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The Great Pause Was an Economic Revolution

83 points by williamsmj 6y ago

fallingfrog 6y ago
Exactly correct. I would go a bit further even though: not only is it possible to deliberately engineer the way the economy functions to achieve specific goals, but this has already been done and the supposedly naturally self designed, self regulated free market economy is anything but. Rather it has been engineered to benefit someone, it’s just not you and me but a small percentage of excessively rich people.
- twblalock 6y ago
  You're kidding, right? This "engineering" of the economy has put tens of millions of people out of work and destroyed many small and medium businesses, and that was only after a couple of months! Imagine how bad things would be if we locked down for an entire year.
  - geofft 6y ago
    I think you're misreading the comment - the person you're responding to is claiming that the engineering of the economy started way more than a couple of months ago.
    - twblalock 6y ago
      I read it right. It's a conspiracy theory about capitalism deployed as proof that "engineering" of the economy works, despite the obvious fact that the past few months of "engineering" have destroyed businesses and ruined many lives. The "self designed, self regulated free market economy" which the OP insinuated is a myth or a lie is actually the only reason the economy still functions. Businesses didn't shift to remote work and radically alter their supply chains in record time because some government central planner told them to.
      - fallingfrog 6y ago
        I’m not talking about conspiracy theories, just mundane things like like urban planning, real estate and industry lobbying, choices about policing and who makes them, I mean just check how many members of your local city council were funded by the chamber of commerce. There’s no conspiracy, it’s all done right out in the open. Why do we drive cars instead of taking mass transit everywhere? Because the big auto companies lobbied to make it that way. Why do real estate prices keep on rising? Because the Fannie Mae and Freddie Mac interfere with loan pricing. You don’t think all this stuff just happens, do you? Most of the laws governing the financial sector were directly written by lobbyists working in that sector. Most of the new technology, the basic research that happens, is funded by the federal government. And then handed off to corporations in the private sector who happen to fund political campaigns. It’s not some secretive cabal or some silly thing like that. It’s just how business is done. The whole economy is like that. Somebody made each choice. It was somebody who had a stake in the outcome, somebody with money.
        geofft 6y ago
        By the way, I really liked this article that was posted here couple weeks ago about how the USDA has been leading a battle against an entire species of worms - and has quite successfully driven them to a defensive line they maintain in Panama - for the sake of the cattle industry: https://www.theatlantic.com/science/archive/2020/05/flesh-eating-worms-disease-containment-america-panama/611026/ https://www.theatlantic.com/science/archive/2020/05/flesh-ea... Nothing hidden, but unquestionably central planning on the part of multiple governments.
      - geofft 6y ago
        The comment would make as much sense if it were made in December 2019 - it has nothing to do with the last few months. The comment was also about engineering, not micromanaging. When a civil engineer designs a bridge to resist vibrations and avoid resonance, the civil engineer is not personally damping the bridge every time a car drives over. They've simply designed the bridge so it does what's wanted. There's no government central planner telling business what to do, but there are absolutely a number of government planners setting up the conditions under which businesses operate.
jennyyang 6y ago
It's hard to say that this Great Pause actually "worked", since the governments of the world had to dump trilions into stimulus to make businesses not simply die. We and our children and our childrens' children will be paying for this with our taxes for decades to come. If we have another Pause in the next few months, then it will be the body blow that completely cripples the economy, especially in the US. I can't see many small businesses surviving on a fraction of the income, especially when their margins are razor thin already.
- buzzkillington 6y ago
  We already have the second wave in the US being worse than the first wave. You can pause an economy for 6 weeks, you can't pause it for the 18 months to 5 years it would take to create a vaccine for the virus. At the end of the day this is a very benign plague that kills people who already have health conditions (and a few unfortunates). If anything the two to five million projected to die will make society better off since they were by and large resource sinks. But we will not know which was the right way to go about this for at least another 5 years.
- rsynnott 6y ago
  No-one’s saying it worked, as such (what would this even mean?) But it arguably didn’t cause the sort of rapid chaos (breakdown of supply chains swiftly followed by social order) that conventional wisdom says this sort of thing should. At least in places where COVID has been largely suppressed now, the second time round shouldn’t be as economically shocking as the first; there’ll be way more focus on the test-and-trace approach that we just weren’t set up for in February. I would be somewhat worried about places where it was never really suppressed when it spikes again, though.
