1 00:00:15,356 --> 00:00:22,556 Speaker 1: Pushkin from Pushkin Industries. This is Deep Background, the show 2 00:00:22,596 --> 00:00:25,836 Speaker 1: where we explore the stories behind the stories in the news. 3 00:00:26,476 --> 00:00:31,636 Speaker 1: I'm Noah Feldman. We're deep into coronavirus world right now. 4 00:00:31,956 --> 00:00:34,596 Speaker 1: It's the only news story that anyone seems to be 5 00:00:34,636 --> 00:00:38,796 Speaker 1: interested in, and it's also obsessing most of us, myself included, 6 00:00:39,076 --> 00:00:42,436 Speaker 1: on a minute to minute basis. We spend a lot 7 00:00:42,476 --> 00:00:45,636 Speaker 1: of time so far on the show focusing on medical 8 00:00:45,676 --> 00:00:48,716 Speaker 1: aspects of the crisis, and that's I think entirely appropriate 9 00:00:48,756 --> 00:00:51,356 Speaker 1: given where we are in the cycle. But it's also 10 00:00:51,436 --> 00:00:53,996 Speaker 1: not too soon, I think, to start talking about the 11 00:00:54,076 --> 00:00:58,276 Speaker 1: economic consequences of what's happening and what's likely to happen. 12 00:00:58,596 --> 00:01:02,916 Speaker 1: And that's particularly pressing because Congress and the President have 13 00:01:02,956 --> 00:01:07,996 Speaker 1: agreed on a relief plan to address coronavirus one that 14 00:01:08,116 --> 00:01:12,436 Speaker 1: is intended to take a stab at slowing down the 15 00:01:12,476 --> 00:01:15,396 Speaker 1: harms economically that people might be facing in real time, 16 00:01:15,636 --> 00:01:19,236 Speaker 1: and also perhaps at softening the blow of recession that 17 00:01:19,396 --> 00:01:23,116 Speaker 1: seems to be headed our way. In order to make 18 00:01:23,196 --> 00:01:26,596 Speaker 1: some sense of what economists think about the set of 19 00:01:26,636 --> 00:01:29,636 Speaker 1: problems and how they can be solved, I knew I 20 00:01:29,676 --> 00:01:33,036 Speaker 1: wanted to talk to Professor Stephanie Stuntsheva of the Harvard 21 00:01:33,036 --> 00:01:37,596 Speaker 1: Economics Department. Fress or Stuntcheva is what economists call technically 22 00:01:38,116 --> 00:01:43,636 Speaker 1: a hot shot. She's extraordinary scholar, tenured pretty much right 23 00:01:43,676 --> 00:01:47,116 Speaker 1: away upon joining the Harvard University faculty on the French 24 00:01:47,116 --> 00:01:50,436 Speaker 1: Council of Economic Advisors. She's French, as you'll hear in 25 00:01:50,476 --> 00:01:53,356 Speaker 1: a moment from her accent, and all around one of 26 00:01:53,396 --> 00:01:56,316 Speaker 1: the most brilliant young economists in the United States by 27 00:01:56,316 --> 00:01:59,716 Speaker 1: common consensus. Also someone who's done work in the long 28 00:01:59,796 --> 00:02:04,916 Speaker 1: run on the consequences and effects of major government interventions 29 00:02:04,956 --> 00:02:10,396 Speaker 1: in the real world of economic reality. Stephanie, thank you 30 00:02:10,476 --> 00:02:14,756 Speaker 1: so much for agreeing to speak to me as we 31 00:02:14,796 --> 00:02:19,916 Speaker 1: watch Congress passing bipartisan legislation for relief in the context 32 00:02:19,956 --> 00:02:23,156 Speaker 1: of the coronavirus. I knew right away that you were 33 00:02:23,196 --> 00:02:25,756 Speaker 1: the person I wanted to talk to try to understand 34 00:02:26,236 --> 00:02:28,116 Speaker 1: how this is going to work and if it's going 35 00:02:28,156 --> 00:02:32,996 Speaker 1: to work. Because a lot of economists study macroeconomics and 36 00:02:33,156 --> 00:02:38,156 Speaker 1: the big picture, a lot study microeconomics and the individual decision, 37 00:02:38,516 --> 00:02:40,556 Speaker 1: but you're one of the people who does what everyone 38 00:02:40,556 --> 00:02:42,676 Speaker 1: else in the world things economists do, which is study 39 00:02:42,716 --> 00:02:45,996 Speaker 1: the relationship between the micro and the macro. So I'm 40 00:02:46,476 --> 00:02:48,236 Speaker 1: really thrilled that you're willing to do this, and I 41 00:02:48,236 --> 00:02:51,876 Speaker 1: want to start by just asking, how is this economic 42 00:02:52,236 --> 00:02:55,676 Speaker 1: crisis or shock different from the kinds of shocks that 43 00:02:55,756 --> 00:02:59,996 Speaker 1: were used to seeing. Yeah, thank you Noah for having 44 00:03:00,036 --> 00:03:05,076 Speaker 1: me on the show, and in this case, first to 45 00:03:05,156 --> 00:03:08,876 Speaker 1: preface it, it's obviously a huge human tragedy that's unfolding 46 00:03:08,956 --> 00:03:13,476 Speaker 1: right now, and many people are in a very precarious situation. 47 00:03:14,076 --> 00:03:17,596 Speaker 1: So that's that's already a very very different situation. But 48 00:03:17,916 --> 00:03:21,316 Speaker 1: you know, an ECON language, it's both a supply shock 49 00:03:21,396 --> 00:03:23,756 Speaker 1: and a demand side shock at the same time. So 50 00:03:24,196 --> 00:03:28,996 Speaker 1: this is a very very peculiar situation. Typically we have 51 00:03:29,156 --> 00:03:32,156 Speaker 1: mostly one or the other, and typically they're not as 52 00:03:32,236 --> 00:03:37,236 Speaker 1: extremely urgent as you know, a pandemic unfolding. So it's 53 00:03:37,276 --> 00:03:41,236 Speaker 1: not going to be a normal situation, and what follows 54 00:03:41,276 --> 00:03:45,796 Speaker 1: won't be a normal recession. So ECON textbooks don't really 55 00:03:45,836 --> 00:03:47,916 Speaker 1: cover how to deal with a you know, with a 56 00:03:47,916 --> 00:03:51,996 Speaker 1: fallout from a global pandemic. Speaking of the ECON textbooks, 57 00:03:52,716 --> 00:03:54,596 Speaker 1: when you say that it's both a supply shock and 58 00:03:54,716 --> 00:03:57,396 Speaker 1: a demand shock, do you mean that I'll try to 59 00:03:57,436 --> 00:04:01,716 Speaker 1: be the good freshman. Do you mean that the ordinary 60 00:04:01,756 --> 00:04:04,116 Speaker 1: people are not demanding goods and services the way they 61 00:04:04,156 --> 00:04:07,316 Speaker 1: usually would because they're staying home and businesses aren't