COVID-19 hospitalizations and deaths are rising in the United States as the highly infectious Delta variant of the SARS-CoV‑2 virus has become the dominant strain in the country. These serious cases are almost entirely limited to people who are not vaccinated against the virus; for the vaccinated, infection rates are much lower and nearly all infections are no more troublesome than a cold or — at worst – a bout of the flu, and often go unnoticed altogether.

COVID-19 caused at least 11 percent of all U.S. deaths in 2020, making it the third leading cause of death, behind only heart disease and cancer. So far in 2021, COVID has killed more than 200,000 more Americans, meaning it will be a top killer this year too. Yet, about a third of American adults haven’t gotten vaccinated against the virus. This is beyond baffling; if there were a highly effective, very-low-risk, zero-out-of-pocket-cost medication against becoming seriously ill or dying of cancer (and that also lessens your family’s risk of getting cancer), you’d take it, right?

For many of the unvaccinated, refusal to get inoculated is linked to political, religious, and racial identity. Some also say they don’t want the shot because it is “experimental,” a justification that has been defended by politicians and TV talking heads. A recent survey of unvaccinated Americans found that 30 percent said they would be more willing to get immunized if the vaccines were fully approved by the U.S. Food and Drug Administration. Many anti-vaxxers argue that government efforts to get people to take an experimental medication are big government run amuck.

Thing is, in saying the vaccines are “experimental,” these people are relying on big government to justify their going unvaccinated.

To date, nearly 350 million doses of the Pfizer/​BioNTech, Moderna, and Johnson & Johnson vaccines have been administered in the United States, and hundreds of millions more have been given worldwide, in a drive that has been ongoing for more than half a year. For all intents and purposes, these medications stopped being experimental a long time ago.

All intents and purposes save one, that is. The vaccines, like all medicines introduced in the United States since early in the 20th century, are available only by permission of the U.S. government. Ordinarily, the FDA only approves a medication after extensive testing to show its safety and effectiveness. The agency has long been criticized for requiring far more testing than is reasonable, thereby delaying the introduction of beneficial drugs to the U.S. market. Currently, the FDA is allowing the SARS-CoV‑2 vaccines only under Emergency Use Authorization (EUA), meaning they haven’t received the agency’s full blessing. Given the national COVID emergency and early data indicating the medicines’ high degree of safety and effectiveness, the FDA decided to allow their administration. (Worth noting: the FDA is keeping other SARS-CoV‑2 vaccines off the U.S. market despite evidence of their safety and efficacy.)

Put simply, the vaccines are not experimental; they just don’t have the government’s full approval. And the FDA is notorious for its risk-aversion in granting approvals. To receive the agency’s blessing, a medication must undergo three phases of agency-reviewed testing. Roughly speaking, Phase I focuses on the product’s safety, Phase II examines its effectiveness in treating its targeted medical condition, and Phase III studies its effects in the presence of complicating factors. The three available vaccines had each completed Phases I and II and were well into Phase III with great results when they were granted EUA. Since then, plenty more data have been collected showing the medicines’ safety and effectiveness. Pfizer/​BioNTech began the application process for full approval back on May 7 and completed it in June; Moderna started the process on June 1 and should complete it soon. J&J is expected to begin the process in the coming weeks. Yet the FDA probably won’t grant approval to Pfizer/​BioNTech until September at the earliest and could drag it out to early next year. Meanwhile, COVID goes merrily on.

So, yes, the anti-vaxxers are right that the SARS-CoV‑2 vaccines do not have full FDA approval. But when they use that justification, they’re just relying on the foot-dragging and risk-aversion of a federal agency and ignoring the ample evidence of COVID-19’s danger and the safety and efficacy of the vaccines.

