United Airlines just announced thousands of prospective layoffs. I hear air travel is down 70%. Meanwhile, a family restaurant in our town just shut down after 45 years. People talk of a need for additional government bailouts. …
My sophistication re: economics and big business are close to nil. Is anyone aware of rational discussions of how our economy - including public spending and debt - get us to anywhere past this COVID disruption? And what that anywhere is expected to look like?
I can’t really tell you my reply, because for I can’t fathom reasons, politics is a no go in this forum.
Okay. I thought that since it concerned the COVID situation. But if more appropriate somewhere else, I hope TPTB move it there.
…I think Chris Hayes says it best:
The shop is on fire. You can’t start to think about how the shop is going to start making money again until at the very least you’ve put the fire out. You want a rational plan? Without getting into the politics of the thing, the simple answer is to put rational people in power. If your government is in actuality an international crime syndicate masquerading as a government which is looting and pillaging from the public purse the odds of them putting together an actual economic plan to get you “past this COVID disruption”
aren’t odds I would be willing to take. So change the government. Get the pandemic under control. Then start opening up, State by State, bit by bit. There are no shortcuts here. You’ve got to do the work.
Well, I didn’t really want this to be a political discussion of current US leadership. In fact, I did not intend to restrict it to the US. I assume many/most countries’ economies are depressed. I was wondering what economists thought (of course, any 2 economists will offer 3 opinions!) as to the route out of this mess.
If the first step is to get COVID under control, what are the anticipated costs/timeframe associated? Or, do we aspire to a future in which the economy functions in some manner WITH some level of recurring pandemics?
BTW - does anyone know how to report a thread for possible moving? I can’t figure out how to do so in the new world. I tried sending an IM, but not sure I got the correct moderator (again, could not readily find.)
Click the 3 dots, then the flag. I think.
…I live in New Zealand. In March we locked down harder than any other nation in the OECD. We are now open and effectively back-to-normal with Covid-19 eliminated everywhere except at our borders, which remain closed to almost everyone except returning visitors and special economic cases.
I run a small business, I’m self employed. At the start of the lockdown our government made available a number of measures to help out businesses, including sole-traders like me. In order to access the sole-trader subsidy all I had to do was answer five questions online: one of those questions was “what is our bank account number” and the other question was a statutory declaration that everything I had said was true (it was.).
The money was in my bank account two days later and a full day before I got a notification to say that my application had been approved. It was enough money to keep my business going until the second round of subsidies (that was a month ago) which has seen me through to today: and this week I had new bookings which were on a par with what I did last year.
Everything apart from the airports and the borders are open. No requirement to social distance, no masks, no restrictions. Even so the government is still pumping millions into the economy with subsidies and loan schemes and investing in infrastructure.
But the economic plan here was dependent on one thing: eliminating Covid-19. The key to opening up was to bring it under control. I’m not expecting America to be able to get to the stage where elimination was plausible. But for an economic plan to work you need to start with the premise that the pandemic must be bought under control. Pretending that you aren’t in the middle of a pandemic isn’t going to work.
What portion of NZ’s economy does that represent? How long can that last?
How scaleable is NZ’s approach to larger, non-island nations?
…I’m not pretending to be an expert here. To find the answer to that I’d have to google it and do some investigations but I can’t be bothered doing that. If you want to find the answer I would reccomend googling it and investigating it yourself.
But the alternative to having the borders closed (as is) is pretty obvious: we wouldn’t be able to keep Covid-19 out, it would re-introduce uncertainty into the economy. We’ve had four recent cases of people “escaping” quarantine/managed isolation and it turned the country upside-down. Nobody here wants to go back into Level 4 Lockdown. The businesses that rely on tourism or the borders being open-as-normal know that it will be at least a year, probably longer, before they reopen. They know they either have to pivot, drastically reduce overheads or shut down. That’s just the way its gonna be: reintroducing Covid-19 just wouldn’t be tolerated.
Vietnam has a population of 96 million, it closed its borders, its had less than a thousand cases and zero deaths. It borders Cambodia, Laos, and the probable origin of Covid-19 China. So can you scale what we did to a non-island nation? Of course.
The NZ plan was to lockdown hard for a several incubation periods and that essentially starved the virus of hosts, leading to its elimination here. It isn’t a difficult strategy to either understand or to implement. But in order for a strategy like that to work you need to start with the premise that “this is what we wanted to do.” It needs to be a goal, it needs to be communicated effectively to the people so that the understand why it is they have to remain locked down. And the government communications strategy here was ultra effective. It came from the top: the Prime Minister knew the answer to every question the press could throw at her. She would go on Facebook Live in her pyjamas after putting her daughter to bed and answer basic questions without hesitation and that level of confidence in both our leadership and the plan helped keep everyone here on point. Then we watched in real time as our cases started to drop while cases in America and the UK started to explode. And that was enough to tell us that our plan was working.
