Weekly Selection 20 March 2020

Emmanuel Saez and Gabriel Zucman, Keeping Business Alive: The Government Will Pay

(UC Berkeley, March 16, 2020)

The two economists propose an unprecedented program for an unprecedented situation. Policies that would have seemed “inconceivable” just a few weeks ago may well become “standard” around the world as governments try to prevent the economic recession turning into a catastrophic depression. In this brief, highly commented paper, they call for the government to act as a “payer of last resort” to “stanch the flow of mass layoffs and business destruction” provoked by the pandemic. Read on to get a sense of what this might/will entail (8-10 min).

Tomas Pueyo, Coronavirus: The Hammer and the Dance

(Medium, March 19, 2020)

This article comes with a huge caveat that doesn’t make it less relevant: a coronavirus influencer, not an expert wrote it. Pueyo’s previous article was downloaded 40 million times, and shows how freewheeling the speculation about the pandemic has become. As the virus expands around the world, nearly everyone with a presence on social media wants to be a public health expert. Our personal take (for what it’s worth!) is this: there is still considerable uncertainty about the virus (its reproduction rate, its lethality rate, etc.), but there is absolute certainty about the situation in Italy. No other country wants to be in such a dramatic situation and this simple evidence is what should guide policy.

Mariana Mazzucato, The Covid-19 crisis is a chance to do capitalism differently

(The Guardian, March 18, 2020)

Expect many more such ideas – there’ll be a pre- and post-pandemic era because the coronavirus will change everything (in economics, geopolitics, the society, the environment and even tech). For the first time in a generation, governments have the upper hand, which will lead us to rethink their role: rather than simply fixing market failures when they arise, the economist suggests that “they should move towards actively shaping and creating markets that deliver sustainable and inclusive growth. They should also ensure that partnerships with business involving government funds are driven by public interest, not profit” (reads in 6-7min).

Gideon Lichfield, We’re not going back to normal

(MIT Technology Review, March 17, 2020)

A number of credible scientific studies make it clear that social distancing is here to stay for much more than a few weeks. It will upend our way of life, in some ways forever. When (and if) the pandemic is over, it will have radically changed almost everything in the macro world (the economy, geopolitics, societal issues, etc.), but also almost everything we do: how we work, exercise, socialize, shop, manage our health, educate our kids and take care of our family members (reads in 6-7 min).

Bruno Maçaes, Coronavirus and the Clash of Civilizations

(National Review, March 10, 2020)

Macaes starts with the following observation: “How notable that we are all together in this, and yet every society seems to deal with the epidemic in its own distinctive way”, and ponders whether social mores explain why some countries and not others became hotspots of the infection. He concludes that the ability to defeat the epidemic comes from what could be called the Confucian “cosmopolis” – the benefits of a moral system that emphasizes duties before rights and places high value on the propriety of customs, measures, and rules as defined by the larger community (reads in 6-7 min).