The short answer is "yes", although not immediately, and not inevitably. My reasons for an affirmative answer are partly demographic and partly economic. Asia has a large fraction of the world's population, and their biggest economies are generally experiencing rapid growth as they narrow the gap in living standards with the West.
To start with the demographics, about 4 billion persons, or almost 60% of the world's population, live in Asia. India and China alone have about 2 ¬Ω billion individuals. Other Asian countries with populations in excess of 100 million are Japan, Indonesia, Pakistan and Bangladesh, while Vietnam and the Philippines each have almost 100 million persons. In addition, Asia's population is growing much faster than that of either Europe or North America, so that 20 years into the future, Asians will constitute more than 2/3 of the total world population.
By contrast, the whole European Union has only about 500 million people, and the very low birth rates in almost all countries within this Union imply that its population will be falling over time, unless offset by steep levels of immigration. The United States is still growing- partly fueled by considerable immigration- but more slowly than Asia's. As a result, the populations of Europe and North America will decline over time, perhaps absolutely but surely relative to the growing numbers in the rest of the world.
Large populations alone do not have much impact on the world economy, as seen from the rather minor economic influence of both China and India prior to 1980, or the unimportance to the world economy of Sub-Sahara Africa's 800 million persons. Asia must have rapid economic growth during the coming several decades for it to become the major player in the economic world. Fortunately for them, China, India, Indonesia, Vietnam, and some of the other larger Asian countries discovered during the past 20 years many of the vital ingredients required to produce economic progress.
These ingredients include first of all a reliance on private companies and competition, and a much smaller role for government direction of the economy. China started along this path in the late 1970s, while India began to throw off its socialist traditions in the late 1980s and early 1990s. Second in importance is the utilization of the world economy to find markets for Asian exports, and to attract foreign capital to finance its rapid industrialization, although India has lagged far behind China in using both world capital and world markets. Most Asian countries also have recognized that human capital is the foundation of modern knowledge-based economies, and they have begun to emphasize investments in education and training.
As a result of these and related policy shifts, Asia as a whole experienced rapid economic growth during the past 20 years, and has narrowed the gap in per capita incomes with the rich countries of Europe and North America. The major Asian economies are likely to continue to grow rapidly for the next decade, and perhaps well beyond that decade, given how far behind Asian per capita incomes still are, the thirst of most of its population to become rich like the West, and the momentum their economies have built up. I say "perhaps" beyond the next decade because one cannot be sure that leading Asian countries will not shift away from growth-producing policies in the more distant future.
its rapid growth in both per capita income and population implies that Asia's importance in the world economy will increase quite rapidly. As a result, Asia will become a far more important source of consumer demand not only for products made in Asia, but also for exports from America and the EU. In addition, it is likely that researchers and companies in Japan, China, India, and elsewhere in Asia will generate an increasing share of the world's important innovations.
Greater economic dominance of Asia does not necessarily mean that the United States will not continue to be the world's leader in per capita income and innovation. The development of Asia can stimulate the US and the EU economies by providing greater opportunities for trade, including valuable imports and large markets for its exports, and other advantages from having a more developed and larger Asia. The economic threat to the West is not Asia's development, but it is government excessive interference in the performance of markets, like the automobile bailout in the US, that may choke the very competitive system that created Western wealth, and demonstrated how to become rich to countries elsewhere.
To be sure, as the economic center shifts to Asia, that continent will expect much greater influence over international institutions, like the IMF and the World Bank, ia greater role in determining common international trade policies, more say on climate policies, and on many other world economic issues. The larger Asian countries will also expect to have a more important role in determining world security and anti-terrorist policies. On security issues and possibly on climate and some other international questions, major conflicts might well emerge between countries like China and India, and the United States and the EU.
Articles in the New England Journal of Medicine on April 30, and in the New York Times on May 19, discuss a proposal now before Congress to impose a tax on sugar-sweetened sodas in order to reduce obesity. Taxes are ordinarily intended to raise revenue, but some taxes, such as taxes on alcohol and tobacco--and on carbon emissions, should such a tax ever be passed--are designed not to raise revenue but to alter behavior, and the more they succeed in altering behavior the less revenue they generate.
