A Long Time Until the Economic New Normal
sloanreview.mit.edu
sloanreview.mit.edu
Now its not to make this sound good, the 2008 crisis had real victims, millions lost jobs, never returned to the workforce and became homeless...but with the stimulus money in play those people were systematically swept under a rug and hidden from public. This was done through cooking the unemployment books (basically if you exhausted your unemployment benefits, the government no longer counts you as unemployed but removes you from the job market on the basis that you will likely not become employed again).
$6T is over 3x the 2008 stimulus packages and it will be spread to an even smaller group of people and a much more significant number of people will become unemployed (already over 20M) and they to will be swept under a rug in time and disappear from economic data when they exhaust their unemployment benefits...the rich will become richer and the government will go on to brag about the drastically falling unemployment numbers.
While the recovery may miraculously end up more evenly distributed (with Sanders out I don't see enough pressure/leverage) under current administration and potentially four more years, nothing is off limits and this one may in fact become much more concentrated than 2008.
The converse, where everyone is prepared, at best would lead to maintaining the status quo, since everyone is ready and willing to pick up the few assets that are forced into a firesale if any.
The incentive for politicians to prop themselves up with the unemployment rate is clear. But why does the media never push back? Does "jobless" data - that is ACTUAL unemployment- not exist?
The issue people are talking about unemployment rate and not the joblessness rate is that people care about ability to get a job if you want one. The joblessness rate includes people who are looking for job but can’t get any, but also people who are supported by their spouses, retirees, and people living on government benefits who are not looking for job, because they are disabled, too busy with childcare, or care for other people needing it, or ultimately too lazy and having too little self-respect to stop living on charity of others.
This wide aggregation makes it very difficult to understand what actually causes changes in it: are more people jobless because of expansion of disability benefits? Or maybe there was a surge of people retiring early? You need to look at other indicators to understand it. For example, good amount of growth of employment rate in recent years is a result of many people, who previously drew disability benefits to compensate them for their inability to work, actually going to work, once the work became better option than government check.
For this reason, unemployment rate is a better metric to look at, because it tells you something more useful and has better signal to noise ratio.
I've heard this before but have not seen good data on it, do you have cites?
https://www.ssa.gov/oact/STATS/dibStat.html
Number of people drawing disability benefits was rapidly growing at around 5% YoY up till 2011, then its growth slowed significantly, and around 2014 it started to slowly fall.
I'm not saying that the common unemployment rate is useless. Only that it's over-used, and used to answer questions it has no business answering. It feels like we're sweeping a lot under the rug and everyone is playing along.
Is joblessness specific enough to answer how many people depend on the system without employment? I thought it includes, among other people, people who aren't job seeking because they are happily supported by their spouse, or people who are happily living off of savings, and not any other system, for example.
Those people are counted. I'm not sure why you're flaming someone attempting to educate you about how they are counted. Hint: it takes more than one number, and, the government publishes more than one number.
Or do you survey people and ask them if they are not worrying, would they rather be working?
And how do you count people in the gig economy? Or folks who used to have professional jobs but are now making do with a service job because they can't find something like what they had before?
Counting unemployment is not straightforward.
One of the funny things is when Trump ran in 2016 a big part of his campaign was acknowledging the fact that the unemployment numbers were a lie and being fudged. He made major promises, which I am sure appealed to a lot of people, he would shine a light on the unemployed workers who were not counted in the workforce...of course, then he got elected and began taking credit for the best unemployment numbers ever using the same accounting methods.
So... who knows. Maybe it's enough, maybe it's too much, or maybe it's too little -- it's too early to say.
I am wayyyy less worried about the magnitude of the Fed’s intervention than I am about what might have happened otherwise.
I really hope you meant this as a joke. Did you mean to use an equal sign? The subset symbol might be defensible:
decrease in goods and services offered ⊆ decrease in economic activities
The forced withdrawal of labor is one type of supply-side shock. If it lasts, it could cause some inflation. One could try to compare it to the OPEC oil shock of 1973. But significant inflation could only occur if people developed an expectation that the resource will remain scarce for the long-term. In 1973, there was the wide-spread belief that oil would remain scarce for a long-time. In the present time we can ask, is the forced withdrawal of labor a permanent change to the economy? Will this last 10 years, or 20 years? Should businesses rebuild their business models around the assumption that labor will remain scarce for a generation? You'd have to believe that's true, if you wanted to compare the current forced withdrawal of labor to something like the 1973 OPEC oil shock.
That's patently false. BLS reports 6 different "unemployment rates" (1). The media has historically reported U-3. You can argue that U-6 is more meaningful in light of recent economic trends. But, no books have been cooked.
Presenting merely data or information is insufficient. The responsibility is to present useful, contextualized information to the public - knowledge.
Government provides a nice website (BLS) with explanations and empowers its citizens to analyze it, and the government is still doing something wrong.
Economists use a wide variety of different metrics to measure employment and set economic policies accordingly. Wage matters a lot too, not just unemployed/partially employed/fully employed.
I tend not to blame authorities for ignorance, because it seems to me ignorance is not passive; it evolves to extreme levels of resistance.
But, if U-6 was the commonly reported figure, we’d get cries of cooked books from some other groups, because why should we count people who have given up on working, or why should we care if somebody is underemployed (they have a job and should be happy).
In the age of fake news and too much information it’s a no win.