in 62 00:04:07,356 --> 00:04:11,076 Speaker 1: a position to deliver those goods and services because they're 63 00:04:11,076 --> 00:04:15,036 Speaker 1: not operating. That's exactly right. So there are disruptions at 64 00:04:15,076 --> 00:04:18,676 Speaker 1: every level of production and at every level of consumption 65 00:04:18,716 --> 00:04:23,236 Speaker 1: and work. So because of the social distancing that's necessary 66 00:04:23,276 --> 00:04:25,636 Speaker 1: in order to limit the spread of the virus, you know, 67 00:04:25,716 --> 00:04:28,196 Speaker 1: people have to in a sense stay home and limit 68 00:04:28,796 --> 00:04:31,716 Speaker 1: the amount of economic activity they engage in, which means 69 00:04:31,756 --> 00:04:33,836 Speaker 1: we don't have the usual demand that we're used to. 70 00:04:34,396 --> 00:04:36,956 Speaker 1: At the same time, the whole work and supply chain 71 00:04:37,036 --> 00:04:40,156 Speaker 1: is disrupted as well as workers cannot or should not 72 00:04:40,196 --> 00:04:42,236 Speaker 1: be going to work. So in a sense, it's this 73 00:04:42,316 --> 00:04:45,956 Speaker 1: weird situation where we have to accept you know, economic 74 00:04:46,076 --> 00:04:48,076 Speaker 1: losses in the in the short run because they will 75 00:04:48,076 --> 00:04:50,836 Speaker 1: actually protect health. So the decline and activity right now 76 00:04:50,956 --> 00:04:55,036 Speaker 1: is not just it's not just unavoidable, it's also desired. 77 00:04:55,396 --> 00:04:57,836 Speaker 1: You know, we cannot just self quarantine and prevent the 78 00:04:57,956 --> 00:05:01,196 Speaker 1: virus from spreading and less activity declines. So the key 79 00:05:01,276 --> 00:05:04,156 Speaker 1: right now is really not to focus on these economic 80 00:05:04,196 --> 00:05:07,596 Speaker 1: costs which makes this unusual, but also really to try 81 00:05:07,596 --> 00:05:10,876 Speaker 1: to basically, I'll try to restimulate the economy, but try 82 00:05:10,876 --> 00:05:12,556 Speaker 1: to accept the fact that we need to shut down 83 00:05:12,636 --> 00:05:15,116 Speaker 1: for a little while. So the accepting of the shutting 84 00:05:15,116 --> 00:05:19,196 Speaker 1: down is itself a completely fascinating phenomenon. And a little 85 00:05:19,276 --> 00:05:21,076 Speaker 1: later in the conversation, I want to come back to 86 00:05:21,156 --> 00:05:24,356 Speaker 1: the question of how we know how much is a 87 00:05:24,396 --> 00:05:27,036 Speaker 1: good amount of shutting down to do. But before we 88 00:05:27,076 --> 00:05:29,556 Speaker 1: get there, I just want to hear a little bit 89 00:05:29,556 --> 00:05:34,316 Speaker 1: about the tools that economists do have for other situations 90 00:05:34,556 --> 00:05:38,956 Speaker 1: and how they might be borrowed into this situation. What 91 00:05:38,956 --> 00:05:40,876 Speaker 1: are the what are the tools that you think of 92 00:05:40,916 --> 00:05:45,076 Speaker 1: as having in your economist toolkit. So in an economist 93 00:05:45,076 --> 00:05:48,076 Speaker 1: tool kits, there's there's a lot of tools. There's all 94 00:05:48,116 --> 00:05:51,996 Speaker 1: sorts of you know, taxes and transfers in both directions, 95 00:05:51,996 --> 00:05:55,996 Speaker 1: so either tax cuts, tax increases, increase in transfers decrease 96 00:05:55,996 --> 00:06:00,556 Speaker 1: and transfers. There is monetary policy that can you affect 97 00:06:00,556 --> 00:06:03,236 Speaker 1: the supply of credit or the interest rate. There are 98 00:06:03,276 --> 00:06:07,676 Speaker 1: regulations that can shape how people will act or how 99 00:06:07,676 --> 00:06:10,636 Speaker 1: businesses will act on a day to day basis, and 100 00:06:10,676 --> 00:06:13,636 Speaker 1: so all of these are currently you know, to some 101 00:06:13,716 --> 00:06:17,476 Speaker 1: extent useful and should to some extent be applied. So 102 00:06:17,756 --> 00:06:22,396 Speaker 1: if we start from the immediate situation, the key is 103 00:06:22,436 --> 00:06:26,596 Speaker 1: basically some direct intervention of government on the public health side, 104 00:06:26,956 --> 00:06:29,436 Speaker 1: so a bit of a whatever it takes approach to 105 00:06:29,556 --> 00:06:34,196 Speaker 1: increase hospital capacity, personnel, production of the necessary equipment like 106 00:06:34,276 --> 00:06:37,916 Speaker 1: respirator's ventilators. So this that requires some sort of direct 107 00:06:38,716 --> 00:06:44,156 Speaker 1: intervention and in a sense industrial policy perhaps that we're 108 00:06:44,196 --> 00:06:46,836 Speaker 1: not that we haven't been used to for quite a while. 109 00:06:47,836 --> 00:06:50,956 Speaker 1: It will require direct intervention and lots of funding for 110 00:06:51,116 --> 00:06:54,876 Speaker 1: developing vaccines or anti virals, and so it's really it's 111 00:06:54,876 --> 00:06:58,036 Speaker 1: really a whole, a whole new world here in terms 112 00:06:58,076 --> 00:07:01,236 Speaker 1: of what is needed for that. And in that sense, 113 00:07:01,236 --> 00:07:04,036 Speaker 1: it's not at all the time to worry about government's costs, 114 00:07:04,156 --> 00:07:06,916 Speaker 1: about government's debt and deficits, because the less we act now, 115 00:07:06,996 --> 00:07:09,396 Speaker 1: the worst it will get later. If you want, like 116 00:07:09,476 --> 00:07:11,316 Speaker 1: if you think of a household or family, you know 117 00:07:11,356 --> 00:07:13,796 Speaker 1: it's exactly for such bad times and health emergencies that 118 00:07:13,836 --> 00:07:16,676 Speaker 1: we save money typically, So saying for the government, this 119 00:07:16,756 --> 00:07:19,836 Speaker 1: is why we save money. It's for these emergency situations 120 00:07:19,876 --> 00:07:25,396 Speaker 1: now and then we have other tools which are on 121 00:07:25,516 --> 00:07:30,596 Speaker 1: the ensuring the supply of essential services side. Uh. You know, 122 00:07:30,676 --> 00:07:32,876 Speaker 1: there's there's some things that still need to be done 123 00:07:33,116 --> 00:07:35,796 Speaker 1: for people to have food and you know, clean water 124 00:07:35,996 --> 00:07:39,116 Speaker 1: and sanitation, so those still need to work. And for those, 125 00:07:39,156 --> 00:07:41,156 Speaker 1: you know, direct regulation of how it should look in 126 00:07:41,196 --> 00:07:44,476 Speaker 1: a workplace, what amount of distance is safe, what essential 127 00:07:44,516 --> 00:07:47,436 Speaker 1: businesses should keep doing. Uh. Those are also tools that 128 00:07:47,476 --> 00:07:50,716 Speaker 1: can be applied here. And one thing that we notice 129 00:07:50,756 --> 00:07:53,396 Speaker 1: the past days, which is again very unusual, is that 130 00:07:53,436 --> 00:07:56,236 Speaker 1: perhaps the price mechanism doesn't work very well. You saw 131 00:07:56,276 --> 00:08:01,276 Speaker 1: perhaps the Amazon sanitizer prices UM that's spiked up, and 132 00:08:01,316 --> 00:08:05,236 Speaker 1: so perhaps some amount of rationing imposing that there's a 133 00:08:05,236 --> 00:08:06,876 Speaker 1: limit on what you can buy at once, so that 134 00:08:06,916 --> 00:08:10,156 Speaker 1: everybody gets some basic supply. Those who another you know, 135 00:08:10,156 --> 00:08:13,356 Speaker 1: another instrument that the government may want to apply. And 136 00:08:13,356 --> 00:08:16,556 Speaker 1: then the final is perhaps more standard. It's what you 137 00:08:16,596 --> 00:08:19,676 Speaker 1: alluded to initially, and when we have a perhaps more 138 00:08:19,716 --> 00:08:22,596 Speaker 1: standard recession, which would be to support you know, the 139 00:08:22,676 --> 00:08:25,876 Speaker 1: demand on both the household side and maintain businesses alive 140 00:08:26,636 --> 00:08:30,956 Speaker 1: while this big shock passes UM. Because you know, the 141 00:08:30,996 --> 00:08:32,996 Speaker 1: health shock is not the only shock that is a 142 00:08:33,036 --> 00:08:36,156 Speaker 1: threat here. It is the most immediate but letting people 143 00:08:36,196 --> 00:08:41,196 Speaker 1: slide into poverty into unemployment can be you know, disastrous 144 00:08:41,196 --> 00:08:44,556 Speaker 1: and very detrimental and carry a huge human toll that 145 00:08:44,676 --> 00:08:46,636 Speaker 1: we also want to avoid. So we want to also 146 00:08:46,676 --> 00:08:49,156 Speaker 1: flatten the recession curve in a sense, not just not 147 00:08:49,236 --> 00:08:52,596 Speaker 1: just the pandemic curve. So there's a range of tools 148 00:08:52,596 --> 00:08:54,356 Speaker 1: and all of these that we can that we can apply. 149 00:08:55,076 --> 00:08:57,836 Speaker 1: So let's take it in two parts. Let's start with 150 00:08:58,476 --> 00:09:00,956 Speaker 1: what you might call you call them, I think old 151 00:09:00,996 --> 00:09:04,796 Speaker 1: fashioned interventions, and I think of these as you know, 152 00:09:04,876 --> 00:09:08,996 Speaker 1: quasi autocratic interventions, where the government says, you know, company, 153 00:09:09,156 --> 00:09:13,556 Speaker 1: you must now devote yourself to producing this particular vaccine, 154 00:09:13,796 --> 00:09:18,316 Speaker 1: or you know you factory you must make these medical masks. 155 00:09:18,996 --> 00:09:24,276 Speaker 1: Industrial policy of the old fashioned top down sort. Prices 156 00:09:24,516 --> 00:09:28,756 Speaker 1: are secondary. And then alongside that comes the emergency version 157 00:09:28,836 --> 00:09:32,516 Speaker 1: of the same, which includes, as you point out, rationing, 158 00:09:32,596 --> 00:09:35,956 Speaker 1: and I guess could also include price limits, right. I mean, 159 00:09:36,476 --> 00:09:39,196 Speaker 1: in this theory, the government could tell Amazon you can't 160 00:09:39,276 --> 00:09:42,276 Speaker 1: charge five hundred dollars for a bottle of hand sanitizer, 161 00:09:42,316 --> 00:09:45,356 Speaker 1: or you can't charge thirty dollars for a tube of 162 00:09:46,396 --> 00:09:51,356 Speaker 1: toilet tissue. So are those I mean, am I combining 163 00:09:51,356 --> 00:09:53,196 Speaker 1: things that shouldn't be combined. There or they all seem 164 00:09:53,196 --> 00:09:55,196 Speaker 1: to have in common to the lay person the idea 165 00:09:55,236 --> 00:09:58,796 Speaker 1: of determination from above, and of course that raises the 166 00:09:58,876 --> 00:10:00,796 Speaker 1: question of do we trust the people above to do 167 00:10:00,836 --> 00:10:04,956 Speaker 1: it right? Absolutely, this is again this is very unusual. 168 00:10:04,996 --> 00:10:09,596 Speaker 1: We don't often resort to such kind of emergency emergency actions, 169 00:10:09,876 --> 00:10:11,796 Speaker 1: but we see it right now in all countries being 170 00:10:11,876 --> 00:10:16,236 Speaker 1: rolled out basically essentially forcing people to stay at home, 171 00:10:16,836 --> 00:10:21,676 Speaker 1: to limit their interactions, forcing companies to impose some different 172 00:10:21,756 --> 00:10:25,596 Speaker 1: rules of working, whether it's remote work or safe distances, etc. So, yes, 173 00:10:25,676 --> 00:10:28,796 Speaker 1: this is very unusual, and it's because of the emergency 174 00:10:28,836 --> 00:10:33,676 Speaker 1: of the virus spreading. But there are more, there are 175 00:10:33,676 --> 00:10:36,236 Speaker 1: more standard strategies that should be combined as well, and 176 00:10:36,276 --> 00:10:40,316 Speaker 1: that's what I would call really the the econ interventions 177 00:10:40,316 --> 00:10:42,996 Speaker 1: per se. So all these things about insuring the health, 178 00:10:43,356 --> 00:10:45,956 Speaker 1: polic health and the direct restrictions, they go a bit 179 00:10:45,996 --> 00:10:50,436 Speaker 1: beyond just basic economics. But now the pure economic interventions 180 00:10:50,476 --> 00:10:53,596 Speaker 1: they also come in several in several forms. So the 181 00:10:53,676 --> 00:10:57,996 Speaker 1: first one is already alluded to. It is to already 182 00:10:58,036 --> 00:11:02,196 Speaker 1: accept that some economic classes which will actually be necessary 183 00:11:02,236 --> 00:11:05,836 Speaker 1: to protect health right now, and you know, we cannot 184 00:11:05,836 --> 00:11:09,676 Speaker 1: totally totally ignore the economic costs, but in the short run, 185 00:11:09,716 --> 00:11:12,676 Speaker 1: we just need to limit the health the health impacts. 