Meanwhile, the government has doled out all sorts of benefits because of the COVID emergency, from helicopter money, to enhanced unemployment benefits, to blocking housing foreclosures and evictions. Yet there are plenty of open jobs around the country. Perhaps these assistance efforts were needed in the first year of the emergency, but it’s difficult to justify continuing them when safe and effective vaccines against the virus are readily available. With rare exceptions for people with medical conditions that prevent them from being inoculated, those who are avoiding immunization should not receive government COVID benefits. And they shouldn’t justify themselves by using the government to claim the vaccines are experimental. Their doing so is as big-government as it gets.

With tremors subsiding from the Supreme Court’s Fulton decision (discussed here, here, etc.) authorities in Philadelphia will now face a policy question: to what extent should they attempt to get around the ruling so as to re-enact blanket anti-discrimination rules for foster care, even if the effect is to drive from the field the successful local Catholic Social Services agency? Just before the pandemic, I testified to the House Oversight Committee about clashes between religious accommodation and LGBT anti-discrimination law. While my testimony ventured into many areas, from government contracting to the role of federalism to the positions taken by the now-departed Trump administration, a good bit of what I wrote related to children’s services, in particular foster care and adoption. You can read my comments here.

As I pointed out, the debate is one in which both sides contend that their position will best expand the pool of qualified potential foster and adoptive parents. On one side, the Family Equality Council supports broad anti-discrimination rules so as not to “allow child-placing agencies to reduce” that pool by turning away families. On the other hand, flat anti-discrimination rules could force out some qualified conservative religious agencies, and some qualified parents could be lost with them.

Just as it would be a humanitarian calamity to lose gay adopters and fosterers – who have often been in the forefront of tough placements for kids who have few other options – so it would be a humanitarian calamity to lose conservative religious agencies many of which also have long track records of success and may bring special advantages such as an intimate bond with birthmothers thinking over the relinquishment of legal rights to their newborns. If conservative religious agencies are driven out, which children will wait longer for a family, or age out of the system without finding one?

These conflicting claims should, in principle, be open to quantitative empirical evaluation, yet arguments often go forward by bare assertion only. (So far as I can tell, in every state there are agencies that participate in public adoption and foster care placement that are happy to work with gay parents.)

That said, the liberal side has a good comeback regarding situations in which an agency may command a bottleneck or monopoly in the matching process. Because of those situations,

I do agree that there are very real problems with declaring (as some would do) an absolute and indefeasible right of religious agencies to 1) participate in public social services contracts and 2) follow conscience rules of their choosing while 3) being free from “adverse action” of any kind. For example, as of not too long ago it was reported that the state of Kansas contracts with exactly two (2) agencies to run its foster care system. If both of those agencies demand religious exemptions, is Kansas to grant both? Now you’ve got a placement problem in the other direction, because qualified families might have no way into the system. So I agree that … both for the sake of successful placement and for the sake of legal equality, a state can reasonably require that the overall mix of agencies provide opportunity to all. That is different from requiring that each individual agency offer universal service.

I go on discuss arguments based on mismatch between foster parents and children.

Sometimes it is argued that religiously conservative agencies must be curbed or excluded because they will be bad at handling the needs of particular children. An example often given is the placement of a child who is, or turns out to be, gay with religiously conservative parents.

It is important to note that conflicts of this sort will arise whatever decisions the law makes about working with religious agencies. .…A foster child may hold, or develop, religious views that clash with those of foster parents, and this can work either way: the parents may be more devout than the child, or vice versa. …

The last thing we should want is the promulgation of ideological screening tests for foster parents. …Instead, we can uphold the more limited and traditional message that a public foster care system has a legitimate interest in seeking harmonious rather than conflict-ridden or alienating matches for each child.

More background in this excerpt from a Cato roundtable published at Cato Policy Report.

A recent study from the Urban Reform Institute is sounding an alarm about rising inequality and decreasing upward mobility in California. In fact, the report found four of the nation’s top ten worst metro areas to live in for upward mobility for African-Americans and Latinos are in California. Those regions include Los Angeles, Stockton, San Francisco and Bakersfield for African-Americans and Santa Rosa, Los Angeles, Stockton, and Modesto for Latinos.