Just spiced enough to make them taste better.
Even U-6 removes people after 12 months...so yes there are 10's of millions who have not been accounted for essentially since 2008. These people simply do not exist to the Bureau of Labor. The numbers are right their in your link, under U-6 the unemployment number is under 8% before March 2020...if you believe that is a legitimate number that isn't manufactured, that is fine, but it does not reflect the reality...hell 12.8% of the US is on disability, another hidden group that is accounted for brings the numbers up to nearly 20%.
Comparing their $1200 checks with no strings attached to other money in the stimulus being lent is apples and oranges.
This would be more relevant is we tallied how much actual credit "money" is getting into the hands of average people. Divide 6 trillion per every person and if that was the extent of the calculation and legislation, we'd be better off. But it's not, the same financial beneficiaries in good times are the ones getting the bailout money in bad times.
>being injected into the economy
Except the crux of the problem is this money, arguably, doesn't "get into the economy", certainly not in any uniform sense.
Big chunks go to bail out large corporate stockholders, bonds, financial assets. Some are funneled through the banks via loans that are hard to come by for some. What is sorta kinda direct payments to people amount to 1 time events, and too small at that. And given no commerce & fixed obligations for many small businesses, what good does debt & "loans" do for them?
The biggest lie in all of this is that the money is actually getting to people that need it. It's not, yet.. and calling it helicopter money doesn't change the fact that many aren't anywhere near the helicopters to get it.
Not that it's a good thing, just saying.
You seem to be saying that excess money would lead to demand-driven inflation. That is clearly impossible at a time when 16 million people lost their jobs in 3 weeks, and the downturn is global, so there is no growth area, somewhere else in the world, to use up resources.
One could make an argument that the withdrawal of labor from the market (last month, this month, and for several months) is a supply-side shock (slightly similar to the OPEC oil crisis in 1973) and therefore can generate some inflation via the supply-side losses. But that kind of supply-side shock is likely to be highly transient, considering how much labor is eager to get back to work, as soon as they are allowed to do so.
But when property prices, rents, and stocks go up, that's labelled a good thing, even though it's just as much inflation as a hike in the price of bread.
2008 was basically a hand-out to the 1% who caused the crisis in the first place. [1] There was a bit of political nudging and winking about how it would trickle down to ordinary workers, but what it actually did was keep wages low and create an even bigger shitpile of unserviceable debt at virtually all economic levels - which was just starting to fall over before CV-19 happened.
Our economic system is perfectly capable of imploding and destroying trillions in value on its own, and does so regularly. CV-19 showed that it's also fundamentally unable to deal with any kind of significant external shock.
With any luck this may raise questions about whether the system really is fit for purpose.
It may finally become clear that you can't solve a problem that requires cooperation and solid support for key front line staff with economic dogma based on cut-throat piratical competition and contempt for "disposable and low-value" front line workers.
CV-19 may not be enough to make the point, but there are other threats coming down the road - expected and not - and the choice is rapidly going to become evolve-or-die, in very stark terms.
[1] And some economic commentators had the gall to call the bail-out Keynesian, when in fact it was plain old corporate welfare which did nothing to repair crumbling infrastructure or provide key services or any form of social investment.
The need is to get people and businesses over the hump, survive this crisis and get to the other side of it in tact.
Now we can can legislate half-measures like rent and mortgage "moratoriums" and such, but that is gumming up the entire financial flow. Much easier to subsidize these payments and let the money flow than adjudicate millions of little friction points, and have tenants and landlords battling each other through no fault of their own, creating bad credit records for missed payments etc. Unemployment benefits can help but even this solution is slow and messy.
A big problem in this whole situation, though, is bailout money is getting handed out. Just not in a uniform manner. And check out who gets "bailouts" and who gets small checks or "loans" (as if more debt is anything but trouble right now). The discrepancy between how different factions are helped, given the huge overall stimulus quantities, is a problem.
Consumer spending was powered by sub-prime mortgages that let people use hyperbolic housing prices as an ATM. Investment was juiced by an unsustainable expansion in residential construction. The financial markets created a flood of illusory wealth based off credit models that were never tested in production. Even after the initial financial crisis subsided, there was no way to turn the clock back to 2007. You couldn't just go back to AAA-rated CDOs built on NINJA loans to let people speculate on McMansions.
This crisis is very different. Quarantine may last a long time, but eventually it will be over. There's no ostensible reason we can't go back to status quo ante bellum. There was nothing grossly unsustainable about the way the economy was operating in 2019. And once the virus threat is gone, we can just go back to the same economic patterns we were engaged in before the crisis.
The 1957 flu pandemic killed 100,000 Americans, which adjusted for population is where current models estimate Covid will land. And it had virtually zero lasting impact on culture of behavior.
I’ve been spending $5+/day at starbucks every single day for the last 15 years. I’d often go morning and afternoon. Lately I’ve had to make my coffee at home. The first week or so sucked. The baristas did a much better job. But I had to make it work so I’d tweak things here and there until I got it right. Now I can pretty much make the same drink I was buying. It’s much faster and much cheaper. I don’t see myself going back to starbucks nearly as frequently as I used to when this is over.
Maybe I only do Starbucks 2x a week when things go back to normal. In general, I'm eating less crap, exercising more, lost about 8 pounds so far. I'm physically healthier than a month ago. Mentally, that's a different story...