186 00:11:12,716 --> 00:11:15,396 Speaker 1: And what we're trying to do at the same time 187 00:11:15,716 --> 00:11:18,396 Speaker 1: is not to restimulate the economy. So that's what I'm saying. 188 00:11:18,436 --> 00:11:21,196 Speaker 1: It's not a standard recession where we're trying to re 189 00:11:21,996 --> 00:11:26,316 Speaker 1: you know, recondle the economy's activity, but whether we're trying 190 00:11:26,316 --> 00:11:28,236 Speaker 1: to plug the holes in the budgets of the most 191 00:11:28,276 --> 00:11:32,476 Speaker 1: vulnerable households and businesses. And the first thing that this 192 00:11:32,516 --> 00:11:36,076 Speaker 1: will imply is to protect basically our productive capacity. So 193 00:11:36,196 --> 00:11:38,716 Speaker 1: when the risk recedes and when we can actually start 194 00:11:38,996 --> 00:11:41,676 Speaker 1: going out again and producing again, that it's ready to go. 195 00:11:42,076 --> 00:11:44,236 Speaker 1: So that's not obvious. It might sound obvious that one 196 00:11:44,316 --> 00:11:46,356 Speaker 1: day we can turn the lights off in the factory, 197 00:11:46,436 --> 00:11:48,796 Speaker 1: the next day we can restart, but that's not quite 198 00:11:48,796 --> 00:11:51,636 Speaker 1: true because we have to avoid a temporary shock from 199 00:11:51,636 --> 00:11:55,436 Speaker 1: becoming permanent. You know, if businesses cannot bridge this period, 200 00:11:55,636 --> 00:11:58,836 Speaker 1: they can go out of business. If workers cannot sustain 201 00:11:58,876 --> 00:12:01,476 Speaker 1: themselves over that period, that will be terrible for them 202 00:12:01,516 --> 00:12:04,316 Speaker 1: trying to find jobs again later. So the bridging here 203 00:12:04,476 --> 00:12:07,116 Speaker 1: is very important, and that's what I mean by social insurance. 204 00:12:08,276 --> 00:12:10,916 Speaker 1: So this happened at several levels. One is to ensure 205 00:12:10,956 --> 00:12:13,996 Speaker 1: that workers actually remain paid, and countries are thinking of 206 00:12:14,036 --> 00:12:17,436 Speaker 1: different policies here. One would be to strength and layoff 207 00:12:17,436 --> 00:12:20,476 Speaker 1: and recall policies so that you know, workers can temporarily 208 00:12:20,636 --> 00:12:23,556 Speaker 1: go home, be paid some fraction or full salary and 209 00:12:23,596 --> 00:12:26,196 Speaker 1: be able to come back easily. Ensure that firms can 210 00:12:26,196 --> 00:12:29,716 Speaker 1: weather the storm with easier credit even you know, imagining 211 00:12:29,756 --> 00:12:33,556 Speaker 1: waving loans or giving direct assistance where needed in general, 212 00:12:33,556 --> 00:12:36,156 Speaker 1: you know, keeping credit lines open for those that simply 213 00:12:36,156 --> 00:12:38,516 Speaker 1: cannot survive in the short run, but that would do 214 00:12:38,636 --> 00:12:41,076 Speaker 1: very well in the medium run. That's the businesses we 215 00:12:41,116 --> 00:12:43,796 Speaker 1: don't want to go out of business. And then support 216 00:12:43,836 --> 00:12:46,476 Speaker 1: the financial system to some extent too, so that you 217 00:12:46,516 --> 00:12:48,916 Speaker 1: know there is credit where needed and money where needed. 218 00:12:49,436 --> 00:12:52,796 Speaker 1: And then on the on the you know, household side, 219 00:12:53,236 --> 00:12:56,356 Speaker 1: extremely important to support, you know, support the ability of 220 00:12:56,356 --> 00:12:59,516 Speaker 1: households to have to have their budgets not completely decimated 221 00:12:59,556 --> 00:13:02,356 Speaker 1: so that when the economy goes back to full capacity 222 00:13:02,716 --> 00:13:06,276 Speaker 1: that they actually can you know, restimulate demand. So here 223 00:13:06,276 --> 00:13:10,236 Speaker 1: again it's mostly social insurance because they're lots of new needs. 224 00:13:10,796 --> 00:13:13,556 Speaker 1: There's a need to bridge this very strange period, and 225 00:13:13,636 --> 00:13:16,956 Speaker 1: there will be extra health spenning that will require households 226 00:13:16,956 --> 00:13:19,796 Speaker 1: to have extra money. And one important thing to note 227 00:13:19,796 --> 00:13:22,396 Speaker 1: here is that it's a situation that's full of what 228 00:13:22,436 --> 00:13:27,436 Speaker 1: economists call externalities, which means something I do affects others 229 00:13:27,556 --> 00:13:30,156 Speaker 1: as well. So if I go out and I'm sick, 230 00:13:30,196 --> 00:13:34,916 Speaker 1: I'm going to hurt others. If I cannot do my job, 231 00:13:35,116 --> 00:13:37,476 Speaker 1: for instance, as a as a cleaner, it's going to 232 00:13:37,476 --> 00:13:41,396 Speaker 1: affect others. So there's lots of externalities here. So even 233 00:13:41,436 --> 00:13:45,716 Speaker 1: for people who don't necessarily worry too much about inequality 234 00:13:45,756 --> 00:13:50,196 Speaker 1: or social inequities, helping people over their current economic difficulties 235 00:13:50,596 --> 00:13:53,236 Speaker 1: is extremely important because it will keep people at home 236 00:13:53,236 --> 00:13:54,916 Speaker 1: where they should be, it will reduce the spread of 237 00:13:54,916 --> 00:13:57,676 Speaker 1: the virus, it will help doing essential jobs, so to 238 00:13:57,756 --> 00:14:01,276 Speaker 1: actually help everyone. So they're very strong efficiency arguments for 239 00:14:01,396 --> 00:14:05,276 Speaker 1: doing that. So you know, there's lots of packages that 240 00:14:05,316 --> 00:14:08,116 Speaker 1: have been proposed here which all make some sense. One 241 00:14:08,236 --> 00:14:11,916 Speaker 1: is to have paid six leave, which is also very 242 00:14:11,916 --> 00:14:15,396 Speaker 1: complementary to the pure public health intervention making people stay 