Working Capital The Real Estate Podcast

Mandates, Lockdowns and the Law with Richard Epstein. Part 1 | EP89

Feb 5, 2022

In This Episode

Richard Epstein is our returning guest. Richard is an American legal scholar known for his writings on torts, contracts, property rights, law and economics, classical liberalism, and libertarianism. He is the Laurence A. Tisch Professor of Law and director of the Classical Liberal Institute at New York University, the Peter and Kirsten Bedford Senior Fellow at the Hoover Institution

In this episode we talked about:

  • Richard’s View on Lockdown
  • Moratoriums on Evictions
  • Policy Responses to Covid Pandemic

Check here the previous show with Richard: https://workingcapitalpodcast.com/the-impact-of-rent-control-and-eviction-moratoriums-with-richard-epsteinep52/

Transcriptions:

Speaker 1 (0s): Low everybody. Okay. So this week, and next we’re going to do something a little bit different and we’re having on returning guests, Richard a Epstein. If you saw his old episode, we talked quite a bit of boat, eviction, moratoriums, and a bit of a history of rent control. And I thought this week, and next we would talk a little bit more about the actual pandemic and COVID-19 in general, talk a little bit about its impact vaccine mandates and kind of the political landscape in Canada and the U S so I thought Richard would be a perfect guest for that.

He’s practiced law for over 40 years. He’s a legal scholar, and I believe still working with the Hoover Institute and New York university. So without further ado, check this episode out. And I should just note, if you liked this episode, feel free to go to working capital podcast.com. You can also download our financial model at that address. Okay. Check it out. All right, ladies and gentlemen, my name’s Jess for galleon, you’re listening to working capital. We have a returning guest on the show.

Richard Epstein. Richard is an American legal scholar known for his works on contracts, property rights, law, and economics towards classical liberalism and more. He is the Lawrence eight-ish professor of law and director of the classical liberal Institute at NYU and Peter and Kirsten Bedford senior fellow at the Hoover Institute. Richard. Good to have you back. How are you doing,

Speaker 2 (1m 27s): Thank you. I’m in given the set of the circumstances in the larger world.

Speaker 1 (1m 31s): Yeah, it is a, a lot has happened since we last spoke. We currently in, in the city of Toronto are back in a modified lockdown, which fingers crossed is going to be something that opens up on the 26th. I think today we had teachers going back to school, but then it was a snow day. So can’t get more Canadian than that.

Speaker 2 (1m 50s): Well, snow is no surprise. Look, the, the good news is, and this is a result largely and natural forces is one of the rules about viruses is what goes up, must come down. And it turns out the Alma chronic virus now seems to be on its downward slope a little bit earlier than some people expected. My view about this, is that the way in which we have handled the entire COVID situation? It means we’re not talking about pandemics that in cleanly, we’re talking about cyclical arrangements or endemics, and it’s just going to be very difficult to predict aid the length of the cycle, be this intensity of the cycle and three, the severity of the disease that comes with the intensity of the cycle.

And so, I mean, if we are going to continue to have a kind of a lockdown mode mentality as the first alternative, it’s likely we will be continuing to face this with COVID for the indefinite future. I mean, the notion that people had when they postponed their admissions to college or to law school in 2020, we’ll be out of this by 2021, nobody postpones today because they think they’re going to be out of it next year, or what’s also happened. And I think quite justifiably is nobody has any competence whatsoever in today’s experts who believe in only the science and all the science that nobody seems to think that that’s true, or if it is true, then science is very, very bad.

So there’s going to be an increasing level of popular discontent that’s likely to spill over. And I know in the United States, one of the things that will lead the Democrats into serious difficulties was that Joe Biden overclaim when he says, I know the cure to cancer at the cancer at the COVID and made the silliest recommendation imaginable where a mask outside, where they don’t do any good for a hundred days, and this thing will stop. Nobody’s going to believe that. And when you overclaim and under produce, your credibility is shot not only in the field that you bungle, but everywhere throughout.

So the COVID performance ratios will influence not only the COVID issues, but the general coloration of the political economy.

Speaker 1 (3m 51s): So on that point, I think when we last spoke, we talked a little bit about the history of rent stabilization. We talked a bit about how the COVID policies affected the real estate development community as a result of the moratoriums on, on evictions. How do you see from the, you know, the time we last spoke to the cases that have now come forward in, in your Supreme court with, with mandates, how have you seen this thing evolve from when we last spoke to now with this latest variant kind of coming through both the states and Canada?

Well,

Speaker 2 (4m 25s): It turns out there’s a twofold issues are that you have to contend with one, there are the various sort of legal arguments associated chiefly with administrative and constitutional, or that people bring to bear in the discussions about the COVID mandates talking largely in terms that are independent of the substantive merits of the program. And then there’s the other way where it says, let me just look at this vaccine, let me look at the underlying disease. Let me look at the available treatments and so forth, which take a much more medicalized view or the way in which it’s commonly dealt with.

And it was the way it was dealt with in the Supreme court is they did it in the first way. They were straight administrative lawyers. And with respect to the grand mandate, what they discovered was that the key issue was what sort of presumptions do you set in favor of or against government action, or there was an interesting conflict of authority with respect to this mandate. The general rule with respect to ocean mandates is there’s a lot of administrative deference for, but the general rule with respect to these emergency situations that apply only in grave times is that the presumption is set against them in the two decisions down below in the fifth and the sixth circuit, one of them is centered in Texas, the other and Ohio, the fifth circuit basically said, oh, this is the narrow COVID emergency problem.

The presumptions are against you. You lose, you get up to the sixth circuit and they say, oh, this is a general administrative law problem. The presumptions of seven, your favor, you win. When it got to the Supreme court, what they essentially did, they decided to stay with the skeptics on this issue. So they required very strong proof on this particular issue. And what they then found is that for something which was of this importance, it could not be done by an administrative fee that it required something that looked more like congressional authorization.

Now notice when I said that, I did not tell you whether the COVID thing was a good or a bad or in different ideally a mile understanding about most academic lawyers is that they are extremely skiddish in dealing with the underlying science. And so what they do is they tend to move their cases sharply in the other direction. I’m not a constitutional lawyer by initial training. I was changed in the English system. I started off as an Oxford lawyer and my torts casebook was actually prepared by a Canadian law professor named sessile, right?

So I mean, it wasn’t as though I was a stranger to all of this. And so we tend to not to start with administrative law. We started with Commonwealth when I came back to the United States. What I discovered quickly is that while the paradigmatic towards case of 1964 was one that involved an automobile collision at an intersection, you had to figure out who had the right of way. You can see what the rise of product liability law. We are now painting on a much wider canvas. We had starting to talk about medical injuries associated with Des and similar quantities.

And I was told by some very smart lawyers, they said, young man. And I was young at the time. They said, if you want to understand how to defend or deal with any one of these cases, you must master the science. Now they didn’t say you had to do the signs because you can’t do that. But they said, it’s like punching in the air. If you don’t know what’s going on. If you’re talking about Des you’re talking about asbestos and so forth, and I basically drank the Kool-Aid, I had a reasonably good, not spectacular science background. And so I’ve always made it a point to start in the opposite direction.

And so I keep up regularly on that literature. I do it with respect to global warming. I do it with respect to the various kinds of health conditions of which COVID is only one. And at that particular point, you start thinking about this case, Jesse, in a very different way, you say, well, the first thing you want to know is what’s the upside and the downside with respect to the various kinds of programs and the insight that I started with a long time ago in which I made a spectacularly wrong prediction under a thoroughly, right analysis, was that you look at this stuff and you start with 1918 and the Spanish flu, it killed 675,000 people, usually in a one day spurt.

And then you always ask people, how long did this last? And do you know how long it lasts? I bet you, it was nine weeks, nine weeks, nine weeks. And virtually everybody who died was in the prime of life. And they died ultimately of pneumonia because of what they call a cytokine rush, which is healthy. B people, seeing the virus try to set out the killer fluids, do it. And what they did is they drowned. You might literally, and we know much more about it today. We could a control for these things, but virtually the entire new movement is completely different from the old one.

This is something that affects people who are relatively old with serious comorbidities and anybody under 60 has only a meniscal chance of dying, unless they also have some very serious kind of comorbidity. So it’s a completely different kind of profile. And so what you kind of guessed it, looking at this sort of thing is if you sort of let it run, its course, it would go up and it would come down Shaw. But since it didn’t have the potency associated with the Spanish flu or the death rates would be very much slow, then that’s the way I thought about it.