The study goes on to point out that minority populations are disproportionately likely to live in poverty and are far less likely to move up the economic ladder. African-American and Latino families make up 43 percent of all families in California, but they compose around 60 percent of Californian families living in poverty and represent just 12 percent of people of those in the top 10 percent of Californian incomes. Other studies have shown California had the 4^th highest level of inequality of any state pre-pandemic. African-American families are twice as likely to be at the bottom of the income distribution than at the top. White families, meanwhile, are the exact opposite; they are twice as likely to be high-income earners rather than low-income earners.

And, we know that minorities have been hit especially hard during the pandemic, exacerbating existing inequality further.

This, despite the fact that California has one of the most generous social safety nets in the nation. Indeed, California provides an object lesson about the limits of redistribution as a weapon against poverty and inequality. Despite a progressive tax system and extensive social welfare programs, California has the highest poverty rate in the nation.

Of course, inequality is not, in and of itself, a bad thing. The economic dynamism that drives growth and produces wealth will inevitably lead to a certain level of inequality. However, too much of California’s inequality results from government policies that make it harder for low-income Californians to take advantage of a growing economy.

The Cato Project on Poverty and Inequality in California has spent the last two years studying the ways in which the state’s policies exacerbate poverty and inequality. We have found a variety of policies in areas as far reaching as housing, criminal justice, education, social welfare, and economic regulation contribute to the problem.

Consider, just one example: housing. A number of state and local policies, including zoning, the California Environmental Quality Act, and building fees have limited the supply of housing and driven up costs. A report from the California Association of Realtors found that the average family would need to make at least $127,200 a year to buy a home in Los Angeles. Only 25 percent of the LA population could afford a home when the study was conducted in 2019. This means that some Californians reap a windfall from rising property values, while others are artificially locked out of the housing market. Making housing more affordable will allow minorities, with a long history of discrimination in the housing market, to accumulate intergenerational wealth. Owning more assets means that people can leverage the equity in their homes to pay for other needs.

It is unavoidable; inequality will most likely increase due to this most recent economic downturn. This trend will be no different than the one seen for the past 40 years. Inequality would be more permissible if economic mobility increased in places like California. But this is not just an issue of class, but of race. Increased economic mobility is particularly important for historically disadvantaged minority groups. Even before COVID-19 and the widespread adoption of telework, people were moving out of California at an alarming rate. If Californians want to preserve the dynamism that made their state so wealthy, policies have to reflect these values. Low taxes, low barriers to entry, and affordable housing will contribute to an inclusive economy for all.

The Cato Project on Poverty and Inequality will release a full set of recommendations for how California can better address poverty and inequality at a conference in Sacramento on October 21.

President Joe Biden said that the richest Americans should “start paying their fair share” of taxes and that his proposed tax increases would ensure that the “wealthiest 1% … just pay their fair share.”

Senator Elizabeth Warren wants to make “changes to our rigged tax code so that the wealthy pay their fair share.”

Senator Bernie Sanders wants to make sure that the “wealthiest people … begin to pay their fair share of taxes.”

To shed light on these statements, we can look at Congressional Budget Office data on federal tax shares by income group. The CBO chart below includes individual income taxes, corporate income taxes, payroll taxes, and excise taxes. The lowest-income three quintiles, or three-fifths of households, are grouped together. The top 1 percent has been split out of the top quintile.

The share of federal taxes paid by the top 1 percent increased from 14.1 percent in 1979 to 25.3 percent in 2017. The share paid by the overall top quintile (the 1 percent group plus the 81st to 99th percentile group) increased from 55.1 percent in 1979 to 69.2 percent in 2017. The share paid by the other four-fifths of households has fallen substantially.

For reporters, an obvious follow-up question when politicians say that high earners are not paying their fair share is: “How high do the top shares need to rise before they are fair?”

Data for the CBO chart is available here.