  - tathougies 6y ago
    Conventional wisdom says that the market will adapt if there is a reasonable hope that this is truly temporary. I dunno about you but my family all believed that the stimulus was fine and it would work out but only because this is expected to be one time and temporary.. Making this permanent or even dragging it out would have severe economic consequences
carapace 6y ago
The "Economic Revolution" of the title is fascinating and exciting: > About 35 percent of food expenditures—more than $2.5 trillion globally—is up for grabs as consumers shift to dining at home and experimenting with new buying channels. This could be the end of cruel factory farms and the resurgence of smaller, healthier and more humane farming. Check out "SPIN farming": it stands for "Small-Parcel INtensive", a kind of turn-key farming business that is meant for small (down to 1/4 acre) urban farms. Combine that with "Syntropic farming" and you've got the makings of a economic revolution. (Normally I would supply links but I've only just recently learned about them so I don't have anything in particular to recommend.)
- DuskStar 6y ago
  > This could be the end of cruel factory farms and the resurgence of smaller, healthier and more humane farming. It could also cement their lead, as there's less signalling to be had when eating at home - so fewer reasons to buy "high-status" food - and easier to compare prices and see what that status costs you. The true believers will continue, but will it be easier or harder for that belief to spread?
  - ornornor 6y ago
    But... not eating meat is an order of magnitude cheaper (most vegetable or tofu don’t cost 20+$/€ per kg) so both incentives are still there: status and much lower cost.
    - naavis 6y ago
      A lot of meat doesn't cost that much either. The cheapest minced meat here in Finland (which is a relatively expensive country) is less than 5€/kg.
- dbcurtis 6y ago
  > This could be the end of cruel factory farms and the resurgence of smaller, healthier and more humane farming. Yes, well, you're going to have to show me the math. We eat incredibly well, with decent nutrition (could be better, yes), 365 days a year. On a modest expenditure. Modern agriculture is sufficiently productive that world hunger is a distribution problem, not a production problem. I would like to see improvements in soil management and reductions in chemical usage, certainly, but new production practices you suggest need to pencil out. If you are going to argue for market forces driving us to smaller farm operations, you need to show me the math. Show me how we get there. And make a net improvement in nutrition for everyone. Without inconveniencing the city dwellers that have forgotten that the phrase "seasonal produce" used to exist. Go grow some food. Keep good records, and share the results with us.
secstate 6y ago
Is it just me, or is it a little silly to compare the 1919 world economy pre-mass production/consumerism with today? The irony to most of this shutdown is that "essential" businesses are still open. What the Great Pause has exposed is the shallowness and fragility of mass production/consumerism. During the pandemic of 1919, 80-90% of household income was spent on food and essential needs. Can you even imagine if we spent 80-90% of our income on essential needs? Well shit, we wouldn't hurt so much when non-essential business was put on pause, that's for sure.
- clairity 6y ago
  > "Can you even imagine if we spent 80-90% of our income on essential needs?" most american households (as in >50%) do spend 80-90% (or more) on essential needs.
  - Exmoor 6y ago
    You may very well be right, but I'd be curious if you have a source for that?
    - sushshshsh 6y ago
      Most of these things seem quite essential and aren't cash in the bank equivalents (pension is debatable) https://images.app.goo.gl/HLGya1YkFJ5vv5oS8 https://images.app.goo.gl/HLGya1YkFJ5vv5oS8
      - ajzinsbwbs 6y ago
        If you think about which of the industries in that chart are partially or fully shut down, it seems pretty consistent with the 14% unemployment we got.
    - edoceo 6y ago
      Piketty has a book called Capital in the 21st Century, which makes similar statements and has pointers to his reference material here: http://piketty.pse.ens.fr/en/capital21c2 http://piketty.pse.ens.fr/en/capital21c2 Also, it's a good book.
geofft 6y ago
There's a lot I agree with about this article in terms of the analysis itself, but I'm amused at the idea that this level of control is a dream of the "the radical left and radical right." The economy / world order we have requires significant amounts of regulation and control. We fear, for instance, China's disrespect of intellectual property law precisely because respect for intellectual property isn't an emergent artifact of a free market; it requires a complex and well-funded legal system with an equally well-funded enforcement arm. An economy where copyright and patent and trademark and trade secret law are effective may be a "living organism," but it's a manicured lawn with a trimmed hedge, not an old-growth redwood forest. You can prefer its shape and appreciate its beauty, of course, but be sure to ascribe agency appropriately. And that's the real thing the centrists don't want the radicals to realize - that the center is where it is because of careful pruning and grafting, that in so many things from immigration and work visas to tax policy to trust funds to zoning to