What impact has the COVID-19 pandemic had on your job?

[russ_watters]

The 2008-2009 recession was triggered by a near-collapse of the financial sector, and these types of event have historically led to longer economic downturns (the best example of this was the Great Depression of the 1920s).

There's a big difference between a "near-collapse" and a "collapse" - a big difference between losing your life savings due to a bank failure and not losing your life savings due to a bank failure.

The 2008-9 recession was just a bad recession and bad recessions take longer to recover from than less bad recessions simply because they are worse; more ground lost means more ground to make-up.

I'm generally an optimistic guy, but I'm not optimistic right now. I think the way that the pandemic is being managed is a dismal failure, the plans for how to manage it for the next year can't possibly succeed, and so until we see a vaccine or the pandemic naturally burns itself out, we're going to see a lot more death and a protracted quasi-shut-down state or cycles of openings and closings.

Hopes for a "V-shaped" recovery are based on the idea that with immense stimulus you can keep people economically health so when the economy re-opens in a month, everything goes almost back to normal. I don't think either premises is likely. There's a lot of real damage being done that will take time to undo, and I don't think we'll be able to go back to normal anyway due to the continuing pandemic. Add to that trillions of dollars of new debt on an already high debt load, and we may see a long recession and a new normal that is decades of stagnation due to a need to pay-back all of our debt (including the medicare and social security shortfalls that already threaten the 2030s+).

 

[PAllen]

T I think the way that the pandemic is being managed is a dismal failure,

What would you recommend? There is a notion of a black swan event that has no reasonable solution approach. For example, a large asteroid hitting Earth in the next year, way before there are any technological prevention approaches.

 

[russ_watters]

What would you recommend?

Compulsory digital contact tracing.

 

[PAllen]

Compulsory digital contact tracing.

Well, that might be nice back at the beginning of March if the US didn’t flub testing role out. It is completely irrelevant now. The hard problem is what to do from where we are now. Even though I am on a high risk group due to age, I lean toward isolating those at risk, providing services to the at risk using the unemployed, and letting the virus rip through the rest of population. I think this would still produce two or three time the current number of deaths, with many serious cases (e.g. the 7 times womens US chess champion, in her mid 30s, with no risk factors, spent 3 days in the hospital before recovering from covid19). However, I discount the pessimistic fears about no immunity. Even the common cold Coronavirus produces one to two years immunity to that strain. SARS and MERS had 2 to 4 years immunity. So I think a managed herd immunity approach is the only plausible way out of this crisis within 6 months.

 

[russ_watters]

Well, that might be nice back at the beginning of March if the US didn’t flub testing role out. It is completely irrelevant now. The hard problem is what to do from where we are now.

It isn't irrelevant for the next year of our response to the virus. We're currently ramping-up an army of potentially hundreds of thousands of manual contact tracers. The death toll moving forward from today depends heavily on how effective the contact tracing is going to be.

Even though I am on a high risk group due to age, I lean toward isolating those at risk, providing services to the at risk using the unemployed, and letting the virus rip through the rest of population. I think this would still produce two or three time the current number of deaths...

I don't think that's necessarily a bad strategy as long as it is really possible to keep the high risk people well isolated, which I'm not sure is realistic.

 

[atyy]

It isn't irrelevant for the next year of our response to the virus. We're currently ramping-up an army of potentially hundreds of thousands of manual contact tracers. The death toll moving forward from today depends heavily on how effective the contact tracing is going to be.

Not a discussion, but an interesting piece of public health messaging, which includes the recruitment of contact tracers that you mention:
https://uthealthaustin.org/blog/the-importance-of-contact-tracing

Your point seems to be supported by these back-of-the-envelope estimates and discussion by Trevor Bedford (there's an error in tweet #6 which he corrects later).

But in another discussion, he also says "However, the main point of the report was that given IFR, we should be pursuing suppression rather than mitigation. This implies a strict lockdown for suppression followed by #TestTraceIsolate to keep epidemic suppressed. Notably, this is exactly what countries like South Korea and New Zealand have been able to achieve. The US was not able to reach suppression with our lockdown and so we're left with agonizing decisions about how to keep society functioning while holding the virus in check. "

 

[StatGuy2000]

There's a big difference between a "near-collapse" and a "collapse" - a big difference between losing your life savings due to a bank failure and not losing your life savings due to a bank failure.

The 2008-9 recession was just a bad recession and bad recessions take longer to recover from than less bad recessions simply because they are worse; more ground lost means more ground to make-up.

I'm generally an optimistic guy, but I'm not optimistic right now. I think the way that the pandemic is being managed is a dismal failure, the plans for how to manage it for the next year can't possibly succeed, and so until we see a vaccine or the pandemic naturally burns itself out, we're going to see a lot more death and a protracted quasi-shut-down state or cycles of openings and closings.

