Chelsea Follett: Today, joining the podcast is Vincent Geloso, an assistant professor of economics at George Mason University, whose research centers on the historical measurement of living standards and inequality, public economics, population economics, and political economy. So, all topics that should be of great interest to those of you who follow this podcast. He identifies as a cornucopian economist, a statistics “freak,” — his word — and is a quantitative historian. He is an extremely prolific scholar with more than 60 peer-reviewed articles in respected academic journals, and he’s here today to discuss one of his latest papers that he has co-authored in the European Journal of Law and Economics titled, “Pandemics, Economic Freedom, and Institutional Trade-Offs.” And he’s been doing a lot of work on this topic recently, and it’s obviously very relevant today. So this is going to be a really interesting conversation. Vincent, how are you?

Vincent Geloso: It’s a pleasure, thank you very much for inviting me. And thanks for the introduction. It makes me seem like a very amazing person, a bit more amazing than I think of myself as… So thank you very much. It’s flattering as an introduction.

Chelsea Follett: No, thank you for joining me. So what is the paper about, and what prompted you and your co-authors to write it?

Vincent Geloso: It started as kind of an accident a few years back, actually, because of an economic historian named Werner Troesken. And Werner Troesken was an incredibly brilliant scholar, and his insight was that what institutions are able to do come with trade-offs. So, imagine today, and this is probably a way to abstract this to make it, so readers can imagine, if the state can do good things and you give it the power to do good things, it can also do the bad things. So, when you’re deciding to give a certain set of powers to the state, you’re giving it the benefits of doing the good thing, but also the bad thing, which any libertarian would kind of appreciate as an argument.

Vincent Geloso: But Troesken went a bit further and applied it to topics of public health, and his trade-off was that when the state had great ability to combat certain types of diseases, it generally came with the inability of restricting property rights, of infringing upon property rights. And the result of that was that, yes, certain diseases could be combated, but diseases that stemmed from poverty could not, and that was because property rights allow for faster economic growth, and faster economic growth reduces problems related to malnutrition, to maternal mortality, to other form of causes of death that are basically the result of people being poor. So the trade-off is you either get a state that’s able to combat certain types of particularly bad diseases that are generally like infectious diseases. So you can quarantine people forcibly, you can force them to have a certain behavior, but that means that the state has the ability and the capacity to infringe on property rights, and the result from that is the trade-off is you get slower economic in the future you will have more deaths from other diseases, that’s like a general argument.

Chelsea Follett: And you argue in the paper that institutions are bundles or package deals. Can you explain what you mean by that? And how should we think about the trade-offs embedded in the provision of public health measures?

Vincent Geloso: So in the example from Troesken, and then we can move on to pandemics, because I think it’s easier to start with his stuff, he takes the example of smallpox and in smallpox in the late 19th century America. America was weird because it’s always been weird, it’s exceptional in so many ways, especially in the way it is, it is contradictory at least at first glance, but when you understand institution it’s actually very consistent. So, the United States was the richest country in the late 19th century in the world, living standards were exceptionally high, but weirdly enough, the United States had one of the highest rates of smallpox deaths, and so some people were saying, “Maybe it’s like there’s something weird about the US on this”.

Vincent Geloso: The bundle here appears clearly for an economist was that the measures back then that could’ve reduced smallpox, which is a highly infectious disease, require a very strong government intervention, especially given the technological constraint of the time that meant very strong states, that meant that they would be able to force people to do certain things to prohibit certain business activities during outbreaks, or just like mandate certain… Like for example, mandate vaccinations back then, so vaccine mandates were a topic a long time ago, but if the state is able to do this, it will be able to disregard property rights, and so they will have lower economic growth. So, what Troesken points out is, “Look, that really explains it well, the United States has such a strong protection of property rights compared with everybody else in the world, that’s what makes it rich”.