I had it for about 3 months, I wfh at least part of the week but now 100% remote and make at least 1-2 lattes a day. 30x3x5 = $450 this is just at one latte a day.
Last time, the package was given to mostly big banks and GM. This time most qualified Americans are getting a check and small businesses are getting sizable support as well. In what way is the base of support smaller than in 2008?
The government literally said “stop what you’re doing” to 80% of the businesses out there.
I’m honestly surprised it’s only 20M people unemployed.
I'll point out, the Democrats are fighting hard to ensure that the rescue money is spread to a very broad section of the public. With enough public pressure, Congress can be pushed to ensure that there is more rescue money made available, and also that the money should be distributed to the broadest possible spectrum of the public. We can look at the mistakes made during 2008 and promise ourselves that this time we will get things right. We all have the moral responsibility to fight and ensure that our government helps everyone through this crisis.
Meanwhile, the Fed has an obligation to make sure that there is no absolute breakdown of the credit markets. The Fed felt it necessary to inject some money into specific markets to ensure they continue to function (the repo market, in particular). But to whatever extent that money might help a narrow section of society, Congress can offset any unfair benefits granted to participants in those markets, by ensuring that money is also given to other sections of society.
Here's some deep analysis from a armchair economist. $6T goes to the US "board members": their share of the company (I mean, the planet's resources) grows, but the share of rank-and-file American employees (I mean citizens), probably shrinks. My guess: $5T will be hoarded by the US elites, $1T will trickle down to citizens, the world's GDP will shrink from $80T to $50T and the US's GDP will shrink from $20T to $15T. If these hand wavy assumptions are correct, the US citizens' share will grow by 5%, from 20/80=25% to 15/50=30%, while the elites will get an extra 5/50=10% share of everything. Everybody outside the 12 mile zone around the US land is going to lose.
2nd paragraph: "...it is likely that full recovery of economic activity, including GDP growth, jobs, and unemployment, will take at least a year, and likely much longer."
At this point we are used to shoddy economic analysis and predictions that are so woolly as to be meaningless, but this article is in direct contradiction with itself. Surely MIT of all places could place a bit more rigor on its output.
By dubbing Econ "Dismal Science"
adherents exaggerate;
The "Dismal"'s fine -- it's "Science" where
they patently prevaricate."
Can you unpack what you mean by that? I get the general gist of investing in the future, but think those are some interesting thoughts to explore.
So I'm not talking about hard-tech startups where social distancing and less investment capital will be affecting you, too (like automobiles or nuclear reactors), although if you are well positioned to build something in the crisis, then why not? But specifically, this is a tremendous opportunity for new software startups or hardware startups that can be built from off the shelf components.
https://www.bloomberg.com/news/articles/2020-03-27/pandemic-...
But I do agree 100% with taken current economic estimates with a huge brain of salt, as our economic machine is far different from the past.
If not, I don't think you can say it's comparable.
that's the (over-)reaction. the precedent is the more-virulent-than-usual infectious disease. the precedent is the need to break the infection chain to slow/stop the pandemic.
you wouldn't expect the reaction to be 'comparable' after 100 years. you'd hope that we'd have developed methods to better assuage fear and panic though.
But other areas of the economy could take off just as quickly and in unexpected ways.
So I'd say it looks very much "precedented", and during the last precedent the situation was much much worse, and the world moved on just fine for another decade after that.
The end of world war 1 had an enourmous impact on continental europe, with many nations simply ceasing to exist at the end of the war.
Germany for instance, had a state of near constant poltical and economic anarchy during the weimar republic. And the austrian-hungarian empire ceased to exist.
Many people seem to forget that world war 1 was suchs a massive shift in terms of the geopolitical landscape that many nations simply had no functioning economy or proper goverment to speak off.
The US population was also only ~103 million in 1918, compared to ~327 million today. Proportionally, we should expect about 2 million deaths from coronavirus to be merely "as bad" as the Spanish flu.
What's unprecedented is the reaction... some might say overreaction.
For a pretty good example of this, look at Spain and the UK.
One of the biggest differences is the enormous growth of what is not very usefully termed "the service economy" since 1918 (really, since maybe 1960 or so). A huge percentage of the population now gets paid to do things that had no real equivalent in 1918, things that you can simply stop doing (at least for some period of time). Restaurants, hotels, therapists of many different kinds, artists, musicians, retail .... these have all exploded, emply lots and lots of people and are all inessentiall to basic living (though essential to meaning for most of us).
The difference now is that people know there's a pandemic, and many would be averse to go out working, or shopping even though the scale is much lower than that of Spanish flu.
Random tidbit:. It's named Spanish flu because that's one of the few places where it was reported, because it wasn't involved in ww1 and had no reason to shut down the press. Everyone thought the flu epidemic was in Spain.
According to wikipedia first news on radio came in 1920.
"The first radio news program was broadcast August 31, 1920 by station 8MK in Detroit, Michigan."
[1] https://en.wikipedia.org/wiki/History_of_radio#20th_century
That being said, my point is that economic predictions are especially difficult given that we’ve never seen this before.
For comparison, consider the many economists who at the time expected the depression to reappear after the demobilization following WWII. Despite their good intentions and good data, they too were dealing with a unique situation, and they turned out to be very wrong.
Yes, life will go on. But it's worth trying to minimize the misery in the meantime.