Sugar-sweetened sodas are high in calories, are drunk in great quantity, and because they have little nutritional value don't substitute for other foods; they are a net addition to caloric intake. The NEJM article estimates that consumption of such sodas adds an average of 125 to 150 calories per day to the average American's diet, and cites studies that estimate that the elasticity of demand for such products is about -1, so that a 10 percent soda tax tax could be expected to reduce consumption by about 10 percent, with the result, according to the author of reducing the average person's weight by about 2 pounds a year.
I am skeptical, because the author ignores the possibility of substituting untaxed sugar-sweetened foods or beverages. People who crave sugar will find no dearth of substitutes for sugar-sweetened sodas. Moreover, most consumers of these sodas are not and never will be obese. They may well be overweight, but all that that means is that they are heavier than the "ideal" weight calculated by physicians; if they are only slightly or even moderately heavier, the consequences for health or social or professional success are apparently slight.
To the extent that a soda tax would cause substitution of equally sugared foods, it would not only have no effect on obesity; it would yield no revenue--a material consideration because supporters of the tax hope, albeit inconsistently, that it will both reduce obesity significantly and contribute significantly to financing the Administration's ambitious and very costly program of health-care reform.
There are many obese Americans, in the sense of ones who are grossly overweight (with some being morbidly obese), and we should consider whether society should be concerned with obesity if not with mere overweight. Obesity impairs health, and, in most segments of the population it diminishes social and professional success as well, and so it can be regarded as self-destructive behavior. Some of it is involuntary--there are people whose genes make it virtually impossible for them to avoid becoming obese--but most obesity could be avoided by careful diet and exercise. The obese are people who by dietary choice and preference for a sedentary style of life have traded off the costs of obesity against the costs of being thin and have decided (at least in a "revealed preference" sense--they may not have consciously chosen a style of life that predisposes them to obesity) that the costs of thinness preponderate over the benefits. And in general we do not try to prevent people from making such tradeoffs.
But there are two situations in which preventing people from choosing the style of life that maximizes their utility can be defended (provided certain assumptions are made about cost and efficacy) on economic grounds. One is where consumers are unable to evaluate a product or to act upon their evaluation; another is where a voluntary transaction imposes costs on other people which the transactors do not take into account.
The first is a significant factor in the soda market. The sellers advertise very heavily to children, who do not have the knowledge or the self-control that they would need to be able to resist such advertising. In well-ordered households, the parents regulate children's access to television and the Internet and know they should limit the children's consumption of sugar-flavored drinks and do limit it. But in many modern American households, especially but not only those in which there is only one parent, children's access to soda and soda advertising is not restricted.
The solution, though, is not a tax on sodas, as such a tax would have only a small effect. A ban on advertising would be preferable; it would probably impose only slight costs on adult consumers of such drinks, because the advertising of such drinks contains little information. It is true that such a ban would reduce new entry into the soda market and that this might lead to higher prices, but if so that would reinforce the effect on sales of the ban on advertising.
As to whether by increasing obesity the sale of sugar-flavored sodas imposes costs on other people besides the buyers, the evidence is mixed. Obese people have more health problems than the non-obese and hence higher annual medical costs; they also lose more time at work because of illness. Their poorer health increases the medical costs of other people in their insurance pools and reduces the productivity of their employers, assuming realistically that employers cannot selectively reduce the wages or health benefits of their obese employees. Cutting the other way, obese people have a reduced life expectancy, and the shorter a person's life, the less an above-average annual cost of medical care translates into an above-average total (lifetime) cost. But assuming nevertheless that the net social costs of obesity are positive, this would be a ground for arguing for taxing obesity, but such a tax would be unacceptable as well as cruel. The alternative of a soda tax would be unlikely to have much effect, for the reasons stated earlier.
Are there better ways of fighting obesity, assuming it is worth fighting? Probably not. Education would probably have very little effect, because almost all people know that being fat has bad consequences and that eating foods rich in sugar and butter and not exercising increase the likelihood of becoming obese. Obesity is concentrated in the lower middle class, which contains a high proportion of people who have very high discount rates, which prevents them from giving significant weight to the future consequences of present behavior.