policing to military spending to labor law to (as the article mentions) how we deal with the homeless and the destitute, we're not taking a natural or default position in any meaningful sense, we're taking the current position, and working hard to keep things that way. The radicals aren't wrong simply because they are radicals and they demand change, so don't argue simply that their position is infeasible, or you may find that it's not as infeasible as you thought. Argue, if it's true, that their position is morally in the wrong. (And "Your proposals will certainly lead to economic collapse and suffering" is really an argument about feasibility.) Another world is possible. For those who benefit from the current one, that's a scary thought. It's a thought that's driven countless restorationist or reactionary movements through history, from the Confederates to the Bourbons to Tokugawa to the well-funded fall of communism - but they fight so hard because they know that the other world can actually survive.
ptero 6y ago
> With the Spanish flu a century ago, people adapted their individual behavior, but social life proceeded more or less as before. “Public places of amusement” were shuttered, but work and business were little affected overall. This is a pretty telling difference with how we perceive the world today. During the last decades most people living in the "first world" (however you define it today) lost ability to rationally think about small additional chances of dying. Even though the usual set of killers, from old age to cancer to traffic, are still around us and take a lot of lives every year (I believe CDC estimates 650000 US deaths from heart disease per year), they do not prevent us from living and enjoying our lives; we seem to mentally zero those deaths out. But a very small unusual danger can cause widespread panic. As a non-coronavirus example, in 2002 a "DC sniper" killed 10 people in 3 weeks. When I was going to DC during that time for business folks from Chicago were calling me crazy, even though Chicago has way more people fatally shot during average 3 weeks. All my attempts to argue that additional risk is minuscule got nowhere. We need to re-learn to make rational decisions about risks. Otherwise we will be constantly hiding under the table for any loud noise and destroy our economy, fun of life and long-term life satisfaction. My 2c.
- kortilla 6y ago
  Shootings in Chicago are not randomly spread across the population though. Most is gang violence and is relatively easy to avoid. The DC shooter was different because it was arbitrary across the population. It was no longer about “avoiding the bad neighborhoods” or “not crossing a drug dealer”. Covid is a little similar in that it’s a new class of risk (different group dying than do from heart disease and all of the other known risks). It also doesn’t help that people on the Internet are calling others murders for being a potential transmission vector.
  - awinder 6y ago
    Also happened in the aftermath of 9/11 and the anthrax mailings which was a big thing in the dc-region, and involved targeting a school which again ups fear factor. Local economies at large were unaffected, everything is/was fine, life went on. People freak out and act economically differently and _have always and will always_ during catastrophes, no one is going to change that.
taneq 6y ago
Sadly, any interest I had in the topic has been overwhelmed by distaste for them letting me get halfway through the article before throwing up a paywall. If you want to charge for content, that's fine, but this kind of bait-and-switch is just rude.
twblalock 6y ago
The article cites the rapid changes to supply chains, particularly Walmart's, as a reason the economy kept going. What else is that, other than the mechanisms of a free market at work? The government didn't tell them how to run their supply chains. Nor did the government tell companies how to shift their workforces to remote work, they just did it, and they did it pretty well, even though some of them had never tried it before. Some companies even introduced remote work in March, before the government ordered any lockdowns! In doing these things, businesses have relied heavily on technology (also a product of the market) which enables far more people to productively work from home than would have been possible a few decades ago. Small, local businesses quickly pivoted to social media and online ordering to survive. Given all of that, how can the author say, with a straight face, "None of this has anything to do with the spontaneous interplay of individual economic units that economists like to talk about." It seems like exactly that.
- js8 6y ago
  It can be both. Government can decide (on behalf of the citizens) to shut down the economy, and yet let all the economic actors to deal with the consequences of that decision on their own. So while I agree that free market plays a role, I interpret the line to say that there is also a central decision of the government that organizes all this.
- ajzinsbwbs 6y ago
  Some companies (especially forward-thinking tech companies we care about on this forum) shifted to remote work quickly. Others fought tooth & nail. There are a lot of stories of companies abusing the rules about essential worker status to get office workers to come in. Government regulations have been an important part of the response to the virus. I think this is to be expected according to mainstream economics. The risk to the public is an externality and many companies will ignore it without government intervention. To the extent that the US response is failing, it’s largely due to insufficient government regulation (although some of it also includes dumb own-goals by our government that are orthogonal from a liberty-regulation axis).