Vincent Geloso: But at the same time, it comes with a downside, which is government entities can’t combat infectious diseases as well as the other countries that have institutions that are more powerful, but because of these more powerful institutions, government-wise, they can’t fight… They can fight these infections diseases, but not generate economic growth, so that’s the first level of trade-off, the second layer of trade-off is that the United States was so rich and the property rights were so well protected that it actually generated enough economic growth that it incentivized, or permitted investment in other form of activities that reduce mortality from other diseases, such as in back then would have been typhoid fever. Typhoid fever is a really good example here because it requires water treatment facilities, these are super capital intensive, this is not something poor societies can do very easily. It’s also investments that are generally long-lasting, because you need to make super big upfront cost, as a result, you would need very strong property rights for, because these capitals that would be fixed, the king or the prime minister, the president could just seize them. If they’re not well-protected, people would just not make these investments.

Vincent Geloso: In the United States, the protection of property rights demand that only was the United States rich, but it also incentivize investments in water treatment facilities. So then the the US, unlike many other countries, had much lower case rates and faster-falling rates of typhoid fever, which was eight times as deadly in terms of how many people got killed on a yearly basis. It was killing eight times more people than smallpox. So in a way, in the United States was not only… Yes, it was doing a sh** job, sorry for cussing a bit. It was doing a horrible job with regards to smallpox, but it was doing an amazing job with regard to typhoid fever, which was a more burdensome disease. That’s the trade-off that Troesken points out, is you either get institutions that are gonna make you protected from certain infectious diseases, but are gonna make you poor, and in the long run make you sicker, or you get institutions that in the short run expose you and make you more vulnerable to certain types of diseases, but that these institutions will make you richer and less vulnerable to other types of diseases.

Chelsea Follett: Right, and as we’re recording this, obviously much of the world is enacting or considering enacting new restrictions related to the Omicron surge of the current pandemic, so this debate is extremely relevant — considering these trade-offs. So let’s zoom out a bit. The paper deals with the relationship between health and wealth and economic freedom. What is the nature of those relationships?

Vincent Geloso: What we did in the paper, we’ve extended the logic Troesken did of the trade-offs, and what we said is, “Listen, there should be a very simple prediction from what Troesken mentions, and we could apply it to pandemics or to any form of other trade-off in terms of diseases,” — economic freedom should reduce diseases of poverty, those that are super responsive to changes in income. If a disease falls as people get richer and it falls really fast, like malnutrition, maternal mortality, generally infant mortalities from… People don’t appreciate this, but diarrhea used to be a major killer because people were dehydrated, typhoid fever would leave a long legacy of this. These are all diseases of basically poverty, like small changes in income leads to very large responses in the reduction of these diseases. If you have a type of disease of poverty and then you have diseases of commerce, which spread regardless of income, and these just spread because we interact with each other, economic freedom should have an effect on… A positive effect in the sense that it would reduce the incidence of diseases of poverty, but would either have no effect or a negative effect, that it would increase diseases of commerce. That’s how we present it in the paper, we divide diseases into two boxes, diseases of poverty, as I said, diseases that respond to income very well, and diseases of commerce that don’t respond to income, but spread really easily by virtue of us interacting.

Vincent Geloso: Just when you meet your butcher, and you buy whatever meat he’s selling you, generally I hope a Wagyu steak, but let’s say we’re trading for something in just by virtue of trade, we’re exposed to the disease. Divide them in these two economic freedoms, should have by virtue of protecting property rights of restricting the ability of the state to intervene. By allowing free exchange, they will reduce diseases of poverty, but not diseases of commerce. That’s what we test and that’s what we actually find. We find no effect of diseases of economic freedom on diseases of commerce, but very strong effect of economic freedom on diseases of poverty. And we find those not only in international settings, but we find it also at subnational level, so even within the United States. In the late 19th century, for example, states that had higher levels of economic freedom than other states had lower rates of diseases of poverty, but economic freedom had no impact on diseases of commerce. That’s the argument.

Chelsea Follett: You make that distinction between diseases of poverty and diseases of commerce, but you also note in the paper that from a longer-run perspective, economic freedom reduces the burden from all diseases. So ultimately, economic freedom and the wealth it creates can help us to tackle not only diseases of poverty, which are the most sensitive to changes in income, but also diseases of commerce. Is that correct?