243 00:14:15,436 --> 00:14:19,796 Speaker 1: at home. Unemployment insurance that should be given out much 244 00:14:19,836 --> 00:14:24,756 Speaker 1: more leniently and much faster even partial unemployment insurance, food support, 245 00:14:25,436 --> 00:14:28,676 Speaker 1: and you know, any safety net measure that can be 246 00:14:28,796 --> 00:14:32,276 Speaker 1: much much more relaxed and generous. At the moment. What 247 00:14:32,596 --> 00:14:36,316 Speaker 1: is tough is that there's a very quick need for action, 248 00:14:37,316 --> 00:14:40,756 Speaker 1: and that's why some people have suggested to not think 249 00:14:40,756 --> 00:14:43,836 Speaker 1: too much and worry too much about who exactly needs 250 00:14:43,836 --> 00:14:46,436 Speaker 1: help right now, but to go a bit all out 251 00:14:46,516 --> 00:14:51,036 Speaker 1: and give basically a lumpsom transfer, something like a universal 252 00:14:51,036 --> 00:14:56,076 Speaker 1: basic income immediately, like sending every American a X dollar 253 00:14:56,236 --> 00:14:59,556 Speaker 1: check right now, perhaps more for households with kids and 254 00:14:59,636 --> 00:15:04,516 Speaker 1: things like that. And that's an unusual situation again, and 255 00:15:05,036 --> 00:15:07,156 Speaker 1: if it is very difficult to see who needs it, 256 00:15:07,716 --> 00:15:11,156 Speaker 1: time is very precious, so that sense, it could make 257 00:15:11,236 --> 00:15:15,276 Speaker 1: sense in this situation to just try to maintain households 258 00:15:15,276 --> 00:15:18,996 Speaker 1: budgets and not worry excessively about the debt and deficits 259 00:15:18,996 --> 00:15:21,876 Speaker 1: that's built up. But it's of course a very difficult 260 00:15:21,916 --> 00:15:26,236 Speaker 1: decision and has to be has to be discussed very carefully, 261 00:15:26,356 --> 00:15:29,236 Speaker 1: because there is absolutely no perfect magic bullet here that 262 00:15:29,316 --> 00:15:32,876 Speaker 1: will save us at no cost. So writing a check 263 00:15:32,916 --> 00:15:35,996 Speaker 1: to everybody is obviously one of the options. And our 264 00:15:36,036 --> 00:15:38,996 Speaker 1: colleague Jason Furman in the AT the Kennedy School has 265 00:15:39,036 --> 00:15:43,036 Speaker 1: been recommending that for a little while now. Before we 266 00:15:43,076 --> 00:15:46,276 Speaker 1: get there, though, it's worth checking into what Congress has 267 00:15:46,276 --> 00:15:48,196 Speaker 1: done and trying to see if it matches what you're 268 00:15:48,276 --> 00:15:51,316 Speaker 1: what you're saying, And my instinct from listening to you 269 00:15:51,396 --> 00:15:53,836 Speaker 1: is that it doesn't. So you know, there was an 270 00:15:53,956 --> 00:15:56,676 Speaker 1: article in The New York Times published by the Editorial 271 00:15:56,676 --> 00:16:01,156 Speaker 1: Board so an editorial arguing that the congressional plan really 272 00:16:01,236 --> 00:16:04,396 Speaker 1: doesn't cover nearly eighty percent of Americans with respect to 273 00:16:04,436 --> 00:16:07,156 Speaker 1: sick leave because it has an exemption for companies with 274 00:16:07,196 --> 00:16:09,676 Speaker 1: more than five hundred employees, which a little more than 275 00:16:09,716 --> 00:16:12,796 Speaker 1: half the economy, a little more of half of American workers. 276 00:16:12,796 --> 00:16:15,396 Speaker 1: That it has another exemption for companies with fewer than 277 00:16:15,436 --> 00:16:19,556 Speaker 1: fifty workers, and that's apparently nearly another quarter of the 278 00:16:20,036 --> 00:16:22,396 Speaker 1: workers in the country. And the upshot is that we 279 00:16:22,436 --> 00:16:26,316 Speaker 1: don't really have in place the kind of social insurance 280 00:16:26,356 --> 00:16:29,276 Speaker 1: model that you're describing, even before we get to handing 281 00:16:29,276 --> 00:16:31,836 Speaker 1: out cash to people. Am I am I getting that right? 282 00:16:31,916 --> 00:16:36,036 Speaker 1: That that would be really inadequate in your account, there 283 00:16:36,076 --> 00:16:39,396 Speaker 1: are a lot of constraints on policymakers given this very 284 00:16:39,476 --> 00:16:44,236 Speaker 1: unusual situation, So drastic action is very tough, but many 285 00:16:44,276 --> 00:16:47,716 Speaker 1: countries have taken it, and for instance, Germany announced a 286 00:16:47,796 --> 00:16:51,636 Speaker 1: very sweeping plan, which was almost a surprise given that 287 00:16:52,196 --> 00:16:55,956 Speaker 1: Germany has been in the past years, you know, advocating 288 00:16:55,996 --> 00:16:58,396 Speaker 1: a lot of a lot of very conservative fiscal policy. 289 00:16:58,476 --> 00:17:00,756 Speaker 1: But it seems like they did save their you know, 290 00:17:00,756 --> 00:17:04,196 Speaker 1: their cartridges for such an extreme situation and giving a 291 00:17:04,236 --> 00:17:08,076 Speaker 1: sense that in this extreme situation, if you have to 292 00:17:08,076 --> 00:17:11,956 Speaker 1: stay at home, if you are lacking you know, necessities, 293 00:17:12,276 --> 00:17:15,356 Speaker 1: they will be provided by the garment. Giving sweeping, you know, 294 00:17:16,236 --> 00:17:21,276 Speaker 1: sweeping generous insurance to you and tiding over private small 295 00:17:21,276 --> 00:17:26,116 Speaker 1: businesses that cannot survive seems quite quite critical. It's critical, 296 00:17:26,156 --> 00:17:28,796 Speaker 1: of course, to save lives in the short run, it's 297 00:17:28,836 --> 00:17:32,116 Speaker 1: also critical to you know, damn the blow that will 298 00:17:32,116 --> 00:17:35,676 Speaker 1: happen to the economy, and that can you know, make 299 00:17:35,716 --> 00:17:39,076 Speaker 1: the pain last much longer. As I said, you know, 300 00:17:39,356 --> 00:17:44,356 Speaker 1: protecting the productive capacity is important and entails not letting 301 00:17:44,396 --> 00:17:48,276 Speaker 1: businesses die which could have been surviving well, not breaking 302 00:17:48,316 --> 00:17:51,156 Speaker 1: employment relationships that then will be very costly to restore. 