I looked in the New York times and I looked also with respect to the Imperial college situation. And they have the following projections that they set up by the media, by July 15th, 2020, we will have 10 million active COVID cases in the United States and a similar proportion in Canada and in great Britain. And if you talk that the chart, it said as of July 1st, it would be relatively modest. And I said to myself, this has to be crazy because of everybody knows that this isn’t just going to come at that particular level and they’re going to take precautions much earlier on and they will be holy without regard to government action.

A lot of the adaptive behavior. There’s no point in engaging in strategic games. The bluff of your own life is at stake. And what you saw on March 9th, the day before this thing, and you know, everyone, transportation was down by 78%. Now people are taking all sorts of strange. I had that patients when they went to restaurants, this bumps and all the rest of that stuff. And you realize that these adaptions were going to take place. The government comes in and makes it more dramatic. But the projections that you actually had was the first peak that not come on, July 15th, 2020, it came on April 9th or 10th in 2020.

And it was follower than anything that anybody had predicted what the predictions were extremely dangerous at that high level, because people tried to gear up for something that was going to be just absolutely enormous. And so one of the things they did in New York city and several other major metropolitan areas, they said, we’re going to have such an onslaught of people in the hospitals. We have to take people who are COVID positive and move them out. So they moved them back into nursing homes where they probably cause an extra 30,000 best simply because you took a very potent person and put them into an environment where there were a lot of variable honorable people.

And what they then did is they opened up in New York city. The jab had sent the, you know, thousands of beds. The Trump administration sent a bunch of hospitals, ships, and none of it was ever used. Right? And all the people who made those projections 16 months later, essentially apologized for the fact that they were very, very wrong, but the interim damage had been done. And once you start to intervene, the natural cycle that you had in 1918 is not likely to continue. What you’re going to do is when you create an artificial foreign team, you slow down herb immune.

So I did some calculations. If you’re curious, tell me if you’re not well, it’s 675,000 deaths. And that was essentially a two and a half percent death rate out of people who got the disease, which was putting it around 20 odd million people coming out of this stuff that doesn’t get you to herb immune gossip, because you need to get the 60%. Well, we got there because it was a pretty rapid prop and some of my guests, and I’m not assigned this, but I am a structuralist is that there were a lot of asymptomatic transitions, which created an immunity, even though it didn’t create a disease.

And this is consistent with something you have to understand in dealing with COVID, which is you just don’t talk about medians. You have to talk about the bearings. And that means in effect that disease like the deadly Spanish flu is relatively innocuous for say 95% of the population that gets it. There may be some people don’t die, but get very sick and so forth. And the herd immunity took effect and it slows things down. We don’t have her. So I remember waking up one day in about may or June. And I said, oh my God.

So long as we protect a large portion of the population, it means that we’re not going to get the herb immunity. And the next time a new variant comes along, it’s going to have a highly vulnerable population because it turns out, and this is, I think a point that’s been well-established, but systematically ignored is that natural immunities are extremely effective in terms of dealing with the condition of my friend, Jay bought the Charia who’s collected and read all of these studies. I have not, you know, it says there’s not a single identification of a breakthrough case in either direction.

And nobody who has natural immunity has ever been seen to give the virus to anybody else. And nobody who has natural immunities has been seen to get the virus from anybody else. So you get a perfect wall. Well, at that point, what you want to do is when you start seeing natural immunities is you’ll let them ride. But when I made my terrible predictions very low and then try to correct them, what everybody said is you have to understand that people who are asymptomatic and give you COVID. But again, the key thing to understand is the distribution.

And so you have to do it in, let’s just do it in discrete terms because the continuity’s don’t matter for the well, so now you have either very high resistant people or very low resistant people. Okay? And you have you the very powerful, very weak viruses. And so you start looking at the parents and if you have essentially a very high resistance rate, you can carry in you a very high dosage of stuff and not get sick. And then when you transfer that some to somebody who has a low resistance state, you can actually give them the disease, the question your then have to ask what’s the probability of that happening, as opposed to the other distribution, which has people have ordinary levels, they get the week COVID stuff.

And then they transfer the week COVID stuff, all of the people who condemn asymptomatic transplant at the high high to the low load person, that was probably 2% of the case. That means that 98% of the cases are doing what they did in 1918. I used spreading the immunity asymptomatic so that you come to a conclusion much more quickly. If you would ignore the second tab and only worry about the 2% you are going to ban the transfers. If you take the whole hundred percent of the distribution into account, you’re not going to do that.

What you’ll try to do is isolate two kinds of specialized cases. If by some miracle you could figure out who is a very high resistant high transmitter type. You try to keep them out of circulation. And if you could certainly identify vulnerable populations, which you can, you try to keep them out of circulation. So they appointed a COVID test would not be the test that driver coming from Canada to the United States will reverse something. You mentioned happened to me before the show. It would be that you will not let the grandkids visit the grandmother.

If it turns out that she was in the COVID vulnerable portion. And so you’d get private administration of the cases in an effort to enforce this policy. And I’m all in favor of that. But when we do it, the other way, what we say is we forget the probabilities. We forget the benefits side. So we systematically overregulate as far as I’m concerned. And I think that the folks who did the great Barrington declaration, Jay and one called door, what probably not, probably pretty surely write about all that stuff.

Although interestingly enough, they didn’t do the probabilistic analysis either. Right? What they did is they just said, this stuff generally works. And what I try to do, knowing a little bit about games, theory and so forth was to figure out why they were right. Not to figure out why they were wrong. And I think they are right with respect to their general conclusion, but then you get everybody up. So that’s the first mistake they made. Second mistake is X. And they post, you can try to attack these things in two ways.

One is you can try to stop it from happening until you can try and cure it after it happened. Right? And it turns out there’s no dominant solution that is you’re not going to do only one or only the other. You want to get the optimal mix. So what’s the advantage of doing it. Soon. You can spare people. The illness what’s the danger is you have wild over breath, because if you’re talking about protecting 0.1% of the general population and so forth, you stop Miami.

But the ex post situation says this. If you get sick, we’re going to treat you. And the advantage of that is if you get it in time and know how to do the treatments, what you do is you have to now tackle 1% of the population instead of a hundred percent of the population you don’t need to quarantine. You certainly don’t want to give any medication to people whom you think is going to be asymptomatic. What slide, which means that virtually everybody under 40, probably 50 or even 60 doesn’t get any kind of treatment except maybe some HCQ ivermectin and kind of stops it.

The question you have to ask is safety. You have to ask effectiveness, okay, Jessie, on the safety stuff, it doesn’t matter what you use a drug for both of these drugs have been out there for a very long time with billions of usages. There’s a kind of an epic, epidemiological and FDA and drug type situation, which says the acid test for any drug is, do you give it to a pregnant woman? And the reason is during the first trimester of pregnancy, the rapid levels of cell differentiation can be easily interfered with, by some foreign substance resulting in something like the food over the mind flips, right?

And it, both of these drugs have been recommended and found safe for women who are pregnant, chances are there’s going to be no subgroup of the population for whom they’re going to be especially vulnerable. And we don’t have clinical studies of a hundred or 200 people. There have been hundreds of millions in the case of ivermectin billions upon applications, but which the safety has never been questioned. So what’s the downside. Well, it turns out Mr. Fallacy, who I think is a terrible master on this particular study. He says, well, you may get some kind of hard complications, but he’s talking about extremely low numbers, one in 10,000 or so for the relatively minor conditions.

But the overall profile on the safety is long use establishes general say, well, what about effectiveness? And I’m here. I like the Pope Rhett Butler, frankly. My idea, I don’t know, but I don’t give a damn. And what do I mean by that? Well, let’s suppose the thing is effective. What will happen is people will quickly use it. And when you measure effectiveness, it’s a completely different inquiry from measuring safety, with safety. You’re worried about, you know, that kind of, oh my God, this is going to take you from 0.1 to 1.4, 1.0 adverse effects.

You make, take a drug off the market when you get things like that. But if you can sell a drug, that’s going to have a 1% effectiveness and nobody’s going to buy, I possibly going to buy a drug, which can take you from a 2% cure rate to a 3% cure rate. So the effectiveness stuff has to be much larger to make it worthwhile. And then when it’s much larger, it’s much more easily detectable, right? Because we have 40% rate you can do. So the key thing is to let this stuff out there and then to get essentially a quantitative assessment.