Children may be ignorant about the costs of obesity and the effects on it of sugar, but because of lack of self-control and children's inability to imagine themselves as middle-aged adults, I doubt that trying to educate them in the dangers of drinking sugar-sweetened beverages would be effective.
A tax on calories, or on high-calorie foods or ingredients, would be difficult to design and administer and would impose welfare losses, without significant offsetting wealth gains, on thin people. A further problem is that fattening foods, including sugar-flavored sodas, have fallen in price over time relative to fruits and vegetables and other healthful foods, so that a tax on calories would be highly regressive.
A modest measure would be to bar the sale or other provision of sugar-flavored sodas and other fattening foods in schools, and the substitution of nutritious low-calorie school lunches for the present fare. In addition, more school time could be allotted to physical education, which in recent years has diminished in most schools. The cost of these measures would be modest and they would have some effect in reducing obesity.
The number of overweight children and adults has grown sharply since 1980. The explanation is usually partly based on the increased availability of sodas and fast foods that have many calories. Also emphasized is the growing number of leisure hours spent at sedentary activities, such as watching television and using computers and cell phones. To combat obesity, an article in the April 30, 2009 New England Journal of Medicine by Brownell and Frieden argues for a tax on sugared beverages. I agree with Posner that this is a bad idea.
From the data presented by the authors of that article, only a very high excise tax on sugared beverages might reduce calorie intake enough to significantly affect the number of overweight and obese children and adults. According to these authors, sugar-sweetened beverages now account for about 10 to 15% of total calorie intake. They also claim that a review of various studies indicates that a 10% increase in the price of beverages reduces consumption by about 8%. These assumptions imply that a tax on beverages that increases its price by 10%-that means a 10 cent tax on a can of soda that sells for about $1.00- would slightly reduce the intake of calories from sodas by 0.8% to 1.2%. Even this overstates the total effect on calorie consumption, given that consumers who like sugar would substitute toward cakes, candies, and fruit drinks that naturally have lots of sugar. The result of this tax on beverages would be at most a very small reduction in the intake of calories and sugar. Indeed, it is quite possible that since consumers do not only buy products on the basis of their sugar and calorie content, these substitutions away from beverages and toward sweets and other drinks induced by a tax on beverages could actually increase calorie and sugar consumption.
In addition, as Posner indicates, there is little reason to tax the many consumers of sodas and other sweetened beverages who do not become obese, and whose consumption does not cause any social problems. That is why the usual recommendation is not to tax all drinking, but only heavy drinking, or better still only the heavy drinkers who cause auto accidents and other harm to innocent persons. A similar approach to the problem of overweight individuals would not tax consumption of beverages or fast foods, but would directly tax excess weight. Such a tax would be unusual to say the least, but it could be implemented if desired.
To me, calculations showing the minor effects of moderate taxes on sugared beverages on weight suggest that such taxes would be only the opening salvo in an effort to tax fast foods and other foods with many calories. One justification given by the authors of the New England Journal of Medicine article for caloric taxes is that the growing rate of obesity is partly due to ignorance of consumers, especially children, about the harmful health consequences of consuming many calories. It is also alleged to be partly due to the inability of consumers to act on the information they have because they are alleged to lack self control in their eating habits. These authors also argue that consumers who eat too much and become overweight impose costs on taxpayers since much medical care is financed out of government tax revenues. I do not find these arguments persuasive.
As Posner indicates, children without enough parental guidance and supervision are more likely than adults to be ignorant of the health consequences of high calorie intake, and children are also less able to exercise self-control over their eating. Very much offsetting this, however, is that the negative health consequences of being overweight and even obese will generally be significantly lower for children than for adults. The reason is that aside from very extreme obesity, the really harmful effects to overweight children will not usually kick in for another 25 or more years when they are in their forties or older. However, one can reasonably expect sizable progress during the coming decades in the development of drugs, such as lipitor, that will reduce the health consequences of high cholesterol and excess weight for heart conditions, diabetes, and some cancers. From that perspective, perhaps even ignorant and impulsive children are not acting so stupidly by indulging themselves in their eating since the future will likely see the development of drugs that will alleviate many serious medical conditions.
