Russ Roberts: prediction

Transcript context

…In terms of policy, what do you expect on the fiscal and monetary fronts moving forward? Well, great minds think alike, Tyler. That’s what I wanted to talk about next. Well, I think there’s some confusion between the abatement of suffering and what we would normally call fiscal stimulus. A lot of what people are proposing is fiscal stimulus isn’t going to stimulate anything. People aren’t making things because they can’t come to work or go out of their house. Putting money in people’s hands has no impact on the overall economy. It will help them pay their rent, which will reduce that cascading worry that I mentioned earlier from the real estate developer I had talked to. That’s going to be, I think, extremely important in reducing the set of economic readjustments that you were more focused on than I was in the earlier part of the conversation. But the idea that somehow we’re going to solve the economic disruption through traditional means, either monetary or fiscal, seems to me to be very unlikely. You can make a case they’re giving people cash right now. I like when people say, “Quickly,” as if we know how to do that. The last time I think we did this, it took two months. It didn’t do much for the economy. The Bush Administration did that… whatever it was called, tax rebate or whatever it was a long time ago. We’re back in, I think, 2001. I’m not sure we have a lot of weapons for this kind of… To come back to my earlier metaphor, everybody go home for a month, maybe six weeks, maybe two months, and when you come back your business might not exist anymore, so find something else. The idea that we’re going to fix that with monetary or fiscal policy seems to be unlikely. The idea that we’re going to, quote, bail everyone out, make everyone whole is going to be really hard to implement. We can say it. You can talk about it like it’s a policy, but I’m not sure how you’d implement it. What are your thoughts on it? I worry that we don’t know how many businesses are bouncing back and how many cannot be kept on life support. Again, if it’s a month or two, I think almost all of them can be kept on life support, and we could throw money at the problem, and then in two months just pick up the pieces and be the America we once knew. But if it’s becoming five or six months or longer, then the amount of money you have to send, and people just being kept in unproductive activities… You actually want some of those restaurant owners maybe to end up as UPS drivers. Right? We don’t know how many. The degree of optimism or pessimism, it really seems to matter for economic stimulus. If you’re a relative optimist about the progression of the virus, I think you should be relatively pro-stimulus, like, “Just keep it running for now. Things will be back.” To the extent you have a more dire forecast, you even worry a bit about the government’s own budget constraint, and you also start asking, “How many of these people,” it’s like a new world, “need to be doing something else?” Maybe you don’t want to hasten that at the fastest possible speed, but you’re not aiming to just keep every business going, say, with loans from the Fed either. I see people making different arguments, and I get very uncomfortable. I think we should be more agnostic than what I’m seeing. Agnostic doesn’t mean you do nothing, but that to me is one of the biggest uncertainties in this debate that’s hardly ever being acknowledged.…

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