Asymmetrical Information - Megan McArdle
04.22.13 2:15 PM ET
The Cost of Boston
How much did it cost to shut Boston down? People have been throwing around some large numbers, arrived at by multiplying the number of people who stayed home by their wage, or some variant on this method.
But of course, this isn't right. Most of the stuff that wasn't done on Friday will instead be done on Monday, or sometime in the next week. The salaried employees who stay home will work harder than usual. The hourly workers will, in many cases, pick up extra shifts.
Of course, not all the activity will be restored. Many events like banquets and charity balls that were cancelled will not be rescheduled, because planning those sorts of events takes months. Ancillary vendors from caterers to dry cleaners have lost revenue that will not be made up. Tourists who couldn't go out will go home with their money unspent. Restaurants and airlines permanently lost the opportunity to sell a spot in those seats. So there has been some real loss of "truck barter and exchange" that is simply lost, not delayed.
But those losses are likely to have been small relative to Boston's overall economy. The real loss was the fear, and the lost enjoyment. That is, people who would rather have spent their Friday day at the office and their evening socializing with friends had instead to spend it cowering in their homes--and some people very close to the action had to leave their homes and go somewhere else. But the economic impact of this is hard to calculate. Not least because some people might have been happier having an unexpected day off and making up the work later.
Then there's the non-economic cost. Many progressives, and especially, many libertarians, are criticizing this as an overreaction that involved immense intrusions into personal liberty. An overreaction it may have been, but I'm less worried about the liberty aspect, because as far as I can tell, compliance with the shutdown was pretty much entirely voluntary. I haven't seen any complaints about jackbooted police officers forcing people back into their homes when they tried to come out, and I have heard reports from folks who drove into the office without getting hassled. I'd imagine that most people were quite willing to stay inside for a day if that would help the police capture the marathon bombers.
Obviously, we don't want to make a habit of this sort of thing. But I'm actually less worried about this sort of large-scale operation than I am about smaller, more pervasive erosions of civil liberties, like airport security, theaters, and warrantless wiretapping. When it comes to shutting down a city, it's very unlikely that we're going to make a habit of this sort of thing: it's immensely costly for the government, somewhat costly to the economy, and except in very extraordinary instances, people don't like it. On the other hand, stop-and-frisk became widespread, and not-infrequently abusive, precisely because it's invisible to most voters. We should be worried about the seizure of our liberty in small, manageable doses, not enormous chunks.