My Coronavirus Conversation with Russ Roberts

We recorded this two days ago on the spur of the moment, the discussion is still current, here is the transcript and audio, here is the CWT summary:

Tyler and Russ Roberts joined forces for a special livestreamed conversation on COVID-19, including how both are adjusting to social isolation, private versus public responses to the pandemic, the challenge of reforming scrambled organization capital, the implications for Trump’s reelection, appropriate fiscal and monetary responses, bailouts, innovation prizes, and more.

Russ is more optimistic than I am, here is one excerpt on the economic side:

COWEN: Well, two to four weeks [of shutdown], those are easy cases. If you think of many service sectors as having to shut down say until August, which is quite a possible scenario in some cases even later. That to me is greatly concerning and it may vary across sectors. So if you think about the NBA, whenever the NBA is ready to play games again, I mean the players will show up the next day and there’ll be ready, right? That will come back very quickly. But if you think of small businesses, say restaurants, the big chains aside, they’re typically thinly capitalized.

Let’s say a significant portion of those are gone forever. And then when things are somewhat normal again, how does the economy re-scramble and re-constitute the organizational capital that was in those ongoing enterprises? That to me is a hugely difficult problem and whatever you think the government should or should not do, just spending a lot on fiscal stimulus will not ease that problem. That’s the actual destruction going on is the relationships, the organizational capital, the intangibles that will decay. Not over two weeks, probably not over four weeks but over four or five months or longer. Then I think that’s a matter really of great concern…

But even in China where the number of new cases is really in most parts of the country, genuinely very low, they are not returning with live sporting events. Keep in mind we will have a pool of never infected people, which will be fairly large in absolute numbers and what risks we will be willing to take. Insurance companies would allow, our liability system and corporate lawyers would be willing to allow. When you think through all of that stickiness, I think we’re really not so close to resuming many of these shutdown activities.

There is much more at the link, we start off on the personal side and then move into the larger issues.

Comments

Unfortunately, you didn’t do any Twitter questions from #askRussTyler. Can you please do a session with the questions? Thanks.

China will be back, a low GDP quarter that's all, but the US economy has been hit by a truck.
Goodbye insouciant future, hello layoffs, bankruptcies, opioid deaths, homelessness. Climate activists rejoice ! the low CO2 economy is here.

As Tyler pointed out, this is a time of unprecedented misinformation, rumor, and misguided speculation. I look forward to seeing this blog continue to signal-boost reliable sources of information such as Marc Lipsitch and Trevor Bedford. It would also be fine to completely ignore anything Robin Hanson has to say.

COWEN: I think there’ll be a huge wave of promiscuous sex once there’s the first break in the virus for instance.
ROBERTS: There goes my G rating on EconTalk.
COWEN: I’m sorry.

Awkward moment of the podcast.

I thought I read millennials aren't really into sex.

Tyler is optimistic if he thinks people will even wait that long. Even a once-100%-fatal virus like HIV never ended promiscuous sex.

Historically, young people have always done reckless things and consequences be damned. If this lasts more than a few weeks they will get social distancing fatigue and start spontaneously "spring breaking in the city".

Doesn't matter if you make it illegal. As with recreational drugs or immigration laws or Prohibition, when very large segments of the population are in contravention of some law you can have piecemeal prosecution but you can't stamp it out. Not in a Western democracy at any rate; East-Asian collectivism and/or draconian authoritarianism is a different story.

‘If your solution to some problem relies on “If everyone would just…” then you do not have a solution. Everyone is not going to just. At not time in the history of the universe has everyone just, and they’re not going to start now.’squareallworthy

there's nothing going on on tinder right now but this is the easiest it's ever been to hook up with your exes.

