The Great Pause Was an Economic Revolution • Hacker News Board

Re: The Great Pause Was an Economic Revolution

#51

Post by lefrenchy » Sun, Jun 28, 2020, 1:19 AM UTC

jackcosgrove wrote: post #42

lefrenchy wrote: post #34

Earlier quoted context omitted.

I agree with the premise, but printing currency in the midst of a large economic crisis to keep consumers afloat is not guaranteed to result in inflation though, is it?

Supply chains were already starting to fray. There's a diner near me with a sign up front apologizing for raising their prices because of a beef shortage. Borrowing money to fund consumption now won't result in long-term inflation if we consume less in the future to account for the pulled-forward demand. I doubt that will happen.

Fair enough. Isn’t that just a result of supply chains being hurt as a result of COVID? Those prices aren’t raising as a result of stimulus or wage growth, and should normalize as we return toward some sense of normalcy.

Re: The Great Pause Was an Economic Revolution

#52

Post by Exmoor » Sun, Jun 28, 2020, 1:20 AM UTC

clairity wrote: post #45

secstate wrote: post #18

Is it just me, or is it a little silly to compare the 1919 world economy pre-mass production/consumerism with today? The irony to most of this shutdown is that "essential" businesses are still open. What the Great Pause has exposed is the shallowness and fragility of mass production/consumerism. During the pandemic of 1919, 80-90% of household income was spent on food and essential needs. Can you even imagine if we s…

> "Can you even imagine if we spent 80-90% of our income on essential needs?" most american households (as in >50%) do spend 80-90% (or more) on essential needs.

You may very well be right, but I'd be curious if you have a source for that?

Re: The Great Pause Was an Economic Revolution

#53

Post by CraigJPerry » Sun, Jun 28, 2020, 1:21 AM UTC

ptero wrote: post #28

> With the Spanish flu a century ago, people adapted their individual behavior, but social life proceeded more or less as before. “Public places of amusement” were shuttered, but work and business were little affected overall. This is a pretty telling difference with how we perceive the world today. During the last decades most people living in the "first world" (however you define it today) lost ability to rationall…

> lost ability to rationally think about small additional chances of dying

I’m not thinking I’ll die if i catch it but if i do catch it, how many people will i pass it on to, and how many will they infect. How many deaths would be attributable to me catching it? It’s pretty heavy when you think about it.

I suppose someone has to be the 1 in 500 at my age. That would suck but like most people, i just assume it wouldn’t be me.

I am however a bit concerned at the folks who take a long time to recover https://www.reddit.com/r/COVID19positive/ they don’t get much focus in the stats but the idea of being absolutely spent for 3 months doesn’t appeal.

Another concern is the fact it seems impossible to avoid. The number of OCD types who almost take pleasure in turning their lives upside down to avoid the virus but then unexpectedly catch it is really disheartening.

I read one guys series of posts on reddit about all the precautions he was taking, only going shopping once a fortnight at a quiet time and enforcing a 30 min limit to get in and out. wearing not just a mask gloves but a face shield and in a few of his posts he detailed his routine for bringing his shopping into the house which involves stripping off all clothing straight into the washing machine while leaving the shopping outside for 1 day before cleaning it and putting it in cupboards. I felt for the guy when he posted his positive test confirmation.

Re: The Great Pause Was an Economic Revolution

#54

Post by js8 » Sun, Jun 28, 2020, 1:23 AM UTC

I am not sure what is there to wonder about. Change has always been possible. It's the elites in power who are conservative, claiming that there is no alternative, they want to (for the most part) keep their position.

It's funny to read that Hayek compared parts of the economy to organs. I often use analogy of money being blood in human body, to illustrate that from the perspective of each individual cell, blood is a resource, but from the perspective of the whole body, blood is just a transport medium of which it can create any amount required.

And accordingly, body can decide to vasoconstrict (shut down) certain organs in times of crisis. It is a collective decision, not a decision of an individual cell.

So of course, you can shut down parts of the economy. You can also put those people in parts that shut down on a kind of helicopter money support. All those things have always been possible, it's just people were conditioned to think they are not.

Re: The Great Pause Was an Economic Revolution

#55

Post by scarmig » Sun, Jun 28, 2020, 1:28 AM UTC

ptero wrote: post #28

> With the Spanish flu a century ago, people adapted their individual behavior, but social life proceeded more or less as before. “Public places of amusement” were shuttered, but work and business were little affected overall. This is a pretty telling difference with how we perceive the world today. During the last decades most people living in the "first world" (however you define it today) lost ability to rationall…

Your implication seems to be that COVID-19 is a "very small unusual danger"; but, your 650k number is in line with the (upper end, reasonable) estimates for how many lives it might take in the USA, this year. And heart disease is certainly something all of us should and do worry about.