- geofft 6y ago
  I don't think this article is primarily about free markets vs. government planning. It's about the ability of humans - any humans - to make conscious collective decisions about how the economy works in ways motivated by things other than finding profit, versus treating the economy as a mostly-uncontrollable force optimizing for what it optimizes for (the "invisible hand"). I think that's what the author means by "the spontaneous interplay of individual economic units" - that if a potential profit advantage exists, some rational actor will spring up to take advantage of it. The idea that this sort of thing happens reliably and consistently is behind theories like the efficient market hypothesis, for instance. There's little profit advantage in being the first company to shift to remote work or in proactively closing your coffee shop while there may still be a trickle of customers, but people did it. (For that matter, there's little profit advantage in being a videoconferencing service that has its average customer use the service occasionally suddenly use the service full-time for all its employees, and yet multiple such products of the market not only embraced it but built up their free offerings, too.) If your claim is that the free market isn't constrained to being motivated by profit and can decide, even (or especially) if not ordered by government, to accomplish some other goal - I think you have no real disagreement with the author. What the author is claiming is novel is that people know that this is true, now.
neonate 6y ago
https://archive.vn/OCTOk https://archive.vn/OCTOk
js8 6y ago
I am not sure what is there to wonder about. Change has always been possible. It's the elites in power who are conservative, claiming that there is no alternative, they want to (for the most part) keep their position. It's funny to read that Hayek compared parts of the economy to organs. I often use analogy of money being blood in human body, to illustrate that from the perspective of each individual cell, blood is a resource, but from the perspective of the whole body, blood is just a transport medium of which it can create any amount required. And accordingly, body can decide to vasoconstrict (shut down) certain organs in times of crisis. It is a collective decision, not a decision of an individual cell. So of course, you can shut down parts of the economy. You can also put those people in parts that shut down on a kind of helicopter money support. All those things have always been possible, it's just people were conditioned to think they are not.
- twblalock 6y ago
  There is a big difference between "possible for a few months" and "possible indefinitely". A lot of what we did during the lockdowns was never going to be sustainable. By the way, the "helicopter money" thing was proposed by Milton Friedman, a libertarian economist who was influenced by Hayek and who was highly critical of most forms of government intervention in the economy.
  - fuvkthisguy 6y ago
    > There is a big difference between "possible for a few months" and "possible indefinitely". A lot of what we did during the lockdowns was never going to be sustainable. I would be interested to see an argument for this point, because I don't think it stands on its own.
mynegation 6y ago
> In fact, supply chains adapted and readjusted at extraordinary speed. Tell that to the shitshow named Canada Post. But seriously, while it is good to discuss what is possible and what might have changed to the better, it will be important for us to understand hidden long term consequences: medical complications of virus, sudden trauma of loss, depression as a result of lack of social interaction, fear of uncertainty, financial or medical, ballooned debt on all levels, while industries wiped out.
hyperborealis 6y ago
The demand shock prompted by the pandemic is hardly a suspension of capitalism. The lockdowns followed the combined decisions of individuals, per a Hayekian model. Government's mainly commanded what people were already doing themselves.
- js8 6y ago
  No. Individuals are less efficient in doing shut down than government, because of the https://en.wikipedia.org/wiki/Coordination_failure_(economics) https://en.wikipedia.org/wiki/Coordination_failure_(economic... . We can see that play out in practice, comparing how different nations dealt with the pandemic. But I do agree with the premise, government shut downs happened because people by and large wanted them, not because the government wanted to impose some random restrictions.
jhallenworld 6y ago
IMHO, the revolution is the quick fed and congressional response in terms of stimulus. The mindset allowing it was a very long time coming, going back to lessons learned from the great depression, the dropping of the gold standard, observations of Japan's lost decade, but more recently the observation that all of the quantitative easing from the 2008 crash did not lead to horrible inflation.
pochamago 6y ago
I feel like this article is simply premature. I think its headline is likely accurate, but all it can really do is cite the events we have been and are living through, not give any concrete suggestion of the consequences. I'm eager to see what kind of interesting theses economists will devise from studying this time period, but I don't think the article offers any in this moment.