Hopes for a "V-shaped" recovery are based on the idea that with immense stimulus you can keep people economically health so when the economy re-opens in a month, everything goes almost back to normal. I don't think either premises is likely. There's a lot of real damage being done that will take time to undo, and I don't think we'll be able to go back to normal anyway due to the continuing pandemic. Add to that trillions of dollars of new debt on an already high debt load, and we may see a long recession and a new normal that is decades of stagnation due to a need to pay-back all of our debt (including the medicare and social security shortfalls that already threaten the 2030s+).

Perhaps because I live in Canada (which, from all the information I've seen thus far, has handled the COVID-19 pandemic far more effectively than the US), my views from this differs from yours. While I agree that as long as the pandemic is ongoing (which will likely continue into either 2021, when a vaccine will likely be available, or into 2022, when enough herd immunity will take place that the pandemic will die down), the economic costs will continue to have an impact.

That being said, in spite of the real damage done, the economic fundamentals of Canada and many other countries (including the US) are still fundamentally sound, and pent-up demand for goods and services will just as likely push for stronger economic growth which will undo much of the damage you speak of.

As for the trillions of dollars of new debt -- keep in mind that borrowing has never been cheaper, with interest rates at record lows. And the debt you speak of isn't uniquely high in the US, as many other countries have taken on debt to mitigate the effects of the pandemic, so the US isn't especially in any worse shape in this regard than other countries. So there is still considerable scope for economic stimulus to kick-start the economy, and stronger growth will more than likely also lead to paying down the debt much more quickly.

So, ironically (given my personal tendencies), I'm much more optimistic on the economic prospects for US, Canada, and the rest of the world post-pandemic than you are.

Of course, only time will tell to see who is right on this.

 

[atyy]

That being said, in spite of the real damage done, the economic fundamentals of Canada and many other countries (including the US) are still fundamentally sound, and pent-up demand for goods and services will just as likely push for stronger economic growth which will undo much of the damage you speak of.

I think the concern is that although there may be quite a good recovery, inequality in the US will be worse, which is the sentiment expressed earlier in the thread by @homeylova223.

I think its over for the middle class in the USA for people who live off a salary not the people who have investments.

https://review.chicagobooth.edu/economics/2020/video/will-covid-19-crisis-exacerbate-inequality
https://voxeu.org/article/covid-19-will-raise-inequality-if-past-pandemics-are-guide
https://www.bloombergquint.com/business/six-ways-coronavirus-will-make-u-s-inequality-worse

 

[StatGuy2000]

I think the concern is that although there may be quite a good recovery, inequality in the US will be worse, which is the sentiment expressed earlier in the thread by @homeylova223.
https://review.chicagobooth.edu/economics/2020/video/will-covid-19-crisis-exacerbate-inequality
https://voxeu.org/article/covid-19-will-raise-inequality-if-past-pandemics-are-guide
https://www.bloombergquint.com/business/six-ways-coronavirus-will-make-u-s-inequality-worse

Inequality in the US has been a long-standing problem pre-pandemic. And whether or not the inequality will be worsened in the US will depend on choices to be made by the state and federal governments in providing relief to their citizens and stimulating the economy. This could serve as an opportunity to tackle inequality head-on.

For reasons related to PF rules on political discussions, I will not go into any more details in this thread.

 

[homeylova223]

Now there are 36 million unemployed according to an article I read on MSNBC. I think a big problem is restaurant closing many people lost their jobs. 36 million is a lot.

 

[gmax137]

Well, when people say "affects the economy" this is what they are talking about. Nobody should be surprised at all.

 

[russ_watters]

I think the concern is that although there may be quite a good recovery, inequality in the US will be worse, which is the sentiment expressed earlier in the thread by @homeylova223.

Inequality in the US has been a long-standing problem pre-pandemic. And whether or not the inequality will be worsened in the US will depend on choices to be made by the state and federal governments in providing relief to their citizens and stimulating the economy. This could serve as an opportunity to tackle inequality head-on.

I don't think it's really possible for inequality to get better as a result of coronavirus. Just like the virus is narrowly focused on killing the elderly, the impact of the shutdown is narrowly focused on harming lower-middle-class and below, wage earners. It's a fundamental feature of the shutdown, so it can't be reversed, it can only be partly mitigated -- barring a seismic shift in the way certain things are done, which would be a completely separate action from the Coronavirus economic impact mitigation efforts themselves.

And while a crisis might motivate the passionate, it doesn't provide much flexibility or attention to making such seismic changes. For example, one common plan for reducing inequality is a $15 minimum wage (that's not even particularly seismic). But this a) doesn't help you if you don't have a job and b) is particularly burdensome on the employers of near minimum wage earners during the phased re-opening. And it's likely that many of the jobs lost won't ever come back and many that do will take years.

 

[Vanadium 50]

the impact of the shutdown is narrowly focused on harming lower-middle-class and below, wage earners

I'm pretty sure that's a side effect and not the intent.

is a $15 minimum wage ... But this ... doesn't help you if you don't have a job

What many people don't recognzie is that a minimum wage says if your labor is not worth $15, it's worth $0.

 

[russ_watters]

I'm pretty sure that's a side effect and not the intent.