303 00:17:51,516 --> 00:17:54,196 Speaker 1: So we can soften the blow by acting more generously 304 00:17:54,276 --> 00:17:59,116 Speaker 1: now and saving you know, resources on this later. If 305 00:17:59,156 --> 00:18:01,956 Speaker 1: we don't act enough. Now we're going to untie all 306 00:18:01,996 --> 00:18:05,836 Speaker 1: these economic links that take a lot of time to form. 307 00:18:06,196 --> 00:18:08,876 Speaker 1: We're going to push many people in very precarious situations 308 00:18:09,116 --> 00:18:11,476 Speaker 1: to have long lasting effects, and we're going to decimate 309 00:18:11,516 --> 00:18:14,436 Speaker 1: businesses which should have survived, and that will make the 310 00:18:14,476 --> 00:18:18,636 Speaker 1: following recession potentially way costlier than the funds we may 311 00:18:18,716 --> 00:18:21,596 Speaker 1: spend now to soften the blow. So I hear you 312 00:18:21,636 --> 00:18:26,196 Speaker 1: saying that there are really two distinct advantages to both 313 00:18:26,236 --> 00:18:28,836 Speaker 1: to the social insurance model and to cash transfers. One 314 00:18:28,996 --> 00:18:31,996 Speaker 1: is to alleviate immediate short term suffering and make sure 315 00:18:32,036 --> 00:18:35,076 Speaker 1: people have enough, and the second is to cushion a 316 00:18:35,076 --> 00:18:38,876 Speaker 1: little bit the blow. And in this respect of the 317 00:18:38,916 --> 00:18:42,076 Speaker 1: possibility of going deeper and deeper into recession, I'm wondering, 318 00:18:42,076 --> 00:18:44,756 Speaker 1: when it comes to a one time cash transfer, is 319 00:18:44,756 --> 00:18:47,236 Speaker 1: it more about trying to help people in the short run, 320 00:18:47,276 --> 00:18:49,116 Speaker 1: because it seems like that would run out pretty quickly 321 00:18:49,156 --> 00:18:51,916 Speaker 1: for a lot of people, or is it more about 322 00:18:51,996 --> 00:18:55,156 Speaker 1: giving people something that would enable some degree of stimulus 323 00:18:55,556 --> 00:18:57,836 Speaker 1: going forward when people are able to go back to 324 00:18:57,836 --> 00:19:00,556 Speaker 1: work and the economy is start starting to get rolling again. 325 00:19:00,556 --> 00:19:02,356 Speaker 1: And that might go to the question of the timing 326 00:19:02,396 --> 00:19:06,636 Speaker 1: of a cash payment like that. Yeah, I think in 327 00:19:06,676 --> 00:19:09,556 Speaker 1: the short run the most important is to just as 328 00:19:09,556 --> 00:19:12,836 Speaker 1: I said, plug plug the holes and people's budget constraints. 329 00:19:12,836 --> 00:19:15,156 Speaker 1: So people will suddenly not be able to get income 330 00:19:15,156 --> 00:19:17,756 Speaker 1: because they have to stay at home. So whether it's 331 00:19:18,196 --> 00:19:21,196 Speaker 1: you know, paid sick leave or letting them get a 332 00:19:21,316 --> 00:19:24,916 Speaker 1: fraction of their salary again, whether we call it unemployment insurance, 333 00:19:24,956 --> 00:19:27,836 Speaker 1: whether we give some cash transfer, food support, any other 334 00:19:27,876 --> 00:19:31,156 Speaker 1: safety net measures, those are extremely critical in the short run. 335 00:19:31,196 --> 00:19:34,756 Speaker 1: And it's not about stimulating aggregate demand or the economy again, 336 00:19:35,716 --> 00:19:39,076 Speaker 1: that will wait for later. And then later, you know, 337 00:19:39,596 --> 00:19:42,796 Speaker 1: the textbooks can be applied again in terms of do 338 00:19:42,876 --> 00:19:45,676 Speaker 1: we want to give more tax cuts at this level 339 00:19:45,676 --> 00:19:47,476 Speaker 1: of income or at that level of income. Do we 340 00:19:47,476 --> 00:19:48,996 Speaker 1: want to give a bit more transfers here, a bit 341 00:19:49,036 --> 00:19:52,756 Speaker 1: less transfers here, What do we want to do unemployment insurance? 342 00:19:53,156 --> 00:19:57,676 Speaker 1: That part will be a different discussion right now. In 343 00:19:57,716 --> 00:20:00,316 Speaker 1: the short run, any hole that can be plugged should 344 00:20:00,356 --> 00:20:04,676 Speaker 1: be plugged to help people bridge this very difficult period. 345 00:20:05,116 --> 00:20:08,916 Speaker 1: You know, when a country is in bad recession, not 346 00:20:09,236 --> 00:20:11,516 Speaker 1: because of an external shock like this, but because of 347 00:20:11,676 --> 00:20:14,116 Speaker 1: something more fundamental to the economic cycle, or even in 348 00:20:14,116 --> 00:20:17,316 Speaker 1: depression as a result of the economic cycle, it can 349 00:20:17,356 --> 00:20:20,236 Speaker 1: be really slow and painful to grow out of it. 350 00:20:21,076 --> 00:20:24,836 Speaker 1: In this instance, presumably when this is over, although we'll 351 00:20:24,836 --> 00:20:26,916 Speaker 1: still be worried about our future in which this could 352 00:20:26,916 --> 00:20:30,556 Speaker 1: happen more frequently. Confidence, I would think would come back 353 00:20:30,636 --> 00:20:33,956 Speaker 1: pretty quickly because people will be able to remember. You 354 00:20:34,116 --> 00:20:36,396 Speaker 1: won't be years from now, so people will be able 355 00:20:36,436 --> 00:20:39,676 Speaker 1: to remember what it was like before, and they should, 356 00:20:39,716 --> 00:20:42,116 Speaker 1: in principle be able to get back to the confidence 357 00:20:42,196 --> 00:20:44,996 Speaker 1: levels that they had previously obviously updated for the reality 358 00:20:45,036 --> 00:20:47,836 Speaker 1: that there can indeed be a pandemic that crunches us. 359 00:20:48,316 --> 00:20:51,396 Speaker 1: Does that sound like, oh, hopelessly optimistic way of thinking 360 00:20:51,436 --> 00:20:54,556 Speaker 1: about it. Let's say it's the more optimistic way to 361 00:20:54,556 --> 00:20:58,316 Speaker 1: think about it, which is possible if nothing else happens 362 00:20:58,316 --> 00:21:03,516 Speaker 1: in the economy, and if we manage to contain this virus, 363 00:21:04,036 --> 00:21:05,996 Speaker 1: and if we take all the actions