To be sure, taxpayers will pay for much of the cost of the development and use of these new drugs. This brings us to the argument that excess weight imposes costs on others through the health payment system. Yet such a health payment "externality" argument is hard to use consistently. Consider a person who significantly shortens his life because of heavy smoking, and thereby reduces the amount of public spending on him through social security, and subsidized health care. Would those who advocate taxes on beverages and other foods because obese persons make use of publicly funded health benefits support a subsidy to smoking if smoking cuts the use of health care and social security benefits? Clearly not, and nor should they. The same logic implies skepticism toward arguments to tax sugared beverages because obese persons make greater use of the health care system.
Many doctors and others who advocate taxing sugared beverages and fast foods at heart do not believe that consumer taste for sugar and fast foods should be taken into account in devising public policy. Perhaps not, but they have to advance better arguments than they have done so far to justify policies that interfere with the exercise of these tastes and desires.
Posner and I decided to post again this week on the conservative movement because of the great interest in our discussion last week. I will try to respond to some of the thoughtful comments and criticisms, and clarify some of my claims.
I claimed in that post that the current Republican Party is trying to incorporate two inconsistent sets of beliefs: one is the support of competition and generally freer markets, and the other is the advocacy of interventionist policies on various social issues, such as gays in military, stem cell research, or in international affairs. Both these positions are often linked together as "conservative", but they involve contradictory views of government. I argued for a consistent conservative position that supports individual choices, and opposes big government. To be sure, government intervention may be required when individuals make decisions that impose sizable external costs (or benefits) on others that are not incorporated into their decisions. On this approach, however, the harmful (or beneficial) effects on others must be considerable before government actions would be justified because governments are generally so inefficient.
A blog by the excellent development economist William Easterly
(http://blogs.nyu.edu/fas/dri/aidwatch/2009/05/confused_american_liberals_and.html) suggests a different definition of conservative beliefs, as do some of those who posted on our blog. Easterly argues that the true definition of a conservative is someone who respects traditions and existing institutions, and who wants to limit change. Although that is a common definition of the essence of conservatism, I do not believe it is a consistent or sensible one. I do agree that considerable respect for what has survived and thrived in the past is warranted, and my anti-big government conservative would certainly respect institutions that have performed well for a long time. However, conditions do change, sometimes in crucial ways, and a sensible conservative philosophy would recognize the necessity of changing one's views when this happens, even when that goes against venerable traditions.
To take one example, until the latter part of 19th century, married women in England were not allowed to own personal property, including money, in their own name, Even though they had a long history in England and many other countries, such laws were discriminatory and undesirable. Note that some other countries, notably Islamic countries, did not have such laws. Another example: laws against divorce may have made sense in an environment where women did not work and had many children since women would have faced serious financial difficulties if their husbands divorced them (I say "may have" because laws might have protected women's rights to financial support if divorce had been allowed). For these reasons the great philosopher, David Hume, who was a strong supporter of freedom of choice, argued for laws against divorce. However, anti-divorce laws make little sense in the modern world when many married women work to earn a living, and they have few children. Therefore, a true conservative that generally opposes government involvement in private decisions would fully support laws that make divorce quite easy to obtain by both men and women.
Many comments on my discussion centered on the issue of abortion, and that is an especially difficult issue for someone who believes in individual rights. For there is an obvious conflict between the rights of women to control their bodies and their motherhood, and the rights of fetuses that might be far enough along in their development to be considered human beings. This is a very prominent example of the general difficulty of determining where to draw the line when the rights of children conflict with the rights of their parents. I do not claim to have a definitive resolution of this conflict in the case of abortion, or in some other parent-child conflicts. But I come down on the side of women's rights to make decisions about their body, except in very late term abortions where fetuses can survive outside a woman's body, and therefore can be considered real children.