I recognize the wink, but regardless I'm not sure that's a hair that needs splitting. The point either way is that the types of jobs being lost are inexorably linked to the shutdown orders. Ask the workers and business owners and a lot will say they feel targeted.

What many people don't recognize is that a minimum wage says if your labor is not worth $15, it's worth $0.

Yes. When unemployment was at near-historic lows, the *hope* would be that there's such a shortage of workers that the job losses would be minimal. But with high unemployment, other steep paths to getting those jobs back (legally mandated half-full restaurants, for example) and business owners learning to live without those workers, adding another barrier against those workers getting their jobs back is not going to be popular/advisable.

The type of seismic shift needed isn't the type typically advocated by people who care about inequality; What's needed is for those people who lost their low-wage jobs to abandon the low-wage workforce and try to get better jobs. And that's not something that can readily be accomplished by government fiat.

 

[StatGuy2000]

I don't think it's really possible for inequality to get better as a result of coronavirus. Just like the virus is narrowly focused on killing the elderly, the impact of the shutdown is narrowly focused on harming lower-middle-class and below, wage earners. It's a fundamental feature of the shutdown, so it can't be reversed, it can only be partly mitigated -- barring a seismic shift in the way certain things are done, which would be a completely separate action from the Coronavirus economic impact mitigation efforts themselves.

And while a crisis might motivate the passionate, it doesn't provide much flexibility or attention to making such seismic changes. For example, one common plan for reducing inequality is a $15 minimum wage (that's not even particularly seismic). But this a) doesn't help you if you don't have a job and b) is particularly burdensome on the employers of near minimum wage earners during the phased re-opening. And it's likely that many of the jobs lost won't ever come back and many that do will take years.

I recognize that dealing with the effects of the COVID-19 pandemic will challenge any government in both mitigating the economic effects and the health effects -- at least until new treatments or vaccines will become widely available, with the FDA approval of antiviral medications remdesivir and favipiravir (the most promising possible treatments thus far, based on the research I've been reading and furthest along in terms of clinical trials), along with COVID-19 vaccines.

That being said, I don't agree with you that governments are hampered in dealing with the inequality that may be exacerbated by the pandemic. You specifically address the $15 minimum wage. Another major proposal that is being discussed is a universal basic income (UBI). In Canada at the present time, all people who have been unemployed due to the pandemic are eligible to receive $2000 per month (until June from what I've heard, but which is likely to be extended) as an emergency benefit, on top of whatever unemployment insurance they are eligible for. That is in essence a UBI. The US had a one time payment of $1000, but a $2000/month UBI in perpetuity during the duration of the pandemic (along with suspensions of mortgage and rent payments, and all moratoriums on evictions and foreclosures) could help people in mitigating further inequalities.

[Aside: in terms of remdesivir approval, please see the FDA announcement of emergency approval:

https://www.fda.gov/news-events/pre...se-authorization-potential-covid-19-treatment]

 

[russ_watters]

That being said, I don't agree with you that governments are hampered in dealing with the inequality that may be exacerbated by the pandemic. You specifically address the $15 minimum wage. Another major proposal that is being discussed is a universal basic income (UBI). In Canada at the present time, all people who have been unemployed due to the pandemic are eligible to receive $2000 per month (until June from what I've heard, but which is likely to be extended) as an emergency benefit, on top of whatever unemployment insurance they are eligible for. That is in essence a UBI. The US had a one time payment of $1000, but a $2000/month UBI in perpetuity during the duration of the pandemic (along with suspensions of mortgage and rent payments, and all moratoriums on evictions and foreclosures) could help people in mitigating further inequalities.

Well again, that's just a partial mitigation of the impact of the pandemic, not a reversal of the systemic "problem" that existed before the pandemic and will exist after it. As far as I know, there is no significant talk of actually implementing a permanent UBI (not the a UBI necessarily solves inequality anyway...), and unemployment compensation doesn't really resemble a UBI (not that UBI is necessarily a well-defined concept anyway...).

Also, I don't know why misunderstandings of the US benefit system are so common (I see daily memes/threads on facebook and Reddit about it), but the US benefit system is quite generous and not fundamentally different from what people are getting in Canada. The average state benefit is $1,600 a month, and the federal government added another $500 a month on top of it. The primary difference is that in the US the unemployment benefits that always exist are are based on your pre-unemployment income, and generally pay about 80% of it. The added federal benefit was supposed to bring the average income up to 100%, but since it is a flat $500 it means that people with below-average incomes are receiving more than 100% while people with above average incomes are receiving less than 100%. It's causing the problem that welfare advocates don't like to acknowledge: some people are refusing to work because they make more money by not working (even though it is illegal).

The unemployment compensation plans are of course neither "universal" or "basic" as they only apply to the unemployed, when they are unemployed and as I said the payments vary based on pre-employment income. I guess you could argue that Canada's is more "basic" in that everyone gets the same amount, but to me that seems problematic if the goal is to try to maintain the status quo. For the US, the $1200 stimulus check was closer to "universal" as it was given to everyone up to a certain income level that covered something like 90% of all adults.

