Day: March 27, 2020

Looking for Silver Linings

Prakshal Jain from the Gokhale Institute writes in:

Hello Sir
Hope you are doing well

Current fiscal and Monetary measures (not stimulus as Parchure Sir mentioned) that are undertaken by Government to infuse money and ensure consumption of essential goods in the hand of public to fight the lockdown situation is actually a blessing.
Our economy needed these reforms since a very long period of time and government has been ignoring it, so can this injection result in some sort of economic upliftment?
Secondly, can more measures like these to the various sectors can help us fight economic slowdown?

I’m treating this as an extremely Rawlsian take. Read more about Rawls here, and his most famous book here.

Rawls’s positive distributive thesis is equality-based reciprocity. All social goods are to be distributed equally, unless an unequal distribution would be to everyone’s advantage. The guiding idea is that since citizens are fundamentally equal, reasoning about justice should begin from a presumption that cooperatively-produced goods should be equally divided. Justice then requires that any inequalities must benefit all citizens, and particularly must benefit those who will have the least. Equality sets the baseline; from there any inequalities must improve everyone’s situation, and especially the situation of the worst-off. These strong requirements of equality and reciprocal advantage are hallmarks of Rawls’s theory of justice.

I understand Prakshal as asking if the corona virus has made our government (and indeed, governments the world over) more Rawlsian in its outlook, and if that is, on balance, a good thing.

Three things come to mind:

  • First: It is a given that the poor will be the most badly hit in these times. See here for a list of recommendations (each of which is worthy of greater debate and potential implementation), follow this Twitter handle to get a sense of how bad things are (or are going to get). Any government would have no choice but to help out the poorest sections of society: it is a moral imperative. From that perspective, yes, the government is more Rawlsian right now than as of a week ago, and that is a great, great thing.
  • Second: The crucial part is the phrase “on balance”. The government is more Rawlsian right now because of the corona virus lockdown, and it is all but certain that the lockdown will do more harm than the government will do good where the economic well-being of the poorest of the poor is concerned.
    Let me be clear: this is not me accusing the government of not doing enough. This is me saying that the problem is far too big for anybody to handle. So even if you were a person who thought we should be more Rawlsian, this is surely far too high a price to pay.
  • Third: And this relates to Prakshal’s final question (will more such initiatives help?), absolutely yes. Governments, NGO’s, civil society – everybody can and must chip in to help out.

Prakshal, if this doesn’t answer your question, please let me know. Thank you for writing in!

Vipul Gupta’s Recommendations

I’ll preface Vipul Gupta’s list with a request I made earlier as well: help students out with your recommendations!

Vipul Gupta recently graduated from the Gokhale Institute, and what follows is his list:

My suggestions on the books an economics students should read

1. Factfulness
2. Fooled by Randomness
3. Naked Statistics
4. Doughnut Economics
5. The physics of Wall street
6. Poor Economics
7. Fault lines
8. Black Swan

Some textbooks I would want to go through again

1. Econometrics by Wooldridge
2. Time Series by Walter Enders
3. Probability and Statistics by Degroot
4. Microeconomics by Varian
5. Futures, forwards and options by Hull

I know my list is a bit biased towards statistics that’s because it is my favorite subject

… that’s a worthy bias to have, Vipul. Thank you so much for sharing this!

Informative articles about the Corona Virus

Prof. Anurag Asawa at GIPE shared this link, which is worth reading in full. There is a PDF at the end, which can be freely downloaded, with more information.

What did we find?

  1. Community transmission of COVID-19 in India most likely started in early March.

  2. National containment is no longer an option in India. However, state or local (temporary) containment and mitigation is the best option.

  3. At baseline (without interventions), between 300 and 400 million Indians are likely to be infected by July. Most of these cases will be mild. At the peak (somewhere between April and May 2020), 100 million individuals will be infected. Of these, approximately 10 million will be severe and about 2-4 million will require hospitalization. This is the most critical period.

  4. Generalized social distancing can, in theory, reduce this peak load by as much as 75%, although this may be difficult to enforce in India.

  5. Our model is sensitive to hospital outbreaks of COVID-19 induced by admission of infected patients into hospitals. There is a need for large, temporary hospitals to handle this patient load over the next three-month period. Secondary, hospital-based transmission fuels the epidemic.

