The General Economics Thread

Plus it'll be easier to get it back up when this is over. A lot of workers currently unemployed are on lay-off. Once things get up and running again, the unemployment should go down considerably.

It's a natural disaster that has specifically and precisely targeted the labor force. The above is correct: when we release workers from lockdown, things should roar back to life if the government has taken appropriate measures to sustain people's livelihoods in the interim. If not, well, a cascade of bankruptcies and defaults could rapidly bring us into a real credit crisis.

Or some other problem in the economy might roar to life during the coronavirus lockdown. Such as the habit of many corporations to borrow heavily ("corporate debt bubble") or the issue mentioned on the preceding page of economic growth being unduly concentrated in too few areas.

Well, seeing as Jared Kushner seems to have final say in dealing with the crisis, I fear that could be a very real possibility.

One thing I haven't seen mentioned is what will happen when farmers get hit by the virus. Do farms have to close down when the owners get sick?

This is a bit of an illusory problem, since most farming for bulk consumer food is corporate, not private. I wouldn't worry about the rugged, noble private farmer. They're already very sparsely distributed and any cases should be relatively isolated. We might see a marginal impact to family and organic farming, but not much. If anything, it's their customers who will be affected as local marketplaces shut down or change their strategies.

Edited by Fighteer on Apr 3rd 2020 at 9:28:28 AM

Agriculture is mostly big business, for better or worse.

Edited by M84 on Apr 3rd 2020 at 9:28:41 PM

In Europe however we are worrying about the lack of manpower during harvest, given that the seasonal workers are being held up by closed borders and coronavirus lockdowns.

Almost as if relying on seasonal labor for harvesting crops was a bad idea.

The Political Gabfest discusses the rising unemployment, and notes that historically, unemployment has always taken a long time to recover. This seems to suggest that companies will be unwilling to rehire everyone right off the bat after the crisis is over.

And if you didn't rely on migrant labour you'd still rely on seasonal labour because it's the most labour-intensive part of the calendar and you don't need all the people the rest of the year. I don't see your point?

"Treating this as a demand failure and pumping stimulus into labor markets like with the Great Depression is the wrong answer. We can't put people back to work. Literally. Instead, we have to support people so they can live and pay rent until everyone is able to start working again."

Yes and no. This isn't at all the same as the Great Depression or the financial crisis of 2008, and the same solution (stimulus spending) won't have the same effect. This is strictly speaking neither a supply side nor a demand side crisis. This is a national emergency that is preventing workers from doing their jobs and earning money, and also preventing consumers from leaving their homes and buying what they need. The long term danger is that businesses will start to go bankrupt in significant numbers, and if that happens, then yes, we will face a supply problem even after the crisis is over. If people start losing their jobs during the emergency, and can't get them back afterward, then we face a demand problem as well. Neither of these have started happening yet, but the crisis is far from over—but consider also that the mere fear that this might happen in a few months has been enough to negatively impact the stock market and capital investment by large businesses. Both have experienced sharp declines and recoveries recently, and it isn't at all clear what the state of the economy will be in a few months time. The current situation is unprecedented, and the standard policy playbook may not help much.

There is, however, one other alternative the government could try, if the Republicans could be convinced to go along with it (hint: unlikely). But the government could become a major purchaser of goods and services (for example, of medical supplies), hire people directly, and put them to work on major projects (for example, infrastructure rebuilding). Currently, and for nearly a century, the government conducts stimulus spending by paying contractors to carry out the work. That isn't good enough in this case, because the pandemic prevents them from providing a safe working environment for their employees. But the government could, in the same way that we are currently imposing rules and restrictions on the military, which has not become a significant vector for spreading the disease (so far, anyway). It is easier to do this with federal employees because they are more easily supervised than people working for a contractor. So what I'm proposing is something like the jobs programs of FDR back in the day. That's what kept the economy going until the mobilization for WWII made them unnecessary, and it could work now too.

Anyway, regardless of that, the point is that the economic effects of the pandemic are likely to be unpredictable, and could last many months after the emergency is over (esp. if Trump succeeds in arbitrarily drawing a line in the sand and declaring victory. Viruses don't care about propaganda).

The big question, of course (after how many people will suffer before all this is over) is how this will affect the election in November. That's anyone's guess, but Trump appears to be sweating bullets over it.

And with good reason. As has been mentioned before, he has tied his success as a president very strongly to the country's economic success, even more so than previous presidents who took credit for the economy, and now the economy threatens to become a millstone around Trump's neck.

