Tyler Cowen: belief

Transcript context

…There’s one really critical element of this plan that I don’t think has been widely discussed, which is that there are 40 percent of people in the essential sector who are still out there doing their jobs. There may have been some improvements in sanitation. There probably have been, though there have been a lot of issues with getting the PPE required to do that. But those people are basically transmitting the diseases they always have been. And so, by far, our first priority has to be not “reopening the economy,” but rather stabilizing that sector of the economy so that transmission is not taking place within that sector. Once we’ve accomplished that goal, it will actually be relatively easy to reopen the rest of the economy, given that that’s 40 percent. It’s just a doubling to get to everybody being in a disease-stabilized situation. So I really think the focus has to be on stabilizing the essential sector by building up this regimen. I think we can do that by the end of June. Once that’s accomplished, I think we can, over the course of July, reintroduce most of the rest of the economy and have the confidence that, because we haven’t seen reemergence of diseases within the essential sector, that reintroducing everybody else will proceed in a similar fashion. I think if people not paying their rents, and maybe more importantly, not paying their mortgages — they worry, say, within four to six weeks, the whole banking system will be insolvent. I don’t mean illiquid, where the Fed can prop it up. I just mean flat-out, permanently insolvent. Isn’t there some very rapid, irreversible, nonlinear deterioration going on, and we’ll need to reopen more than we would like to pretty soon, no matter what our level of testing is? What do you think of that claim? Obviously, you’re an economist. I think it’s a little bit extreme, but I’m certainly inclined in that direction. The problem, Tyler, is that if we reopen under the current conditions, we’re going to see — and this is expected by all the epidemiological models — a resurgence of the disease, probably sooner rather than later, and we’re going to have to lock things down again. As problematic as it is to keep things closed for another month plus, it’s going to be much more problematic to suddenly and unexpectedly every so often have to shut everything back down again. It will completely destroy the capacities of businesses to plan if that is looming out there. Whereas, if we can plan for some period of bridge loans, some period of the Fed bailouts, et cetera, then at least we can get that into a bill and get ahead of it, rather than relying on people to just have to deal constantly with new crises emerging.…

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