Mihir Bapat, a CA based in Bombay, sent this link, which is worth reading in full. Yes, 92 pages, but still, worth reading in full.

My thanks to both!

 

The Chinese Government and the Corona Virus

There’s people, there’s the government that represents said people, and there’s a concept called “nation”.

They’re three separate things.

If you disagree, I submit that people have existed before nations have, and (most) nations have existed for longer than individual governments have. And the reason I bring this up is because I put up a video some while ago, arguing against tribalism, and therefore arguing that blaming the Chinese for the virus didn’t make sense.

Here’s the video:

And I stand by said video: it makes no sense to blame a country, or its people for a virus.

But a government? That’s a separate story, for as I said at the start of this essay, a government is not its people, and vice versa:

Some of the bravest men and women have been the Chinese doctors and nurses on the frontlines of this virus, who were bravely raising alarm, often at the cost of their lives, and suppressed by the most totalitarian and evil great power in the planet.

And the Chinese government can say what it likes, it bungled this up. Fact.

A study published in March indicated that if Chinese authorities had acted three weeks earlier than they did, the number of coronavirus cases could have been reduced by 95% and its geographic spread limited.

As with any quantitative model, treat the number with a pinch of salt, but fewer people would have died had the Chinese government acted faster, and communicated better.

We now know that the opposite happened: local authorities in China suppressed information about the outbreak, even destroying proof of the virus sometime in December. Official censors scrubbed social media posts from medical professionals warning of a new “SARS-like” disease. And as late as mid-January, Chinese authorities denied evidence of any community transmission, allowing the lunar new year celebrations to proceed despite having known about it for at least a month.

Not only is the Chinese government obviously aware of this fact, it is trying – surprise, surprise – to not only hush things up, but warning other countries of ‘adverse’ impacts if the line is not toed, stat.

Once the virus made its inevitable outward march, claiming lives beyond China’s borders, the CPC mounted a major public relations exercise that exploited common human decencies to evade accountability. Criticism of the Chinese government was equated with racist prejudice against ordinary Chinese people. The result: rather than confront China, precious energies were exerted to avoid the trap set by China. In February, the Mayor of Florence launched a campaign encouraging Italians to “hug a Chinese”, describing it as a “fight of solidarity and unity against virus”. The People’s Daily, a mouthpiece of the CPC, applauded young Italians advertising their virtuousness on the Internet with photos of themselves hugging Chinese tourists without mentioning a word about the mortal perils of human contact.

China didn’t owe an apology or an explanation to the world: the world owed China proof of its anti-racism.

China has legal problems on its hands, once the worst of the crisis is behind us:

While China’s intentional conduct is wrongful, is it unlawful? If so, do other states have a legal remedy? Under Article 1 of the International Law Commission’s 2001 Responsibility of States for Internationally Wrongful Acts, states are responsible for their internationally wrongful acts. This commission’s restatement of the law of state responsibility was developed with the input of states to reflect a fundamental principle of international customary law, which binds all nations. “Wrongful acts” are those that are “attributable to the state” and that “constitute a breach of an international obligation” (Article 2). Conduct is attributable to the state when it is an act of state through the executive, legislative, or judicial functions of the central government (Article 4). While China’s failures began at the local level, they quickly spread throughout China’s government, all the way up to Xi Jinping, the general secretary of the Chinese Communist Party. He is now being pilloried by Chinese netizens for his failures of action and inaction. The most prominent critic, Chinese tycoon Ren Zhiqiang, lambasted Xi for his mishandling of the coronavirus, calling him a “power hungry clown.” Ren soon disappeared.

But that also depends on an internationally coordinated response, and that isn’t likely, given current evidence:

In this effort, the third event mentioned above, i.e., Donald Trump’s chaotic management of the spread of the disease in the US, is an asset for Beijing. The US President’s early responses were bumbling, flippant and motivated by narrow domestic political considerations. Trump went from being completely dismissive to eventually declaring a Europe travel ban, a national emergency and a potentially collaborative approach with G7 countries. It’s still early days, but if the US leadership continues to stumble in its efforts to contain the spread of the disease domestically and mismanages ties with international partners, it will work to Beijing’s advantage. In such a scenario, expect the Communist Party to further double down on the effectiveness of its governance system to contain unrest at home and reshape global norms

Demanding clear(er) communication ought to be requirement number one from any government here on in, beginning with the Chinese government. But I wouldn’t hold my breath.