Well, what did we do? Well, first we have the phony subjects that were done in Lancet, right? Edited. It should have been filed five because of the recklessness moves. You’d put his vote, but since he was anti-Trump, he was perfectly okay. And they had to retract that and they did. And then there was a Ford study in the news, and then the journal of medicine, they had to retract that because it turns out clinical studies are extremely difficult to do with viruses because essentially the theory of both ivermectin and HCQ is you have to catch it at a very early stage that prevent the things from breaking through.

Once they broken through, it’s useless to give the drug and it may have a slight negative effect. So if you don’t get the right controls on this, you can’t do it most critical studies. You know, people in a third degree, third stage cancers or something, you can begin everybody on April 15th and this drug, you have to do it on very different dates. And you have to have a physician who can record the accuracy. Well, this is extremely difficult to do through an organized clinical trial. And so what happens is people start to put together these various kinds of indices recording, all the cases that have come through my all sorts of people, this, by the way, in the United States and it’s worldwide is the common way.

Nobody trusts formal government warnings. They’re too rigid, too stiff, too out of date. So they do is they form voluntary associations and they collect the information and then they organize it and update it and give you recommendations as to which drugs and what combinations at what sequence at what those images at what time. And self-worth in an effort to do that. And so what you need to do is to encourage that ex-post collection rather than to rely on clinical trials. And then it’s also, if this is a game of trying to get advantages, you have to have a theory.

And what happens is it turns out there is a general theory that says, zinc is a very powerful agent for doing this, but if you give it alone, it’s not going to work. And so I have to do is you have to give them some other drug as this role might as soon as something which prevents in probation, and then you have to give them something else. The HCQ in order to make sure that you can find a way to protect those zinc from being wiped out. So they’re kind of tripartite situation. You’re not going to ask me to tell you everything about it. I don’t know enough about, but what you do know is the way in which this stuff ex-post works is it does not depend simply on trial and error because trial and error, cherish Jeffries, Jesse is too slow.

What it does is you got a theory that zinc in this combination has worked in other cases, and then you carry it over. Now, is this something which is just done for this, you know, or there is a wide class understanding of what we call off-label drug uses. I don’t know if you’re familiar with the term, but essentially it gets approved by a government agency. And then once it’s on the market, a doctor could use it for any other condition that he or she wants to do it. And in the United States where the numbers are pretty good, for many cancers, off-label uses are dominate.

On-label uses by five to one 10 to one ratio or whatever it is. And all of this is outside the formal system. It becomes the standard of care for malpractice, the standard of care for insureability and forth. So you get this back culture what’s happened here is they’re killing this off with respect to this drug. And they’re saying, if you go through the clinical trials or we’re going to go after you. And so, you know, the last blog that I read said, you can only get ivermectin in the United States. If you get a court order, they’re killing the off-label mark, right?

So now you kill off the ex post market. It puts greater pressure on the ex-ante market and you start getting these quarantines. But if you understood what was going on, it turns out that some people might be good targets for HQ, some not, but by having this thing on the wraps for the last 18 or 19 months, it means that you don’t get the aggregate data, which will start to tell you whether or not there are subpopulations that are especially prone to damages with this or 72 real advantages for trying to use it. What we do now is the same point I said before, everything is a matter of Marion’s right?

Same block won’t have the same effect on more people and the larger, the samples that you get, you can do it, and you’re reasonably happy to do this because you know that for all of these subsets, the negative side has been ruled out by the extensive use that has happened before. So this is the perfect case for running that situation. Then what we do is everybody wants to do basically become German autocrats. You know, the famous Maxim in German, I will say it in English because my German is terrible. At least today, all of that is not required as forbid or all that is not forbid and as required required, there’s nothing left the choice.

What this means is once we decide, this is a very good vaccine, everybody’s got a tick. Yep. But again, what have they done? They’ve ignored the variants, which is the key.

Speaker 1 (25m 31s): I want to ask you about that. So we’ve been kind of going through this process back to the extreme again, I think we talked before about us in Ontario, Canada being in lockdown again. Now what we have seen from businesses, chamber of comments, commerce, I think announced today that the biggest thing that’s killing us right now from a business standpoint that can be in real estate or business in general is the uncertainty of what the government is doing when we’re supposed to come back in any clarity. Originally, the vaccines, my understanding was that, you know, it was the target was to actually stop, you know, flatten the curve and then it had shifted.

And now the conventional wisdom we’re told is that it is you’re, you’re far, far more likely to end up into the, in the ICU or the hospital, if you are not vaccinated. Now in Canada, I believe double vaccination is at 82% as of right now. So I think Mo majority of Canadians do want to get vaccines. However, just to your point, natural immunity was, was almost a word you couldn’t use words you can say a year ago. And it’s interesting to me that I had COVID over the Christmas break and mail, like, God,

Speaker 2 (26m 44s): Yeah, there you go. Giving it

Speaker 1 (26m 46s): To each other. We might have. And what I find funny is that you have the congressional hearings in your country that just happened in the Supreme court cases. You have policymakers saying one thing, but I called the U S embassy about cause I’m flying to Florida next week. And basically they they’ve said just like Canada has, as long as I give them a positive test. I think the us needs a physician to show that you have recovered. Now you can cross without a molecular test. So to me that says that it’s admitting natural immunity from a policy standpoint.

So it, maybe you could talk a little bit about the, the kind of moving target and just as a footnote, one thing we do know in Canada, the last lockdown, what they said was no, no. The difference now is cases don’t matter anymore. It’s about hospitalizations. And I do think Canada is probably, I think it is the worst in the , if not one of the worst four per capita ICU beds. And one of the issues just to aggravate this even more is the fact that because of our policies, when it comes to testing, we have a bunch of nurses that have tested positive for this new variant.

So we’re even understaffed to a greater degree. So maybe talk a little bit about how this target has shifted and you know, where do you, where do you see this going? Because it is certainly impacting not just individuals but businesses, the at large, in, in both of our countries.

Speaker 2 (28m 7s): Okay, look, I mean, let’s just state this, first of all, it is true as a statistic that there are relatively few vaccinated people who end up in ICU, a similar place as relative, do they own vaccinate, which is an argument in favor of vaccination. So it doesn’t want to be, but you have to break the unvaccinated populations down into two plots unvaccinated with natural immunities and unvaccinated without natural moon. And if it turns out that the, all of the situations, all with unvaccinated people with no natural amenities, then the number is actually higher than it might otherwise appear.

And if you were somebody like that, you should think very seriously about the vaccine or getting yourself a natural immunity. So there are a couple of papers that have been written recently, which says, now that everybody gets this thing, if they’re under a certain age, because they’re going to survive that, and it’s better than the vaccine. And there’s a lot to be said for that position, but it’s certainly wrong to treat that statement as though it carries with it, an implication that natural immunities are no good or uncertain. And one of the lasting disgraces of the CDC is just kind of throws up his hands and says, we don’t really know very much about the door ability of the natural amenities or the backseat.

Now, one of the things we do know about is that some of the immunities that we’re talking about in these cases that come from natural sources and date from previous epidemics 10 years ago, even 50 years ago, if you were old enough for it. So we used to have something on durability with the vaccines. We have no information whatsoever. And so, so then the question is, well, what do you look at? You look at the past numbers and I’m just going to make a two comparison, and then I’m going to extrapolate from it. It turns out that the more potent vaccine is the maternal, but less potent is the Pfizer.

The more journal last longer, it gives a greater penetration than does the fine. But if you start looking to adverse side effects, the other side of that, it turns out that the Moderna vaccine is associated with more adverse events than is the Feisal, which is exactly what you would expect, right? The good and the bad are both simulated bias all above. So the question that you then have to ask as well, what is this situation? And the numbers in my view, keep changing that is what’s really happened in this case, is that people have to understand MRN.

A vaccine is not a vaccine. It’s a drug because if you look, but the CDC did was to change its definitions in the United States. So it’s no longer kind of a diluted version of the original stuff. It can be totally fabricated the way in which the MRR and a vaccine. Well, the natural immunities are like a bore spectrum antibiotic, but the MRI is a specific situation. And the way to understand that is you have a large number of links in this particular chain, and they take advantage of a principle known in a railroad, which is you take out 10 feet of a railroad.

You can’t go from one end of the country to the other, right. What they forgot to say is you take out 10 feet of a railroad. It turns out you can build a bypass around it at 40 feet and fix it back up again. And so what’s happening is that my guests and I would want, you know, I’m not a biologist, but I am a strategic game player. And I think is that you see the part of the track is broken and you’re a virus. You don’t do this by deep connotation, right? But you have so many mutations that are thrown up at a very rapid rate.