Abortions often allow women to have children at later dates when they are better prepared emotionally and in other ways to have children. In effect, abortions in these cases would allow women to substitute children who would be born later, and would be better taken care of, for the fetuses that are aborted now. That seems to me to be a tradeoff worth making. Moreover, laws banning abortion would be difficult to enforce against wealthy women since they would be able to get abortions illegally under reasonably good conditions, including by going abroad. Poor women who want abortions would suffer the most from enforcement of an anti-abortion law, as they are the ones who mainly suffer from laws against the use of drugs and many other types of laws.
Conservatives are not isolationists on international affairs since they recognize that the interests of a country like the US are affected by what happens in other countries. This is clear in Reagan's successful efforts to wear down the Soviet Union during the Cold War, or in more contemporary efforts to anticipate terrorist attacks planned in other countries. However, just as with the use of government powers on purely domestic issues, conservatives would recognize that governmental foreign actions are usually very inefficient (as in conducting wars), and are often driven by special interests. A conservative philosophy would limit governmental international interventions to cases where the risks from not taking actions are very large, and the interventions reasonably straightforward.
My post last week on the decline of the conservative movement in the United States received more than 200 comments. Many of them were very thoughtful, and many others were very shrill.
It is apparent that global warming, abortion, and guns, in approximately that order, arouse particular emotions among many passionate self-described conservatives. About the first of these three issues, I wish to clarify my position briefly. I do not think there is much doubt that carbon emissions generated by human activities increase the amount of carbon dioxide in the atmosphere and by doing so raise surface temperatures. How much they raise them and with what consequences remain uncertain. I merely think that the risk of catastrophic global warming is sufficiently great to warrant more vigorous remedial efforts than have been attempted thus far by the United States.
About abortion, my personal position is the same as Becker's. I will add only that I think the legality of abortion should be determined by legislatures rather than by courts. I think Roe v. Wade was a mistaken decision, though probably one that we shall have to live with.
Similarly, I think private gun ownership should be a matter for legislative determination, rather than judicial. The Second Amendment is unclear about whether there is a right to own guns for personal self-defense or hunting, and I don't think delving into eighteenth-century documents argued to bear on the meaning of the amendment is a sensible way of doing constitutional law in the twenty-first century.
Some commenters seem to believe that because I am critical of the current conservative movement, I must be a liberal--maybe even a left-wing Democrat. To those commenters, disbelief in global warming, in the regulation of gun ownership, and in the criminalization of early as well as late abortions is a litmus test of "true" conservatism. There are, in fact, multiple conservatisms, as Becker and I have emphasized. Like Becker, I believe in limited government and so do not support government activities that cannot be justified convincingly by reference to considerations of economic prosperity, basic individual liberties, or domestic or national security. I do not favor the curtailment of individual liberties on the basis of religious beliefs, nostalgia for the "good old days," or traditional social beliefs (such as distaste for racial minorities or homosexuals) that cannot be related to economic, libertarian, or security values. One of Reagan's great political achievements was to unite the diverse conservatisms in a single political movement that managed to gain the support of a majority of the American people.
That unity has now dissolved, and it will require skillful political entrepreneurship plus overreaching by liberal politicians (or the kind of left-wing extremism that marred the late 1960s and early 1970s) to restore it.
The ideological division within the conservative movement has been compounded by a decline in intellectual and managerial competence--a tendency to substitute will for intelligence ("I believe it so it must be so"). Some commenters note the intellectual and ethical failings of liberals, and they are right to do so. But it is only at the Right, at present, that anti-intellectualism is embraced and extolled.
I sense intellectual deterioration of the once-vital conservative movement in the United States. As I shall explain, this may be a testament to its success.
Until the late 1960s (when I was in my late twenties), I was barely conscious of the existence of a conservative movement. It was obscure and marginal, symbolized by figures like Barry Goldwater (slaughtered by Lyndon Johnson in the 1964 presidential election), Ayn Rand, Russell Kirk, and William Buckley--figures who had no appeal for me. More powerful conservative thinkers, such as Milton Friedman and Friedrich Hayek, and other distinguished conservative economists, such as George Stigler, were on the scene, but were not well known outside the economics profession.
