Tyler Cowen: belief

Transcript context

…Well, I was going to ask you if you were, quote, in charge, if you were the coronavirus czar today or President of the United States, besides creating potential a very large prize, the other ideas that are being bandied about are bailouts of various kinds for certain industries that are particularly hard hit by this. Do you think there’s a moral industries that are particularly hard hit by this. Do you think there’s a moral hazard issue there in some of those cases? Obviously in a lot of those cases there’s not much of a moral hazard issue. Somebody pointed out, I don’t think you expect the Thai restaurant on the corner to prepare for a pandemic and act accordingly in advance so that, worrying about the impact of a bailout there is probably not the biggest worry. What are your thoughts on these moral hazard issues? Do you think the airline should get a bailout? I think that’s a good thing? One has to be very careful with that word bailout. People mean so many different things by it. I don’t think our government should let all of the major corporations fail, which are likely to fail if we do nothing. That said, at this point, I remain agnostic as to exactly what we should do. On one hand you don’t want to be in a position of picking winners and losers. But on the other hand, I think one needs to realize maybe cruise ships are not really coming back in a big way and maybe they shouldn’t. There is something to be said for some sectoral targeting here, but I think the political economy consequences of just letting all of those jobs go away are too dire and we would end up with much more government. We’d have like a New Deal Squared and I think some BandAid has to be applied. I’ve yet to see a plan that I find very convincing and they’re all plans based on the premise of, these businesses just need some loans to tide them over. That might be true. It might be the bet we end up having to take because maybe there’s not any other bet, but I don’t feel as good about it as the other people out there pushing these ideas. They seem a little hasty to me. Like they’re taking tools out of the toolbox from the last crisis. Things they thought should have been done and weren’t and saying now is the time to see I was right all along. It makes me very nervous. I’m seeing high levels of epistemic non-rationality. But that said, I really am not here trying to argue for doing nothing. I don’t think we can let all the cards fall to the ground. What’s your view on that? Well, I’m not sure what, I’m like you, I want to minimize what we do particularly if it’s likely to be permanent, makes me really uneasy. We’re at risk that this becomes a watershed moment. I think actually, it’s probably too late. Everyone just expects the government to quote, solve this. Again, they neglect the things that we’ve done on our own. I understand the things that we can’t do on our own to fix macroeconomic cascades. I’m not suggesting that we’re going to avoid all the problems if we just leave things alone. I know that’s not true. But I know there are a lot of things happening. People are buying gift certificates from their rest favorite restaurants and other things to keep them going. They’re doing takeout. Obviously that’s not going to be enough. If people aren’t flying, there’s going to be airlines going bankrupt. But the idea that somehow we can make everyone whole. I really don’t like the idea of big business as whole. I’d much rather make individuals whole and I think that’s just really hard to do. This idea of giving everybody $1,000, I don’t need $1,000. Presumably you don’t need $1,000 and do we want to allow every American, you know, is it to make it easy? Should we do that? But it’s clear there’s going to be terrible hardship on individuals who can’t get in to work or shouldn’t go to work. There’s no quote free market solution to that that’s obvious. There may be some of those things that are necessary to reduce the spread of the virus, but they’re so blunt and it discourages me tremendously to think about the consequences of how that will be going forward. Both in how it affects behavior that everyone thinks, “Oh, I don’t have to worry about fill in the blank because eventually I’ll get a check from the government.…

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