All of a sudden, one of the managers, the go around the particular break and all of a sudden, the vaccine turns out to be worthless because it’s been circumvented or compromised in some way. And that you have to really know what the composition is of subclasses Alma viruses. But the point I’m making is the prediction you would make from this theory is that it will turn out that the vaccines will be progressively more on ineffective because there’ll be more workarounds that the virus is able to do in order to defeat it.

So the prediction that you’re going to get is that it’s going to be less effective and it’s going to be less effective with each future innovation. That’s why Robert Malone, the guy who invented this stuff. I mean, he’s out there freaking out in public, right? Essentially an answer. I, you know, I may have created a deaf machine in some sense. Now he was right. I mean, early on the first round, possibly the cost benefits were very enormous, but the law marginal rates of return applied to everything, including vaccine usage.

And so if this thing is evolving in the way in which I suspect it is, then what would you would suggest is that the immunities that you get from the backseat will be a flow with durations. And in fact, the breakthroughs in both directions giving and getting will become watcher. And so the ratio of success between the natural immunities and the artificial immunities very heavily in favor of doing the natural immunities rather than this. And so this constant re vaccination program that’d be terrible. So that’s the first part. Second part is what are the adverse events?

When they did the swine flu thing, it turned out they were a real rush. They got the numbers completely wrong, and they gave all sorts of people. The vaccine, they didn’t give sufficient warnings, particularly for pregnant women. And the government had assumed all liability for bad warning. They ended up paying $4 billion in 1970s and 1980s for the bad vaccines that they put out on the market. Well, there is no government liability today, as far as I can tell. And under the emergency use authorization, I don’t think there’s one either for the companies or I’d have to check that, but I’m going to check it very soon because it’s something worth writing about.

And so what you’re going to see is diminished the effectiveness of this and the rising adverse side effect. So right now, I mean, I’ve seen at least one publication, which just simply collected a hundred articles, all of which pointed to some adverse events associated with Mr and a vaccine. Now you look at the studies and I did with a couple of handfuls, and they’re exactly what you’d expect in conclusive that somebody reports six cases of this three cases of that one case of that, somebody that clinical studies very hard to get broad spectrum stuff.

But if you then start to aggregate them and try to figure out, well, we’ve got 50 of these studies, which have three cases of death after taking a certain kind of vaccine. Now you’ve got 150. You have to make sure that you don’t have double counting a lot of other stuff, but you then become more cautious. And the same thing with respect to administration, just in the last several days, people said, Hey, this seems to lengthen the menstrual cycle. You do this to a woman who’s 35 years old, right. Who’s trying to get pregnant and this could be just devastating kind of stuff.

And do we know how long it lasts? Of course now, do we know how serious it is? Of course not. Right. Well, what’s the rule you take with respect to major conditions in essentially the population that’s right in the core of the distribution 20 to 40. Well, my view is you say the cost of COVID is very well. You say in effect the effectiveness of the various kinds of remedies, like ivermectin and ACQ is doubted, but certainly possible.

Oh, last thing you want to do is to give people other conditions for which there is no known cure. And so you do is you back off in the middle generation. So what are universities doing? They have undergraduates in their late teens. They have graduate students, postdocs in the twenties and thirties, and they impose the vaccine mandate and all of that. But me, I took it as it were under protest. Not that anybody care, but when you understand is when you’re 78, as I am, you’re not worried about reproductive success.

You’re not worried about, you know, going out and playing competitive sports in the Olympics and things like that. You all worried about something that might happen. And so the cost benefit analysis tends to shift by age a little bit more in favor of doing it. But rather than that, what you do is you look at these things and what are they counting? They shameful. What they say is, everybody knows it. This is not a question of individual Liberty. This is a question of collective responsibility, and everybody’s doing this to serve the common. Good. Have you ever heard that expression?

The promise. They don’t know how prisoner dilemma game place. And so I’m going to be just a little bit technical for a second, but the traditional prisoner’s dilemma game was that you get two people going into jail. And if each of them keep silent, then neither one gets convicted. But if one of them starts to Blab and the other one does and Blab, the guy who blabs gets the lightest sentence, and then a guy who doesn’t want to get so much heavier sentence. So some say, I don’t know what that other guy’s going to do.

I can’t talk to him. So they both Blab and they’re both worth or worse off than they would have been. If not the report. Now, the way this works is you now have a need for a public facility. It’s perfectly homogenous. It turns out, let’s say it’s a road on which there are houses on both sides and you impose the special assessment by majority vote. And every unit has to paint Penn dollars into it. And every unit gets $15 worth of benefit. If you did it by voluntary agreement, instead of all one, everybody would sit, let the other people build the road and it never gets built at all.

Right. So why is that not work? You don’t have how much in aid, right? And it also turns out that not only do you get differential effectiveness, but you get differential worse off. So you don’t have a prisoner’s dilemma game. If you turn out Jessie to be better off not taking the vaccine, no matter what anybody else does. Right. And if the same tools or somebody out, or what happens is under these circumstances, you now have the ability for self protection by isolation or by taking a vaccine or by teaching HCQ.

So you can get several solutions, which you can’t do when you’re building a road down the middle of the situation. So what happens is all of the collective action systems, all wildly optimistic because you can’t get the initial homogeneity on either the cost side or on the benefit side to make this thing work. So you have to just chill that particular language. This is not the kind of case where to apply. That doesn’t mean it doesn’t work like that with all diseases. And so it turns out smallpox is a very rigid virus. It doesn’t change virtually at all.

It also turns out that Cal parks is relatively innocent and we give everybody count pops. It’s an actual immunity against smallpox, and you do it individually and you do it collectible. But what happens to people look at this and they come to the following conclusion. I don’t care whether anybody else wants to take the stand backseat. I’m going to take it anyhow, because I’m better off. So it’s not a prisoner’s dilemma, gamma. And when you know the polio vaccine, you’re not old enough to remember this, but the polo polio vaccine came at the Joan speech and a mother place.

It got shut down every summer because of polio. And then the Salk vaccine comes out. And I mean, I was 11 at that time. And my father was adopted. You see people lining up around the block to take the shot, because essentially they were reasonably confident that it would prevent this forge. And they were reasonably confident that they didn’t seem to be any kind of potent side effects because it was done in the attenuation method, right? Like the small, like the other thing. And then there was a huge fight between him and save it whether you use the live virus or the dead virus, right?

Because the dead virus turns out to be as effective, but less, she was side effects, whatever. And they fought over this for 15 years, but this is just not what we are today. And if you would see people lined up around the block in order to get it, and the fact that you don’t see them lined up, suggest that maybe they know something that the other guys don’t, but the people who run me, Mr. Bouncy may have been a great firewall, just in some sense. But you know, now all of a sudden it becomes a social commentator talking about epidemiology, public health and game theory about what she knows less than nothing.

And ironically, he doesn’t learn those things. Right. When I said is, I’m sitting down there and I read the scientific reports. I don’t try to perform them. I don’t check the calculations on the this on, but I look at the abstracts and the major discussions on this stuff and try to figure out something from the methodology. And as I said, at the beginning of the show, that was the way I was told you had to do law at the beginning with the sire. And I think it’s, it’s the correct approach. So this has become an international travesty and the quarantines prolong the situation and expose you to something else.

And as far as I can see, I have not seen a single serious public official in out. I didn’t say commentator, who’s actually got this right. And I’ve seen many commentators who seem to get it right, or at least on some of it. And there’s some people who are really smart and they get much of it. Right? Some of it won’t, your job is in my case, it is not to essentially reproduce the date. I can’t do that, but I’ve been trained in, you know, I’m just old lawyer, right. But no, I mean, I’ve been trained in the science.

I, you know, I had to learn some games. I’m not a game theorist, but I had to learn it. It turns out from a very long time, I did sociobiology and evolutionary theory and inclusive fitness and all that stuff, which is absolutely critical for understanding how these things start to go in one way or another. And so having done the sociobiology and the games theory, and then all this other stuff, what happens is lawyers have the following set of tax advantages over specialists. I worked in five or six different areas that are relevant to this thing.

And, you know, I spent my entire life learning everything one-on-one, but the point is knowing one-on-one about a lot of stuff is extremely important. And many other people come in and they know 5 0 5 about one thing and 0.0 on other things, right. They had it, it turns out the person who has my kind of intellectual profile is probably better suited for figuring out what the systematic response would be on one condition. They don’t run ahead of the evidence in substance and barriers.

Why always talking to people who know more than they do about any one of these particular things. So your job is to synthesize the best rather than to make it up yourself. So, I mean, I do a lot of work on science cases have been for many, many years, starting in the early eighties with Des and the specialists and agent orange and the whole thing. And you don’t go near one of these cases unless there’s a specialist who’s worked in the area for years, it yourself.

