Synopsis

by John Quiggin on December 9, 2020

As was the case with Economics in Two Lessons, I’ve been struggling with the material for my book-in-progress, The Economic Consequences of the Pandemic. But I’ve now managed to put together a synopsis I can work with. I’d very much appreciate comments, including but not limited to: topics I should be covering; issues raised by the brief summaries; and useful references. Thanks for comments so far, and thanks in advance for more.

{ 12 comments }

1

George MIchaelson 12.09.20 at 11:11 pm

1) you could reference prior pandemics for their economic consequences. the great stink of london maybe? Give it some light-touch historical depth. And there would be examples in other economies.

2) you could do stuff on the economic effects of the spanish flu, and the 2nd wave, and why even under slow transport we had a risk, and the consquences of labour returns from the war and rushing back into an active economy.

3) wages/office-rent tension, the shift in cost burdens to home work, and the removal of asset value as listed property trusts tanked, and the funds wrote down their value using the pandemic as an excuse.

4) why didn’t we get sweeping capital flight from Spain, Italy? Or did we? Did Greece really weather covid better because of .. eg. being on a lower base?

5) how much of the “chyna virus” is front for a continuing trade war where increased costs are being mis-attributed to C19 when they are blow-back from US-CN trade tensions?

Looked like a good synopsis.

2

steven t johnson 12.10.20 at 1:21 am

The implicit notion that the wars are not really related to the economy but some sort of ill-mannered political accident that derailed the otherwise inevitable progress of the empires ever higher and mightier may be popular but it really needs some explication. It is not clear for instance how the “failure” of the settlement in Europe led to the Pacific war. Or how it led to the emergence of fascism in Italy. It is particularly not clear how “economic policy errors” led to the rise of nazism, though surely the Friedman’s shade is blushing with pride.

Similarly it is not clear how the post-WWII settlement made the trente glorieuses. If it has something to do with US domination of world economy making it the largest conceivable empire of money, it is not to be expected that this wondrous state of affairs can be repeated without re-conquering the world, despite the changing balance of forces. If the good times are to be attributed to something else, saying what that is, seems to be essential.

The implication the present economic crisis was due to the pandemic needs justification. In December 2019, the stock market took a dive and the Fed abandoned its last attempts to end the supposed emergency policies put into place after the previous crash. The pandemic seems to be something of a red herring. The question is, what economic policy is capable of finally resolving the hangover from 2008-2009? Is economic policy (whose? for whose good?) any more capable of curing the system of its normal functioning in a grossly uneven quasi-periodic way?

This only comments on the first three sentences, but the tacti vision of history displayed here is fundamental to the whole analysis. Perhaps the intent is to begin with the conventional wisdom, as the best course?

3

John Quiggin 12.10.20 at 2:00 am

“It is not clear for instance how the “failure” of the settlement in Europe led to the Pacific war.”

As I argued Zombie Economics, drawing on Blyth, Japan’s shift to militarism was driven by austerity policies. I’ll be spelling this out.

“The implication the present economic crisis was due to the pandemic needs justification”

That implication is certainly not intended. I agree entirely with your third para.

4

nastywoman 12.10.20 at 7:39 am

A book about ”The Economic Consequences of the Pandemic”.
starts with ”the Economic Consequences of the Great Wars”?

Wouldn’t it be a lot more… ”current” to start with the current consequences of the Pandemic and get to ”the Great Wars” later?

And about the end of ”the goods economy” – as the (Great) Service Economy(s) are suffering under the pandemic disproportional ”more” – tor let’s say ”revolutionary different” than any of the producers of goods.

Wouldn’t that be the first consequence to recognise in a book about – ”The Consequence of the Pandemic”?

5

nobody 12.10.20 at 8:39 am

I don’t feel you’ve made a clear connection between the pandemic’s economic dimensions and the need to address climate change. The two threads feel like two different theses appended into one document.
With regards to the risks of a lost generation stemming from the pandemic, I am much more concerned over the prospects of the 40ish demographic than for today’s children and teens. Children and teens who have had their educations delayed by a year or two are young enough to catch up. People in their 40s, however, have now been subjected to two ‘once in a lifetime’ economic crises (2008-09, 2020-) that have completely obliterated their ability to build wealth and to build their careers. This will have massive public policy consequences in terms of a large cohort paying less taxes and ultimately retiring into poverty.
While I appreciate that this may be out of your scope, I feel it would be worthwhile to touch on how the economic consequences of the pandemic have been made worse due to failures in American governance. Inside the US, the refusal of US elites to use fiscal policy to substantively benefit the median American has caused many unnecessary deaths and has created far more socioeconomic harm than was necessary. This does not bode well for using government policy to combat inequality or any other issue effecting the median American. Outside of the US, American withdrawal from global leadership may have longer-term, unpredictable, impacts on global economic flows going forward. Damage to US credibility may chip away at US rentier businesses (e.g. SWIFT), US terms of trade, or even the role of the USD as the reserve currency.