Vincent Geloso: Yes, in the way I’ve exposed it up to now, and this is one of the reasons why I’m gonna explain in one of the key results we find no effect, that doesn’t mean we… When we found that there was no effect of economic freedom on diseases of commerce, that’s probably because of what I’m about to say. When I was presenting these results, we kind of implicitly assumed that each diseases are independent of each other, but that is completely incorrect. Anyone who’s at least like mildly versed in anything medical know that comorbidities are an issue. And so if you are exposed to diseases of poverty, you are probably more vulnerable to diseases of commerce. And a good way to think about this is a person that’s undernourished, when exposed to a virus, or a person who is malnourished, or has say, lacking certain nutrients or lacks in certain vitamins will probably be more exposed to…

Vincent Geloso: To an infectious disease, a disease of commerce, when there is comorbidity, what’s going to happen is that economic freedom is going to reduce diseases of commerce. They’re gonna reduce also, so they’re gonna reduce diseases of poverty, but they’re gonna reduce, just a bit, the diseases of commerce, because you’re reducing the diseases of poverty. So the comorbidity link causes a reduction in both with a disproportionate reduction in diseases of poverty. And the argument here is kind of a weird one, because it says that all diseases should fall, but because it’s uneven, what’s going to happen is that liberal democracy, societies that have high levels of economic freedom, and will have a skewed ratio so that they’ll be at any point in time, when there’s like a pandemic, for example, they will suffer much more than the ratio of… Sorry, if you divide one by the other, by diseases of commerce, by diseases of poverty, you’ll find that they’re skewed, so there’ll be more deaths relative of commerce, rather to deaths of poverty in an unfree society.

Vincent Geloso: But the overall level for both will be lower, so there will be like the ratio of them will be different, but the overall level will be lower, and what we find is exactly that, and so one of the other tests we did is we check… Let’s divide the deaths for diseases of commerce by the deaths from diseases of poverty, and let’s see if economic freedom, skews the ratio, in the sense that there is a greater proportion in total deaths from diseases of commerce, and we find exactly that. Suggesting that, yes. What’s happening in economic freedom does reduce diseases of poverty and drops down the diseases of commerce just a bit, so that the ratio is skewed. So when we go back to the bundles argument, that’s actually suggesting that a trade-off is even cheaper than we realized because in the trade-off I’ve presented when summarizing this was, you either have bad institutions, but they allow you to fight diseases of commerce, but you’re gonna be poor, you’re not gonna fight diseases of poverty. Or you had institutions that were good, you would do a terrible job at diseases of commerce, you’d do a great job at economic growth, and that’s a great job at diseases of poverty, that second trade-off was incorrect. It’s actually, you get good institutions, you get a faster economic growth, at any point in time you might be doing a worse job with diseases of commerce, but you’re less vulnerable to them at any given point because of economic growth.

Vincent Geloso: So yes, if the thing arrives and you’re surprised by it, you will probably fare at the beginning of a pandemic, for example, you’ll fare less effectively than unfree regimes. But in the long run it’s more likely that you are going to resist better, so there’s a robustness mechanism that economic freedom creates, that is unappreciated, and that’s what we emphasize in the paper is, and through that ratio, I mentioned. Economically-free societies, when things happen, they’re taken by surprise and they can’t by virtue, they’re struggling, they can’t respond as strongly, but because of the advantages of economic freedom, when the shock repeats itself, you find that they’re better able to deal with this. So right now, this is still… I’m gonna mention something that’s preliminary work, but we’re testing what happens at successive waves of different… Of certain, for example, pandemics, and we wanna check if economically free society fare worse in the first wave, but better at the second and third waves, and what we find is, the preliminary results are yes, exactly that.

Vincent Geloso: At first wave, economically free societies, do a horrible jobs, but in second and third waves, they are much more robust to the shocks because the system has allowed people to rearrange resources more effectively, to reorganize production more effectively, to minimize risk more cheaply, but also as a result of economic growth afterwards when the disease just becomes endemic rather than being a pandemic, just like the flu it occurs annually, it kills fewer and fewer people every time, which means that the system has this ability to learn from shocks. I hate citing that guy but I think it was Nicholas Taleb, the antifragile. It actually works as a system that builds resilience each time it’s hit with a shock, that’s a great virtue of economic freedom and… Yeah, that’s like… I’m trying to make this the simplest summary, there’s many layers, but that simple summary is really… I think the simplest I can do is really important because it says look economic freedom is probably your best long run solution to dealing with any form of diseases of commerce, considering that you also wanna maximize health on a greater array of dimension than just not dying from a plague, you wanna make sure that you’re not killing yourself in the next period by making yourself starve or something like that, I’m exaggerating, but it’s kind of the idea. In terms of global health, economic freedom is most effective.