The theory of all of this for the pandemic is that if we keep paying everybody what they were making before they lost their job, then they are in no worse shape at the end of the pandemic than when it started, and they can simply pick right back up where they left off when they get their job back. The problems with that are:
1. The mitigation strategies aren't going to be shut off like a light switch.
2. Many of those jobs aren't coming back.
3. It's expensive.

So we're financing a bridge to nowhere on debt. Despite what the statistics tell us, the actual depression hasn't started yet - it starts after we decide we're finished with the pandemic mitigation. That's when the numbers change from being an interesting spectator sport to having a real impact. That's when, for example, there will be an explosion in home foreclosures and evictions.

 

[homeylova223]

I think there definitely will be more income inequality. WalMart and those big corporations did not shut down. The small business owner who are middle working class people had to shut down their restaurants and business. And people got crowded in supermarket anyway. I think the this is a new type of capitalism where there will be a few really rich people and a poor mass.

 

[homeylova223]

Well again, that's just a partial mitigation of the impact of the pandemic, not a reversal of the systemic "problem" that existed before the pandemic and will exist after it. As far as I know, there is no significant talk of actually implementing a permanent UBI (not the a UBI necessarily solves inequality anyway...), and unemployment compensation doesn't really resemble a UBI (not that UBI is necessarily a well-defined concept anyway...).

Also, I don't know why misunderstandings of the US benefit system are so common (I see daily memes/threads on facebook and Reddit about it), but the US benefit system is quite generous and not fundamentally different from what people are getting in Canada. The average state benefit is $1,600 a month, and the federal government added another $500 a month on top of it. The primary difference is that in the US the unemployment benefits that always exist are are based on your pre-unemployment income, and generally pay about 80% of it. The added federal benefit was supposed to bring the average income up to 100%, but since it is a flat $500 it means that people with below-average incomes are receiving more than 100% while people with above average incomes are receiving less than 100%. It's causing the problem that welfare advocates don't like to acknowledge: some people are refusing to work because they make more money by not working (even though it is illegal).

The unemployment compensation plans are of course neither "universal" or "basic" as they only apply to the unemployed, when they are unemployed and as I said the payments vary based on pre-employment income. I guess you could argue that Canada's is more "basic" in that everyone gets the same amount, but to me that seems problematic if the goal is to try to maintain the status quo. For the US, the $1200 stimulus check was closer to "universal" as it was given to everyone up to a certain income level that covered something like 90% of all adults.

The theory of all of this for the pandemic is that if we keep paying everybody what they were making before they lost their job, then they are in no worse shape at the end of the pandemic than when it started, and they can simply pick right back up where they left off when they get their job back. The problems with that are:
1. The mitigation strategies aren't going to be shut off like a light switch.
2. Many of those jobs aren't coming back.
3. It's expensive.

So we're financing a bridge to nowhere on debt. Despite what the statistics tell us, the actual depression hasn't started yet - it starts after we decide we're finished with the pandemic mitigation. That's when the numbers change from being an interesting spectator sport to having a real impact. That's when, for example, there will be an explosion in home foreclosures and evictions.

I cannot see the government just giving people free money but I think they will have to or face major social unrest or do like in the soviet union and make people do forced labor.

 

[StatGuy2000]

I cannot see the government just giving people free money but I think they will have to or face major social unrest or do like in the soviet union and make people do forced labor.

This is admittedly off topic, but technically speaking, forced labour already exists in the US, in the form of penal (i.e. prison) labour.

https://en.wikipedia.org/wiki/Penal_labor_in_the_United_States

 

[StatGuy2000]

I think there definitely will be more income inequality. WalMart and those big corporations did not shut down. The small business owner who are middle working class people had to shut down their restaurants and business. And people got crowded in supermarket anyway. I think the this is a new type of capitalism where there will be a few really rich people and a poor mass.

WalMart and some big corporations did not shut down, but there are large corporations who have had to close down stores or shops of which they own/operate (at least in person) due to COVID-19. Many retail chains, for example, are owned by large corporations.

And there are small business owners whose businesses are deemed essential that continue to operate (for example, restaurants, who have switched to takeout or delivery).

So what you state isn't actually correct. Although you are not entirely wrong that the small business owners have suffered during the pandemic.

As for a few really rich people and a poor mass -- that is a reality in many parts of the world already prior to the pandemic, and to a certain extent in the US.

[Aside: You strike me as someone who is incredibly bitter. Is that accurate?]

 

[StatGuy2000]

The theory of all of this for the pandemic is that if we keep paying everybody what they were making before they lost their job, then they are in no worse shape at the end of the pandemic than when it started, and they can simply pick right back up where they left off when they get their job back. The problems with that are:
1. The mitigation strategies aren't going to be shut off like a light switch.
2. Many of those jobs aren't coming back.
3. It's expensive.

The idea of keep paying everybody what they were making (or at the very least have some basic floor to what they are receiving) is that those who have been most adversely affected by the pandemic will generally immediately spend their income on necessities. Because the money is immediately spent on goods and services this spurs economic growth far more quickly and efficiently than, say, a tax cut, which tends to favour those who already earn higher than average incomes (who will more likely take that money and add it to their savings, so the stimulating effects are less immediate).

