I have reached the point where I am afraid that we are permanently losing our way of life. When government obtains new powers in a crisis, it does not relinquish them. When the Fed is going to have power to control more capital than all of the bank loans and corporate bonds combined, that is going to make the American economy like the Chinese economy, where the government also acts as the central source of credit. On the fiscal front, we may never again see Federal government is taking on a share of the economy not seen since World War II, starting from a higher debt level than we ended the war with, and with no thought whatsoever of future fiscal austerity.
I disagree with the elite consensus in two ways. First, I do not think that we should rely so heavily on the stay-at-home strategy and we ought to at least in some region try the masks-and-scarves strategy. Second, I think that the “stimulus” is misguided. At the very least, the government should have a plan to undo the increase in debt and a plan to unwind the huge Fed balance sheet.
If we are going to get off this disastrous course, people who agree with me will have to be heard. My thought is to try to start some sort of discussion about how to do this.
President Trump and his virus task force seem to give daily briefings. I would like to see citizens get together, say on Zoom, to give their own briefings. Call this idea Citizens’ Daily Briefings.
My dream is that eventually every day there would be several thousand different online meetings, each with a few dozen participants, discussing these issues and coming up with ways to pressure the elites to change course. You can think of this as a modern version of Committees of Correspondence.
I would like to hear comments from anyone who would like to see this idea work. I know what I am proposing is difficult to execute and likely to fail. It may not be desirable to try. But I don’t need to hear any of that. Negative, hostile, and snarky comments are not welcome. If you don’t buy into the spirit of the idea, just keep silent.
UPDATE: at 6:30 pm eastern time today, March 31. Meeting id 824-584-0623. Going to try a Zoom meeting. A learning experience.
I agree that the actions being taken in society and the economy right now are unprecedented, untested, and in at least some cases, misguided. Regarding your idea of “citizens briefings,” I have started to see something along these lines from a completely random and unexpected source. I am a hobbyist photographer and subscribe to a Youtube channel called FStoppers. Since the crisis started kicking into high-gear, they have been posting videos on a daily or almost-daily basis where they simply sit around and talk about their thoughts on what’s going on in the world (mostly as it relates to Coronavirus). These are not economists, doctors, or other ‘elite’ types that generally have a platform, but I find it interesting nonetheless. You can see a lot of their videos on their channel. The Coronavirus-centric videos mention that in the title: https://www.youtube.com/user/FStoppers/videos
Youtube certainly seems like one avenue that could be used for these sorts of community discussions (or perhaps broadcasting them).
Limit the briefings to examples of PSST and that intrigues me.
I would watch this briefing. But I doubt any of the trad media would be willing to carry it, so your choices are likely a conservative channel like TheBlaze, or a podcast.
Stimulus checks make up 10-15% of the stimulus. Efforts to “target” those check to “the deserving” only reduced that cost by 10-20% tops, so maybe a few % of the total stimulus.
I think that being against the checks was wrong on a policy level, but it’s definitely wrong on a political level. This was the most popular (and deserving) thing in the stimulus. If you really want to go after the stimulus, you go after the corporate giveaways. That has some base of support in the political class (reportedly what Democrats were hung up on) and amongst the people.
If anything, I think doubling or tripling the stimulus check (possibly by simply committing to multiple checks) would have been an easier way to take a hammer to the rest of the stimulus.
If you become the “let all assets sink by 50%+ and unemployment go to 30%” movement then you are going to get no support, even if you think those things would be “good”. Try to think of ways of moving things in the direction you want without that outcome.
Lastly, I would like some color on why you think ordinary Americans, not just a handful, are going to reliably wear masks and follow other directions for which they have no cultural precedent. We aren’t Asians. I just don’t see people doing this in public nor would I trust them too. My own family refused the masks I provided them.
In the city I live in about half the people outside are already wearing masks. And while I’m flattered they the idea that I deserve a $1200 check despite being fully employed, enjoying a comfortable standard of living, and having plenty saved up, it is unambiguously bad policy. Most of the people getting checks don’t need them, and I don’t see why they deserve the money more than the people who will eventually pau the taxes.
Of course giving people free stuff at someone else’s (or one’s future self’s) expense is always good politics in a democracy, which is a point against democracy (or at least in favor of less of it).
They worked for it, hence they deserve it. I don’t see why hard work and thrift should be punished.
I have no doubt that the people not receiving checks and the people that will be paying the future taxes have a lot of overlap.