to often the 364 00:21:05,996 --> 00:21:08,916 Speaker 1: blow that we spoke about previously, So if we managed 365 00:21:08,916 --> 00:21:12,036 Speaker 1: to not turn what should be a temporary shock, although 366 00:21:12,036 --> 00:21:14,956 Speaker 1: a very severe one, into a more permanent one because 367 00:21:14,956 --> 00:21:19,436 Speaker 1: we untie all possible economic relationships and break down businesses 368 00:21:19,476 --> 00:21:22,556 Speaker 1: and many parts of the economy, it is possible in 369 00:21:22,636 --> 00:21:27,156 Speaker 1: principle that we could jump back to a situation where 370 00:21:27,156 --> 00:21:30,756 Speaker 1: things are better. But how long this process will take 371 00:21:30,836 --> 00:21:32,876 Speaker 1: right now and how much we will actually destroy of 372 00:21:32,916 --> 00:21:36,436 Speaker 1: economic activity is very much up in the air. The 373 00:21:36,516 --> 00:21:39,556 Speaker 1: point that you keep making about untying economic relations is 374 00:21:39,596 --> 00:21:42,516 Speaker 1: it really seems like a really profound one. And the 375 00:21:42,596 --> 00:21:44,556 Speaker 1: metaphor that keeps coming into my mind is sort of 376 00:21:44,556 --> 00:21:46,516 Speaker 1: like a fall of Rome, a situation, you know, you 377 00:21:46,596 --> 00:21:50,436 Speaker 1: have a very developed economy and it's got lots of 378 00:21:50,476 --> 00:21:54,036 Speaker 1: people doing complex things in relationship to each other, and 379 00:21:54,076 --> 00:21:56,316 Speaker 1: then there's an external shock like the fall of Rome, 380 00:21:56,756 --> 00:22:00,196 Speaker 1: and then instead of everyone bouncing back and rebuilding Rome, 381 00:22:00,316 --> 00:22:03,276 Speaker 1: you get something like the dark Ages where people can't 382 00:22:03,316 --> 00:22:06,516 Speaker 1: really rebuild those those kinds of ties. And maybe that's 383 00:22:06,516 --> 00:22:08,476 Speaker 1: too extreme a way of thinking about it, but is 384 00:22:08,476 --> 00:22:10,396 Speaker 1: that sort of what you're describing when you talk about 385 00:22:10,396 --> 00:22:13,476 Speaker 1: the breaking of economic relations? You mean that I lose 386 00:22:13,516 --> 00:22:17,596 Speaker 1: my job, and then I stop shopping at the corner store, 387 00:22:17,676 --> 00:22:20,516 Speaker 1: and then the corner store stops getting supplies from the 388 00:22:20,516 --> 00:22:23,116 Speaker 1: place which it orders from, and then none of us 389 00:22:23,156 --> 00:22:27,436 Speaker 1: can exactly rebuild that overnight. We have to slowly, gradually 390 00:22:27,756 --> 00:22:31,876 Speaker 1: each redevelop each of those links exactly. There's so many 391 00:22:31,916 --> 00:22:38,916 Speaker 1: links between workers and companies, between customers and suppliers, especially 392 00:22:38,956 --> 00:22:42,156 Speaker 1: also in the very complex supply chains we have right now. 393 00:22:42,516 --> 00:22:46,836 Speaker 1: So all these links are there and arnstorm sort of equilibrium, 394 00:22:47,076 --> 00:22:49,716 Speaker 1: and once you start breaking them down, it's going to 395 00:22:49,756 --> 00:22:52,716 Speaker 1: simply take time to rebuild. It's not as smooth as 396 00:22:52,756 --> 00:22:56,156 Speaker 1: simply going back to the way things were at once. 397 00:22:56,636 --> 00:22:58,716 Speaker 1: These are the things people mean when they say we 398 00:22:58,756 --> 00:23:02,116 Speaker 1: need to maintain the productive capacity. We need to avoid 399 00:23:02,196 --> 00:23:06,836 Speaker 1: destroying links in the economy which are productive and should 400 00:23:06,876 --> 00:23:10,196 Speaker 1: normally be saved and are simply suffering in the short run, 401 00:23:10,236 --> 00:23:13,116 Speaker 1: and we need to bridge that short run. It seems 402 00:23:13,156 --> 00:23:15,756 Speaker 1: to me like we're going to need economists in this 403 00:23:16,236 --> 00:23:20,476 Speaker 1: next phase of dealing with Corona just about as much 404 00:23:20,556 --> 00:23:23,476 Speaker 1: as we need physicians in the first phase. I mean, 405 00:23:23,636 --> 00:23:25,676 Speaker 1: obviously the physicians are the ones who are dealing in 406 00:23:25,716 --> 00:23:29,876 Speaker 1: the immediate term with people's health and lives, but people's 407 00:23:29,916 --> 00:23:32,636 Speaker 1: health and well being in the long run really does 408 00:23:32,716 --> 00:23:35,436 Speaker 1: depend on being in a functioning economy. I mean, we 409 00:23:35,476 --> 00:23:39,316 Speaker 1: know that in a down economy, more people will become sick, 410 00:23:39,396 --> 00:23:41,796 Speaker 1: more people will die because there will be poverty. Assuming 411 00:23:41,796 --> 00:23:44,236 Speaker 1: we don't have a perfect social insurance system, and we 412 00:23:44,276 --> 00:23:47,196 Speaker 1: in the United States definitely don't. So it seems as 413 00:23:47,236 --> 00:23:50,196 Speaker 1: though the role of the economists as sort of physicians 414 00:23:50,196 --> 00:23:53,876 Speaker 1: of the economy is going to be absolutely central here. Yes, 415 00:23:54,196 --> 00:23:58,036 Speaker 1: very soon. The economic costs on people who fall into poverty, 416 00:23:58,076 --> 00:24:01,236 Speaker 1: who have no more income to take care of their 417 00:24:01,796 --> 00:24:04,796 Speaker 1: of their basic needs for just basic necessities, take care 418 00:24:04,796 --> 00:24:07,316 Speaker 1: of their health in a very basic way, that's going 419 00:24:07,356 --> 00:24:11,756 Speaker 1: to have gigantic costs and antic human costs, so those 420 00:24:12,156 --> 00:24:15,636 Speaker 1: we also need to avoid. It's hard to rank things 421 00:24:16,956 --> 00:24:19,956 Speaker 1: because every every situation sounds very bad, whether it is 422 00:24:19,996 --> 00:24:21,436 Speaker 1: that your sick, whether it is that you have nothing 423 00:24:21,436 --> 00:24:24,756 Speaker 1: to eat, or that you lose you know, your shelter, 424 00:24:24,956 --> 00:24:27,756 Speaker 1: or your your your job. All of these