As for point # 1 of mitigation strategies -- no, they aren't going to be shut off like a light switch (nor should they be). Instead they will be gradually winded down, and this gradual process will far more likely allow space for both individuals and businesses to be able to restart their businesses (with support that can be provided, whatever shape that support may be).

For #2, yes, some jobs are not coming back. Government action can help to keep the number of jobs lost or businesses failing to a minimum than doing nothing or too little.

For #3, yes, it is expensive. But I would argue that not doing so is even more costly in the short and longer-term (hence why governments are acting).

So we're financing a bridge to nowhere on debt. Despite what the statistics tell us, the actual depression hasn't started yet - it starts after we decide we're finished with the pandemic mitigation. That's when the numbers change from being an interesting spectator sport to having a real impact. That's when, for example, there will be an explosion in home foreclosures and evictions.

I disagree with your characterization of a "bridge to nowhere". As far as debt is considered, it has never been more cheaper to borrow for governments than at any time in recent history, with interest rates across the world at record lows. If a government issues, say, bonds to cover the debt to cover these mitigation programs (or print money), then now would be the time to do so with very little risk of inflation.

I also disagree with that the depression will begin after the pandemic mitigation ends, because governments will need to continue with the economic mitigation strategies and stimulus strategies for some time after the pandemic ends. If anything, strong government support (along with pent-up demand from the populace) will far more likely lead to strong economic growth that will balance out the sharp decline in GDP and economic activity that was enforced by the containment and lockdowns the world over.

 

[russ_watters]

I think there definitely will be more income inequality. WalMart and those big corporations did not shut down. The small business owner who are middle working class people had to shut down their restaurants and business. And people got crowded in supermarket anyway. I think the this is a new type of capitalism where there will be a few really rich people and a poor mass.

There really is another class, that are people formerly labeled "middle class". They are comprised of most of the top half of the income distribution, up until you consider people "rich". Most of the shrinkage of the "middle class" in the past few years is people who remain in and moved up in this group (contrary to popular belief). These are largely white-collar workers, including small business owners. For now, the majority of them have been untouched by the economic issues because white-collar jobs can relatively easily be done from home. Many of these jobs will be at risk when the "real" depression starts, but for now they are ok.

Most of the new inequality will be from the lower class moving down.

I cannot see the government just giving people free money but I think they will have to or face major social unrest or do like in the soviet union and make people do forced labor.

I will expect if more is done it will be pseudo-market based solutions like in the 2008-10 recession; funding infrastructure projects, for example.

 

[russ_watters]

The idea of keep paying everybody what they were making (or at the very least have some basic floor to what they are receiving) is that those who have been most adversely affected by the pandemic will generally immediately spend their income on necessities. Because the money is immediately spent on goods and services this spurs economic growth far more quickly and efficiently than, say, a tax cut, which tends to favour those who already earn higher than average incomes (who will more likely take that money and add it to their savings, so the stimulating effects are less immediate).

While it's often the case that stimulus money is intended to keep the economy's momentum up by keeping people spending, it isn't for this one. People physically can't spend money on many goods and services they ordinarily would because those goods and services are physically unavailable right now. The economy didn't crash because people didn't have money to spend, it crashed because they had fewer opportunities to spend it. The idea/theory of keeping the economy's momentum going simply doesn't apply to this situation.

See the restaurant industry for example -- one major recession-affected industry. The restaurants were ordered to shut down, so no amount of money pumped into the economy is going to get people to spend money on restaurants right now.

As for point # 1 of mitigation strategies -- no, they aren't going to be shut off like a light switch (nor should they be). Instead they will be gradually winded down, and this gradual process will far more likely allow space for both individuals and businesses to be able to restart their businesses (with support that can be provided, whatever shape that support may be).

I had hoped the new case counts would crash and with testing and contact tracing we'd be able to get back to near normal by summer. Now I think we'll be continuing partial-shutdowns and the associated economic costs. I think that's bad because it means we won't be able to fully shift from "mitigation" to "recovery" for a very long time.

For #3, yes, it is expensive. But I would argue that not doing so is even more costly in the short and longer-term (hence why governments are acting)...

I disagree with your characterization of a "bridge to nowhere". As far as debt is considered, it has never been more cheaper to borrow for governments than at any time in recent history, with interest rates across the world at record lows. If a government issues, say, bonds to cover the debt to cover these mitigation programs (or print money), then now would be the time to do so with very little risk of inflation.

I also disagree with that the depression will begin after the pandemic mitigation ends, because governments will need to continue with the economic mitigation strategies and stimulus strategies for some time after the pandemic ends. If anything, strong government support (along with pent-up demand from the populace) will far more likely lead to strong economic growth that will balance out the sharp decline in GDP and economic activity that was enforced by the containment and lockdowns the world over.