Finally, it’s pretty minuscule what you’ve accomplished by capping the checks. It amounts to what, a couple % of the stimulus package. I believe it was pure optics and moral grandstanding, it would have been far easier to just send a check to everyone. I guarantee the “well off” receiving checks will end up paying a lot more in taxes than they get in a check long term.
Besides, who knows who needs what. I make too much to qualify, but I just bought a house at what is clearly going to be the peak of a market, have a wife that’s going to get laid off, and my parents can’t get back their deposit with the nursing home they moved out of. So yeah, I wouldn’t mind getting a check despite being told I don’t need it.
You wrote: “ You can think of this as a modern version of Committees of Correspondence.”
I suspect you know what’s implied by that sentence in its historical context.
It’s an idea with merit if you can convince prominent citizens to pledge their live, fortunes, and sacred honor to the cause of changing to a sane fiscal and monetary course.
Definitely worth a try.
“… we ought to at least in some region try the masks-and-scarves strategy.”
I imagine that, around the country, factories, plants, and other work places that must continue operating are following this strategy. Is there any way to identify such locations and get some data from them?
I decided to try a meeting this evening, just to learn more about the logistics. 6:30 PM eastern time. Zoom meeting id 824-584-0623.
Be very careful about sharing Zoom meeting IDs publicly. There are some trolls out there, and some of them are doing pretty disgusting things.
Arnold, have you been reading Cowen and Tabarrok the last 3 weeks? People I had previously thought sane have turned out to be complete lunatics.
This times 1000.
What do you think is the best example of what you’re talking about?
Handle,
Neither one of them appear to question anything about the data they and we are being fed- it permeates nearly all of their posts since early March, nor do they strongly question the various plans for shuttering the economy for how ever long it takes to get to a manageable number of cases. The closest Cowen came to making such a lucid post was where he asked the readers to declare where they would offer a change in current strategy.
Tabarrok has been on this idea that you can test everybody in the country every few days swabbing all of us and getting real time test results. The sheer ludicrousness of such a logistical nightmare didn’t even seem to cross his mind as a counterargument.
Maybe I should be surprised- neither man is missing a paycheck and won’t miss one no matter how long this lasts. Maybe they wake up when the Amazon grocery delivery to their door doesn’t show up for a week.
And don’t even get me started on how avowed libertarians have basically been mute on the expanded state power being utilized right now.
They basically seem like Eloi to me these days.
I don’t necessarily agree with the hardcore libertarian response to this crisis, but wasn’t it obvious what kind of people Cowen, Alex, Caplan, etc were?
They are professional toadies for a certain kind of elite zeitgeist which also happens to be who funds their lifestyles, they say as much in private. If that happens to overlap with libertarianism, that’s great, but its not the driver.
How can a mask strategy be tried if even hospitals and first responders are having problems in getting enough masks? The medical logistics system and PPE distribution systems are already broken. How could everyone get the required mask and learn how to properly use it now?
Improvised masks made out of normal fabric materials like the bandanas and scarves and balaclavas people wear in cold or dusty conditions perform about as well as surgical masks, which according to Loeb (2009, JAMA), reduce infections a lot, nearly as much as N95s.
I got a bunch of such masks the other day, but can’t convince my family to wear them.
“No one else is, it would be weird.”
This is certainly a fair view of what I see (I would say less then 10% of non-service workers I see are wearing masks when out and about). I just wish they could make a decision based on something other then observed behavior of the masses.
We have always been permanently losing our way of life. The new way usually turns out to be different than the old way, but neither much better nor much worse.
I’m in. Thanks!
If only we had a way to allocate scarce resources towards competing uses, some way of communicating that using a resource, say a mask, for one purpose imposes an opportunity cost of not being able to use that same resource for another purpose. If only that way of allocating resources were particularly good for allocating resources that were both rivalrous and exclusionary. If only…
In a time of pandemic, does anyone really want hospitals competing with hoarders and speculators for N95 masks based on price? How many more people would die if hospitals even have fewer masks/PPE while competing with the wealthy for the materials?
Yes, we really do want allocation by price during times of pandemic. It’s the best way to increase supply and allocate to those who truly have need.
The alternative is much less pleasant. It falls somewhere between a bureaucrat telling you that there are none available for use below arbitrary priority A; or a man with a gun dictating production and distribution. Neither are helpful or just.