The problem is that we started our lockdown so late.
On January 24, Beijing went into lockdown because they had reported 25 dead and 830 cases of a mysterious new disease. There had been rumours about it for about a month and some doctors had been anxious - were they paranoid or prescient? - that it was transmitted quickly between humans.
https://www.oneindia.com/international/coronavirus-death-toll-in-china-climbs-to-25-with-830-confirmed-cases-millions-under-lockdown-3020275.html

25 dead was the straw that broke the camel's back for China. Americans are blaming them for causing the problem by failing to handle things properly: https://www.nationalreview.com/corner/coronavirus-crisis-caused-by-decisions-chinese-government/?fbclid=IwAR3-WzB1ZxJnkC7Bnj7EdoE3zLCeLcXbZfz4GwXDAIV1UiHJOYhYHbQMeIM
...yet there were over 100 deaths in America before Trump changed his tune. And 10s of times more worldwide, even not counting those in China, were direct evidence of what was expected.

Let me add that the Communist Party probably did know sooner and cover it up - so what I said there is probably misleading, in that respect.

Still, Trump then essentially did the same.

The key to a successful response this time is an earlier failure . The Chinese government knew if it handled this the way it handled SARS, there was a good chance of open revolt.

We are getting a helluva natural economic experiment, in real time. What happens when the economy voluntarily shuts itself down?

Not sure how Tyler's prediction of the demise of the "progressive left as an intellectual force" squares with some of the other future potentialities discussed here and elsewhere. For example, I see this possibly strengthening the argument for universal healthcare, at least in the minds of people who are already proponents, the number of whom is not insignificant. Perhaps a matter of semantics, but where Tyler suggests the turn will be toward conservatism-of-a-type, I think it will be toward populism, where "the right" has not cornered the market. See: Bernie Sanders. Regardless, I do agree, and fear, it will have a nationalistic, "cranky" valence to it.

There's a theory that crises, such as wars, promote social policy . For example , the NHS after WWII . At the least , I believe you will see a push for new sick leave laws.

"Let’s say a significant portion of those are gone forever."

Exactly. People talk about shutting down our economy as though it only impacts the few weeks or months that the shutdown is in effect: "It's like an extended Christmas vacation." Relief measures are directed towards helping people during the shutdown (paid leave, unemployment benefits, etc.). Indeed, many people will return to the same lives that they had before and, after some time, the long-term impact of the shutdown may be close to zero. The actual damage, however, will be to all those whose lives will forever be altered. The companies they worked for before the shutdown will not actually be around afterwards, at least not around for very long. (Think of a family restaurant that can't survive a few months on takeout-only and no weekday lunch crowd or a startup that will run out of cash.) And, those companies actually would have been viable if not for the shutdown. So, it's not a matter of creative destruction. It's a matter of altering small history (lives of regular people as opposed to big events) on a massive scale. Somehow, that local information about whether a shutdown is truly temporary has not made it into our centralized plans.

Even as opposition melts for things like universal basic income or student loan forgiveness, the wokeness catechism will see dour pushback, especially if campuses and high schools are durably replaced by distance learning and home schooling.

Privilege discourse and victimhood status signaling won't really fly anymore if everyone has fallen on grim times. The establishment, scrambling to survive, won't have the luxury of buying off and co-opting dissent anymore. There will be no way forward for slavery reparation proposals. Foreign actors will not stop fomenting divisiveness, indeed they may raise their ambitions towards outright chaos.

That was intended as a reply to John re: Tyler's prediction of the demise of the progressive left as an intellectual force.

Agreed. Hopefully the progressive baby doesn't get thrown out with the identity politics bathwater.

On the issue of semantics, we need a serious audit of meanings for the words "left/right/liberal/conservative/progressive/etc.". When was the last time you heard someone intelligently use one of those words WITHOUT saying "what I mean by that is", as Tyler did in the podcast? Defeats the purpose of having a word for "that".

Very good podcast thanks.

This was a great conversation, but one big question was left out: Doesn't our reaction to this pandemic falsify Tyler Cowen's thesis in Stubborn Attachments that we should focus on economic growth at all costs for the good of future generations?

How?

There's no good for future generations without the health and safety of the current generation. If things go south, like really south, then there's not much of future generation left at all.

But aren't most corona-related deaths of old people (beyond child-bearing age) ...?

Great podcast. I, however, side with Russ in that the effects won't be too bad--or too long-lasting.

Sorry, but I had to laugh when you called the US public health system "good".
And then I switched off.

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