The Economy vs Pandemic Debate

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People with strong opinions about this likely don’t understand the problem.

This graphic comes to mind - there are better versions of this elsewhere but this is the original.

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First question is which quadrant? Can rule out simple.

This article frames up the problem:

Right now, we have two large, complex systems. The first is a virus sweeping through the global population and our combined efforts to mitigate it. The second is a declining global economy. Both systems are incredibly difficult to measure and understand, much less predict. Both are so large and unruly that we struggle to even comprehend them in their entirety. And so far, pretty much everything we’ve thought about either has been utterly wrong.

Two large complex interacting systems.

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As does this one

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I picked up a tidbit this morning (sorry no cite, CNN), but its effect should be evident. It turns out that the Payroll Protection Program has a provision in it which requires that the funds received be spent within 8 weeks. This is a built-in incentive to get businesses open.

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Trump Orders Meat Plants to Stay Open in Move Slammed by Union

Meat processing plants around the U.S. have shut down because of the coronavirus, but Trump said in the order that “such closures threaten the continued functioning of the national meat and poultry supply chain, undermining critical infrastructure during the national emergency.”

Using the Defense Production Act, Trump is ordering plants to stay open as part of the critical infrastructure needed to keep people fed amid growing supply disruptions from the coronavirus outbreak. The government will provide additional protective gear for employees as well as guidance.

He invokes the DPA for pork?!? COVID testing will save our bacon. Why he doesn’t he invoke the DPA for that?

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They have tests?!?

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Fear of a hamberder shortage can be a powerful motivator.

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I’ll send him a pen to sign a COVID19 DPA, if he can’t find one. You know, because of the economy and all…

Not sure how this is working out, but just bought a few 7-10 lb pork butts for pickup at my local Harris Teeters for 99 cents a lb. BBQ is alive and well over this way. Now if I can just find the buns and cabbage for cole slaw. Still working on my chinese made Weber grill with lifetime warranty. My local 7-11 with protections in place has been a good source of buns and eggs. I am quite easy to please sometimes, sometimes not.

Article from CNN lay out the problem.

“The No. 1 rule of virus economics is, go stop the virus if you want to fix the economy,” says Austan Goolsbee, a former economic adviser to President Barack Obama. He suggested that White House economists pore over state-by-state data to identify the best ways to halt epidemic spread.

Success would preserve the possibility of the rapid “V-shaped” recovery that the Trump administration has embraced as its objective. The quest to achieve it has led Trump to allow federal guidelines to expire and goad governors into re-opening their states for business despite warnings from public health officials of resurgent infections.

A " V-Shaped" recovery. Other possibilities are U-shaped, W and even L.

This is a continuously updated list of interdisciplinary research papers related to the Coronavirus pandemic. Check it out if you’re interested if you’re looking for academically rigorous information instead of click-bait headlines.

https://papers.ssrn.com/sol3/JELJOUR_Results.cfm?form_name=journalBrowse&journal_id=3526437

Not as entertaining as opinion pieces but if you want to argue about the relative value of re-opening businesses early, why not read a paper from the Journal of Cost-Benefit Analysis, for example?

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3561934

We examine the net benefits of social distancing to slow the spread of COVID-19 in the United States. Social distancing saves lives but imposes large costs on society due to reduced economic activity. We use epidemiological and economic forecasting to perform a rapid benefit-cost analysis of controlling the COVID-19 outbreak. Assuming that social distancing measures can substantially reduce contacts among individuals, we find net benefits of about $5.2 trillion in our benchmark case. We examine the magnitude of the critical parameters that might imply negative net benefits, including the value of statistical life and the discount rate. A key unknown factor is the speed of economic recovery with and without social distancing measures in place. A series of robustness checks also highlight the key role of the value of mortality risk reductions and discounting in the analysis and point to a need for effective economic stimulus when the outbreak has passed.

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The information is greatly appreciated. Why the snark?

I don’t have the expertise to evaluate those papers. I need to work a layer or two above the level of these papers. For things outside my expertise I have to rely upon experts to evaluate this sort of thing and report in the media.

Headlines are important for screening what to read but to evaluate the article the sources can be checked. The CNN article I posted quotes Kevin Hassett who is the White House economic adviser and "Austan Goolsbee a former economic adviser to President Barack Obama"

I started a thread on where I get my news here: Where are you getting your pandemic analysis for layman?

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I suspect that those papers are being written and the models are being built because that’s what those particular academics do. That doesn’t necessarily mean that any of it’s useful.

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“Ninety percent of everything is crud” – Theodore Sturgeon

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Apologies. No snark intended. I’ll try to work on on my writing tone.

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Eventually the White House released models suggesting that letting the virus spread unchecked could kill as many as 2.2 million Americans, in line with the projections of other epidemiologists. Trump backed off his calls for an early reopening, extending guidelines on social distancing through the end of April. But his essential argument remained: that in the coronavirus pandemic, there is an agonizing trade-off between saving the economy and saving lives.

Evidence from research, however, shows that this is a false dichotomy.

I saw a Swedish govt. official (Health Minister I think) quoted as saying words to the effect that:

“A shutdown will certainly work to slow the virus, but we didn’t opt for a shutdown because the problem with a shutdown is that it is very hard to end!” (my words…approximating his quote)

I have searched and searched for that quote and haven’t been able to find it, but he certainly realized something very early that we are now learning for ourselves big time!

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Sweden isn’t doing too badly. It certainly doesn’t seem to be Armageddon. Yes, they have more death than their neighbors but their economy is doing okay. Plus they must be closer to herd immunity than most. That gives me hope that the United States could be okay emulating Sweden not by choice but by fate because some will resist a lockdown. Besides I think people are mentally adapting to the idea that people are just going to die more.

As Stalin is said to have noted, one life a tragedy, a million lives a statistic.

Edit to add: Besides, is someone more likely to be negatively affected by the economy or a death? Right now about one in five Americans are out of work. Only one in five thousand Americans have died. Figuring a social/family/work circle of one hundred people that means only one in fifty know someone who has died with a small likelihood that person is emotionally close to them. Almost everyone knows someone who is out of work.

Perhaps that makes the economy a high probability/low consequence threat almost everyone notices with the virus a low probability/high consequence threat few have seen go badly.

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