Probably because there was no choice but to barrel forward towards herd immunity and deal with the suffering and loss of life.
In 2020, we're delaying and dragging out the tragedy at the cost to the economy.
On top of that, the economy was far more distributed and local. With globalization, things are much more interconnected and interdependent.
Restarting local commerce is much much easier.
Also, lots of people worked from home in 1918. 40% of people lived on farms in 1900 so probably not much change from that by 1918.
The economic collapse from the Spanish Flu was so devastating it was used as a selling point to create the Federal Reserve, which was sold to help a situation similar to today. Today, the Fed's marketing is on the line.
"The disruptions in face-to-face work will be a drag on economic efficiency, leading to slower growth in revenues, lower profit margins, and reduced cash flow."
Maybe I've been doing business remote/virtual for so long already that I see actual face-to-face as the economic inefficiency more often than not. Earlier, the author espouses the obvious benefits of being in person, but I think those have been outweighed by the trade-offs for many years already. What many will simply need to adapt to going forward is the type of communication differences required for successful remote/virtual/verbal interactions.
Quality listening skills and straight talk are more important than ever!
There is also an issue of transition, where there plausibly is quite an efficiency lag (months, at least) before people become get really set up, even assuming they are able to be as (or more) efficient.
Personally, I struggle to focus at home, and I have a pretty ideal WFH situation. I am fortunate enough/foolish enough to pay for a trivial commute, but I'm simply more productive in-office. And I don't think it is just me, many many problems can be solved in-office quickly without having to set up online calls (or letting an email thread drag on for weeks).
And the larger attitude among my office was that working from home is a burden. We're all software devs, we all have no strict barriers to WFH, but most people prefer going into the office most of the time.
However, I'd point out that many software companies have far more sales people than engineers. There has been this expectation that salespeople should fly out, and have meetings, meals, and expensive drinks with the companies they sell to. Now magically that's all vanished, but sales are still happening. The cost of some sales efforts has presumably plummeted.
Once the lockdown is over, I wouldn't bet on the company that keeps doing remote sales versus the company doing normal face to face sales.
And sure, they'll revert back, losing the efficiency gains once the government stops accidentally intervening in sales practices.
People don’t need cosmetics or new clothes or cars or gasoline, and some luxury flashy items take a hit because there’s no way to really flaunt your wealth inside your own home. People aren’t traveling as much, tourist hotspots that were getting trashed from so much traffic are getting a reprieve. People take joy in simple mundane things like boiling some tea or tending to some house plants instead of enduring a miserable struggle chasing their wildest ambitions fueled by what they see on social media. People who work from home or remote are no longer second class citizens, they are now first class citizens just like everyone else who is also working from home. And a result of this, I find people are more tolerable, and I even find myself caring more about the plight of homeless people, because these are the times when one really needs a home more than ever.
Not every business can survive this, but most can if they are built with the assumption that this is the new normal. That’s how you protect yourself.
Fuck man, this is a way better world, and frankly I’m not sure I really want to go back to what we used to have. I actually get depressed thinking this will all go away and I’ll never experience anything like this again in my life. I hope the pandemic lasts long enough to make some of these things permanent.
PEOPLE ARE DYING. This is A DISASTER. Have some fucking compassion, good grief.
Keep your myopic melodrama to yourself.
They're looking at losing everything they've built up slowly over a matter of years being completely destroyed in the matter of a few months--with ripple effects to dozens of employees that are essentially "family".
It's brutal.
I agree that there are a lot of silver linings, which you've outlined pretty well, but for some folks, it is REALLY bad.
It’s not like a restaurant failing and putting entire families out of business is some surprising event. I’m sure it happens everyday.
You have to look at the other side, when your friends restaurants fail and move out, new ones will move in with the same optimism as your friend originally had, except this time it may be better equipped to survive social distancing by adopting a “take-out first” approach.
I don't have the numbers but this doesn't seem to match my anecdotal experience. Yes, restaurants do fail but I really don't think "most" of the ones I have seen in various neighborhoods I lived in failed.
I haven't lived in Seattle for 4 years or Tucson for 7, but when I go back to those places, most of the restaurants I remember frequenting are still around.
Only the best restaurants with strong support for takeouts and deliveries will survive, and that’s a good thing.
Those out of work cannot get care for usual issues that would normally be provided by their employer, and are now unable to get care for issues related to COVID.
They are going to struggle to pay rent next month (like 40% of New Yorkers by some estimates) much less food, utilities, and other necessities.
People who are able to work from home are in a tremendously better places than blue collar or service workers who make up a great deal of the economy. I suppose in office politics a remote worker might have felt like a "second class citizen." In comparison with many workers who risk being laid off if they are even a few minutes late to their shift, remote workers had things very good.
I think you need to expand your view a little. It sounds like many in your life are not affected by this situation. Many of us, or those close to us, are struggling immensely right now and there is not a clear path out.
For what it's worth, I agree with what you're saying about how this could refocus the economy on things other than luxury goods. I just think we need more support for the people losing jobs than a ¯\_(ツ)_/¯
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[0] - https://www.theguardian.com/us-news/live/2020/apr/09/coronav...
[1] - https://www.nytimes.com/2020/03/31/nyregion/coronavirus-land...