The domestic disorder of the late 1960s, the excesses of Johnson's "Great Society," significant advances in the economics of antitrust and regulation, the "stagflation" of the 1970s, and the belief (which turned out to be mistaken) that the Soviet Union was winning the Cold War--all these developments stimulated the growth of a varied and vibrant conservative movement, which finally achieved electoral success with the election of Ronald Reagan in 1981. The movement included the free-market economics associated with the "Chicago School" (and therefore deregulation, privatization, monetarism, low taxes, and a rejection of Keynesian macroeconomics), "neoconservatism" in the sense of a strong military and a rejection of liberal internationalism, and cultural conservatism, involving respect for traditional values, resistance to feminism and affirmative action, and a tough line on crime.
The end of the Cold War, the collapse of the Soviet Union, the surge of prosperity worldwide that marked the global triumph of capitalism, the essentially conservative policies, especially in economics, of the Clinton administration, and finally the election and early years of the Bush Administration, marked the apogee of the conservative movement. But there were signs that it had not only already peaked, but was beginning to decline. Leading conservative intellectual figures grew old and died (Friedman, Hayek, Jeanne Kirkpatrick, Buckley, etc.) and others as they aged became silent or less active (such as Robert Bork, Irving Kristol, and Gertrude Himmelfarb), and their successors lacked equivalent public prominence, as conservatism grew strident and populist.
By the end of the Clinton administration, I was content to celebrate the triumph of conservatism as I understood it, and had no desire for other than incremental changes in the economic and social structure of the United States. I saw no need for the estate tax to be abolished, marginal personal-income tax rates further reduced, the government shrunk, pragmatism in constitutional law jettisoned in favor of "originalism," the rights of gun owners enlarged, our military posture strengthened, the rise of homosexual rights resisted, or the role of religion in the public sphere expanded. All these became causes embraced by the new conservatism that crested with the reelection of Bush in 2004.
My theme is the intellectual decline of conservatism, and it is notable that the policies of the new conservatism are powered largely by emotion and religion and have for the most part weak intellectual groundings. That the policies are weak in conception, have largely failed in execution, and are political flops is therefore unsurprising. The major blows to conservatism, culminating in the election and programs of Obama, have been fourfold: the failure of military force to achieve U.S. foreign policy objectives; the inanity of trying to substitute will for intellect, as in the denial of global warming, the use of religious criteria in the selection of public officials, the neglect of management and expertise in government; a continued preoccupation with abortion; and fiscal incontinence in the form of massive budget deficits, the Medicare drug plan, excessive foreign borrowing, and asset-price inflation.
By the fall of 2008, the face of the Republican Party had become Sarah Palin and Joe the Plumber. Conservative intellectuals had no party.
And then came the financial crash last September and the ensuing depression. These unanticipated and shocking events have exposed significant analytical weaknesses in core beliefs of conservative economists concerning the business cycle and the macroeconomy generally. Friedmanite monetarism and the efficient-market theory of finance have taken some sharp hits, and there is renewed respect for the macroeconomic thought of John Maynard Kenyes, a conservatives' b√™te noire.
There are signs and portents of liberal excess in the policies and plans of the new administration. There will thus be plenty of targets for informed conservative critique. At this writing, however, the conservative movement is at its lowest ebb since 1964. But with this cardinal difference: the movement has so far succeeded in shifting the center of American politics and social thought that it can rest, for at least a little while, on its laurels.
The roots of conservatism go back to philosophers of the 17 and 18th centuries, such as John Locke, David Hume, and Adam Smith. They opposed big government, and favored private decision-making, primarily because they argued that individuals were generally better able to protect their interests than could government officials tied down by bureaucracy and special interests. They claimed further that making decisions for oneself and suffering the consequences were usually good for people, even when these decisions led to bad outcomes, because learning from one's own mistakes helps improve future choices.