Speaker 1 (42m 55s): So that was part one of two with Richard Epstein. And we’re going to cap off the second half of that conversation next week. So I hope you enjoyed it. And I hope you tune in next week. And if you want to download our financial model or check out other episodes, go to working capital podcast.com, hope to see you there.

Transcript

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Speaker 1 (0s): Low everybody. Okay. So this week, and next we’re going to do something a little bit different and we’re having on returning guests, Richard a Epstein. If you saw his old episode, we talked quite a bit of boat, eviction, moratoriums, and a bit of a history of rent control. And I thought this week, and next we would talk a little bit more about the actual pandemic and COVID-19 in general, talk a little bit about its impact vaccine mandates and kind of the political landscape in Canada and the U S so I thought Richard would be a perfect guest for that.

He’s practiced law for over 40 years. He’s a legal scholar, and I believe still working with the Hoover Institute and New York university. So without further ado, check this episode out. And I should just note, if you liked this episode, feel free to go to working capital podcast.com. You can also download our financial model at that address. Okay. Check it out. All right, ladies and gentlemen, my name’s Jess for galleon, you’re listening to working capital. We have a returning guest on the show.

Richard Epstein. Richard is an American legal scholar known for his works on contracts, property rights, law, and economics towards classical liberalism and more. He is the Lawrence eight-ish professor of law and director of the classical liberal Institute at NYU and Peter and Kirsten Bedford senior fellow at the Hoover Institute. Richard. Good to have you back. How are you doing,

Speaker 2 (1m 27s): Thank you. I’m in given the set of the circumstances in the larger world.

Speaker 1 (1m 31s): Yeah, it is a, a lot has happened since we last spoke. We currently in, in the city of Toronto are back in a modified lockdown, which fingers crossed is going to be something that opens up on the 26th. I think today we had teachers going back to school, but then it was a snow day. So can’t get more Canadian than that.

Speaker 2 (1m 50s): Well, snow is no surprise. Look, the, the good news is, and this is a result largely and natural forces is one of the rules about viruses is what goes up, must come down. And it turns out the Alma chronic virus now seems to be on its downward slope a little bit earlier than some people expected. My view about this, is that the way in which we have handled the entire COVID situation? It means we’re not talking about pandemics that in cleanly, we’re talking about cyclical arrangements or endemics, and it’s just going to be very difficult to predict aid the length of the cycle, be this intensity of the cycle and three, the severity of the disease that comes with the intensity of the cycle.

And so, I mean, if we are going to continue to have a kind of a lockdown mode mentality as the first alternative, it’s likely we will be continuing to face this with COVID for the indefinite future. I mean, the notion that people had when they postponed their admissions to college or to law school in 2020, we’ll be out of this by 2021, nobody postpones today because they think they’re going to be out of it next year, or what’s also happened. And I think quite justifiably is nobody has any competence whatsoever in today’s experts who believe in only the science and all the science that nobody seems to think that that’s true, or if it is true, then science is very, very bad.

So there’s going to be an increasing level of popular discontent that’s likely to spill over. And I know in the United States, one of the things that will lead the Democrats into serious difficulties was that Joe Biden overclaim when he says, I know the cure to cancer at the cancer at the COVID and made the silliest recommendation imaginable where a mask outside, where they don’t do any good for a hundred days, and this thing will stop. Nobody’s going to believe that. And when you overclaim and under produce, your credibility is shot not only in the field that you bungle, but everywhere throughout.

So the COVID performance ratios will influence not only the COVID issues, but the general coloration of the political economy.

Speaker 1 (3m 51s): So on that point, I think when we last spoke, we talked a little bit about the history of rent stabilization. We talked a bit about how the COVID policies affected the real estate development community as a result of the moratoriums on, on evictions. How do you see from the, you know, the time we last spoke to the cases that have now come forward in, in your Supreme court with, with mandates, how have you seen this thing evolve from when we last spoke to now with this latest variant kind of coming through both the states and Canada?

Well,

Speaker 2 (4m 25s): It turns out there’s a twofold issues are that you have to contend with one, there are the various sort of legal arguments associated chiefly with administrative and constitutional, or that people bring to bear in the discussions about the COVID mandates talking largely in terms that are independent of the substantive merits of the program. And then there’s the other way where it says, let me just look at this vaccine, let me look at the underlying disease. Let me look at the available treatments and so forth, which take a much more medicalized view or the way in which it’s commonly dealt with.

And it was the way it was dealt with in the Supreme court is they did it in the first way. They were straight administrative lawyers. And with respect to the grand mandate, what they discovered was that the key issue was what sort of presumptions do you set in favor of or against government action, or there was an interesting conflict of authority with respect to this mandate. The general rule with respect to ocean mandates is there’s a lot of administrative deference for, but the general rule with respect to these emergency situations that apply only in grave times is that the presumption is set against them in the two decisions down below in the fifth and the sixth circuit, one of them is centered in Texas, the other and Ohio, the fifth circuit basically said, oh, this is the narrow COVID emergency problem.

The presumptions are against you. You lose, you get up to the sixth circuit and they say, oh, this is a general administrative law problem. The presumptions of seven, your favor, you win. When it got to the Supreme court, what they essentially did, they decided to stay with the skeptics on this issue. So they required very strong proof on this particular issue. And what they then found is that for something which was of this importance, it could not be done by an administrative fee that it required something that looked more like congressional authorization.

Now notice when I said that, I did not tell you whether the COVID thing was a good or a bad or in different ideally a mile understanding about most academic lawyers is that they are extremely skiddish in dealing with the underlying science. And so what they do is they tend to move their cases sharply in the other direction. I’m not a constitutional lawyer by initial training. I was changed in the English system. I started off as an Oxford lawyer and my torts casebook was actually prepared by a Canadian law professor named sessile, right?

So I mean, it wasn’t as though I was a stranger to all of this. And so we tend to not to start with administrative law. We started with Commonwealth when I came back to the United States. What I discovered quickly is that while the paradigmatic towards case of 1964 was one that involved an automobile collision at an intersection, you had to figure out who had the right of way. You can see what the rise of product liability law. We are now painting on a much wider canvas. We had starting to talk about medical injuries associated with Des and similar quantities.

And I was told by some very smart lawyers, they said, young man. And I was young at the time. They said, if you want to understand how to defend or deal with any one of these cases, you must master the science. Now they didn’t say you had to do the signs because you can’t do that. But they said, it’s like punching in the air. If you don’t know what’s going on. If you’re talking about Des you’re talking about asbestos and so forth, and I basically drank the Kool-Aid, I had a reasonably good, not spectacular science background. And so I’ve always made it a point to start in the opposite direction.

And so I keep up regularly on that literature. I do it with respect to global warming. I do it with respect to the various kinds of health conditions of which COVID is only one. And at that particular point, you start thinking about this case, Jesse, in a very different way, you say, well, the first thing you want to know is what’s the upside and the downside with respect to the various kinds of programs and the insight that I started with a long time ago in which I made a spectacularly wrong prediction under a thoroughly, right analysis, was that you look at this stuff and you start with 1918 and the Spanish flu, it killed 675,000 people, usually in a one day spurt.

And then you always ask people, how long did this last? And do you know how long it lasts? I bet you, it was nine weeks, nine weeks, nine weeks. And virtually everybody who died was in the prime of life. And they died ultimately of pneumonia because of what they call a cytokine rush, which is healthy. B people, seeing the virus try to set out the killer fluids, do it. And what they did is they drowned. You might literally, and we know much more about it today. We could a control for these things, but virtually the entire new movement is completely different from the old one.

This is something that affects people who are relatively old with serious comorbidities and anybody under 60 has only a meniscal chance of dying, unless they also have some very serious kind of comorbidity. So it’s a completely different kind of profile. And so what you kind of guessed it, looking at this sort of thing is if you sort of let it run, its course, it would go up and it would come down Shaw. But since it didn’t have the potency associated with the Spanish flu or the death rates would be very much slow, then that’s the way I thought about it.

I looked in the New York times and I looked also with respect to the Imperial college situation. And they have the following projections that they set up by the media, by July 15th, 2020, we will have 10 million active COVID cases in the United States and a similar proportion in Canada and in great Britain. And if you talk that the chart, it said as of July 1st, it would be relatively modest. And I said to myself, this has to be crazy because of everybody knows that this isn’t just going to come at that particular level and they’re going to take precautions much earlier on and they will be holy without regard to government action.