6

notGoodenough 12.10.20 at 10:55 am

JQ @ OP

While I’m slightly disappointed this post heralds the end of the interesting excerpts you’ve been treating us with, this is vastly outweighed by my excitement for the forthcoming book. The synopsis looks highly interesting, and I think this nails a lot of the most interesting points I’ve seen (particularly from the environmental perspective).

First, a potential suggestion – I think there has been some general rumblings in the various comment sections about disconnect between some of the topics and the pandemic. If I may be incredibly presumptuous (and you do have my sincere and profuse apologies for being so), from my understanding you are not only examining the outcomes of the pandemic but also using these to illustrate broader points (for example, some of the trends accelerated by the pandemic were already established, but have come more into sharp focus as a result).

If I haven’t misunderstood too badly, I think it could be clearer if the title were more something like: “Economic lessons from the pandemic: considering consequences” or something along those lines (I am no-where near the writer and communicator you are!). It is just that perhaps something like that would make it a bit clearer that your book is not just addressing the pandemic itself, but also what it has shown in a broader sense too.

Sorry if this is wrong, or if I am overstepping too much – it is just a thought, as this seems to be a reoccurring complaint in the threads…

Second rambling: I think, for me, one of the most intriguing sections (with respect to my niche interests) will be “The role of public investment”. In particular this:

“We need to look beyond traditional investments in infrastructure capital (though these are still important) and invest in human and social capital to rebuild broadly shared prosperity”

caught my eye, particularly given the section regarding “climate emergency”.

This seems to relate to one of my bugbears (probably the one which normally drops biscuit crumbs down the sofa, and leaves 1 ml of milk in the bottle so they don’t have to replace it), so please don’t take this as a suggestion if you have not already planned on including, but I can’t help but wonder how much you are planning on exploring the link between various forms of potential infrastructure investment (for example, funding on a community level vs traditional large company or governmental funding), the potential returns (which seem more reliable than most investments these days…), and the implications this may have in a broader context (for example, will there be more of a decoupling of monopolies as localised feed-into-grid energy becomes more prevalent?).

This may not be sufficiently coherent (I’m running a bit low on mental energy!), and perhaps this is too much of a sidetrack (I will find out when I read the final book anyway!), but I do find it quite exciting that there may be a more immediate and visible defence of the view that infrastructure-spending is an investment…

Anyway, this is enough of my nonsense. Please keep up the excellent work!

7

ccc 12.10.20 at 11:50 am

From the synopsis it seems like you during this deadly zoonotic global pandemic decided to write a book that ignores the moral, political and economic underpinnings of the zoonotic causes of pandemics? In that case it is at best a waste of time, at worst harmful.

8

nastywoman 12.10.20 at 12:01 pm

AND isn’t it already common knowledge that ”the HUUUGEST Economical Consequence of the Pandemic is:

”The Astronomic Cost of STUPID Carelessness”? –
As how much does each of these Covid Deaths and Patients cost my homeland America?
And what an ”economical advantage” NOT to have your Health Care System collapsing?

AND how amazing and wonderful to witness how other countries are trying to take care of ”their people” also – ”economical”.

9

Mike Huben 12.10.20 at 12:15 pm

nobody @ 5:
“People in their 40s, however, have now been subjected to two ‘once in a lifetime’ economic crises (2008-09, 2020-) that have completely obliterated their ability to build wealth and to build their careers.”

That’s a really important point! There might be some substantial dips in wealth due to these economic crises, compounded by the stagnation of wages for this group.

10

John Quiggin 12.10.20 at 9:49 pm

@7 Did you miss the excerpt I posted earlier on this? https://crookedtimber.org/2020/11/28/climate-health-and-the-pandemic/

11

ccc 12.11.20 at 1:54 pm

@10: I did miss it. But after reading it now there is almost nothing there. So I’m shifting to: Seems like you during this deadly zoonotic global pandemic decided to write a book that (apart from a short comment or two) ignores the moral, political and economic underpinnings of the zoonotic causes of pandemics. You’re treating the primary cause of all this as a tiny aside.

12

John Quiggin 12.12.20 at 3:06 am

@11 I’m an economist and the title of the book is The Economic Consequences of the Pandemic, so my discussion of the causes is brief. If you want a book about the causes of the pandemic, you’ll have to look elsewhere. This 2013 book on the zoonotic causes of pandemics seems to cover a lot of the ground you want. I’ll cite it.

https://www.amazon.com.au/Spillover-Animal-Infections-Human-Pandemic/dp/0393346617/ref=sr_1_7?__mk_ja_JP=%E3%82%AB%E3%82%BF%E3%82%AB%E3%83%8A&dchild=1&keywords=causes+of+the+pandemic&qid=1607742031&sr=8-7

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