Tyler Cowen: belief

Transcript context

…Let’s turn to that. You said unemployment might be 20%, of course, it’s higher than that right now in a real sense, in an unmeasured non-quantified sense. A lot of people “aren’t working” and I would as I’m sure you would, I’d encourage you to look at employment as opposed to unemployment in the coming weeks and months. But if the economy took a break, if government had announced, irrespective of this virus, that everybody has a forced two week vacation. Everybody goes home for two weeks, stays home, it’s good. We’re going to have more family time. You know GDP would go down in those two weeks if we could measure it in a two week period. We don’t. Some of that would be made up for in the two weeks after because people would be buying or creating things that weren’t made during those two weeks. Some things are not replaceable. The meal out versus the meal in, right? Eating out versus cooking yourself. You don’t make that up or you could a little bit. But in general, what are your thoughts on, on that sort of extreme version of this, right? That would be a stylized way of thinking about what we’re going through now. Well, what would be the con the impact of that, if everybody just stopped making stuff for sale, that commercial life stopped for two weeks or four weeks? Well, two to four weeks, those are easy cases. If you think of many service sectors as having to shut down say until August, which is quite a possible scenario in some cases even later. That to me is greatly concerning and it may vary across sectors. So if you think about the NBA, whenever the NBA is ready to play games again, I mean the players will show up the next day and there’ll be ready, right? That will come back very quickly. But if you think of small businesses, say restaurants, the big chains aside, they’re typically thinly capitalized. Let’s say a significant portion of those are gone forever. And then when things are somewhat normal again, how does the economy re-scramble and re-constitute the organizational capital that was in those ongoing enterprises? That to me is a hugely difficult problem and whatever you think the government should or should not do, just spending a lot on fiscal stimulus will not ease that problem. That’s the actual destruction going on is the relationships, the organizational capital, the intangibles that will decay. Not over two weeks, probably not over four weeks but over four or five months or longer. Then I think that’s a matter really of great concern. Well, I’ll make a bet with you right now, Tyler, that this four or five months from now, it won’t look like it does now. In terms of the expectations of sub quarantining and self isolation and things being closed. I think we’re going to get to see Tom Brady in a Tampa Bay Buccaneer uniform. For example-…

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