Average tax rates by income group are discussed here.

The pandemic has caused or accelerated the demise of numerous U.S. companies, and your local department stores are among the hardest hit. Government lockdowns and consumer reluctance in 2020 intensified longstanding pressures on the brick-and-mortar retail industry, pushing many iconic names, such as Neiman Marcus, J.C. Penney, and Belk, over the edge and into bankruptcy – events that have elicited laments about not only the companies and workers involved but the broader, long-term decline of brick-and-mortar retail and, by extension, the American middle class. Such claims, however, are heavy on nostalgia but light on facts – especially when it comes to the e‑commerce jobs replacing lost department store jobs. Indeed, while department store closures are undoubtedly difficult for the companies, workers, and (perhaps) communities involved, their secular decline has little to do with the state of the middle class and may, in fact, be something to celebrate.

On the first issue, the decline of department store jobs actually coincides with rising median personal incomes and disposable incomes (though the latter data are incomplete):

As we’ve discussed here previously, other data on middle-class wages and incomes show that the primary cause of the “shrinking” middle class is Americans moving up, not down, the financial ladder. Thus, there’s little data to suggest that “the collapse of America’s middle class crushed department stores.” Instead, this is far more likely a simple case of – pandemic aside – increasingly wealthy Americans preferring the convenience and variety of e‑commerce or the uniqueness of brick-and-mortar niche retail over the traditional department store model – a preference that anyone who’s recently wandered a cavernous department store looking for a shirt or toaster, only to find it’s out of stock, probably understands. (And don’t even get us started on the parking garages.)

Second, there’s reason for optimism when considering the jobs in e‑commerce that are most likely replacing many of those lost from department store closures. As Figure 2 below shows, e‑commerce and related jobs began their steady rise just as department store jobs began to fall (around 2010):

These e‑commerce jobs are not just increasing but – contrary to conventional wisdom – increasingly well-compensated. As the Progressive Policy Institute’s Michael Mandel recently explained, for example, the “e‐​commerce era” (2013–19) has seen hourly earnings for production and nonsupervisory workers in the warehousing industry increase 11.5 percent (inflation-adjusted)—a much better pace than brick‐​and‐​mortar retail and other industries. In the last year, moreover, wage gains in retail/​warehousing/​delivery (5.2 percent) outpaced private-sector wage gains (4.4 percent).

In fact, Mandel finds that “blue-collar” and administrative jobs in e‐​commerce/​warehousing now pay better than in the oft-revered manufacturing sector or the private sector overall, while the “picking and packing” jobs done by e‐​commerce fulfillment workers “are clearly better paid than the typical jobs in the brick‐​and‐​mortar retail sector, by about 30 percent.”

With e‐​commerce fulfillment centers popping up all over the country—there are 110 Amazon centers in the U.S. alone, and they’re planning 1,000 more (to compete with Walmart, which just announced raises for its e‑commerce workers)—these jobs are increasingly “local.” (Large e‑commerce sites often help small retailers (brick & mortar or otherwise) too – local jobs and output that wouldn’t be included in the data here.)

Furthermore, as Figure 3 below shows (latest data available), warehouse and other types of jobs in e‑commerce compare quite favorably to similar jobs at department stores:

As Mandel notes, the wage data above do not include benefits or alternative forms of non-cash compensation, for example, the company stock (“restrictive stock units”) that many Amazon employees receive. That many e‑commerce jobs do not require the standard workday schedule or can be done remotely also can provide workers with more flexibility and contribute to a better work-life-balance. (And as one of us who spent many long weekend hours on his feet in a Dallas Galleria shoe store can confidently state, those mall retail jobs are hardly cushy gigs.)

These figures also show the variety of jobs that e‑commerce companies – known for their sophisticated technology and unparalleled customer service – offer. Some require physical prowess and limited education or training, while others demand “soft skills” (for customer-facing operations), organizational skills (for managerial work), or even mathematics or engineering degrees.