But in America the messaging was all about “flattening the curve”. To “stop the hospitals being overwhelmed.” That goal turned out to be relatively easy to do, and outside of a few places (like New York) the hospitals weren’t overwhelmed. So the country started to open up. And now the pandemic (in many places) is now starting to get out of control.
There is nothing the current Federal Government can do to fix the economy right now. They have abdicated responsibility, and until they are replaced its down to the States to mitigate what harm is done until the elections later in the year. I’m not being partisan here. Just being realistic.
And as an aside: being an island didn’t help the UK in its pandemic response.
As Banquet Bear more or less pointed out, it’s possible to shut down much of the economy for a while (I realize “a while” needs a definition), but it’s a question of the will to do it. If we want to say that people the UK or USA would never tolerate being locked down for X number of days, weeks, or months because they just can’t handle it for whatever reason, I guess that could be a valid conclusion. Just don’t say it’s not possible when other countries are proving that it is.
If every state had shut down as hard as NY and NJ, we would all be reopening right now. Canada has it under control, and they aren’t an island nation. Most of Europe has it under control.
We have to stabilize the public health situation first. It’s a question of whether that stabilization is the result of the federal, state, local governments and an overwhelming majority of the people finally putting egos aside and acknowledging we have a need to wear masks and shutter portions of our economy…or instead the result of waiting until the virus run its course and exacts a death toll in the millions.
It’s a waste of time to really think of a long-term economic solution as long as we’re having ICUs fill up to 90% of capacity in the nation’s most heavily populated states and metropolitan areas.
Thanks. I guess I was hoping someone might have an insight as to how to calculate the “costs” of various measures - such as “shutting down much of the economy for a while,” and how that is paid for by whom?
What would the relative costs be of various approaches - such as “hard shut down like NY/NJ/NZ” - possibly appropriate only for entities with “New” in their names? 
- or stumbling along until the dead pile up in the streets.
Even with NZ’s approach, how much of an economic hit was incurred? How many folk (tourism?) remain out of work? How long is it anticipated that will continue? How are those costs being absorbed by whom?
Yes, I know I could google away myself. I’ve turned up the likes of this. I was hoping someone with some expertise could at least help me fine tune the search or interpret the results.
I think researchers are in the process of trying to quantify the answer that question now, and the research could take a while. There’s only anecdotal, ex post facto research about the economic impacts of the 1918 influenza outbreak. They can approximate policies, timing, and death rates, and they can go back and review newspapers to see which stores announced closures and, in some cases, for how long, but that’s the best they can do.
There’s already some evidence to show that not shutting down did not prevent Sweden from sustaining economic damage that was similar to those neighboring states that used a different approach. We can also see right now that states that shut down sooner (the Northeastern US, for instance) are right now gradually reopening and recovering while states that either didn’t shut down or reopened too quickly and otherwise didn’t take precautions are now dealing with a massive surge in cases.
…answering these questions though aren’t going to do anything though. We won’t be able to calculate the “economic hit” until the next quarter. We go the figures for March just last month. New Zealand also has a strong social safety net, universal healthcare, and a completely different paradigm to the US: we have a strong emphasis on family, or whanau, on looking after each other whilst in the US the focus is more on rugged individualism and taking responsibility for yourself.
So who paid for the “economy shutting down for a while?” Our government did, by way of taxes, and for me that’s a rather obvious answer, because that is the obvious role (from our perspective) of our government.
As for relative costs: that wasn’t in question from our governments response. It wasn’t a matter of cost. It was a matter of saving lives.
We are only a few months into a global pandemic. I won’t downplay the importance of questions like “how many folk (tourism?) remain out of work” but answering it won’t change anything. The borders are going to remain closed. The folk that are out of work will get paid the appropriate benefit or wage subsidy from the government. The businesses that cater to international tourism will either have to pivot, downsize or close down. That’s just the way it is.
Its a global pandemic. There isn’t a perfect solution. Not every business is going to survive. But businesses are more likely to survive when everything is open as normal (as they are here) than what is happening in the States. Because in many places the pandemic is almost out of control, because businesses that open often have to immediately shut their doors, because hundreds of people dying every single day in a horrible way is simply not good for business.
You want an economic plan? Get the pandemic under control. That’s your plan. That answers the OP. Everything else follows from there.
That’s it right there; close the thread. Kind of astounding that the question even gets asked, really; it’s blindingly obvious what the plan should be.
Since it is so blindingly obvious to you, kindly explain how that is done either in a larger country than NZ, and/or worldwide over how long of a period of time. If you want to use the US - what specific industries do you shutter? What healthcare steps do you take? Do you take any steps to try to keep certain businesses from going out of business? How much do you compensate whom for how long? What sorts and magnitude of expenditures in the short-term will balance favorably in terms of reducing longer-term costs?
Also, please explain where the funds are to come from in the short term, and how those expenditures are handled over the long run. For how long can we just keep on printing how much money? Can every nation do the same?