A lot of the adaptive behavior. There’s no point in engaging in strategic games. The bluff of your own life is at stake. And what you saw on March 9th, the day before this thing, and you know, everyone, transportation was down by 78%. Now people are taking all sorts of strange. I had that patients when they went to restaurants, this bumps and all the rest of that stuff. And you realize that these adaptions were going to take place. The government comes in and makes it more dramatic. But the projections that you actually had was the first peak that not come on, July 15th, 2020, it came on April 9th or 10th in 2020.

And it was follower than anything that anybody had predicted what the predictions were extremely dangerous at that high level, because people tried to gear up for something that was going to be just absolutely enormous. And so one of the things they did in New York city and several other major metropolitan areas, they said, we’re going to have such an onslaught of people in the hospitals. We have to take people who are COVID positive and move them out. So they moved them back into nursing homes where they probably cause an extra 30,000 best simply because you took a very potent person and put them into an environment where there were a lot of variable honorable people.

And what they then did is they opened up in New York city. The jab had sent the, you know, thousands of beds. The Trump administration sent a bunch of hospitals, ships, and none of it was ever used. Right? And all the people who made those projections 16 months later, essentially apologized for the fact that they were very, very wrong, but the interim damage had been done. And once you start to intervene, the natural cycle that you had in 1918 is not likely to continue. What you’re going to do is when you create an artificial foreign team, you slow down herb immune.

So I did some calculations. If you’re curious, tell me if you’re not well, it’s 675,000 deaths. And that was essentially a two and a half percent death rate out of people who got the disease, which was putting it around 20 odd million people coming out of this stuff that doesn’t get you to herb immune gossip, because you need to get the 60%. Well, we got there because it was a pretty rapid prop and some of my guests, and I’m not assigned this, but I am a structuralist is that there were a lot of asymptomatic transitions, which created an immunity, even though it didn’t create a disease.

And this is consistent with something you have to understand in dealing with COVID, which is you just don’t talk about medians. You have to talk about the bearings. And that means in effect that disease like the deadly Spanish flu is relatively innocuous for say 95% of the population that gets it. There may be some people don’t die, but get very sick and so forth. And the herd immunity took effect and it slows things down. We don’t have her. So I remember waking up one day in about may or June. And I said, oh my God.

So long as we protect a large portion of the population, it means that we’re not going to get the herb immunity. And the next time a new variant comes along, it’s going to have a highly vulnerable population because it turns out, and this is, I think a point that’s been well-established, but systematically ignored is that natural immunities are extremely effective in terms of dealing with the condition of my friend, Jay bought the Charia who’s collected and read all of these studies. I have not, you know, it says there’s not a single identification of a breakthrough case in either direction.

And nobody who has natural immunity has ever been seen to give the virus to anybody else. And nobody who has natural immunities has been seen to get the virus from anybody else. So you get a perfect wall. Well, at that point, what you want to do is when you start seeing natural immunities is you’ll let them ride. But when I made my terrible predictions very low and then try to correct them, what everybody said is you have to understand that people who are asymptomatic and give you COVID. But again, the key thing to understand is the distribution.

And so you have to do it in, let’s just do it in discrete terms because the continuity’s don’t matter for the well, so now you have either very high resistant people or very low resistant people. Okay? And you have you the very powerful, very weak viruses. And so you start looking at the parents and if you have essentially a very high resistance rate, you can carry in you a very high dosage of stuff and not get sick. And then when you transfer that some to somebody who has a low resistance state, you can actually give them the disease, the question your then have to ask what’s the probability of that happening, as opposed to the other distribution, which has people have ordinary levels, they get the week COVID stuff.

And then they transfer the week COVID stuff, all of the people who condemn asymptomatic transplant at the high high to the low load person, that was probably 2% of the case. That means that 98% of the cases are doing what they did in 1918. I used spreading the immunity asymptomatic so that you come to a conclusion much more quickly. If you would ignore the second tab and only worry about the 2% you are going to ban the transfers. If you take the whole hundred percent of the distribution into account, you’re not going to do that.

What you’ll try to do is isolate two kinds of specialized cases. If by some miracle you could figure out who is a very high resistant high transmitter type. You try to keep them out of circulation. And if you could certainly identify vulnerable populations, which you can, you try to keep them out of circulation. So they appointed a COVID test would not be the test that driver coming from Canada to the United States will reverse something. You mentioned happened to me before the show. It would be that you will not let the grandkids visit the grandmother.

If it turns out that she was in the COVID vulnerable portion. And so you’d get private administration of the cases in an effort to enforce this policy. And I’m all in favor of that. But when we do it, the other way, what we say is we forget the probabilities. We forget the benefits side. So we systematically overregulate as far as I’m concerned. And I think that the folks who did the great Barrington declaration, Jay and one called door, what probably not, probably pretty surely write about all that stuff.

Although interestingly enough, they didn’t do the probabilistic analysis either. Right? What they did is they just said, this stuff generally works. And what I try to do, knowing a little bit about games, theory and so forth was to figure out why they were right. Not to figure out why they were wrong. And I think they are right with respect to their general conclusion, but then you get everybody up. So that’s the first mistake they made. Second mistake is X. And they post, you can try to attack these things in two ways.

One is you can try to stop it from happening until you can try and cure it after it happened. Right? And it turns out there’s no dominant solution that is you’re not going to do only one or only the other. You want to get the optimal mix. So what’s the advantage of doing it. Soon. You can spare people. The illness what’s the danger is you have wild over breath, because if you’re talking about protecting 0.1% of the general population and so forth, you stop Miami.

But the ex post situation says this. If you get sick, we’re going to treat you. And the advantage of that is if you get it in time and know how to do the treatments, what you do is you have to now tackle 1% of the population instead of a hundred percent of the population you don’t need to quarantine. You certainly don’t want to give any medication to people whom you think is going to be asymptomatic. What slide, which means that virtually everybody under 40, probably 50 or even 60 doesn’t get any kind of treatment except maybe some HCQ ivermectin and kind of stops it.

The question you have to ask is safety. You have to ask effectiveness, okay, Jessie, on the safety stuff, it doesn’t matter what you use a drug for both of these drugs have been out there for a very long time with billions of usages. There’s a kind of an epic, epidemiological and FDA and drug type situation, which says the acid test for any drug is, do you give it to a pregnant woman? And the reason is during the first trimester of pregnancy, the rapid levels of cell differentiation can be easily interfered with, by some foreign substance resulting in something like the food over the mind flips, right?

And it, both of these drugs have been recommended and found safe for women who are pregnant, chances are there’s going to be no subgroup of the population for whom they’re going to be especially vulnerable. And we don’t have clinical studies of a hundred or 200 people. There have been hundreds of millions in the case of ivermectin billions upon applications, but which the safety has never been questioned. So what’s the downside. Well, it turns out Mr. Fallacy, who I think is a terrible master on this particular study. He says, well, you may get some kind of hard complications, but he’s talking about extremely low numbers, one in 10,000 or so for the relatively minor conditions.

But the overall profile on the safety is long use establishes general say, well, what about effectiveness? And I’m here. I like the Pope Rhett Butler, frankly. My idea, I don’t know, but I don’t give a damn. And what do I mean by that? Well, let’s suppose the thing is effective. What will happen is people will quickly use it. And when you measure effectiveness, it’s a completely different inquiry from measuring safety, with safety. You’re worried about, you know, that kind of, oh my God, this is going to take you from 0.1 to 1.4, 1.0 adverse effects.

You make, take a drug off the market when you get things like that. But if you can sell a drug, that’s going to have a 1% effectiveness and nobody’s going to buy, I possibly going to buy a drug, which can take you from a 2% cure rate to a 3% cure rate. So the effectiveness stuff has to be much larger to make it worthwhile. And then when it’s much larger, it’s much more easily detectable, right? Because we have 40% rate you can do. So the key thing is to let this stuff out there and then to get essentially a quantitative assessment.

Well, what did we do? Well, first we have the phony subjects that were done in Lancet, right? Edited. It should have been filed five because of the recklessness moves. You’d put his vote, but since he was anti-Trump, he was perfectly okay. And they had to retract that and they did. And then there was a Ford study in the news, and then the journal of medicine, they had to retract that because it turns out clinical studies are extremely difficult to do with viruses because essentially the theory of both ivermectin and HCQ is you have to catch it at a very early stage that prevent the things from breaking through.

