Saturday, November 14, 2020

Literary Corner: Time Will Tell

Mark, Rothko, No. 6 (Yellow, White, Blue over Yellow on Gray), 1954. Via WikiArt.

This Administration Will Not

by Donald J. Trump

According to some estimates, a national lockdown
costs fifty billion dollars a day and hundreds of
thousands of jobs every single day. Ideally,
we won’t go to a lockdown. I will not go.
This administration will not be going to
a lockdown. Hopefully, whatever happens in the
future, who knows which administration it will be.
I guess time will tell, but I can tell you,
this administration will not go to a lockdown.

Heritage Foundation on 20 April guessed that an 8-week national shutdown would lower economic output by $2 trillion, which only comes to $357 million a day, and cost 14 million jobs from February's 152 million total employed, or 250,000 jobs per day. This was under the assumption that the only region of the country seriously affected by the coronavirus was the New York area, and that this would remain true. 

In the event, in the real world as opposed to Heritage's modeling factory, total US economic output declined at exactly that rate, for a total of $3 trillion in the second quarter of 2020, while the number of jobs declined by 25 million or nearly 300,000 jobs per day, without a national shutdown, so if Heritage's estimates were correct a national shutdown would actually have led to a small but significant improvement, but never mind that. 

Also, the coronavirus did spread beyond the New York area, as you know, but not until the fall, and it's now raging through the country (with the nationwide test positivity rate rising from a low of around 4.5% through most of the fall to 9.5% and skyrocketing right now, while in New York State and New York City it remains under 3% for the moment), which is why a national lockdown is still something people are talking about, and we're not talking about the economic damage we'll see in Q4.

But back in June Austan Goolsbee and Chad Syverson did some serious looking at the data of what had actually happened in the early months of the pandemic, when there were a lot of lockdown restrictions in the Northeast, and found that the restrictions themselves really didn't have as much of an effect as the disease itself:

While overall consumer traffic fell by 60 percentage points, legal restrictions explain only 7 percentage points of this. Individual choices were far more important and seem tied to fears of infection. Traffic started dropping before the legal orders were in place; was highly influenced by the number of COVID deaths reported in the county; and showed a clear shift by consumers away from busier, more crowded stores toward smaller, less busy stores in the same industry. States that repealed their shutdown orders saw symmetric, modest recoveries in activity, further supporting the small estimated effect of policy. Although the shutdown orders had little aggregate impact, they did have a significant effect in reallocating consumer activity away from “nonessential” to “essential” businesses and from restaurants and bars toward groceries and other food sellers.

Which would certainly account for why there's so little difference between the Heritage predictions with a national lockdown and the reality without one; because the lockdown just isn't a very important factor in the total numbers. And stopping the virus with whatever it takes to achieve universal masking and social distancing, call that a "lockdown" if you like, will do a lot more for the economy than not stopping it. And Donald vaguely rehashing forecasts from six months ago and getting the numbers all wrong is not saying anything even slightly relevant, as usual.

There's been a lot more excitement, as you know, over Donald's apparent admission that he's heard there might be some other presidential administration in place in some future time, expressed so softly and wistfully you hardly notice it going by. As if he thinks we might not even notice, at that point, whether he's president or not any more, as if his presidency might just expire, unheard, while we're preoccupied with something else, and he doesn't even want us to be disturbed about it, as long as we don't think he's to blame for any lockdowns that occur as a consequence. I think that's the most interesting thing—the way he couches it in this discussion of the lockdown, as if to say if there is a lockdown it's probably a sign that he's not president any more and it's not his fault.


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