The point of the article is that the pandemic has opened the world of possibilities for these humdrum "oh it's just how the world is" social harms. Many things have been written off as impossible to fix, as it's too expensive for society to afford. But COVID-19 has shown that society can afford to dedicate huge amounts of social resources toward saving lives; particularly, we have the capacity to set a much higher value for USD/QALY that we're willing to save. E.g. eliminating HIV/AIDS mortality in the US and even the world becomes almost trivial with that amount of resources, using known technologies. Deaths from accidents? Stress from debt or unemployment? A bit trickier, but we can imagine putting a significant dent in them.

Re: The Great Pause Was an Economic Revolution

#56

Post by sushshshsh » Sun, Jun 28, 2020, 1:32 AM UTC

Exmoor wrote: post #52

clairity wrote: post #45

Earlier quoted context omitted.

> "Can you even imagine if we spent 80-90% of our income on essential needs?" most american households (as in >50%) do spend 80-90% (or more) on essential needs.

You may very well be right, but I'd be curious if you have a source for that?

Most of these things seem quite essential and aren't cash in the bank equivalents (pension is debatable)

https://images.app.goo.gl/HLGya1YkFJ5vv5oS8

Re: The Great Pause Was an Economic Revolution

#57

Post by _skel » Sun, Jun 28, 2020, 1:33 AM UTC

js8 wrote: post #54

I am not sure what is there to wonder about. Change has always been possible. It's the elites in power who are conservative, claiming that there is no alternative, they want to (for the most part) keep their position. It's funny to read that Hayek compared parts of the economy to organs. I often use analogy of money being blood in human body, to illustrate that from the perspective of each individual cell, blood is a…

There is a big difference between "possible for a few months" and "possible indefinitely". A lot of what we did during the lockdowns was never going to be sustainable.

By the way, the "helicopter money" thing was proposed by Milton Friedman, a libertarian economist who was influenced by Hayek and who was highly critical of most forms of government intervention in the economy.

Re: The Great Pause Was an Economic Revolution

#58

Post by ajzinsbwbs » Sun, Jun 28, 2020, 1:35 AM UTC

twblalock wrote: post #39

The article cites the rapid changes to supply chains, particularly Walmart's, as a reason the economy kept going. What else is that, other than the mechanisms of a free market at work? The government didn't tell them how to run their supply chains. Nor did the government tell companies how to shift their workforces to remote work, they just did it, and they did it pretty well, even though some of them had never tried…

Some companies (especially forward-thinking tech companies we care about on this forum) shifted to remote work quickly. Others fought tooth & nail. There are a lot of stories of companies abusing the rules about essential worker status to get office workers to come in. Government regulations have been an important part of the response to the virus. I think this is to be expected according to mainstream economics. The risk to the public is an externality and many companies will ignore it without government intervention. To the extent that the US response is failing, it’s largely due to insufficient government regulation (although some of it also includes dumb own-goals by our government that are orthogonal from a liberty-regulation axis).

Re: The Great Pause Was an Economic Revolution

#59

Post by eloff » Sun, Jun 28, 2020, 1:36 AM UTC

cheerlessbog wrote: post #15

eloff wrote: post #11

Earlier quoted context omitted.

The question is, was this a free lunch then, or will it be paid for via inflation?

Inflation is too much demand chasing too little supply. If the money printing simply replaced missing demand, should we expect any inflation?

I think that's too simplistic. If it were true you could just print your way out of any down turn with no consequences. Crazily enough there is a mainstream view in macroeconomics that you can do just that. I think people aren't stupid though. If suddenly there are more dollars, then a dollar should be worth less. Hence inflation.

Re: The Great Pause Was an Economic Revolution

#60

Post by js8 » Sun, Jun 28, 2020, 1:36 AM UTC

twblalock wrote: post #39

The article cites the rapid changes to supply chains, particularly Walmart's, as a reason the economy kept going. What else is that, other than the mechanisms of a free market at work? The government didn't tell them how to run their supply chains. Nor did the government tell companies how to shift their workforces to remote work, they just did it, and they did it pretty well, even though some of them had never tried…

It can be both. Government can decide (on behalf of the citizens) to shut down the economy, and yet let all the economic actors to deal with the consequences of that decision on their own.

So while I agree that free market plays a role, I interpret the line to say that there is also a central decision of the government that organizes all this.