Once they broken through, it’s useless to give the drug and it may have a slight negative effect. So if you don’t get the right controls on this, you can’t do it most critical studies. You know, people in a third degree, third stage cancers or something, you can begin everybody on April 15th and this drug, you have to do it on very different dates. And you have to have a physician who can record the accuracy. Well, this is extremely difficult to do through an organized clinical trial. And so what happens is people start to put together these various kinds of indices recording, all the cases that have come through my all sorts of people, this, by the way, in the United States and it’s worldwide is the common way.

Nobody trusts formal government warnings. They’re too rigid, too stiff, too out of date. So they do is they form voluntary associations and they collect the information and then they organize it and update it and give you recommendations as to which drugs and what combinations at what sequence at what those images at what time. And self-worth in an effort to do that. And so what you need to do is to encourage that ex-post collection rather than to rely on clinical trials. And then it’s also, if this is a game of trying to get advantages, you have to have a theory.

And what happens is it turns out there is a general theory that says, zinc is a very powerful agent for doing this, but if you give it alone, it’s not going to work. And so I have to do is you have to give them some other drug as this role might as soon as something which prevents in probation, and then you have to give them something else. The HCQ in order to make sure that you can find a way to protect those zinc from being wiped out. So they’re kind of tripartite situation. You’re not going to ask me to tell you everything about it. I don’t know enough about, but what you do know is the way in which this stuff ex-post works is it does not depend simply on trial and error because trial and error, cherish Jeffries, Jesse is too slow.

What it does is you got a theory that zinc in this combination has worked in other cases, and then you carry it over. Now, is this something which is just done for this, you know, or there is a wide class understanding of what we call off-label drug uses. I don’t know if you’re familiar with the term, but essentially it gets approved by a government agency. And then once it’s on the market, a doctor could use it for any other condition that he or she wants to do it. And in the United States where the numbers are pretty good, for many cancers, off-label uses are dominate.

On-label uses by five to one 10 to one ratio or whatever it is. And all of this is outside the formal system. It becomes the standard of care for malpractice, the standard of care for insureability and forth. So you get this back culture what’s happened here is they’re killing this off with respect to this drug. And they’re saying, if you go through the clinical trials or we’re going to go after you. And so, you know, the last blog that I read said, you can only get ivermectin in the United States. If you get a court order, they’re killing the off-label mark, right?

So now you kill off the ex post market. It puts greater pressure on the ex-ante market and you start getting these quarantines. But if you understood what was going on, it turns out that some people might be good targets for HQ, some not, but by having this thing on the wraps for the last 18 or 19 months, it means that you don’t get the aggregate data, which will start to tell you whether or not there are subpopulations that are especially prone to damages with this or 72 real advantages for trying to use it. What we do now is the same point I said before, everything is a matter of Marion’s right?

Same block won’t have the same effect on more people and the larger, the samples that you get, you can do it, and you’re reasonably happy to do this because you know that for all of these subsets, the negative side has been ruled out by the extensive use that has happened before. So this is the perfect case for running that situation. Then what we do is everybody wants to do basically become German autocrats. You know, the famous Maxim in German, I will say it in English because my German is terrible. At least today, all of that is not required as forbid or all that is not forbid and as required required, there’s nothing left the choice.

What this means is once we decide, this is a very good vaccine, everybody’s got a tick. Yep. But again, what have they done? They’ve ignored the variants, which is the key.

Speaker 1 (25m 31s): I want to ask you about that. So we’ve been kind of going through this process back to the extreme again, I think we talked before about us in Ontario, Canada being in lockdown again. Now what we have seen from businesses, chamber of comments, commerce, I think announced today that the biggest thing that’s killing us right now from a business standpoint that can be in real estate or business in general is the uncertainty of what the government is doing when we’re supposed to come back in any clarity. Originally, the vaccines, my understanding was that, you know, it was the target was to actually stop, you know, flatten the curve and then it had shifted.

And now the conventional wisdom we’re told is that it is you’re, you’re far, far more likely to end up into the, in the ICU or the hospital, if you are not vaccinated. Now in Canada, I believe double vaccination is at 82% as of right now. So I think Mo majority of Canadians do want to get vaccines. However, just to your point, natural immunity was, was almost a word you couldn’t use words you can say a year ago. And it’s interesting to me that I had COVID over the Christmas break and mail, like, God,

Speaker 2 (26m 44s): Yeah, there you go. Giving it

Speaker 1 (26m 46s): To each other. We might have. And what I find funny is that you have the congressional hearings in your country that just happened in the Supreme court cases. You have policymakers saying one thing, but I called the U S embassy about cause I’m flying to Florida next week. And basically they they’ve said just like Canada has, as long as I give them a positive test. I think the us needs a physician to show that you have recovered. Now you can cross without a molecular test. So to me that says that it’s admitting natural immunity from a policy standpoint.

So it, maybe you could talk a little bit about the, the kind of moving target and just as a footnote, one thing we do know in Canada, the last lockdown, what they said was no, no. The difference now is cases don’t matter anymore. It’s about hospitalizations. And I do think Canada is probably, I think it is the worst in the , if not one of the worst four per capita ICU beds. And one of the issues just to aggravate this even more is the fact that because of our policies, when it comes to testing, we have a bunch of nurses that have tested positive for this new variant.

So we’re even understaffed to a greater degree. So maybe talk a little bit about how this target has shifted and you know, where do you, where do you see this going? Because it is certainly impacting not just individuals but businesses, the at large, in, in both of our countries.

Speaker 2 (28m 7s): Okay, look, I mean, let’s just state this, first of all, it is true as a statistic that there are relatively few vaccinated people who end up in ICU, a similar place as relative, do they own vaccinate, which is an argument in favor of vaccination. So it doesn’t want to be, but you have to break the unvaccinated populations down into two plots unvaccinated with natural immunities and unvaccinated without natural moon. And if it turns out that the, all of the situations, all with unvaccinated people with no natural amenities, then the number is actually higher than it might otherwise appear.

And if you were somebody like that, you should think very seriously about the vaccine or getting yourself a natural immunity. So there are a couple of papers that have been written recently, which says, now that everybody gets this thing, if they’re under a certain age, because they’re going to survive that, and it’s better than the vaccine. And there’s a lot to be said for that position, but it’s certainly wrong to treat that statement as though it carries with it, an implication that natural immunities are no good or uncertain. And one of the lasting disgraces of the CDC is just kind of throws up his hands and says, we don’t really know very much about the door ability of the natural amenities or the backseat.

Now, one of the things we do know about is that some of the immunities that we’re talking about in these cases that come from natural sources and date from previous epidemics 10 years ago, even 50 years ago, if you were old enough for it. So we used to have something on durability with the vaccines. We have no information whatsoever. And so, so then the question is, well, what do you look at? You look at the past numbers and I’m just going to make a two comparison, and then I’m going to extrapolate from it. It turns out that the more potent vaccine is the maternal, but less potent is the Pfizer.

The more journal last longer, it gives a greater penetration than does the fine. But if you start looking to adverse side effects, the other side of that, it turns out that the Moderna vaccine is associated with more adverse events than is the Feisal, which is exactly what you would expect, right? The good and the bad are both simulated bias all above. So the question that you then have to ask as well, what is this situation? And the numbers in my view, keep changing that is what’s really happened in this case, is that people have to understand MRN.

A vaccine is not a vaccine. It’s a drug because if you look, but the CDC did was to change its definitions in the United States. So it’s no longer kind of a diluted version of the original stuff. It can be totally fabricated the way in which the MRR and a vaccine. Well, the natural immunities are like a bore spectrum antibiotic, but the MRI is a specific situation. And the way to understand that is you have a large number of links in this particular chain, and they take advantage of a principle known in a railroad, which is you take out 10 feet of a railroad.

You can’t go from one end of the country to the other, right. What they forgot to say is you take out 10 feet of a railroad. It turns out you can build a bypass around it at 40 feet and fix it back up again. And so what’s happening is that my guests and I would want, you know, I’m not a biologist, but I am a strategic game player. And I think is that you see the part of the track is broken and you’re a virus. You don’t do this by deep connotation, right? But you have so many mutations that are thrown up at a very rapid rate.

All of a sudden, one of the managers, the go around the particular break and all of a sudden, the vaccine turns out to be worthless because it’s been circumvented or compromised in some way. And that you have to really know what the composition is of subclasses Alma viruses. But the point I’m making is the prediction you would make from this theory is that it will turn out that the vaccines will be progressively more on ineffective because there’ll be more workarounds that the virus is able to do in order to defeat it.