I'm pretty floored these days by how little people care about or think the costs matter. They do matter. They really, really do. When governments borrow money, they are borrowing it from their future citizens, and those citizens have to pay it back. That's a good part of the reason our taxes are higher today than they were in the past; we're paying back past loans and commitments. That money is money we don't have available to spend today -- it is money we lose that hurts our standard of living.

Up until about 2 months ago, a sentence including the words "national debt" often included the word "crisis" immediately after. Prior to the pandemic, an awful lot of people thought debt was a problem, and now we're running it up at unprecedented rates to unprecedented levels. It matters. A lot.

The 2008-10 recession was the worst since the Great Depression and governments spent unprecedented sums of money to mitigate it (and with a friendly government for it). But they didn't 100% mitigate it -- not even close. They won't this time either. This one is worse and will be worse in basically every way.

IMO, you're substituting what you hope governments will do for what it is likely they will do.

 

[StatGuy2000]

While it's often the case that stimulus money is intended to keep the economy's momentum up by keeping people spending, it isn't for this one. People physically can't spend money on many goods and services they ordinarily would because those goods and services are physically unavailable right now. The economy didn't crash because people didn't have money to spend, it crashed because they had fewer opportunities to spend it. The idea/theory of keeping the economy's momentum going simply doesn't apply to this situation.

See the restaurant industry for example -- one major recession-affected industry. The restaurants were ordered to shut down, so no amount of money pumped into the economy is going to get people to spend money on restaurants right now.

Non-essential businesses are unable to provide goods and services physically, but there are many businesses that are still able to provide goods and services online. I've recently ordered many items (yarn, books, clothing) entirely online. And spending on goods and services online also spur economic growth as well.

Also, you are incorrect about people not being able to spend money on restaurants. They are not able to physically go to a restaurant. But restaurants are still open for takeout and delivery in both Canada and the US. My cousin is the owner/manager of a restaurant in Michigan and he and his employees have been busy preparing meals and delivering to customers in door fronts. And I've just recently ordered dinner at a Vietnamese restaurant via takeout.

I had hoped the new case counts would crash and with testing and contact tracing we'd be able to get back to near normal by summer. Now I think we'll be continuing partial-shutdowns and the associated economic costs. I think that's bad because it means we won't be able to fully shift from "mitigation" to "recovery" for a very long time.

Given the numbers of asymptomatic cases of those infected with the SARS-COV2 virus, I have always felt it was unrealistic that new case counts would crash. In the US, the ineffective response of governments (both federal and state) have postponed the recovery, but I believe we are now seeing some progress in a gradual reduction of new cases. So we will likely see, with improved contact tracing and testing being available, to move toward the gradual re-opening of the economy coming into the fall.

Canada is so far ahead of the situation in this regard.

I'm pretty floored these days by how little people care about or think the costs matter. They do matter. They really, really do. When governments borrow money, they are borrowing it from their future citizens, and those citizens have to pay it back. That's a good part of the reason our taxes are higher today than they were in the past; we're paying back past loans and commitments. That money is money we don't have available to spend today -- it is money we lose that hurts our standard of living.

Up until about 2 months ago, a sentence including the words "national debt" often included the word "crisis" immediately after. Prior to the pandemic, an awful lot of people thought debt was a problem, and now we're running it up at unprecedented rates to unprecedented levels. It matters. A lot.

The 2008-10 recession was the worst since the Great Depression and governments spent unprecedented sums of money to mitigate it (and with a friendly government for it). But they didn't 100% mitigate it -- not even close. They won't this time either. This one is worse and will be worse in basically every way.

IMO, you're substituting what you hope governments will do for what it is likely they will do.

Of course costs matter. But you make several fallacies here.

First of all, taxes are not necessarily higher in the US today than they were in the past -- the US was far more heavily taxed during the 1950s and the 1960s than they are now, in terms of both income taxes and taxes on capital gains.

Second, the money that governments are borrowing today are to mitigate the economic impact of the pandemic. Once the pandemic passes and stimulus is applied to increase economic growth, such economic growth will provide greater revenues which will allow said governments like the US, Canada, and others around the world to essentially pay back that money (assuming governments act responsibly, which I admit is a big if).

Third, I have always felt that the whole "national debt crisis" rhetoric in the US was greatly misplaced. The US has never been in a position to default on paying its debts (unlike, say, Greece during the 2008-10 economic crises).

Fourth, the actions taken by the US government during the 2008-2010 economic crisis set the stage for a strong economic recovery toward the period of 2014-2019. You yourself have posted here on PF about how strong the job market was during that period in time.

Of course it didn't 100% mitigate the loss, but since when has economic recovery from a recession ever done that? That is a straw man argument.

Am I certain that the US and other countries will recover economically from the pandemic? Of course not. But strong Keynesian fiscal and monetary policies can potentially have a positive effect in reviving the economies currently suffering through the effects of the pandemic.

So in essence, I am far more optimistic about the prospects of an eventual global economic recovery from the pandemic than you are. Ironic, given that I have always considered myself to be a hard-nosed realist (and have been called a pessimist by others).

 

[Mondayman]

Started a new job. One business that seems to be booming is gardening and home hardware. People are at home doing renovations all day.