Chelsea Follett: Right, and I don’t think most people fully appreciate how strong that link is between economic freedom and wealth and health. Obviously throughout most of human history, life spans were essentially flat, they were very low. And then the massive health investments, like better sanitation, that many economists, like Angus Deaton, credit with that sudden skyrocketing of life expectancy almost like a hockey stick moving straight up after being flat for so long… Many people say those improvements could not have happened without the funding from the unprecedented wealth from the global skyrocketing of GDP with the industrial revolution. So wealth can clearly reduce mortality in a number of ways, and so you point out that trade-off between government actions that can promote health in some ways, but slow down economic growth and then can actually increase mortality overall. Could you elaborate on that?

Vincent Geloso: So the best way to think about how to elaborate on this kind of a trade-off is the Diseases of Commerce are not a large share of the total burden of disease that we carry, if you take, for example, relative to Diseases of Poverty. If you try to classify them and there is a way to classify them, there is the Global Burden of Health Survey, which is produced every year by The Institute for Health Metrics, and it’s like, the issue is always republished in The Lancet or something like that, so they’re not… It’s a pretty well-respected source, and if you check worldwide, even today with the high levels of income that we have, roughly 3/4 of all deaths come from diseases of poverty. The diseases of commerce account for 15%. The rest of deaths worldwide are wars, accidents, the remaining 10% is wars, violence, murders, suicides or drug overdose. The vast majority of deaths worldwide are from diseases that are super, super easily reduced by economic growth.

Vincent Geloso: If you go further back in time, you’ll find that this is even stronger. Maternal mortality, for example, which was prevalent, so for example, the rate of… For the… Just the… Maternal mortality is… Death rates during labor or in the days after giving birth, these rates were exceptionally high throughout human history. Today, in rich countries they’re exceptionally low and they’re generally linked to steps that… Like an extra few dollars of income solve really easily, like clean hospitals, certain cheap antibiotics to prevent infections that then… I think fighting preeclampsia, for example, is incredibly cheap today, but it’s allowed by economic growth, so these types of mortalities, like I’m using this example is, economic growth really reduces this, super, super cheaply. So these are very sensitive, if you go… So those if you go back in the past, that 75%, I imagine was probably a greater proportion, in large part, because we were so incredibly poor that kids would die from poor water quality, mothers would die from unclean instruments during birth, people would die from infection.

Vincent Geloso: Actually, just to give you like… I think this is my favorite example when I teach anything health-related. Calvin Coolidge’s son died in 1924 of a blister that got infected. So President Coolidge, right? President of the United States, most powerful man in the world, I hate saying this but let’s go with the clichés. His son died of a blister that got infected. It caused sepsis and then his 12-year-old kid died. And this was a guy that probably had access to incredible resources that the average American did not, and still something as trivial as a blister that popped, got infected, caused sepsis and then caused a kid’s death. That’s a trivial way to die today, we’d find this like so crazy that it happens today, because it’s so incredibly cheap to fight. Just like a round of antibiotics that cost $1 or $2 to manufacture, and then you’re done, that’s over. This is something that economic growth fights really effectively, and so we don’t appreciate the role that economic freedom plays, because economic freedom increases economic growth.

Vincent Geloso: If there is something I could drill in people’s head is, don’t under appreciate how much of the progress in human health we’ve achieved through economic growth that is allowed by economic freedom. That connection is incredibly strong and under appreciated by many right now who are just willing to engage in giving governments increasingly great powers. And I understand their motivation, they’re not bad, they’re actually using pretty decent science, but they’re not understanding the trade-offs and the role of institutions in the long run, and the role that has on global health, not just like a particular sub dimension of it, so this is probably the thing I’d like to drill is like, “Please remember trade offs”.

Chelsea Follett: Right. And you mentioned this already, but it’s not just that wealth affects health in poor countries or in the past. Even in the rich countries today you mentioned comorbidities like obesity and their relationship with wealth and economic freedom, and you give the example of the Navajo in the paper. Could you talk a bit about comorbidities and those effects?