83 points by williamsmj 6y ago

Exactly correct. I would go a bit further even though: not only is it possible to deliberately engineer the way the economy functions to achieve specific goals, but this has already been done and the supposedly naturally self designed, self regulated free market economy is anything but. Rather it has been engineered to benefit someone, it’s just not you and me but a small percentage of excessively rich people.

twblalock 6y ago
You're kidding, right? This "engineering" of the economy has put tens of millions of people out of work and destroyed many small and medium businesses, and that was only after a couple of months! Imagine how bad things would be if we locked down for an entire year.
- geofft 6y ago
  I think you're misreading the comment - the person you're responding to is claiming that the engineering of the economy started way more than a couple of months ago.
  - twblalock 6y ago
    I read it right. It's a conspiracy theory about capitalism deployed as proof that "engineering" of the economy works, despite the obvious fact that the past few months of "engineering" have destroyed businesses and ruined many lives. The "self designed, self regulated free market economy" which the OP insinuated is a myth or a lie is actually the only reason the economy still functions. Businesses didn't shift to remote work and radically alter their supply chains in record time because some government central planner told them to.
    - fallingfrog 6y ago
      I’m not talking about conspiracy theories, just mundane things like like urban planning, real estate and industry lobbying, choices about policing and who makes them, I mean just check how many members of your local city council were funded by the chamber of commerce. There’s no conspiracy, it’s all done right out in the open. Why do we drive cars instead of taking mass transit everywhere? Because the big auto companies lobbied to make it that way. Why do real estate prices keep on rising? Because the Fannie Mae and Freddie Mac interfere with loan pricing. You don’t think all this stuff just happens, do you? Most of the laws governing the financial sector were directly written by lobbyists working in that sector. Most of the new technology, the basic research that happens, is funded by the federal government. And then handed off to corporations in the private sector who happen to fund political campaigns. It’s not some secretive cabal or some silly thing like that. It’s just how business is done. The whole economy is like that. Somebody made each choice. It was somebody who had a stake in the outcome, somebody with money.
      - geofft 6y ago
        By the way, I really liked this article that was posted here couple weeks ago about how the USDA has been leading a battle against an entire species of worms - and has quite successfully driven them to a defensive line they maintain in Panama - for the sake of the cattle industry: https://www.theatlantic.com/science/archive/2020/05/flesh-eating-worms-disease-containment-america-panama/611026/ https://www.theatlantic.com/science/archive/2020/05/flesh-ea... Nothing hidden, but unquestionably central planning on the part of multiple governments.
    - geofft 6y ago
      The comment would make as much sense if it were made in December 2019 - it has nothing to do with the last few months. The comment was also about engineering, not micromanaging. When a civil engineer designs a bridge to resist vibrations and avoid resonance, the civil engineer is not personally damping the bridge every time a car drives over. They've simply designed the bridge so it does what's wanted. There's no government central planner telling business what to do, but there are absolutely a number of government planners setting up the conditions under which businesses operate.

jennyyang 6y ago

It's hard to say that this Great Pause actually "worked", since the governments of the world had to dump trilions into stimulus to make businesses not simply die. We and our children and our childrens' children will be paying for this with our taxes for decades to come. If we have another Pause in the next few months, then it will be the body blow that completely cripples the economy, especially in the US. I can't see many small businesses surviving on a fraction of the income, especially when their margins are razor thin already.

buzzkillington 6y ago
We already have the second wave in the US being worse than the first wave. You can pause an economy for 6 weeks, you can't pause it for the 18 months to 5 years it would take to create a vaccine for the virus. At the end of the day this is a very benign plague that kills people who already have health conditions (and a few unfortunates). If anything the two to five million projected to die will make society better off since they were by and large resource sinks. But we will not know which was the right way to go about this for at least another 5 years.
rsynnott 6y ago
No-one’s saying it worked, as such (what would this even mean?) But it arguably didn’t cause the sort of rapid chaos (breakdown of supply chains swiftly followed by social order) that conventional wisdom says this sort of thing should. At least in places where COVID has been largely suppressed now, the second time round shouldn’t be as economically shocking as the first; there’ll be way more focus on the test-and-trace approach that we just weren’t set up for in February. I would be somewhat worried about places where it was never really suppressed when it spikes again, though.
- tathougies 6y ago
  Conventional wisdom says that the market will adapt if there is a reasonable hope that this is truly temporary. I dunno about you but my family all believed that the stimulus was fine and it would work out but only because this is expected to be one time and temporary.. Making this permanent or even dragging it out would have severe economic consequences