 

[Vanadium 50]

'm pretty floored these days by how little people care about or think the costs matter. They do matter. They really, really do.

Something called Modern Monetary Theory explains why they don't. Countries are free to print as much money as they want to fix the problem. Soon the US will be as prosperous as Venezuela! Or Zimbabwe!

 

[StatGuy2000]

Something called Modern Monetary Theory explains why they don't. Countries are free to rpint as much money as they want to fix the problem. Soon the US will be as prosperous as Venezuela! Or Zimbabwe!

@Vanadium 50 , no one (at least no one who is governing responsibly, nor any economist with a scintilla of competence) is seriously arguing that countries are free to print money. That's a straw man argument.

 

[russ_watters]

Something called Modern Monetary Theory explains why they don't. Countries are free to rpint as much money as they want to fix the problem. Soon the US will be as prosperous as Venezuela! Or Zimbabwe!

Fun fact: I'm an actual Zimbabwean billionaire. Or maybe 20 billion, I can't really remember, it's in a box of tchotchkes somewhere.

 

[Vanadium 50]

no one (at least no one who is governing responsibly, not any economist with a scntilla of competence)

Rep. Alexandria Ocasio-Cortez (D-NY), who has a degree in Economics.

 

[russ_watters]

Non-essential businesses are unable to provide goods and services physically, but there are many businesses that are still able to provide goods and services online. I've recently ordered many items (yarn, books, clothing) entirely online. And spending on goods and services online also spur economic growth as well.

But again, this isn't a recession that can be dealt with on a level of bulk statistics, its one of classes of businesses being destroyed by forced closure/restriction. The idea of general stimulus is that it can ultimately help every kind of business, though particularly discretionary/non-essential spending ones (because they are hardest hit). You don't need or necessarily even want to target the spending. That's why general payments and tax credits work well in a normal recession. You hope that giving people more money to spend will mean they spend it and fewer businesses will fail. Theoretically if you give people enough money, the economy will keep running as normal and the recession won't even happen. The reason the difference here matters is:
1. It isn't possible to spend enough via stimulus to keep certain businesses from failing, because they are legally required to be closed or otherwise restrict their operations.
2. Because of #1 it isn't mathematically/physically possible to spend enough to level-off the recession/depression. Theoretically you could spend enough to cause other companies to do better, but the economy couldn't pivot like that. Hairdressers aren't going to go get construction jobs.

That's why much of the stimulus was targeted at unemployed people and at-risk businesses rather than general stimulus (and though there was some general stimulus, it didn't really do much good).

Also, you are incorrect about people not being able to spend money on restaurants. They are not able to physically go to a restaurant. But restaurants are still open for takeout and delivery in both Canada and the US.

Restaurants capable of pivoting to a takeout-only model can stay open in a limited capacity, but as I think you are probably aware:
1. The point and profit driver of most restaurants is the dining room. It's only certain specific types of restaurants that tend to do well in a takeout mode (Pizza, Chinese, fast food). Saying they can stay open in a takeout mode doesn't help if people don't come and doesn't help the dining room staff that has to be laid-off.
2. I think you probably recognize that there's no point in splitting the hair that they are only forced to shut the dining room and not the restaurant per se, it doesn't help them if they can't pivot. Also, I'm sure you are aware that restaurants are only one of many types of businesses heavily impacted by legal restrictions on their operations.

This objection is unnecessarily argumentative.

Given the numbers of asymptomatic cases of those infected with the SARS-COV2 virus, I have always felt it was unrealistic that new case counts would crash. In the US, the ineffective response of governments (both federal and state) have postponed the recovery, but I believe we are now seeing some progress in a gradual reduction of new cases.

In my county as measured by phone GPS tracking we had a 96% reduction in individual travel a few weeks into the shutdown. Regardless of any government folly to get us to that point, to me that's a pretty stunning success. I expected it to be reflected in the case counts, but I was wrong.

The death rate, however, is about 12% if you shift the data by 2 weeks, which implies we may be missing more than 80% of cases. If that's true, then the peak was higher and the reduction faster. Still, the testing rate has leveled-off and so the trajectory of the past couple weeks pretty much has to be real. It may be reflective of people getting tired of social distancing.

Regardless of the cause, if the current trajectory is real it does not bode well for the future.

Of course costs matter. But you make several fallacies here.

First of all, taxes are not necessarily higher in the US today than they were in the past -- the US was far more heavily taxed during the 1950s and the 1960s than they are now, in terms of both income taxes and taxes on capital gains.

It does depend on what you measure and how you set the baselines. But one noteworthy example is the Social Security (payroll) tax. It's gotten progressively higher over time because it borrowed from the future by its very design. Much of our pre-COVID deficit issues were caused by that money transitioning from just being promised-debt to being real debt. It was only $80 B negative in 2019, but prior to that it had positive outflow, so the delta is actually much larger. (Note: some would say it has a fund that still has money in it, but that belies the fact that the "fund" is just intra-government IOU debt.