(Apologies for being overly USA-centered, that is where I live and am most familiar with)
I am mostly introverted, have some hermit like tendencies, and can't wait for this to all be over. I can't imagine how terrible the more extroverted, social folks feel. The mental toll of this is going to be enormous for many of us.
It's a dystopian nightmare... or at least the beginning of one. People are afraid to leave their homes. When you do leave your house, you can't go and relax anywhere anyway. Nothing's open obviously. Even a simple walk around town is depressing as hell. All the closed shops and restaurants, people in masks looking scared, worries if you're walking to close to someone... both for them, and for you.
too soon, man, too soon
Give it forty or fifty years before you say shit like this out loud where people can hear you.
If you want to be part of the solution and are looking for a startup idea, I have tried repeatedly over the years to suggest that we can try to develop gig work platforms that are actually a good deal for the worker. I work for such a platform and I've written about that (again) here:
https://writepay.blogspot.com/2020/03/the-textbroker-solutio...
Discussed on HN and some of the comments there are important: https://news.ycombinator.com/item?id=22734447
Edit: And if you do create a gig work platform based roughly on the Textbroker model, you are invited to post the announcement to r/GigWorks. I'm the mod there.
[0] https://www.brookings.edu/wp-content/uploads/2016/07/1_how_m...
There’s a $2,000 per child federal tax credit. That’s 25% of that number just off the bat.
Here’s a link which claims we spend $12,000 per child in 2005 just on education. [1]
Based on what we spend on education, which apparently is the second highest in the world... I have a hard time concluding we are under-investing.
Keep in mind the majority of spending on elderly is social security, which is a mandatory retirement program that every worker paid into.
Even if that's the case, I'm not sure most Americans are getting the education they need. Maybe that takes even more money, maybe that takes more effective investment of that money, maybe it takes something else.
The economic outlook of my generation, the millenials, nearly all hard at work already, isn't looking so hot, and I fear that the next generation's chances look more grim.
Or not, but if not, why not?
The economic consequences of the pandemic will make things fundamentally worse for the average person. The wealthiest entities will accumulate even more wealth, because they have the resources to survive, to petition the government for assistance over smaller players, and to buy out the leftover pieces of those who couldn't survive. In the end, the majority of the bailout will go to the rich, because they are the ones with the bargaining power. The result is lower competition, which is worse for almost everybody.
The only upside could be a shifting technological landscape. Work-from-home and physical distancing could create demand for new solutions which would be capitalized by smaller, agile companies, creating new competition. That's what I'm hoping for anyway.
EDIT: I don't know if that's how a drought actually works. The demand for new tech is already here, it's a question of whether it will stay long-term.
Or may be we are looking at an upcoming false silver lining before the real economical problems show up.
I sense a kind of broken-window fallacy here. If consumers want to spend less on things they don't essentially need, then why is that a problem? Isn't that a net-win for everybody (since what people don't want doesn't need to be produced) and the planet (for obvious reasons)?
* No surplus sufficient to ride out a crisis
* No safety net
* Barely functioning public health system
* No preparation for a major disease outbreak
* Etc.
It's the same economy today, but slightly different operating mode, like a car with the same engine but in a different gear. I'm certainly hoping for a new normal.
This is a self-induced economic freeze.
Yes, an unfreeze won't immediately revive the world, because some capacities will have been lost along the way. But once demand ramps back up, you'll have entrepreneurial individuals and companies findings extraordinary ways to meet that rising demand, including who knows, repurchasing/rebuilding the required capacities :)
Yet people buy insurance for that.
Pandemic insurance could exist, and a massive fund could be built up over many decades to pay out when a pandemic does occur.
It would be expensive though. If a pandemic occurs every 100 years, and cuts revenue to zero for 6 months, that means the average cost is 0.5% of revenue...
Pandemic insurance does exist:
https://www.insurancebusinessmag.com/us/news/breaking-news/w...
"Meanwhile The Times as well as The Guardian reported the estimated payout for the cancelation to be in excess of £100 million (around $123.7 million). AELTC is said to be in the process of putting together the claim."
On the other hand, the very nature of a pandemic is that all insured businesses will make their claims at the same time. It's impossible to actually make it work.
... unless there is profit to be made!
What financial instruments could be made to give massive payouts in case of a future pandemic? If enough of those instruments existed, there would be financial skin-in-the-game for preventing pandemics.
Gov is insurance and I want them to be building resilience into the system. That is done with proper unemployment systems that can help people get back to work, but also are ready to go in cases like this or recessions. The delay to pay people is crazy. The EU and Canadian unemployment systems are designed for this more than the American system and it is showing.
The true problem here is the so called Risk "experts" do not understand Risk, and that is the core problem.
The problem isn’t risk experts; the problem is that government representatives elected have no domain expertise nor leadership fortitude to put domain experts into the driver’s seat when the situation dictates.
China, for all its failings, gets this right. Their leadership is more STEM and less lawyers and politicians.
Can we please stop parroting that distortion of the facts?
https://www.factcheck.org/2020/03/dems-misconstrue-trump-bud...
> China, for all its failings, gets this right. Their leadership is more STEM and less lawyers and politicians.
You don't know anything about China's leadership. They're all politicians. Not a decision gets made without it being vetted ideologically -- ideology always comes first. And we should look at the timelines from China before saying they "got it right."[1]
[1] https://www.nationalreview.com/the-morning-jolt/chinas-devas...