Vincent Geloso: So the comorbidities are probably the best way to connect the diseases of commerce with the diseases of poverty, so how at the same time, not only are reducing so as a share of the total, but the total number of death also falls, right? So that’s an important subject question of how the pie is divided, there’s the pie of deaths, which I don’t really you want the pie to get bigger, but the pie of dead people, you want it to get smaller, right? If you wanna make that pie smaller, comorbidity is gonna make the number of deaths from diseases of commerce small, and for example, obesity reduces… It has problems in terms of circulatory complications, of breathing problems, so that it’s more likely that when you’re hit with, for example, COVID, obese people were particularly vulnerable to the disease, to the virus more precisely, so you would have… You would have an effect from this, but if you check, for example, at different levels of income, the effect of obesity, that’s like I think people don’t notice is really poor people who are obese are much more vulnerable than richer people who are also obese to the disease, which tells you that even within particularly high comorbidity factor, an extra level of income may actually cause you to have access to more resources and be less vulnerable to the disease of poverty.

Vincent Geloso: Here I’m not sure how people would classify obesity like that would be an issue if it’s a disease of poverty or if it’s actually like disease of some would call it a disease of affluence, but the point is, I don’t wanna get into that because eventually they’ll eventually fall with income, that’s the point. It’s like you can have a small hump, like you do, for example, cancer rates, but that’s because you get to live to be long to be… You get to live long enough to get to die of cancer, it’s kind of weird thing to say, but eventually more and more income moving cancers down as well, so they’re technically a disease of poverty in that sense, but that being said, is even at the same levels of income.

Vincent Geloso: Sorry, same levels of comorbidities, higher incomes have an effect and the Navajo are a good example because they’re a lower income group and they were more affected by their obesity rates than richer people who were equally obese, who were as obese as them in terms of the preponderance so this is something that needs to be understood, is the mechanism to reduce the effect of diseases of commerce, and you could call covid a disease of commerce because it’s spread through contact and exchange between people, more affluent people will be less vulnerable to it and making society richer as a whole will make the comorbidities either fall or less problematic, and so you can actually deal with the disease of commerce like covid better than if you have institutions that are so strong and so powerful that they deter economic growth in the long run, so that the next time a pandemic hit… You’re actually not able to have a system that learns as fast, that creates new information for people to respond and thus you are actually left more vulnerable, even though the state is actually weaker.

Chelsea Follett: Right, and when you wanted to test that relationship between economic freedom and health effects you used both international evidence and evidence from the United States. Can you talk a bit more about what you did in this paper and what you found?

Vincent Geloso: So in that paper we did, we used the two historical example of disease of commerce and poverty. Commerce is, smallpox, which is the one Troesken kind of imposes upon us, and diseases of poverty is represented by typhoid fever, and what we did is collected all the data we could from either the late 19th century, which is when there was still… Because we needed it to be before the eradication of smallpox and in a period where there still had to be investments made in fighting typhoid fever, and the other part is that the world was relatively a poor place in the late 19th century. So we take that first sample, we find using data from a really good economic historian Leandro Prados De la Escascura who created an economic freedom index for countries from 1850 to 2007. It’s a bit different than the one that’s generally used by the Fraser Institute and the Cato, but it’s a very useful one and using his data, we found countries that were economically free had lower rates of typhoid fever.

Vincent Geloso: But not significantly different rates of smallpox. Then we did that same test again for a wider sample of countries, but for the 1950s, just before the World Health Organization’s crusade to eradicate smallpox, which eventually basically ends in the… It wanes completely in the 60s, I forget the official date of eradication, but whatever is left collapses rapidly, and we find that in the 1950s, the countries with low rates of typhoid fever were countries that were incredibly free in terms of economic freedom. And also, were richer, and we also find that there is no effect of economic freedom on smallpox, so institutions that are ergonomically free, don’t do a better job at dealing with those the sample is a bit small, we only have 50 countries so it’s not perfect, but we find this for worldwide now, worldwide, most of the differences will come from property rights differences, and you could say that you’re just checking if you get a failed state that’s not even able to provide courts and whatever it is, police and states that do that. I’m like, Okay, that’s a fair criticism. So let’s look at the United States, and let’s look at state level, where there you would have variation.