Also, while it's true that the federal tax rate (e.g, excluding the employer portion of the payroll tax, which has risen continuously) has been remarkably flat over time:
https://www.taxpolicycenter.org/statistics/historical-average-federal-tax-rates-all-households
...that represents an ever-increasing value of taxes paid due to increases in income over time. And even at that, at the peak of the economy last year we were still taking on significant debt, so again, that's borrowing from the future to keep the tax rate lower. E.G., the average tax rate is about 20%, the deficit is 15% of federal income tax, so the tax rate would need to be 23% to eliminate the deficit -- during a strong economy (higher during a weak one).

Second, the money that governments are borrowing today are to mitigate the economic impact of the pandemic. Once the pandemic passes and stimulus is applied to increase economic growth, such economic growth will provide greater revenues which will allow said governments like the US, Canada, and others around the world to essentially pay back that money (assuming governments act responsibly, which I admit is a big if).

In the US we ran a $740B deficit in 2019. Even if we could magically make 2021 look like 2019 economically (impossible), we'd still need to raise taxes to eliminate that deficit and raise them more to pay back the loss. We're certainly not going to have a better economy in 2021 than we did in 2019, which is what would be needed to avoid raising tax rates while paying down the debt.

And again, I think you are confusing what you hope will happen with what is likely to happen. I think it is worth noting that the US never did start paying off the debt from the Great Recession in the 10 years since it ended. And for that matter, neither did Canada. I see no reason to expect a rapid change of tune here.

Third, I have always felt that the whole "national debt crisis" rhetoric in the US was greatly misplaced. The US has never been in a position to default on paying its debts (unlike, say, Greece during the 2008-10 economic crises).

That's not a common view. And while you said that the interest on the debt wasn't a big deal due to low interest rates, we were projected to pay $480 B on it this year, or 10% of the federal budget. That's a lot of money that could be spent elsewhere (or not taken from taxpayers).

Fourth, the actions taken by the US government during the 2008-2010 economic crisis set the stage for a strong economic recovery toward the period of 2014-2019. You yourself have posted here on PF about how strong the job market was during that period in time.

We didn't have a strong recovery, we just had a long one. I think it is consensus (and I pointed it out repeatedly) that the recovery was sluggish and high debt load was probably part of the reason why. Also, while we eventually got to a great place, we never did start paying-down the debt we incurred.

Of course it didn't 100% mitigate the loss, but since when has economic recovery from a recession ever done that? That is a straw man argument.

I don't think it is. Your position requires that we have a better 2021 than 2019 (otherwise, how can we expect to be paying back the debt?), not to mention a better recovery from this recession than the last one.

 

[StatGuy2000]

To all participants on this thread:

I appreciate the vigorous discussion that my original thread has prompted. At the same time, this thread has strayed far from its original subject (impact of pandemic on your job, at the personal level) to debates/arguments about, among other things, macroeconomics, which I do not feel anyone here (including myself) are especially qualified to discuss.

So I am asking the moderators here to close this thread from any further replies.

 

[Vanadium 50]

It looks like this thread is being kept open.

Let's sweep away the brush. "The Economy" is the sum total of goods and services produced. Nothing more, nothing less. Because production has fallen, consumption must fall as well. No amount of printing of green slips of paper by governments can change this. (This is somewhat of a Marxist view, but it is nevertheless correct)

This reduction of consumption does not affect everyone equally. As an example, here The Wise have decided that barbers are not essential, but ice cream truck drivers are. So the barbers are hit harder. Government policies can act to redistribute the pain, but they can only redistribute. They cannot eliminate.

The Wise have been able to partially insulate ourselves from the economic effects - many of us can work from home, for example. Since the economy has already shrunk, this means that if it affects us less, it affects others more. One might even think that given that, a bit more empathy be shown to those who are bearing the brunt of this.

 

[atyy]

It looks like this thread is being kept open.

Let's sweep away the brush. "The Economy" is the sum total of goods and services produced. Nothing more, nothing less. Because production has fallen, consumption must fall as well. No amount of printing of green slips of paper by governments can change this. (This is somewhat of a Marxist view, but it is nevertheless correct)

This reduction of consumption does not affect everyone equally. As an example, here The Wise have decided that barbers are not essential, but ice cream truck drivers are. So the barbers are hit harder. Government policies can act to redistribute the pain, but they can only redistribute. They cannot eliminate.

The Wise have been able to partially insulate ourselves from the economic effects - many of us can work from home, for example. Since the economy has already shrunk, this means that if it affects us less, it affects others more. One might even think that given that, a bit more empathy be shown to those who are bearing the brunt of this.

Where is "here"?

 

[Vanadium 50]

The USA, near Fermilab. (For the moment)

 

[Richard191]

Every person effect due to COVID-19 but some of the industries still working in that condition. Software houses are still operating. Many people are earning too much money in these months. I am still working as an SEO at the initial stage our team used to work from home and now we are working from the office.

Due to lockdown, most of the things are not available in the market. That's the main issue and all the days I am working from home. I am very sad to see that most of the employees lost a job due to COVID-19.