carapace 6y ago

The "Economic Revolution" of the title is fascinating and exciting: > About 35 percent of food expenditures—more than $2.5 trillion globally—is up for grabs as consumers shift to dining at home and experimenting with new buying channels. This could be the end of cruel factory farms and the resurgence of smaller, healthier and more humane farming. Check out "SPIN farming": it stands for "Small-Parcel INtensive", a kind of turn-key farming business that is meant for small (down to 1/4 acre) urban farms. Combine that with "Syntropic farming" and you've got the makings of a economic revolution. (Normally I would supply links but I've only just recently learned about them so I don't have anything in particular to recommend.)

DuskStar 6y ago
> This could be the end of cruel factory farms and the resurgence of smaller, healthier and more humane farming. It could also cement their lead, as there's less signalling to be had when eating at home - so fewer reasons to buy "high-status" food - and easier to compare prices and see what that status costs you. The true believers will continue, but will it be easier or harder for that belief to spread?
- ornornor 6y ago
  But... not eating meat is an order of magnitude cheaper (most vegetable or tofu don’t cost 20+$/€ per kg) so both incentives are still there: status and much lower cost.
  - naavis 6y ago
    A lot of meat doesn't cost that much either. The cheapest minced meat here in Finland (which is a relatively expensive country) is less than 5€/kg.
dbcurtis 6y ago
> This could be the end of cruel factory farms and the resurgence of smaller, healthier and more humane farming. Yes, well, you're going to have to show me the math. We eat incredibly well, with decent nutrition (could be better, yes), 365 days a year. On a modest expenditure. Modern agriculture is sufficiently productive that world hunger is a distribution problem, not a production problem. I would like to see improvements in soil management and reductions in chemical usage, certainly, but new production practices you suggest need to pencil out. If you are going to argue for market forces driving us to smaller farm operations, you need to show me the math. Show me how we get there. And make a net improvement in nutrition for everyone. Without inconveniencing the city dwellers that have forgotten that the phrase "seasonal produce" used to exist. Go grow some food. Keep good records, and share the results with us.

secstate 6y ago

Is it just me, or is it a little silly to compare the 1919 world economy pre-mass production/consumerism with today? The irony to most of this shutdown is that "essential" businesses are still open. What the Great Pause has exposed is the shallowness and fragility of mass production/consumerism. During the pandemic of 1919, 80-90% of household income was spent on food and essential needs. Can you even imagine if we spent 80-90% of our income on essential needs? Well shit, we wouldn't hurt so much when non-essential business was put on pause, that's for sure.

clairity 6y ago
> "Can you even imagine if we spent 80-90% of our income on essential needs?" most american households (as in >50%) do spend 80-90% (or more) on essential needs.
- Exmoor 6y ago
  You may very well be right, but I'd be curious if you have a source for that?
  - sushshshsh 6y ago
    Most of these things seem quite essential and aren't cash in the bank equivalents (pension is debatable) https://images.app.goo.gl/HLGya1YkFJ5vv5oS8 https://images.app.goo.gl/HLGya1YkFJ5vv5oS8
    - ajzinsbwbs 6y ago
      If you think about which of the industries in that chart are partially or fully shut down, it seems pretty consistent with the 14% unemployment we got.
  - edoceo 6y ago
    Piketty has a book called Capital in the 21st Century, which makes similar statements and has pointers to his reference material here: http://piketty.pse.ens.fr/en/capital21c2 http://piketty.pse.ens.fr/en/capital21c2 Also, it's a good book.