Vincent Geloso: Very little variation in property rights and all the variations would be in government-size labor market regulations, whatever is can we find the same pattern of results and yes, we find exactly the same pattern of results at the sub-national level, the effects are a bit smaller for sure, but we find the same significance, there is no effect of economic freedom at the state levels on smallpox I.e. Diseases of commerce. But we find a strong effect of economic freedom for the different states, in the late 19th century, By the way I just mentioned the period on typhoid fever, I.e diseases of poverty. So by the way again with typhoid fever being a standard for diseases of poverty and smallpox being standard for diseases of commerce, and we find exactly that for state and the same pattern of level international and sub-national, which tells you it’s a pretty strong result.

Chelsea Follett: Right, so that pattern seems to hold internationally and nationally, when it comes to smallpox and typhoid. You said also in your more recent research that your theory seems supported by the evidence when it comes to how countries respond to different waves of pandemics. And related to that, previously, you’ve argued that economic freedom was also an important mitigating factor that helped save lives during the 1918 flu pandemic. So this seems to apply in every case you’ve looked at. Can you talk a bit about the 1918 flu pandemic findings as well?

Vincent Geloso: So that paper is a bit different, that one checks if in pandemics, economic freedom mitigates the effect of mortality, and the idea here is economically free society would be able to adjust faster. So think about how the current pandemic started, you had delays in accreditation of new tests by the FDA, which regulated the market, you had, for example, in my home country of Canada, where we have remained faithful colonists to the crown. I like to tease Americans with this, but in Canada, we had, for example, the Health Department at the Federal level imposed regulations on the accrediting of firms that wanted to do hand sanitizer, and so there were delays of 60 to 90 days in getting firms to increase productions. So you have a series of government barriers to private responses to the pandemic, you pile these on these small pebbles of government intervention you would make for few things as a bigger contraction when the pandemic happens where businesses have to close rather than adjust their activities to maybe like a new margin, maybe like…

Vincent Geloso: Oh, maybe I can sell alcohol through Uber Eats and I can legally do this, can I… I’m distilling of alcohol for consumers, consumers don’t consume as much alcohol, but I can fix mix them with the alcohol, make hand sanitizer with it whatever it is, you can adjust faster if you have a relatively unregulated environment, the argument, me and my co-author made in that paper is for each death economically free country will suffer less, so there’s an effect of an extra person dying, but it’s conditional on how free you are, so how extensive is the disease at that point in time it can be milder for free country than it is for unfree country, and we find exactly that so what we did is we took a regression we made regressions using the same data from Leandro Prados De la Escascura and we checked if economically free country got smaller effects from an extra death per 1000 people from during the 1918 pandemic, and we found exactly that. One extra point of economic freedom on 10 eliminated roughly 15% of the effect of an extra death that came from basically the worst pandemic we’ve had in terms of the share the world population that either got infected or died. An extra point of economic freedom mitigated the effect by 15%, which is a very strong effect, so it meant smaller recession, shorter recessions.

Vincent Geloso: And by the way what we measure is the effect on economic activity, and we find that the effect is that there’s smaller contractions and faster recoveries. How is this tied with other dimensions of living standards, think about the discussion of increased suicide rate during pandemics or deaths from other diseases because hospitals don’t have the resources to treat people with cancer because resources are fixed by government intervention too strongly. So there’s restrictions, for example, on the supply of hospital services because of regulations which would basically reduce the benefits of economic freedom, so people die more on other dimensions because of the strain on resources, the flexibility of the economic freedom allows… Makes the economic shock milder, but it means that every disease, every form of mortality that would come or health costs that would come with the decline in economic activity are going to be mitigated conjointly thanks to economic freedom. I think as a good example. There is work by Alicia Morgan Plemmons, and it’s a good analogy here, she took certificate of needs from today during the pandemic.