Modern conservatism is only partly built on these roots. Its support of competition and private markets, and hostility to sizable regulations, is a direct descendant of the classical liberal views, as espoused for example in Smith's Wealth of Nations. Competition and markets puts faith in the power of individuals and firms to satisfy their own and society's wants better than when governments manage firms and whole industries. To such conservatives, the present US government's management of the American auto industry is an invitation to disaster for that industry. It would be much better to have allowed GM and Chrysler several months ago to be reorganized through bankruptcy proceedings. Classical conservatism would recognize that the intervention of the Fed and Treasury in the finance sector may be necessary, given the crisis in that sector, but classical conservatives would look for this involvement to end as soon as possible.
The other pillars of modern conservatism are aggressive foreign policy to promote democracy in other countries, and government actions to further various social goals, such as fewer abortions or outlawing gay "marriage". These views fit less comfortably in the conservative tradition that is hostile to big government and skeptical about the use of government power to override individual decisions. Classical conservatives would argue that governments are no more effective at interventions internationally or on social issues than they are on economic matters. So governments should usually not get involved in such issues, except when its intervention has enough benefits to compensate for governmental inefficiency and ineffectiveness. This usually is not the case.
A political party, like the Republican Party, may encompass both economic conservatives, and social and international conservatives, even though the philosophies behind each type are inconsistent with each other. The reason is that for parties to compete at the national level, or in other large political arenas, they have to put together coalitions of groups with different interests, such as different types of conservatives, or market interventionists with laissez faire internationalists. However, even large parties are generally stronger and more coherent when different factions share most of the same philosophy. The Democratic Party is now fairly well united in the belief that governments frequently do better than private decision makers in both the economic and social spheres.
Similarly, the Republican Party under the leadership of Eisenhower and Reagan had a more consistent classical conservative philosophy of supporting private markets in the economy, little military involvement in other countries, and even little interference in social arrangements. Neither Eisenhower nor Reagan was particularly religious, and they did not have strong views about gays or abortion rights. The shift in the attitudes of the Republican Party toward more interventionist views on social issues, and to some extent also on military involvement to create more democratic governments in other countries, has created this crisis in conservatism. Better stated, it has created this crisis in the conservatism of the Republican Party.
I believe that the best way to restore the consistency and attractiveness of the conservative movement is for modern conservatism to return to its roots of skepticism toward governmental actions. This involves confidence in the capacity of individuals to make decisions not only in their own interests, but also usually in the interests of society at large. Such a shift in attitudes would require more flexible approaches toward hot button issues like gays in the military, gay marriage, abortions, cell stem research, and toward many other issues of this type. It will not be easy for the Republican Party to emerge from the doldrums if it cannot embrace such a consistently skeptical view of government.
My book A Failure of Capitalism: The Crisis of '08 and the Descent into Depression was published a couple of weeks ago, but it had been completed on February 2. In order to bring the book up to date, reflecting events since then and also some fresh thinking and reading on my part, I have decided to do some update blogging of the book under the auspices of the Atlantic Monthly, which hosts a number of blogs. The address of my Atlantic blog is http://correspondents.theatlantic.com/richard_posner/. The entries are, as in the Becker-Posner blog, in reverse chronological order. The first two entries have now been posted.
I will not be using any material from the Becker-Posner blog in the Atlantic blog (the name of which is A Failure of Capitalism), or vice versa. My blogging with Professor Becker will therefore be unaffected.
Every century or so, a major flu pandemic (an epidemic with a global impact) occurs. The last one, the Great Pandemic of 1918-19, infected many hundreds of millions of people, and killed about 50-100 million men and women worldwide. The Asian flu of 1957 is estimated to have killed 2 million people, and the pandemic of 1968 killed over 1 million persons. Various false alarms have also occurred, such as the swine flu outbreak in 1976 in the US, where over 40 million persons received flu vaccinations, and 30 persons died from the vaccinations, while few died from the flu itself. Is this swine flu scare the "big one" that has come almost 100 years after the Great Pandemic? If so, what would be its economic cost?
So far, less than 1,000 persons worldwide are confirmed to have swine flu -they are mainly persons under age 16- and the death rate is a few percent of those contracting the disease. However, it is still too early to be confident that the effects of this swine flu will be mild or moderate since flu pandemics, including the Great Pandemic, often go through phases, where the first phase is rather moderate, and the next phases are much more devastating. Whatever the course of this flu outbreak, health officials are confident that before long a major pandemic will strike that could wreak devastation throughout the world.