I think we’ve moved beyond the point of just getting the pandemic under control as a plan. Even if we started mass producing a vaccine tomorrow, the economy would not just recover to its pre-pandemic state on its own. To many businesses have closed and too many people have lost their jobs.
I think we’re in a 1932 situation, where we need significant government intervention to get the economy moving again. We’re going to need some federal job programs to get people back on a payroll. People having job will then put money into the economy and get new businesses started and new job created. At which point, we can start phasing out the government jobs programs.
This will of course, cost a lot of money. And that means we’ll need to raise taxes. Not just for these new programs but also to pay for the handouts the government has already given.
All of this will involve significant political issues but I’m intentionally avoiding those because of the forum. I just want to acknowledge I’m aware they exist so I don’t get accused of ignorance.
This gets to another thing I’ve been trying to get my head around, but have not tried to phrase as a thread. Individually, my paycheck has been consistent and will continue to do so. I’m reasonably content to just continue as I am, as I rarely ate out/travelled by air. But I don’t know that my personal approach works for the state/national/world economies as a whole.
It seems as tho most people talk about getting “back to normal”, as tho individuals and societies are just going to resume pre-COVID behaviors. I haven’t seen much discussion of what DIFFERENT existences are likely/achievable. The cockeyed optimist in me would LOVE it if this provided an opportunity for the US to re-envision our safety net, health care, environmental policies, international relations, etc. So long as we are spending trillions, why not aim at a better future instead of putting out fires in the hopes of clinging onto the past? But we’ve never shown much of that sort of foresight.
Other that some somewhat superficial commentary on increased work from home, commercial real estate losses, and the like, I haven’t seen many sophisticated and thorough efforts to predict what to post-COVID society will/could/should look like. Just to take one area - are air travel/tourism going to just bounce back? How quickly? How long does the government support the industry hoping it recovers?
…I gifted you the example of Vietnam, a country substantially bigger than New Zealand, that borders three different countries including ground zero, that has had zero deaths from Covid-19. Want to find out how they did it? Then go read up on it. Or any of the other countries, like Australia, or South Korea, who have had effective responses to the pandemic.
In New Zealand we “shuttered” everything except essential business. Supermarkets, dairies, liquor stores in areas where supermarkets couldn’t operate. Petrol stations. Public transport. Hospitals and pharmacies. And that was basically it. You could work from home. But had to remain in your bubble, with your bubble being defined as the people you were locked down with at the start of Level 4.
How long do you do it for? We did it for 3 incubation periods of Covid-19. So six weeks, and just a bit longer to be safe. We then dropped to Level 3, which meant you could expand your bubble to include one other bubble, more shops were allowed to open with social distancing measures remaining in place. We did that for two further incubation periods before dropping to Level 2 for another incubation period before we opened everything (except for the borders) back up again.
We seperated testing from the hospitals. Hospitals went to reduced but essential services only. We ramped up testing, we bolstered our contact tracing. We started to ration medication: instead of getting three month prescriptions we only get a months supply instead. We increased our supply of PPE, introduced Covid 19 protocols. AND we locked down the country, the ultimate defense against a pandemic.
I’ve already explained that NZ introduced wage subsidies that would pay 80% of a workers wage to keep them on with the expectation that money went directly to the worker or else the business would get sanctioned. The government has pumped millions of dollars into every sector to keep businesses afloat, its providing low interest loans to bigger businesses to keep them alive.
It depends. For my business the government provided me with just the right amount of money for just the right amount of time for me to be able to survive long enough for the work to start to pick up again. That could have just been luck, I suppose. Or it could be that the government is working overtime to figure out ways to keep the economy going, and they’ve just done a REALLY good job of doing so.
Who the fuck knows? You don’t seem to realize that we are in uncharted territory here. The world has gone-to-shit and the best we can do is to follow the science, follow the experts, and do the best that we can. If you really want the inside scoop on what went on behind the scenes then read the Pandemic Papers by Matt Nippert in the NZ Herald. Its paywalled: but for $2.50 its an astonishing work of journalism that walks you through the pace at which decisions were made. We essentially had to rewrite how society would exist in a matter of weeks. Civil Servants, used to the glacial pace of government were writing policy papers and documents so quickly that they were full of spelling and grammatical errors.
The New Zealand plan worked because we did the work. We moved forward even though we didn’t have all the answers because the alternative would have been thousands of deaths and an economy in tatters.
The NYPD budget for 2020 alone is 10.9 billion dollars. The Department of Defense budget is 600 billion. Money isn’t a problem in America. The billionaires in America have managed to make money over the last few months. If New Zealand, on the arse-end of the world, with an economy heavily reliant on international travel, without the massive economies of scale that that US can leverage, if we can figure out how to do it then you guys can too. You don’t need to “print money.” You simply have to start redistributing it. There is nothing stopping America from doing what it needs to to get control of the pandemic except for the fact that the people in power don’t actually want to do it. And the only way you can fix that is to vote them out.