I'm not a fan of fact-checker battles but Snopes says "Claim: The Trump administration fired the U.S. pandemic response team in 2018 to cut costs. True."
One would think reading only the Snopes article, or the Twitter thread (!) the piece is based on, that to save money (or because the Trump administration hates science, or something) the entire "US Pandemic Response Team" agency was eliminated and everyone in a large DC office building was fired.
Actually reading the contemporary NBC News https://www.nbcnews.com/politics/politics-news/tom-bossert-t... and Washington Post https://www.washingtonpost.com/news/to-your-health/wp/2018/0... articles the Snopes piece cites in the body, they seem to have been a handful of people in one team in the National Security Council (not CDC, contrary to what toomuchtodo claims) hierarchy, that the new National Security Advisor reassigned to related agencies, as part of a desire to have his own hierarchical structure. Ziemer resigned because he wanted to keep his team the way it was.
COVID19 was not a surprise; that is, it was known to exist in China some time before the first cases appeared in the US. It is not unreasonable for a government to assemble a team to respond to something like a pandemic as needed, as opposed to having people dedicated solely to the purpose and nothing else. And that's exactly what the US did, implementing the ban on non-American travelers who'd been to China in late January, among other things.
You may or may not agree with this. But please don't claim that this is somehow prima facie proof of the Trump administration's malfeasance/evilness.
PS - No, Trump did not "cut the CDC budget" either. https://apnews.com/d36d6c4de29f4d04beda3db00cb46104
PPS - Trump was not acquitted in the Senate until February 5. Thought experiment: What do you think would have happened if he had implemented the only thing that would have 100% kept COVID19 out of the US, completely shut down all borders (including with Canada) before January 15, the day "patient zero" entered Seattle from Wuhan? (The WHO was still stating that person-to-person contact for COVID19 did not seem to be occurring.)
Further, the entire culture he created — don’t speak truth to power, or you will be fired - is also responsible for the late actions and poor preparedness of the administration.
Furthermore, I seriously doubt that there is anything close to a “populist” war on expertise. The US public has had a somewhat adversarial relationship with Science throughout its history (possibly because College is not considered mandatory, but that’s me speculating). The lack of education and the unrelenting advertisement infrastructure around climate denial is probably what has painted scientists especially in a bad light.
Um, what? Look no further than the manufactured controversy over climate science, or evolution.
That's not getting it right, it's a different type of shit show.
My point is that they reacted the second half of January, after trying to cover up the outbreak for weeks/months. If the local and regional officials had acted effectively in late December, there might not be a global pandemic.
Although given a long enough timeline a pandemic is all but guaranteed, on a annual or election cycle it scores pretty low on the probability scale. Our gauge of the severity may have been misrepresented due to the once-in-a-century nature of this event.
Juxtapose that with issues that people face in the immediate term like budget shortfalls, service disruptions creating disgruntled electorates, etc. I think it's easy for powers-to-be to convince themselves to gut preparations for a pandemic in favor of more 'guaranteed-to-happen' short term crises. Combining poor risk assessments with a recency bias can incentivize these kinds of decisions.
Prominent people call this a black swan just to deflect responsibility, and perhaps to get a bit of bailout money on the side.
Yes respirators and masks, I know, but the previous administration had gone through the same thing on a smaller scale and stockpiles were not replenished possibly because experts said it won't happen again for a while (I am giving the previous administration the benefit of the doubt here.. I don't know why they didn't replace those items).
The point here is, there's not that much that even had all information been available, and masks, and respirators, the world could have done. It's literally a force of nature that humans have a limited ability to deal with instantly.
I am not defending any political or public policy department past or present. I am just stating the obvious. Everything else is 20/20 hindsight aimed at the margins of effectiveness, so why go there ?
even ... c.f. California.
These are all jurisdictions that took early, effective, widespread action that have resulted in dramatically lower rates of cases and deaths.
https://ourworldindata.org/grapher/covid-daily-cases-traject...
If you look at who has the LEAST per million (absolute number of cases are worse than useless and what most statisitic sites are showing) it's not nations usually associated with good governance, ahem...
So what's going on.
It's traffic. Flights into a nation, and especially flights from China. The nations with the best per capita numbers are low-air-traffic nations, per capita, so Belize, South Africa, Thailand, Andorra places like that.
So mystery solved. The difference between the US and Germany, the best of the "developed" nations, is not that big at all. For a long time, weeks and weeks, it's been mid 700s for BOTH nations. I am not sure where the very latest data is getting we're at 100 per million now, but still they're comparable in the larger scheme of things.
The virus started in China. The virus spread from China because of of the Communist Chinese Party's denial and lack of response.
Those are, in turn intimately connected to the fact that China is a one-party dictatorship that murdered the doctors who first tried to bring their attention to COVID-19 in the early days of the virus, lest the world forget.
Currently, Chinese epidemological numbers cannot be trusted because the Chinese Communist Party, on top of being a murderer of its own truth-telling scientists, is a pathological liar and manipulator of information, like all Communist regimes.
That's all I said about China; maybe someone said something more, so talk to them.
How many people die, the death rate from COVID-19, is about the same in most nations and mostly a function of age and previously existing health issues.
Aside from these facts, I don't even know what in my post you could be reacting to.
I was looking at a chart of the trajectory of the epidemic in different countries, and it was interesting because there were at least three qualitatively different types of curves.