Note that flu pandemics involve a huge " externality" because infected individuals have limited incentives to consider the likelihood of infecting others when deciding how much contact to have with other individuals. This externality justifies a significant public health involvement in trying to control the spread of flu during a pandemic.
Consider the cost of a modern flu pandemic with the impact of the Great Pandemic. Fifty million deaths in 1918-19 constituted about 2.8% of the world population at that time. Since world population has grown twofold since then, a flu pandemic at this time that killed 2.8% of all people would take about 150 million lives. This is a staggering number. It can be converted into an equally staggering monetary value by using findings on what people are willing to pay to avoid fatal health and other risks- what economists call the statistical value of life. It is estimated that this statistical value of life for a typical young adult in the United States is about $5 million. This means that a young person would be willing to pay about $500 for a decrease of 1/10,000 in the probability of dying at each age, and $1000 for a decrease in the probability of dying of 1/1,000.
To get a monetary value of the aggregate cost of another such great pandemic, we assume that the comparable statistical values of life in other countries equal $5 million times the ratio of the per capita incomes to the US per capita income. For example, the statistical value of life for a typical young person in a country with half the per capita income of the US would be $2.5 million. Then if we assume that the same percent of the population would die from such a pandemic in all countries, the total cost of a pandemic equal in severity to the Great Pandemic would be over $100 trillion. This is such a huge amount that it is hard to visualize. It dwarfs in magnitude the effects of such a pandemic on world GDP, the economic effects that are usually calculated.
A study published in the science magazine Lancet in December 2006 by Murray, et al estimates that a modern pandemic of equal virulence to the Spanish flu that caused the Great Pandemic would kill not 150 million persons, but about 60 million people. They also claim that these deaths would be very much concentrated in poorer countries. Using Murray, et al's calculations to adjust my estimate of what people of the world would be willing to pay to avoid such a pandemic would reduce the estimate from $110 trillion to about $20 trillion.
The number of deaths from such a virulent flu might well be proportionately less than that caused by the Spanish flu because of important developments in the world health care system. On the one hand, the explosion in world population since 1919, the growth of cities at the expense of the countryside, and the development of air travel that led to much greater movement of persons across national boundaries imply that the spread of flu among people has become a lot easier. Offsetting these changes are others that make it a lot easier to contain the spread and severity of flu pandemic. Public health officials can more quickly isolate and identify the genetic composition of different flu strains than they could during the Great Pandemic. Officials of different countries are also in much greater contact with each other, and can collaborate to partly quarantine the epicenters of future pandemics.
Perhaps the most important development in recent decades that would save lives during a future pandemic are vaccines and antiviral drugs, such as Tamiflu. Vaccines might be produced quickly enough to inoculate huge numbers against new flu strains, even highly virulent strains. When taken early enough, the antivirals can greatly moderate the course of an illness and speedup recovery. The US and the European Union apparently have large enough stocks of antivirals to treat about 16% of their populations-the US supply covers about 50 million persons- while Japan has even large drug supplies relative to its population. The poorer countries of Africa and elsewhere are the least prepared to fight a major pandemic.
Of course, new flu strains may emerge that cannot be treated by the known antivirals. And bioterrorists may be able to produce and spread highly deadly viruses of all kinds. At the same time, however, drug companies are better prepared than even a few years ago to ramp up production of old drugs, and to develop additional drugs to fight new flu strains and other viruses that are not treatable by present drugs.
I have indicated that the vast majority of people are willing to pay a lot to gain protection against deadly flu viruses. This is why it would be desirable to greatly increase the stockpile of drugs and vaccines even if the probability of another pandemic were low, and its nature not known. For example, the expected worldwide cost in terms of willingness to pay to avoid the risk of another great pandemic that had a one in hundred probability of occurring during the next twenty years would be approximately 1/100 x $20 trillion, or about $200 billion. This cost would justify sizable increases in world spending on antiviral drug and flu vaccines.