicycles have become the mode of transport of choice for those who can afford them. The healthcare system has collapsed, leading child mortality rates to spike to levels not seen in a generation. Diseases such as diphtheria and malaria, which were all but eradicated decades ago, are back. The sole bright spot? Murder rates have fallen because, some surmise, ammunition is in short supply and gang members have migrated to neighboring countries."

"The main culprit is clear enough: socialism, in a particularly virulent and criminalized incarnation. A wave of expropriations beginning in 2005 put much of the country’s private economy in state hands. Those firms that remained private faced a wall of state controls that left them with little say over their own operations. Wages, prices, hiring and firing, production levels, imports, exports and investment—each became subject to minutely detailed rules thought up by socialist bureaucrats with little notion of how to run a business."

"Private investment largely ceased. No sane entrepreneur would invest in an economy like Venezuela’s, unless in illegal businesses or in companies with close ties to corrupt military or government bigwigs. Of them, there were many: Bureaucrats across the growing state-owned enterprise sector looked for creative ways to extract value from the assets they controlled and ferret it away in offshore bank accounts. Soon, Caracas had turned into a major money laundering hub, with neophyte kleptocrats looking for savvier partners able to help them hide their loot.

Venezuela’s socialism was criminalized from the start, often serving as little more than a narrative that the powerful used to cover up their plunder of public assets. A ruthlessly extractive state elite ran through the nation’s economy like a plague of locusts, leaving virtually nothing behind.

How could such a destructive governance model take hold in a country with one of the most enduring democracies in Latin America? The question will keep academics busy for generations, but the first place to look for an answer is Cuba, which is where Venezuela found the model of state control that it would implement to such disastrous effect.

To call Venezuela under Hugo Chávez and Cuba under Fidel Castro “allies” is to understate the case. Beginning in the early 2000s, thousands of Cuban doctors, teachers, nurses, sports-trainers and community organizers poured into Venezuela as part of an oil-for-development-assistance deal that became an economic lifeline for the island while filling Venezuela to the brim with Cuban spies. Soon, Cubans were enmeshed in Venezuela’s state system at every level, and Chávez made little secret of the fact that he trusted them more than his own people."

"Venezuela experienced a kind of upside-down colonization, with the smaller, weaker country—Cuba—effectively taking over its larger, richer neighbor."

"Soon, Venezuelan kleptocrats were buying ranches in the Argentine pampas and castles in picturesque towns in Spain." 

"sanctioning Venezuela did little to isolate its regime. Why? Because the U.S.’s strategic competitors—including China, Russia, Iran, Belarus, Turkey, Qatar and, of course, Cuba—stepped into the breach, creating an alternative international support system that sustained the Venezuelan dictatorship."

"the Western left took up a well-funded propaganda campaign, called “Hands-Off Venezuela” and supported by the Venezuelan government, that called for “nonintervention” in Venezuela’s affairs, but in a strikingly lopsided fashion: Only the Western democracies were admonished to keep their hands off Venezuela, not the autocracies that propped up the regime."

The Omicron Variant Panic

Markets fall, but the biggest danger is more government lockdowns

WSJ editorial. Excerpts:

"The good news is we’re better prepared if Omicron does spread and proves more virulent than other strains. BioNTech and Pfizer say they can quickly adjust their mRNA vaccine to combat the new variant if necessary. Moderna plans to rapidly advance an Omicron-specific booster candidate. The Food and Drug Administration would need to give vaccine manufacturers a green light.  

Manufacturers have been reluctant to tweak vaccines for other new variants because this could become a game of whack-a-mole. Plus, modifying a vaccine for a new variant may leave it less effective against others. It’s also worth remembering that vaccines generate T-cell immune protection, beyond antibodies, that variants can’t easily evade.

Anti-viral Covid pills by Merck and Pfizer—which the FDA ought to approve pronto—have shown remarkable success in trials at preventing severe illness in high-risk groups. Both drug makers have licensed their pills to other manufacturers, so they should be widely available within months. The Biden Administration has ordered 13 million courses of the two drugs.