are bad. 425 00:24:27,876 --> 00:24:29,796 Speaker 1: So there will be a role for economists for sure 426 00:24:29,876 --> 00:24:32,436 Speaker 1: to ensure that the poverty doesn't take a huge tool 427 00:24:32,476 --> 00:24:46,196 Speaker 1: as well. We'll be back in just a moment. Are 428 00:24:46,236 --> 00:24:48,716 Speaker 1: there any historic examples that you can think of off 429 00:24:48,716 --> 00:24:52,516 Speaker 1: the top of your head of where societies did come 430 00:24:52,556 --> 00:24:55,636 Speaker 1: back from massive shocks like this one? I mean, one 431 00:24:55,676 --> 00:24:58,436 Speaker 1: shock that seems maybe vaguely comparable to the shock of 432 00:24:58,476 --> 00:25:03,276 Speaker 1: disease is the shock of war, which also presumably affects 433 00:25:03,276 --> 00:25:07,036 Speaker 1: both supply and demand side. Is there I mean, is 434 00:25:07,076 --> 00:25:10,876 Speaker 1: there sort of general learning among economists on how how 435 00:25:10,876 --> 00:25:14,116 Speaker 1: hard it is or how long it takes to bounce back. Yeah, 436 00:25:14,436 --> 00:25:17,756 Speaker 1: I think quantifying the severity of the shock, the length 437 00:25:17,756 --> 00:25:20,556 Speaker 1: of time it will take to recover, those are really 438 00:25:20,596 --> 00:25:24,516 Speaker 1: really difficult right now. All the other shocks like wars 439 00:25:24,676 --> 00:25:29,236 Speaker 1: or other big pandemics or epidemics happened at very different 440 00:25:29,236 --> 00:25:32,556 Speaker 1: times in very different contexts, and so it's just it's 441 00:25:32,596 --> 00:25:37,276 Speaker 1: just impossible to draw quantitative conclusions from there. But in 442 00:25:38,716 --> 00:25:41,876 Speaker 1: the advice that economists are giving today about, for instance, 443 00:25:41,916 --> 00:25:46,276 Speaker 1: the need to act pretty generously and very quickly, that 444 00:25:46,396 --> 00:25:51,236 Speaker 1: is very much informed by you know, historical experiences where 445 00:25:51,356 --> 00:25:54,836 Speaker 1: it was just critical to contain things. And it's also 446 00:25:54,956 --> 00:25:57,436 Speaker 1: you know, informed by even the very short run experience 447 00:25:57,476 --> 00:26:01,436 Speaker 1: of different countries over the past weeks. So we learn 448 00:26:01,556 --> 00:26:03,876 Speaker 1: a bit in real time as well. We see what 449 00:26:04,396 --> 00:26:07,156 Speaker 1: happens in other countries in this case, you know, sadly 450 00:26:07,316 --> 00:26:11,036 Speaker 1: in Europe and in Asia about different different paths that 451 00:26:11,156 --> 00:26:13,796 Speaker 1: countries too, So we very much learn in real time. 452 00:26:14,076 --> 00:26:18,876 Speaker 1: But again it's just impossible to predict how long, how severe, 453 00:26:19,436 --> 00:26:22,076 Speaker 1: and what it will look like, Stephanie, I really want 454 00:26:22,076 --> 00:26:24,996 Speaker 1: to thank you for this very clear analysis and very 455 00:26:24,996 --> 00:26:28,116 Speaker 1: clear set of prescriptions. You know, I think tell me 456 00:26:28,116 --> 00:26:30,476 Speaker 1: if I'm summing this up correctly. But what I'm hearing 457 00:26:30,516 --> 00:26:34,516 Speaker 1: you say is, first of all, extremely unusual situation relative 458 00:26:34,556 --> 00:26:38,276 Speaker 1: to the usual shocks. Ordinary tools of economics not immediately 459 00:26:38,276 --> 00:26:42,756 Speaker 1: obviously applicable. We need strong social insurance to make sure 460 00:26:42,756 --> 00:26:46,396 Speaker 1: that we meet people's immediate economic needs, but we also 461 00:26:46,476 --> 00:26:49,676 Speaker 1: need some sort of transfers of wealth in order to 462 00:26:49,756 --> 00:26:53,796 Speaker 1: soften the long run effects of the recession that we're 463 00:26:53,796 --> 00:26:56,876 Speaker 1: going to go into, so that we don't break economic 464 00:26:56,916 --> 00:26:59,556 Speaker 1: ties that exist and make it harder to climb out 465 00:26:59,556 --> 00:27:03,556 Speaker 1: of it. That does that sound like, you know, Stephanie 466 00:27:03,556 --> 00:27:07,876 Speaker 1: Stantcheva's official takeaways, I would say more than transfers of wealth, 467 00:27:07,916 --> 00:27:11,556 Speaker 1: it would be really social entrance to bridge this shock, 468 00:27:11,796 --> 00:27:15,036 Speaker 1: both on business sites and on household sites. So that's 469 00:27:15,076 --> 00:27:18,076 Speaker 1: the most most critical. On top of course the public 470 00:27:18,076 --> 00:27:21,756 Speaker 1: health intervention, which is a first order, just not in 471 00:27:21,796 --> 00:27:25,636 Speaker 1: my expertise, but yes, bridging the gap for households and 472 00:27:25,756 --> 00:27:28,516 Speaker 1: businesses in the short run will also make the longer 473 00:27:28,596 --> 00:27:32,236 Speaker 1: run look much better. Thank you. That's very very helpful. 474 00:27:32,316 --> 00:27:35,396 Speaker 1: Thank you so much for your time. Deep Background is 475 00:27:35,436 --> 00:27:38,716 Speaker 1: brought to you by Pushkin Industries. Our producer is Lydia 476 00:27:38,796 --> 00:27:42,556 Speaker 1: gene Coott, with studio recording by Joseph Fridman and mastering 477 00:27:42,636 --> 00:27:47,436 Speaker 1: by Jason Gambrell and Martin Gonzalez. Our showrunner is Sophie mckibbon. 478 00:27:47,916 --> 00:27:51,356 Speaker 1: Our theme music is composed by Luis Gara. Special thanks 479 00:27:51,396 --> 00:27:55,276 Speaker 1: to the Pushkin Brass, Malcolm Godwell, Jacob Weisberg, and Mia Lobel. 480 00:27:55,836 --> 00:27:59,356 Speaker 1: I'm Noah Feldman. I also write a column for Bloomberg Opinion, 481 00:27:59,516 --> 00:28:02,756 Speaker 1: which you can find at Bloomberg dot com Backslash Feldman. 482 00:28:03,356 --> 00:28:07,116 Speaker 1: To discover Bloomberg's original slate of podcasts, go to Bloomberg 483 00:28:07,156 --> 00:28:10,676 Speaker 1: dot com Backslash Podcasts. You can follow me on Twitter 484 00:28:10,876 --> 00:28:14,156 Speaker 1: at Noah R. Feldman. This is Deep Background.