South Korea and China are notable for nearly completely flattening out after a certain point. The former might tend to undermine conspiracy theories about China, I don't know. On the other hand, why have no other countries had the same experience? Could it be the response, or characteristics of data gathering and reporting?
Japan and Singapore have risen much more slowly than the US and hard-hit European countries, but do not seem to be flattening which is surprising and seems ominous.
The western countries that have a lot of cases seem to have a characteristic sort of gradual curve, that rose faster early on, gradually is leveling out, but not completely (yet). The US looks similar to the others, except it is larger and continuing to suggest a higher peak.
I am wondering if Japan, and maybe the US states that are not initially seeing a lot of cases, will end up being a second wave after things seem to be under control in a lot of places.
Without supporting an alternative theory, this sounds doubtful to me. Do you think, for instance, that the difference between West Virginia and New York is a result of the superior containment measures in the former? WV has a lower death rate so far than even South Korea.
There have been much more serious pandemics in the past, way too many to even list here. I'll briefly mention two because we know them well in the western canon -- the 1918 flu epidemic and the black death.
Everybody forgets that part (which sort of proves the point, eh?)
You can't prepare for specific black swans, but you can generally structure things to be more or less resilient. It's not even impossible for small businesses to gain during this time - my local wing spot is doing crazy good business because they've converted to to-go orders amazingly intelligently (curbside delivery, easy to get orders, high order accuracy, and delivery area is well managed by multiple employees).
Low interest rates and an abundance of cheap money looking for yield distort the environment. Your debt-free, slow growth company will be wiped out by some bilion $ valued cash-burning startup.
I'd argue that the poor government response to pandemic planning led those companies to conclude that whatever length of time this event was to last, there weren't strong signs that national management would mitigate that. They probably read those leaves correctly.
It's not just about the businesses.
(I say all this as someone who got laid off and has some savings but can't last as long as I would've 5 years ago...)
This is kind of one of those ‘Hindsight is 20-20’ things. During the good times, building resilience means buying extra capacity that you do not need, and answering awkward questions about empty wards and hospital beds.
In good times, the demand from the people is that every dollar is spent well, which is usually defined as meeting demand in the here and now. Real life doesn’t have auto-scalability.
https://www.nytimes.com/2020/04/05/world/europe/coronavirus-...
Normally I don't link NYT, but there is no paywall for Coronavirus coverage.
People talk about efficiency, but efficiency also means fragile because there is no slack or fat in the system.
At the exact same time China and the WHO were lying that this wasn't person-to-person transmissible?
December 30: Dr. Li Wenliang sent a message to a group of other doctors warning them about a possible outbreak of an illness that resembled severe acute respiratory syndrome (SARS), urging them to take protective measures against infection.
December 31: The Wuhan Municipal Health Commission declares, “The investigation so far has not found any obvious human-to-human transmission and no medical staff infection.” This is the opposite of the belief of the doctors working on patients in Wuhan, and two doctors were already suspected of contracting the virus.
January 2: One study of patients in Wuhan can only connect 27 of 41 infected patients to exposure to the Huanan seafood market — indicating human-to-human transmission away from the market. A report written later that month concludes, “evidence so far indicates human transmission for 2019-nCoV. We are concerned that 2019-nCoV could have acquired the ability for efficient human transmission.” Also on this day, the Wuhan Institute of Virology completed mapped the genome of the virus. The Chinese government would not announce that breakthrough for another week. [1]
January 3: China’s National Health Commission, ordered institutions not to publish any information related to the unknown disease, and ordered labs to transfer any samples they had to designated testing institutions, or to destroy them. Also on this day, the Wuhan Municipal Health Commission released another statement, repeating, “As of now, preliminary investigations have shown no clear evidence of human-to-human transmission and no medical staff infections.” [2]
January 8: Chinese medical authorities claim and Western media continue to repeat, “there is no evidence that the new virus is readily spread by humans, which would make it particularly dangerous, and it has not been tied to any deaths.” [3]
[1] https://www.wsj.com/articles/how-it-all-started-chinas-early... [2] https://www.straitstimes.com/asia/east-asia/how-early-signs-... [3] https://www.nytimes.com/2020/01/08/health/china-pneumonia-ou...
[0] https://www.cnn.com/2020/04/08/politics/intel-agencies-covid...
A business is not a household.
Though, what the government wants right now is more than direct losses paid. The purpose of covering business payrolls is to keep money velocity up.
It is astounding that the US can’t even seem to get helicopter money right.
Something is fishy with the current narrative.
https://www.nbcnews.com/business/business-news/why-have-more...
Most Americans are about to receive a $1200 check and unemployment benefits that pay more than their job did for the next 6 months. I don't think consumer spending is going anywhere soon.
Has anyone on here ever actually been poor before? Genuinely curious.
Being self-employed, my dad's income was irregular and often came in $5000 chunks. You might call that a windfall, but my parents were disciplined enough with their money that it automatically went into a savings account for the next mortgage payments, or to pay off credit card debt[1]. We weren't suddenly going out to eat when a cheque came in (in fact, when I was 10 or so, I remember helping my mom enter receipts into her big accounting book, and the total restaurant expenses for the entire year was something like $30).
I don't think we were ever officially under the poverty line, but with a family of 11 in a high cost of living area, the money had to go a lot farther than normal.
