by Vincent Geloso (King’s University College at Western University Canada), discussing Werner Troesken’s ‘The Pox of Liberty’
Shutdowns, quarantines, lockdowns and curfews impose economic costs. Yet, from a public health perspective, shutdowns, quarantines, lockdowns and curfews have benefits in that they limit contagion risks and deaths. There is thus a trade-off to be made. Economists, epidemiologists and others have tried to measure the costs and benefits of the measures presently adopted by governments. The idea is to identify which measures are too extreme in that they increase economic distress [i], might induce behavioral responses that mitigate the effectiveness of public health measures [ii] or that are simply too costly compared to other alternatives.
However, these trade-offs understate the complex web of issues associated with public health measures. At least, that it is the conclusion that emerges after reading Werner Troesken’s The Pox of Liberty: How the Constitution Left Americans Rich, Free, and Prone to Infection (University of Chicago Press, 2015).
Few economists (none, probably) would dispute that the state has a role in the domain of public health. After all, while self-quarantining exists, it would clearly be “underprovided” if marginally disinclined individuals were not somewhat coerced into quarantining themselves. Thus, there is a role for government. Normally, this is the end of the story – at least from the perspective of welfare economics. “Not so” replies Troesken! Institutions that exert the coercion necessary to produce public health measures are also able to use coercion for other, less beneficial purposes, which also generate a series of trade-offs.
The first trade-off
Troesken concentrates on inoculation and vaccines in the late 19th and early 20th centuries, to argue that the United States was an incredibly rich country by the standard of the time and also exhibited exceptionally high (and probably underestimated) smallpox death rates compared to other countries. To explain the puzzle, Troesken argues that by expanding and securing economic freedoms, the Constitution also constrained the ability of governments to prevent contagion of infectious diseases in the short-run. Under the Equal Protection and Due Process Clauses of the Constitution, numerous public health measures were overturned – including measures to make vaccination compulsory. Consequently, Americans were likelier to die from highly contagious diseases.
Yet, the same constraints also protected property rights and economic freedoms, which allowed Americans to grow exceptionally rich during the late 19th and early 20th centuries.
The second trade-off
Certain diseases are easily combatted thanks to economic prosperity (either directly through improved nutrition or indirectly through the ability to make certain investments). Other diseases are less sensitive to the income of the people they maim or kill. [iii] Thus, it might be conjectured that the Constitution made Americans richer and sicker from smallpox while simultaneously reducing the likelihood of their dying from other diseases. This is the basis of Troesken’s chapter, “The palliative effects of property rights”. The wealth of America made it easier to invest in capital-intensive projects to deal with waterborne diseases and typhoid fever. Troesken demonstrates how the protections afforded by the Constitution encouraged investments in water treatment infrastructures because it protected private firms from politically opportunistic behavior and bondholders from default. These protections made Americans less likely to die from typhoid fever.
One could reply to Troesken that the United States is, in many ways, an oddity. Yet, this strange trade-off can be seen through a global lense as well. If Troesken is correct, institutional regimes that score high with regards to economic freedom are ill-equipped to combat infectious diseases as the latter are better dealt with by strong and capable states. Thus, economic freedom would show a zero, or maybe even a positive, relation with death rates. However, these same regimes would be better able to combat “poverty diseases” as economic freedom promotes growth thereby improving the ability to combat certain diseases. Economic freedom would exhibit a negative relation with death rates from poverty diseases. Leandro Prados de la Escosura who compiled time-series of estimates of “economic liberty”, [iv] showed that this relationship was testable. His measures are very similar to those used in the modern literature on economic freedom but with some differences. Regressing death rates from smallpox and typhoid fever on economic liberty data allows to test the validity of Troesken’s argument.
The result of such a test can be seen in Table 1 below. The relationship is bivariate and plagued by the problem of a relatively small number of countries providing cause-specific death rates. Thus, it ought to be taken lightly; it is presented only to suggest new directions of enquiry. Nonetheless, it is supportive of Troesken’s core idea: Economic liberty has no statistically significant effect on the log of smallpox death rates. However, it does have a strong significant effect on death rates from typhoid fever.
This complex trade-off can be summarized: one set of institutions makes us healthier and poorer now while making us less healthy than we could be in the future; the other set of institutions make us sicker and richer now while making us healthier than we could be in the future. Simplified in this manner, we can see the value of the points made by economists such as James Buchanan and Ronald Coase – institutions are not “all you can eat buffets”.
In the current crisis, this insight about the roles, advantages, limitations and consequences of public health measures is too often set aside. But this does not make it irrelevant. Unfortunately, terms of explaining this powerful and crucial insight, I am a poor substitute for Werner Troesken, [v] who died in 2018. Nevertheless, his writing ought to be on all our minds when we consider the proper response to the current crisis.
[i] W. Kerr et al. 2017. “Economic recession, alcohol, and suicide rates: comparative effects of poverty, foreclosure, and job loss.” American Journal of Preventive Medicine, Vol. 54, n. 4, pp. 469-475.
[ii] A, Mesnard and P. Seabright. 2009. “Escaping epidemics through migration? Quarantine measures under incomplete information about infection risks.” Journal of Public Economics, Vol. 93, no. 7-8, pp. 931-938.
[iii] See notably the works of B. Harris, (2004). “Public Health, Nutrition, and the Decline of Mortality: The McKeown Thesis Revisited.” Social History of Medicine, Vol. 17, no. 3, pp. 379-407 and D. Bloom and D. Canning, (2007). “Commentary: The Preston Curve 30 years on: Still sparking fires.” International Journal of Epidemiology, Vol. 36, no. 3, pp. 489-499 for a summary of the complex relation between prosperity and health.
[iv] L. Prados de la Escosura, (2016). “Economic freedom in the long run: evidence from OECD countries, 1850-2007”. Economic History Review, Vol. 69, no.2, pp. 435-468
[v] I have applied his insights to the case of the Cuban health care system: see V. Geloso, G. Berdine and B. Powell, “Making Sense of Dictatorships and Health Outcomes”, British Medical Journal: Global Health, (forthcoming); G. Berdine, V. Geloso and B. Powell, (2018). “Cuban Infant Mortality and Longevity: Health Care or Repression?” Health Policy & Planning, Vol. 33, no. 6, pp. 755-57.
A longer review of “The Pox of Liberty” by Vincent Geloso is available here: https://notesonliberty.com/2017/01/19/the-pox-of-liberty-dixit-the-political-economy-of-public-health/
See also, Clay, K.; Schmick, E. and Troesken, W. (2019) “The Rise and Fall of Pellagra in the American South”, Journal of Economic History 79(1):32-62, DOI: https://doi.org/10.1017/S0022050718000700
and reviews by Kenneth F. Kiple in The American Historical Review, https://doi.org/10.1086/ahr/110.2.501 , and a review by Alan M. Kraut in Bulletin of the History of Medicine:https://doi.org/10.1353/bhm.2006.0062