He may still spin his way out of it, but he most likely won't have a strong economy going for him come November.

A lot of people who claim to vote for Trump on economic reasons will find excuses to vote for him anyway even if the economy tanks. That's how his fandom operates.

"Economic anxiety" among Trump's supporters is a myth.

They didn't follow him for the economy and they won't leave him over it either.

Hell if he says the economy is doing well they'll believe him even if it's a disaster.

Its not a myth, its just more complex than that. They voted for him because many of them see the economy in zero sum terms, therefore gains for "liberals" (ie, people of color, women, the poor) are a loss for them. They also see well educated elites as having economic interests that are fundamentally opposed to theirs. If Trump hadnt come along, they would had to have invented him.

The problem with the "economic anxiety" narrative is not that there is no economic component, but rather that it asserts that the economic component is the sole factor while conveniently ignoring bigotry.

In reality, it's both.

The petit-bourgeois that back Trump do it for the same reason that supporters of fascism the world over have done it, because they feel their place in the world is under attack from below and from without, which is the product of scapegoating of both real and imagined issues.

Remenber that critic about how the left blames the system and borgouis for everything?

This is the right white supremacy equivalent, they belive they are skilled worker who make the economy work by their own effort and it feel it dosent pay up as it should them is someone else that is taking for them.

But the ethnonationalist Right doesn't blame the system, they specifically single out minority scapegoats.

Trump didn't run on systemic change, he ran on keeping 'those people' out and maintaining law and order (read: keeping 'those people' who are already here down). Heck your example was itself them not blaming the system, structural criticism would be "the economy isn't working for me, clearly, there's something wrong with the economy" blaming "someone else" is the exact opposite.

Edited by Fourthspartan56 on Apr 5th 2020 at 9:50:56 AM

All of that is blaming the system, is just that as far they are concern the economy was doing fine when it catter to them because it did "right", trump did blame a liberal, super bland system that he was going to restore into proper buissness(is part of the whole "make america great again"), as far people know, those re keeping the system down of what it used to be.

Trump while using racism, populism and being a living meme to win popularity also coast on his perception as no-nonsense, super smart and asertive buissnessmen who would keot the system for those who cheat it.

Is just that he is exactly that kind of person, but that is proyecting for yoy.

How is blaming social groups blaming the economic system itself?

Because, by that reasoning, the economic system is "unfairly" favouring those social groups. Their twisted logic is that if the economic system doesn't cater to them specifically, it must be a wrong system.

Kinda, in their logic they are actually proper part of the system, they work and make money which help the nation, pretty easy.

Inmigrants otherwise are not, they benefit from the system but dosent paid in kind and democracs use them in order to benefit themselves and stay in power.

There is also the idea of democrats and liberal as pampers babies who let anyone else run over them, which trump in theory wont let that happen.

reallty said...otherwise.

That's just torturing the definition to make a false equivalency.

Fundamentally, the conservative mindset is about the "other", the scapegoat. It is about protecting what you have from those who would take it, and defining the "takers" is an important aspect of its psychology. Very few of them care about the economics per se; it's a way to give a phony intellectual veneer to what is at heart an argument based on tribalism.

The core idea breaks down thusly:

• We are good people, and good people deserve economic opportunity.
• We do not have economic opportunity.
• Someone must be taking our economic opportunity from us, since we are clearly deserving and can't be at fault.
• Let's watch the talking box that we trust (Fox News) to find out who that enemy is.
• The enemy is liberals/blacks/Mexicans/globalists/gays/etc.
• Those people must be prevented from freeloading off of our hard work/destroying our culture.
• We must resist any economic plan that would give them anything, even if it would help us.
• Corollary: since we are good people, we can't be racist, so they must deserve to be treated badly.

Do not mistake this for an economic argument, because it is not. Now, there is a different mindset that goes with the conservative elite:

• We deserve lots of money because we are just the most important people ever.
• Everyone with less money is less deserving.
• Anything that gets us more money and other people less is a good thing.
• We will pay people to come up with whatever bullshit theory they can to make this happen, then pay Fox News to spread it and buy politicians to vote for it.

Trying to make sense of the economic theory is a trap. It just sends you down endless rabbit holes that loop back on each other, because that's all they are: rhetorical traps to keep people distracted while the elite steal all the money in the world.

Edited by Fighteer on Apr 5th 2020 at 2:14:55 PM