Vincent Geloso: So for those who don’t know, certificate of needs are basically state-level regulation that prohibit and limit entry in the hospital market, so that means that the level of care is pretty much fixed by regulation, and what Alicia did was check if states that had no certificate of needs fared better during the Covid outbreak, and they did, and did states that eased their certificate of need restrictions they kind of liberalized just a bit, did they actually get improvements and she finds yes they also got improvements, not to the same effect as the states that never had those laws, but state that could adjust more freely actually fared better. So here is a good analogy that ties my research to today is systems that are economically free will adjust faster, the contraction will be smaller, but in ways that will also then mimic on health cost, ergo there is a direct connection between them. I think that’s also under-appreciated, maybe there’s another point I’m not sure if it’s worth actually it’s worth mentioning I’m originally from Canada, in Canada, by virtue of the public system, there is pretty much a monopoly on most services, and we get overcrowded in the hospitals, there is constant complaints that there is…

Vincent Geloso: The system is over-strained, but that’s in part over-strained because the restriction on private care, limit the number of beds, limit the number of the level of care that is available, which means that there is complaints that people are on wait-list for very minor treatments such as hernias, such as cataracts, hip replacements, all of these are cost that people suffer for on other dimensions, delayed treatments for cancer, which is really much clear how it’s costly, these also come from governments restrictions on economic activity, and by creating this kind of rigidity in the system, by not allowing entrepreneurs to adjust, you actually create a bigger shock, both economically and health-wise.

Chelsea Follett: Right, so policies clearly have a big impact. And you start out the paper on pandemics, economic freedom and institutional trade-offs, by noting that this pandemic, the Covid-19 pandemic, initiated important debates about the proper role of government and noted that discussion often occurred within the general framework of market failures. So how do you think the pandemic affected the debate about the scope of government, and what do you hope the contribution of your paper will be ultimately to that debate?

Vincent Geloso: So people in the debate really think that there’s… Here’s because people walking around cause an externality, if, for example, I have good behavior, I get vaccinated, I wear a mask, whatever it is, by virtue of this and somebody walks out and just does all these bad things, he’s basically free-riding on my efforts to mitigate, and thus I don’t get the full rewards of this, there’s actually a cost imposed upon me and the argument is that that will lead to under provision of mitigation efforts that some people will call the market failure.

Vincent Geloso: I think it is actually correct to say that this is technically a problem, but it doesn’t mean that the solution is actually gonna be better than the problem, because when you give to states the ability to fight these infectious diseases, it comes with all the trade-offs we’ve been mentioning since we started the podcast, which is, you’re gonna get lower economic growth in the future, you’re going to get a lesser ability to fight diseases of poverty, which means that you’re gonna be more vulnerable in the subsequent periods to the disease, so you’re not gonna build a better outcome. So people think, “Oh look, there’s a government problem, here it goes, it has to be solved; there’s a market problem, it has to be solved by government,” my point is well. You haven’t shown to me that governments can actually do the job, and here there’s good reasons to believe that they just can’t.

Vincent Geloso: There is no ability of governments to deal with these in more than a very, very limited circumscribed ways, but otherwise, not really… That’s like my criticism is, we have given very often blank cheques in terms of powers given to governments to solve that problem, not knowing to which extent that blank check came with. Well, how big is the amount we are gonna write for the next periods on the blank check. My claim is that cost is probably greater than what we manage to save, and you’re over-estimating by the way, how much we actually save because you’ve discounted how much we gain in the future to against what we save now, you’re basically over-estimating the effect of today’s policy.

Vincent Geloso: So that’s the claim I’ve been trying to make, it doesn’t mean, by the way, that this is something that people think I’m saying, that I say all lockdowns are bad, that mandates are always bad. That’s not what I’m saying. What I’m saying is, it’s unlikely that there is a one-size-fits-all solution, so for example, just in terms of policy implications, I’ve argued throughout the pandemic that maybe federalism is the best way to go, give power to the most smallest of authorities possible, so that they have localized policies that respond to their environments, so they can actually maybe build something.

Vincent Geloso: Something that works for North Dakota or for Loving County, Texas, which is I think like seven people. Isn’t the same as for Washington DC at the very least, you’re bound to have… By virtue of the checks and balances between municipal and state governments, you’re gonna have some experimentation, some tinkering at the margins, some feedback loops, and some checks and balances. That’s probably better than doing stuff at the national level.