All of this paints a much more hopeful message about the future of American retail and the dynamic U.S. labor market more broadly, as well as the necessity of considering the “creation” and not just the “destruction” in the standard Schumpeterian process. Retail – driven by both longstanding changes to consumer preferences and the more recent effects of COVID-19 – is undoubtedly experiencing disruptions that can be difficult for certain American workers. But many of the jobs lost are being replaced by jobs that are, on average, better than the old ones in several important ways (not to mention more responsive to consumer wants and needs). While this process can be painful for some, especially during a pandemic, it is an unavoidable part of economic growth – one that, contra the pessimism and nostalgia, will make us all better in the long run.

One of the most interesting things about the COVID-19 pandemic is the way it has exposed previously existing flaws in so many government institutions. Many of California’s long-standing problems, from housing to the criminal justice system to business regulation have been both exacerbated and highlighted by COVID. In particular, the pandemic has made it difficult to ignore problems with the state’s public school system.

For example, nearly all California public schools remain closed, and most cities have no plans for when and how to reopen. As a result, almost six million California children are currently unable to attend classes. While Los Angeles County schools could reopen today under state regulations, LA Unified School District’s reopening date is still pending, as negotiations with the teachers’ union drags on. Meanwhile in San Francisco, which has yet to put forward a reopening plan, the school board has been embroiled in a fight over renaming schools.

School closures are bad for children in many ways. Children suffer psychologically from the absence of contact and socialization. They are less able to build relationships with their teachers, and studies show that academic performance declines substantially. Parents often have to sacrifice work and income in order to stay home and care for school age kids.

All of these problems are particularly severe for poor and minority students who frequently lack access to broadband and other “study from home” materials. A McKinsey report predicted that white students would be set back four to eight months worth of learning, while students of color could be set back eight to twelve months.

Of course, California schools were not exactly thriving before the pandemic. The Golden State ranks 39th in reading and 41st in math performance at the eighth grade level. Nor is this a question of funding. The state ranks in the middle of the pack when it comes to education funding, spending roughly $12,000 per student, more in big cities. In Los Angeles, the public school system spends just under $19,000 per student, the 7th highest of the top 30 largest districts.

Responsibility for California’s educational failures is shared by local school districts and the state. While some observers have pointed to the power of teacher unions in the state’s politics, it’s necessary to dig a little deeper to get to an answer. Specifically, California’s schools, even for large cities, are run by largely independent school boards, rather than mayors. Members of these school boards are elected in low-turnout elections, in which voters may not have much information about the candidates. In a 2019 runoff election for a seat on the board of Los Angeles Unified School District, for instance, turnout amounted to less than 8 percent. While this election was an outlier for its low turnout, even in the 2020 election, turnout for LAUSD districts three and seven elections was lower than countywide turnout as a percent of registered voters by about 5 to 13 percent. The voters who do turn out are disproportionately white, compared with the students who the district serves. Although some cities have moved away from this approach, in San Francisco and some other cities, board members are elected to at-large seats by the district as a whole, instead of to subdistrict seats, which further dilutes the voice of minority voters.

This system contrasts with big-city school districts elsewhere in the country, including in New York, Washington D.C., and Chicago, where city governments control schools through a variety of means including the appointment of an individual or board who manages the schools. While this system isn’t perfect, it at least gives voters a higher profile elected official to hold accountable than their local school board. Notably, a proposal by then-Mayor Antonio Villaraigosa to gain control over Los Angeles’ schools failed in court. Another approach, more common in the Southeast, is to use county-wide districts which, despite the troubled history of education in the South, has allowed for more equity-focused reforms in recent years.

Meanwhile, at the state level, there has been long-standing hostility towards the state’s charter schools, one of the few bright spots for California education. Charters have outperformed more traditional public schools in California for students who are in poverty. One study from Stanford University showed gains equaling 14 days’ worth of learning in reading and 29 days in math. And despite concerns that charter schools may siphon money from traditional public schools, there’s evidence that shows increased charter enrollment has no ill effect on districts’ finances.