I’ve been priced out of the market for desirable things lately. It’s not pleasant. I accept it because the alternative is much less pleasant.
The 3M plant in Aberdeen SD is running 24/7 to make N95 masks. Every company in the U.S. that can make N95 masks is running at capacity. Other companies are trying to get facilities on line as fast as possible. The same is true for surgical and procedure masks.
Allowing speculators and hoarders in the marketplace means the price is set by the stupidest person around. Why would 3M want to destroy its goodwill with large consumers of its products just to make a few quick bucks from speculators.
Opinions only to follow
The alarm needs to be sounded with an even greater level of intensity and strong emotion that what the traditional persuaders in society are mustering (and have mustered). Normally persuading with a cool & rational demeanor is desired and taking the higher ground. Not sure that this is the time for that demeanor. In fact, I’m positive that it isn’t the time for that any longer. Dr. Kling, you set-up that call because you are alarmed, frustrated, and incredulous as to what we’re witnessing. While I missed the first four minutes, what I heard lacked the intensity of what I was expecting given what you’ve been writing in your blogs.
You’re highly persuasive and you understand incentives. Your book The Three languages of Politics demonstrates this. You should rope-in everyone you know who has influence (smart folks who blog who have an audience and who are generally like-minded) into this with two to four specific central rallying themes that all influencers involved will agree to.
I have three things, that if it were just my idea and I had the power to influence by myself, I’d roll with:
1) Starting 2021 and all years afterward, everything must be paid for during the budget year through current taxes. No exception. None. As painful as that may be. If its promised it is paid for at the same time.
2) The eligibility age of our entitlement programs (Social Security and Medicare) have to be adjusted upward (not necessary to make them the same age) so that the acronym OASDI actually represents its true purpose — there ain’t no more thinking of it as a retirement plan and if one does not wish to work until the eligibility age, this has to be funded by oneself. Median age now is like 78. Tough ****, it has to be this way.
3) That everyone, everywhere in government, television news, and print media cut the crap an level with people about the unsustainability of what was happening pre and post pandemic — start setting new expectations so that disgust from the next several generations of citizens to come is more palpable.
Some additional thoughts
-People like Larry Kudlow and Stephen Moore (especially Moore given the his previous ‘life’ as a free-market type) should be ‘called to the carpet’ by citing previous things they’ve written or said. They have the ear of the current ‘leadership’ who are supposed to be giving fiscal sanity at least proper lip-service. Where are these clowns? Which Body Snatchers took them away? Did the power compromise their once deeply held beliefs or were those beliefs not-so deeply held from the get-go?
-If this president is as brash and fearless as people think he is — and if he’s such a sharp business mind — how come he can’t be the one who starts this conversation? If there were ever a time to tell someone that the bandaid was going to be pulled off and it’s not going to feel pleasant, you’d think that he’d be the guy to communicate it.
-To incite using language of the left: “So, what does proxy voting look like for publicly trading companies when the boards of directors are being voted for by the central bankers who now have quite the percentage of stock ownership? At least if the corporation folds those same bankers will also; right? But, even if that’s the case, they’ll still get paid first since they bought-up much of the their corporate debt that was issued.”
-To incite using the language of the Right: “The president you’ve been defending at every turn just had a quasi government entity buy-into the means of production of many different companies which encompass EVERY SINGLE industry. There’s a name for that, isn’t there? Name escapes me at the moment. What’s that called again?”
-I contacted the American Red Cross leadership and tried my own skills at trying to influence (a purpose which I floated on the call). Got bounce-back messages from all senior leaders of that organization saying that e-mail was blocked (either I had the incorrect format or those addresses were really blocked). So, as an alternative, I e-mailed their general support e-mail address and also their social media e-mail address and didn’t get any bounce-back. I’ll see what happens there and share anything noteworthy that may come from it.
You said you expect more inflation.
If more inflation becomes reality, the Federal debt becomes more sustainable so may be we can relax.
If more inflation becomes reality, all bonds will be priced lower and at some point banks and savers and pension funds and insurance companies will not mind owning some more bonds. Then the Fed can sell some. In an alternative outcome, if the Fed never sells and waits for maturity it might not be the end of asset pricing as we know it. If the Fed is passive then diverse traders will determine the price. If 50 private institutions trade a particular bond what difference does it make if a passive Fed owns none of it or if the Fed owns some of it?
I’m not necessarily expecting more inflation by the way. I’m just saying that since you are expecting more inflation perhaps we can relax.