Mr. Biden nonetheless joined other governments on Friday in ordering restrictions on travel to the U.S. from South Africa and seven other countries as a “precautionary measure.” He seems to be doing this for political appearances lest he be criticized later for not doing enough.

But travel restrictions didn’t stop the Delta, Alpha or the original Wuhan strain from spreading around the world. Omicron has been found in Belgium, which means it’s probably already in Europe and the U.S. too. If Omicron is found in more countries—as invariably it will be—will governments shut down their borders and lock down again?

That’s the fear animating markets. Many European countries are reimposing pandemic restrictions in response to rising cases. Austria has shut down again, and Germany is flirting with another national lockdown. Belgium on Friday announced it would close nightclubs and prohibit private parties except for weddings and funerals.

***

One clear lesson from the pandemic is that lockdowns do more harm than good. Booster shots will help the U.S. and Europe weather a winter surge and mitigate the impact of Omicron. That’s no doubt why Mr. Biden on Friday urged all Americans to get boosters, though the Centers for Disease Control and Prevention was late to endorse them for all adults.

The Administration worried about the political optics of boosting Americans while most people in low-income countries remain unvaccinated. That’s also why Mr. Biden on Friday reiterated his support for a petition at the World Trade Organization backed by South Africa and India to waive intellectual property protection for Covid vaccines.

Even left-wing groups pushing the waiver acknowledge it won’t do any good unless vaccine manufacturers are also forced to share their technical knowledge of how to produce the vaccines, which they are already doing with licensed partners. In any case, vaccine manufacturers are ramping up production as fast as possible consistent with quality control.

Vaccine hesitancy is also a bigger challenge than supply in some low-income countries. South Africa this week asked Johnson & Johnson and Pfizer to delay deliveries of their vaccines because it has a surplus."

San Franciscans Get What They Voted for With Chesa Boudin

The Weather Underground scion isn’t the first district attorney they’ve elected on a soft-on-crime platform

By Michael Shellenberger. Excerpts:

"When Chesa Boudin ran for San Francisco district attorney in 2019, he said crime was caused by poverty, wealth inequality and inadequate government spending on social programs."

"The result has been an increase in crime so sharp that San Francisco’s liberal residents are now paying for private security guards, taking self-defense classes, and supporting a recall of Mr. Boudin, with a vote set for June 2022. Retailers like Walgreens and Target are closing stores in the city, citing rampant shoplifting. Last week, a shockingly organized mob of looters ransacked a downtown Louis Vuitton store."

"Mr. Boudin and his defenders say crime in San Francisco has actually declined under his watch. The store closings had little to do with shoplifting, they insist; Walgreens announced in 2019 it would close stores as a cost-saving measure. And after the Louis Vuitton looting, Mr. Boudin talked tough on Twitter : “Standby for felony charges.”

Indeed, some crimes did decline, but for Covid-related reasons, while many other offenses increased. The pandemic crimped tourism, which meant fewer car break-ins and less shoplifting, but both are now on the rise. Car break-ins were 75% higher in May 2021 than in 2019, before the pandemic."

"In 2019, 40% of all shoplifting reports resulted in arrest; in 2021, under Mr. Boudin, only 19% did. Walgreens says shoplifting is five times as high, and security costs 50 times as high, in its San Francisco stores as the chainwide average."

"the charging rate for theft by Mr. Boudin’s office declined from 62% in 2019 to 46% in 2021; for petty theft it fell from 58% to 35%. San Francisco’s jail population has plummeted to 766 in 2021 from 2,850 in 2019. More than half of all offenders, and three-quarters of the most violent ones, who are released from jail before trial commit new crimes."

"The San Francisco Police Department is short 400 officers and demoralized. A security video obtained by the San Francisco Chronicle last week appeared to show officers allowing a robbery of a marijuana dispensary. Total narcotics arrests declined by half from 2019 to 2021."

"The solution to San Francisco’s problems is relatively straightforward. The city needs to shut down the drug scene by working with the federal government to deport dealers who are here illegally, most of whom are from Honduras; arrest addicts who camp and use drugs publicly and offer them rehab as an alternative to jail; and redevelop the squalid Tenderloin neighborhood, which, because of the influx of out-of-town addicts, fosters depravity and criminality affecting the entire city."