[1]: Unfortunately, they weren't disciplined enough to build up and maintain an emergency fund to carry them through rough times, so they relied on a low-interest credit card for essentials way too often.
If you are paid weekly, the amount of cash you have in your pocket might only be $50, and then only on a Friday night, so $1200 looks like an extraordinary windfall.
I used to do taxes for extremely poor (<$10K yearly income) people in Michigan as a volunteer thing. For most of them, I could get the ~$3.5-5K earned income tax credit. A huge windfall? No, these people need that money for basic expenses like feeding their kids.
I can guarantee you these same folks—and the millions that suddenly lost their jobs—are not looking at a $1200 check and thinking, “sweet, 6 months of weed money!”.
But yeah, I’m “thinking about it wrong”.
Going off closing lows, the SPY is up ~25% from it's ~223 close on 23 March. The Nasdaq Composite is up ~19%. That puts them back at mid-late 2019 prices, not 2016-2017 levels.
This all agrees w/your latter point - investors are already bullish again - but I wanted to add data points to supplement the market has recovered much faster than some people realize.
Does anyone have reports of anyone getting it?
None of my friends who were laid off are getting it yet and the states they talked to say they are waiting guidance from the labor department.
when things get tough and there is scarcity, people save more and spend less. as far as the unemployment benefits go, i think most people will still be very reluctant to spend on anything other than staples until they have a sustainable way of generating income that isn't dependant on a government program.
many of today's workers remember the duration of the unemployment benefits offered during the great recession -- and they remember for how many years economic conditions were difficult long after those benefits ended, even including the extension programs. everyone sees that there is a substantial chance of an extended and deep COVID depression which might dwarf the great depression and will certainly dwarf the great recession. you're not going to convince people to spend money in that environment.
plus, most of the things people would usually spend on are either explicitly off-limits or unlikely to be purchased in the current situation.
It's only enough if you stop paying your mortgage/rent and utilities. It's certainly not enough for most people if they still have those expenses on top of everything else.
Though, admittedly, lots of people are getting substantially more than that -- a married couple earning even into six figures gets $2,400 plus $500 per kid.
Yeah, right. Citation needed. My to-buy list of pent-up demands grows longer by the hour.
For example, many people have vowed never to step on a cruise ship after this and attending large scale events in person will probably give a lot of people anxiety for some time.
The restaurant and bar industry might be toast and that's going to have big social and cultural impacts.
What is going to change is the world's attitude toward the Communist regime currently running China. I feel pretty confident in saying that that regime is slated for death, even as public officials and famous people act, in public, like they're willing to get back to normal.
This is where some of us have been for a long time. You cannot permit an intolerant, racist, minority persecuting, citizen murdering, dictatorial, totalitarian government armed to the teeth with the latest in biowarfare who is inclined to make aggressive noises towards everyone who is not like them and some who are (Taiwan) to exist, period.
I think COVID-19 finally brought that home to everyone who is not just outright anti-Western in their outlook.
People are going back to bars and restaurants and jobs, the stock market is going to go up, but the Communist regime in China is going down.
That's what the near future looks like.
Not all bars and restaurants cater to "the reckless youth" segment, heck, not even most, because there simply isn't enough money in that segment to keep the industry afloat.
We'll see though, fun times ahead!
Care to put a date to your prediction?
It's just like before WWII. Some people see the mortal danger and realize by hook or by crook something HAS to be done. Some people are suing for "peace in our time". Only one of these camps is right. Guess which one.
Say what you want, this is something we DID learn from WWII. Know the signs and don't kid yourself about them. However bad your situation is now, it will only get worse in the future.
Covid-19 onboarded the majority of the population in all nations to this little project. Have no doubt.
The response to the virus was typically disorganized and indicative of wider issues. The last 40 years have seen a huge slide in power and credibility, what is going to stop that?
Formerly, before COVID-19 and China building up outcroppings of rock into military bases, and declaring the whole of the South China Sea to be their personal property, and the genocide of the Uyghurs the details of which are far far more horrifying than the average Westerner is aware of (proof on demand), before the bellicose anouncements about the upcoming "China Century" before all that... the conventional wisdom was the growing propserity of China would lead to a burgeoning middle class, which in turn would demand their human rights causing a reform of the Communist regime. That and giving China MFN status would make them behave like other nations with respect to IP laws and pirating and currency manipulation etc. etc.
It didn't happen. Instead what we got was a blustering, expanionistic kleptocracy provably willing to murder their own people, other people's people and anything else that stands in the way of the mighty Century of China, where China takes its "rightful place" as the undisputed world leader.
So now, Plan B.
Your point on the consequences for the CCP, not so much. They have an iron grip on their people and information flows. COVID provides them with validation to tighten that grip. I think what will topple them will the be long run consequences of resource misallocation rather than anything their citizens can do. Their 'cost-to-control' is too low for civil unrest to be an issue, in my opinion.
People who previously didn't think anything of it will, for decades, be aware that if you're indoors and/or closer than six feet from a person who coughs, you will likely inhale airborne droplets that may contain viruses or bacteria from their lungs. I think this was known academically by some, and the risk was calculated and accepted by a few, but most people wouldn't have expected to inhale airborne droplets from someone they pass in a grocery store aisle.
In addition, there will be structural changes to consumption habits. Many meetings will persist online when this is over, creating a drag on demand for airline services. Cruise ships, large sporting events, and concerts will take years to bounce back.