Despite this, California’s school funding system caps the additional funding that charter schools can receive to help them serve disadvantaged youth, cutting funding by about one-fifth compared to traditional public schools, and more for charters that have high concentrations of disadvantaged students.

And, it’s worth noting that the state lacks any other form of school choice.

The COVID crisis has further exposed, among other problems, the ways that California’s educational system marginalizes disadvantaged students and limits the schools that perform best for them. On the other hand, this is an opportunity to get things right for the future and build back a more inclusive society. As California recovers from the pandemic state policymakers would do well to examine the systems that failed and to implement reforms that emphasize accountability so that Californians can enjoy the benefits of a competent government going forward.

Cato’s project on Poverty and Inequality in California will be keeping on eye on this debate as it progresses.

Economists are pretty much united in their opposition to rent control. Yet, as I’ve written before, price controls on rents have been making something of a comeback in recent years across the country.

One new “rent stabilization” proposal is Bill 52–20 in Montgomery County, Maryland (MoCo). This legislation would institute an annual cap on rent increases for currently uncontrolled properties that are close to rail and bus transit stations. The maximum increase would be linked to the previous year’s residential rent component of the Consumer Price Index for urban consumers in the Washington-Metropolitan Area. To translate: landlords wouldn’t be able to raise rents above some variant of rent inflation for the whole region.

In recent history, properties in affected locations have, on average, tended to see rents increase more slowly than this metric. But market rents are likely to differ year-to-year and property-to-property. If the demand for rental accommodation was strong in MoCo transit areas relative to supply in a given year, the rent regulation would “bind” – keeping rents depressed below market levels, in turn creating shortages of rental property in the area. Many rent control proposals seek to protect tenants against “economic eviction” by capping rent increases within tenancies, while allowing them to adjust between tenancies. This policy would not allow such market adjustments in prices when tenants move out. So, the dislocations would worsen over time.

It’s almost impossible to predict the magnitudes of the negative economic impacts, given they are influenced by the business cycle and a range of other economic phenomena. But economists have a good idea of their direction. An Economic Impact Assessment by the Office of Legislative Oversight, written by analyst Jacob Sesker, is scathing about the likely consequences:

Residents of rent stabilized units would periodically benefit from lower rent increases. Residents of non-rent stabilized units would likely face increased rent costs. The economic benefit to households is smaller than the economic cost to businesses, in part because the household sector would absorb employment and earnings losses associated with decreased revenue for businesses in the real estate industry. Artificially constrained rents will also have a negative impact on asset values and property tax revenues.

Research indicates that rent stabilization could lead to reduced supply of rental housing and upward pressure on the prices of unregulated units (including owner-occupied units). This reduced supply could occur as a result of condominium conversion or reduced construction activity. Research also indicates that rent stabilization programs often result in disinvestment by owners, including deferred or foregone maintenance. There is evidence that rent stabilization has led to neighborhood deterioration or increased crime in some locations.

This damning verdict is a good summary of what the economic literature predicts. But evidence from previous rent control experiences suggests it could be worse still. Rent controls can harm the labor market by deterring mobility, since they encourage those lucky enough to benefit from the controls to remain in properties unsuited to their circumstances or prospects. This can also lead to a shadow economy of bribes and waitlists for accommodation. The retardation of supply is likely to be exacerbated further as well, because landlords will rightly perceive rent stabilization as the thin of the wedge. In response to a lot of the negative consequences outlined, in time politicians are highly likely to propose additional legislation to control other aspects of the landlord-tenant relationship.

For more on recent rent control efforts, see here, here, and here, or the articles linked below.

I also contributed a chapter on rent regulation to an excellent overall volume on price controls edited by Christopher and Rachel Coyne, entitled “Flaws and Ceilings: Price Controls and the Damage They Cause.”