geofft 6y ago

There's a lot I agree with about this article in terms of the analysis itself, but I'm amused at the idea that this level of control is a dream of the "the radical left and radical right." The economy / world order we have requires significant amounts of regulation and control. We fear, for instance, China's disrespect of intellectual property law precisely because respect for intellectual property isn't an emergent artifact of a free market; it requires a complex and well-funded legal system with an equally well-funded enforcement arm. An economy where copyright and patent and trademark and trade secret law are effective may be a "living organism," but it's a manicured lawn with a trimmed hedge, not an old-growth redwood forest. You can prefer its shape and appreciate its beauty, of course, but be sure to ascribe agency appropriately. And that's the real thing the centrists don't want the radicals to realize - that the center is where it is because of careful pruning and grafting, that in so many things from immigration and work visas to tax policy to trust funds to zoning to policing to military spending to labor law to (as the article mentions) how we deal with the homeless and the destitute, we're not taking a natural or default position in any meaningful sense, we're taking the current position, and working hard to keep things that way. The radicals aren't wrong simply because they are radicals and they demand change, so don't argue simply that their position is infeasible, or you may find that it's not as infeasible as you thought. Argue, if it's true, that their position is morally in the wrong. (And "Your proposals will certainly lead to economic collapse and suffering" is really an argument about feasibility.) Another world is possible. For those who benefit from the current one, that's a scary thought. It's a thought that's driven countless restorationist or reactionary movements through history, from the Confederates to the Bourbons to Tokugawa to the well-funded fall of communism - but they fight so hard because they know that the other world can actually survive.

ptero 6y ago

> With the Spanish flu a century ago, people adapted their individual behavior, but social life proceeded more or less as before. “Public places of amusement” were shuttered, but work and business were little affected overall. This is a pretty telling difference with how we perceive the world today. During the last decades most people living in the "first world" (however you define it today) lost ability to rationally think about small additional chances of dying. Even though the usual set of killers, from old age to cancer to traffic, are still around us and take a lot of lives every year (I believe CDC estimates 650000 US deaths from heart disease per year), they do not prevent us from living and enjoying our lives; we seem to mentally zero those deaths out. But a very small unusual danger can cause widespread panic. As a non-coronavirus example, in 2002 a "DC sniper" killed 10 people in 3 weeks. When I was going to DC during that time for business folks from Chicago were calling me crazy, even though Chicago has way more people fatally shot during average 3 weeks. All my attempts to argue that additional risk is minuscule got nowhere. We need to re-learn to make rational decisions about risks. Otherwise we will be constantly hiding under the table for any loud noise and destroy our economy, fun of life and long-term life satisfaction. My 2c.

kortilla 6y ago
Shootings in Chicago are not randomly spread across the population though. Most is gang violence and is relatively easy to avoid. The DC shooter was different because it was arbitrary across the population. It was no longer about “avoiding the bad neighborhoods” or “not crossing a drug dealer”. Covid is a little similar in that it’s a new class of risk (different group dying than do from heart disease and all of the other known risks). It also doesn’t help that people on the Internet are calling others murders for being a potential transmission vector.
- awinder 6y ago
  Also happened in the aftermath of 9/11 and the anthrax mailings which was a big thing in the dc-region, and involved targeting a school which again ups fear factor. Local economies at large were unaffected, everything is/was fine, life went on. People freak out and act economically differently and _have always and will always_ during catastrophes, no one is going to change that.

taneq 6y ago

Sadly, any interest I had in the topic has been overwhelmed by distaste for them letting me get halfway through the article before throwing up a paywall. If you want to charge for content, that's fine, but this kind of bait-and-switch is just rude.

twblalock 6y ago

The article cites the rapid changes to supply chains, particularly Walmart's, as a reason the economy kept going. What else is that, other than the mechanisms of a free market at work? The government didn't tell them how to run their supply chains. Nor did the government tell companies how to shift their workforces to remote work, they just did it, and they did it pretty well, even though some of them had never tried it before. Some companies even introduced remote work in March, before the government ordered any lockdowns! In doing these things, businesses have relied heavily on technology (also a product of the market) which enables far more people to productively work from home than would have been possible a few decades ago. Small, local businesses quickly pivoted to social media and online ordering to survive. Given all of that, how can the author say, with a straight face, "None of this has anything to do with the spontaneous interplay of individual economic units that economists like to talk about." It seems like exactly that.