So the prediction that you’re going to get is that it’s going to be less effective and it’s going to be less effective with each future innovation. That’s why Robert Malone, the guy who invented this stuff. I mean, he’s out there freaking out in public, right? Essentially an answer. I, you know, I may have created a deaf machine in some sense. Now he was right. I mean, early on the first round, possibly the cost benefits were very enormous, but the law marginal rates of return applied to everything, including vaccine usage.

And so if this thing is evolving in the way in which I suspect it is, then what would you would suggest is that the immunities that you get from the backseat will be a flow with durations. And in fact, the breakthroughs in both directions giving and getting will become watcher. And so the ratio of success between the natural immunities and the artificial immunities very heavily in favor of doing the natural immunities rather than this. And so this constant re vaccination program that’d be terrible. So that’s the first part. Second part is what are the adverse events?

When they did the swine flu thing, it turned out they were a real rush. They got the numbers completely wrong, and they gave all sorts of people. The vaccine, they didn’t give sufficient warnings, particularly for pregnant women. And the government had assumed all liability for bad warning. They ended up paying $4 billion in 1970s and 1980s for the bad vaccines that they put out on the market. Well, there is no government liability today, as far as I can tell. And under the emergency use authorization, I don’t think there’s one either for the companies or I’d have to check that, but I’m going to check it very soon because it’s something worth writing about.

And so what you’re going to see is diminished the effectiveness of this and the rising adverse side effect. So right now, I mean, I’ve seen at least one publication, which just simply collected a hundred articles, all of which pointed to some adverse events associated with Mr and a vaccine. Now you look at the studies and I did with a couple of handfuls, and they’re exactly what you’d expect in conclusive that somebody reports six cases of this three cases of that one case of that, somebody that clinical studies very hard to get broad spectrum stuff.

But if you then start to aggregate them and try to figure out, well, we’ve got 50 of these studies, which have three cases of death after taking a certain kind of vaccine. Now you’ve got 150. You have to make sure that you don’t have double counting a lot of other stuff, but you then become more cautious. And the same thing with respect to administration, just in the last several days, people said, Hey, this seems to lengthen the menstrual cycle. You do this to a woman who’s 35 years old, right. Who’s trying to get pregnant and this could be just devastating kind of stuff.

And do we know how long it lasts? Of course now, do we know how serious it is? Of course not. Right. Well, what’s the rule you take with respect to major conditions in essentially the population that’s right in the core of the distribution 20 to 40. Well, my view is you say the cost of COVID is very well. You say in effect the effectiveness of the various kinds of remedies, like ivermectin and ACQ is doubted, but certainly possible.

Oh, last thing you want to do is to give people other conditions for which there is no known cure. And so you do is you back off in the middle generation. So what are universities doing? They have undergraduates in their late teens. They have graduate students, postdocs in the twenties and thirties, and they impose the vaccine mandate and all of that. But me, I took it as it were under protest. Not that anybody care, but when you understand is when you’re 78, as I am, you’re not worried about reproductive success.

You’re not worried about, you know, going out and playing competitive sports in the Olympics and things like that. You all worried about something that might happen. And so the cost benefit analysis tends to shift by age a little bit more in favor of doing it. But rather than that, what you do is you look at these things and what are they counting? They shameful. What they say is, everybody knows it. This is not a question of individual Liberty. This is a question of collective responsibility, and everybody’s doing this to serve the common. Good. Have you ever heard that expression?

The promise. They don’t know how prisoner dilemma game place. And so I’m going to be just a little bit technical for a second, but the traditional prisoner’s dilemma game was that you get two people going into jail. And if each of them keep silent, then neither one gets convicted. But if one of them starts to Blab and the other one does and Blab, the guy who blabs gets the lightest sentence, and then a guy who doesn’t want to get so much heavier sentence. So some say, I don’t know what that other guy’s going to do.

I can’t talk to him. So they both Blab and they’re both worth or worse off than they would have been. If not the report. Now, the way this works is you now have a need for a public facility. It’s perfectly homogenous. It turns out, let’s say it’s a road on which there are houses on both sides and you impose the special assessment by majority vote. And every unit has to paint Penn dollars into it. And every unit gets $15 worth of benefit. If you did it by voluntary agreement, instead of all one, everybody would sit, let the other people build the road and it never gets built at all.

Right. So why is that not work? You don’t have how much in aid, right? And it also turns out that not only do you get differential effectiveness, but you get differential worse off. So you don’t have a prisoner’s dilemma game. If you turn out Jessie to be better off not taking the vaccine, no matter what anybody else does. Right. And if the same tools or somebody out, or what happens is under these circumstances, you now have the ability for self protection by isolation or by taking a vaccine or by teaching HCQ.

So you can get several solutions, which you can’t do when you’re building a road down the middle of the situation. So what happens is all of the collective action systems, all wildly optimistic because you can’t get the initial homogeneity on either the cost side or on the benefit side to make this thing work. So you have to just chill that particular language. This is not the kind of case where to apply. That doesn’t mean it doesn’t work like that with all diseases. And so it turns out smallpox is a very rigid virus. It doesn’t change virtually at all.

It also turns out that Cal parks is relatively innocent and we give everybody count pops. It’s an actual immunity against smallpox, and you do it individually and you do it collectible. But what happens to people look at this and they come to the following conclusion. I don’t care whether anybody else wants to take the stand backseat. I’m going to take it anyhow, because I’m better off. So it’s not a prisoner’s dilemma, gamma. And when you know the polio vaccine, you’re not old enough to remember this, but the polo polio vaccine came at the Joan speech and a mother place.

It got shut down every summer because of polio. And then the Salk vaccine comes out. And I mean, I was 11 at that time. And my father was adopted. You see people lining up around the block to take the shot, because essentially they were reasonably confident that it would prevent this forge. And they were reasonably confident that they didn’t seem to be any kind of potent side effects because it was done in the attenuation method, right? Like the small, like the other thing. And then there was a huge fight between him and save it whether you use the live virus or the dead virus, right?

Because the dead virus turns out to be as effective, but less, she was side effects, whatever. And they fought over this for 15 years, but this is just not what we are today. And if you would see people lined up around the block in order to get it, and the fact that you don’t see them lined up, suggest that maybe they know something that the other guys don’t, but the people who run me, Mr. Bouncy may have been a great firewall, just in some sense. But you know, now all of a sudden it becomes a social commentator talking about epidemiology, public health and game theory about what she knows less than nothing.

And ironically, he doesn’t learn those things. Right. When I said is, I’m sitting down there and I read the scientific reports. I don’t try to perform them. I don’t check the calculations on the this on, but I look at the abstracts and the major discussions on this stuff and try to figure out something from the methodology. And as I said, at the beginning of the show, that was the way I was told you had to do law at the beginning with the sire. And I think it’s, it’s the correct approach. So this has become an international travesty and the quarantines prolong the situation and expose you to something else.

And as far as I can see, I have not seen a single serious public official in out. I didn’t say commentator, who’s actually got this right. And I’ve seen many commentators who seem to get it right, or at least on some of it. And there’s some people who are really smart and they get much of it. Right? Some of it won’t, your job is in my case, it is not to essentially reproduce the date. I can’t do that, but I’ve been trained in, you know, I’m just old lawyer, right. But no, I mean, I’ve been trained in the science.

I, you know, I had to learn some games. I’m not a game theorist, but I had to learn it. It turns out from a very long time, I did sociobiology and evolutionary theory and inclusive fitness and all that stuff, which is absolutely critical for understanding how these things start to go in one way or another. And so having done the sociobiology and the games theory, and then all this other stuff, what happens is lawyers have the following set of tax advantages over specialists. I worked in five or six different areas that are relevant to this thing.

And, you know, I spent my entire life learning everything one-on-one, but the point is knowing one-on-one about a lot of stuff is extremely important. And many other people come in and they know 5 0 5 about one thing and 0.0 on other things, right. They had it, it turns out the person who has my kind of intellectual profile is probably better suited for figuring out what the systematic response would be on one condition. They don’t run ahead of the evidence in substance and barriers.

Why always talking to people who know more than they do about any one of these particular things. So your job is to synthesize the best rather than to make it up yourself. So, I mean, I do a lot of work on science cases have been for many, many years, starting in the early eighties with Des and the specialists and agent orange and the whole thing. And you don’t go near one of these cases unless there’s a specialist who’s worked in the area for years, it yourself.

Speaker 1 (42m 55s): So that was part one of two with Richard Epstein. And we’re going to cap off the second half of that conversation next week. So I hope you enjoyed it. And I hope you tune in next week. And if you want to download our financial model or check out other episodes, go to working capital podcast.com, hope to see you there.