Vincent Geloso: There’s also the idea that you can rely more on private resources, remember at the beginning of the pandemic, people said, “We’re never gonna have a vaccine for the next two years”, we had one in one year, and then we learned that the FDA pretty much delayed things by roughly nine months, so there is actually a case to be said that if I go into the extreme counterfactual, the one I can still defend, but requires some people to like… You’re stretching a bit, Vincent, but I don’t think I’m stretching, but let’s say I’m going as far as I can without going into fringe lane, greater dis-intervention, so deregulation would have probably reduced the pandemic rather than more intervention, the government doing less would have probably been better than what it actually ended up doing.

Chelsea Follett: Right, so you ultimately conclude that economic freedom is, on balance, good for public health, when considering all of these trade-offs.

Vincent Geloso: Yes.

Chelsea Follett: Do you find there’s a lot of pushback to that view? Or how has this work been received?

Vincent Geloso: When I say that sentence you just said like that, yes, there’s a lot of pushback. When I get to make the point to audiences and say, “Look, there’s all of these elements, here’s the entire reasoning, they end up actually agreeing, so when the pedagogical effort is made, it seems like people are convinced, so I’d see what I basically am trying to do is find a way to make it to keep the pedagogical effort distilled to the smallest form possible so that people can understand it without backing off, without jolting when I say it. But there is a really good case. I think, Alex Tabarrok my colleague here at Mason has been arguing that a lot of deregulation would have helped massively with dealing with the pandemic. It complements some of my work saying that economically free societies do better during pandemics, they suffer less. And in terms of other types of diseases, and in terms of economic output that in the long-run economic freedom actually increases health by reducing diseases of poverty, but also by the link through comorbidities reduce diseases of commerce, ergo, like stuff like covid in the long run by making it less vulnerable to subsequent shocks.

Vincent Geloso: We are not appreciating how much the possibility of less government intervention could have been better than what we ended up doing. I’m not saying there’s action when you deregulate, action to deregulate would have been superior to actions that led to more regulations to more intervention. And I think on net is actually a good case to be made. There’s a good article by Douglas Allen in the international Journal of economics and business, I think where he points out that the cost of lockdowns was… Although they did save live. Let’s not lie, lockdowns did save lives on net but the economic cost per life saves compared with other potential measures like for example deregulating or allowing trial basis for covid vaccine. So people knowing full well that it’s not fully vetted, but you can take it if you want, would have been much cheaper than what we ended up doing.

Vincent Geloso: So when I tell people these arguments, they generally start understanding which tells me that the most important job is to distill this to the simplest form possible. So that it can be said in the shortest amount of time possible and repeated multiple times until it sinks in at least I guess as a countervailing narrative to people who have claimed that there should have been just given more powers to government. I think that is the claim that needs to be combated because it is historically wrong. It is also factually based on very limited understanding of how institutions work and tend to be very narrow-minded. I think in terms of what you… If you care about global health. It’s very narrow-minded.

Chelsea Follet: So what do you hope to be the main lesson that people will take away from this paper and your other work on this topic? If you could just distill it as succinctly as possible.

Vincent Geloso: Economic freedom increases economic growth that we know, but by accident of increasing economic growth, it makes us less vulnerable to the vast majority of causes of death that happened worldwide. And by accident, they make us less vulnerable for future events of outbreaks of diseases of commerce such as plagues, flus, cholera doesn’t apply that much anymore but something like variants of Covids as well. So the idea is economic freedom is a source of anti-fragility. It makes us richer, it makes us better off and it means that we are better able to deal with unexpected event and we can adapt faster. So we need to understand this. It needs to be repeated and it need to be told that don’t give government blank checks for policies that are immediate but whose long-term costs are harder to assess. I think it’s safer to go with policies that have very low short-term cost and very low long-term cost as well. They should be privileged and you should put a pretty high discount on anything that creates uncertainty about costs in the future. If you are pretty certain that there is no cost in the future, that probably a set of policies you could go with.

Chelsea Follett: Thank you so much for speaking with me. This has been absolutely fascinating and I hope our listeners will check out your work on this topic. And you’re doing so much amazing research on a wide variety of topics, again that followers of should find to be of interest. So congratulations on yet another insightful paper. And thank you again for joining the podcast.

Vincent Geloso: Thank you very much.