js8 6y ago
It can be both. Government can decide (on behalf of the citizens) to shut down the economy, and yet let all the economic actors to deal with the consequences of that decision on their own. So while I agree that free market plays a role, I interpret the line to say that there is also a central decision of the government that organizes all this.
ajzinsbwbs 6y ago
Some companies (especially forward-thinking tech companies we care about on this forum) shifted to remote work quickly. Others fought tooth & nail. There are a lot of stories of companies abusing the rules about essential worker status to get office workers to come in. Government regulations have been an important part of the response to the virus. I think this is to be expected according to mainstream economics. The risk to the public is an externality and many companies will ignore it without government intervention. To the extent that the US response is failing, it’s largely due to insufficient government regulation (although some of it also includes dumb own-goals by our government that are orthogonal from a liberty-regulation axis).
geofft 6y ago
I don't think this article is primarily about free markets vs. government planning. It's about the ability of humans - any humans - to make conscious collective decisions about how the economy works in ways motivated by things other than finding profit, versus treating the economy as a mostly-uncontrollable force optimizing for what it optimizes for (the "invisible hand"). I think that's what the author means by "the spontaneous interplay of individual economic units" - that if a potential profit advantage exists, some rational actor will spring up to take advantage of it. The idea that this sort of thing happens reliably and consistently is behind theories like the efficient market hypothesis, for instance. There's little profit advantage in being the first company to shift to remote work or in proactively closing your coffee shop while there may still be a trickle of customers, but people did it. (For that matter, there's little profit advantage in being a videoconferencing service that has its average customer use the service occasionally suddenly use the service full-time for all its employees, and yet multiple such products of the market not only embraced it but built up their free offerings, too.) If your claim is that the free market isn't constrained to being motivated by profit and can decide, even (or especially) if not ordered by government, to accomplish some other goal - I think you have no real disagreement with the author. What the author is claiming is novel is that people know that this is true, now.

neonate 6y ago

https://archive.vn/OCTOk https://archive.vn/OCTOk

js8 6y ago

I am not sure what is there to wonder about. Change has always been possible. It's the elites in power who are conservative, claiming that there is no alternative, they want to (for the most part) keep their position. It's funny to read that Hayek compared parts of the economy to organs. I often use analogy of money being blood in human body, to illustrate that from the perspective of each individual cell, blood is a resource, but from the perspective of the whole body, blood is just a transport medium of which it can create any amount required. And accordingly, body can decide to vasoconstrict (shut down) certain organs in times of crisis. It is a collective decision, not a decision of an individual cell. So of course, you can shut down parts of the economy. You can also put those people in parts that shut down on a kind of helicopter money support. All those things have always been possible, it's just people were conditioned to think they are not.

twblalock 6y ago
There is a big difference between "possible for a few months" and "possible indefinitely". A lot of what we did during the lockdowns was never going to be sustainable. By the way, the "helicopter money" thing was proposed by Milton Friedman, a libertarian economist who was influenced by Hayek and who was highly critical of most forms of government intervention in the economy.
- fuvkthisguy 6y ago
  > There is a big difference between "possible for a few months" and "possible indefinitely". A lot of what we did during the lockdowns was never going to be sustainable. I would be interested to see an argument for this point, because I don't think it stands on its own.

mynegation 6y ago

> In fact, supply chains adapted and readjusted at extraordinary speed. Tell that to the shitshow named Canada Post. But seriously, while it is good to discuss what is possible and what might have changed to the better, it will be important for us to understand hidden long term consequences: medical complications of virus, sudden trauma of loss, depression as a result of lack of social interaction, fear of uncertainty, financial or medical, ballooned debt on all levels, while industries wiped out.

hyperborealis 6y ago

The demand shock prompted by the pandemic is hardly a suspension of capitalism. The lockdowns followed the combined decisions of individuals, per a Hayekian model. Government's mainly commanded what people were already doing themselves.

js8 6y ago
No. Individuals are less efficient in doing shut down than government, because of the https://en.wikipedia.org/wiki/Coordination_failure_(economics) https://en.wikipedia.org/wiki/Coordination_failure_(economic... . We can see that play out in practice, comparing how different nations dealt with the pandemic. But I do agree with the premise, government shut downs happened because people by and large wanted them, not because the government wanted to impose some random restrictions.

jhallenworld 6y ago

IMHO, the revolution is the quick fed and congressional response in terms of stimulus. The mindset allowing it was a very long time coming, going back to lessons learned from the great depression, the dropping of the gold standard, observations of Japan's lost decade, but more recently the observation that all of the quantitative easing from the 2008 crash did not lead to horrible inflation.

pochamago 6y ago

I feel like this article is simply premature. I think its headline is likely accurate, but all it can really do is cite the events we have been and are living through, not give any concrete suggestion of the consequences. I'm eager to see what kind of interesting theses economists will devise from studying this time period, but I don't think the article offers any in this moment.