Tag: corona virus

Team Lockdown, or Team Get Back to Work?

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An anonymous reader writes in with the question below:

As a student of economics, our mind forces us to think rationally, even during the present time of corona pandemic which is taking a toll on several lives. The question which is bothering me is about the enactment of lockdown and bypassing the one of the fundamental right of livelihood without constitutionally declaring emergency in the country due to COVID-19. As we’re constantly keeping an eye on news, the millions of businessman, traders, labor whose daily living is in danger (for at least coming 2 more weeks) has been taken away with an announcement of PM.
Are we sacrificing our country’s livelihood in the wake of moral persuasion by PM or it is the just the ignorance/illiteracy towards our fundamental rights?

 

First things first: I’m the very opposite of a legal scholar! But here’s my attempt at answering the question, first from a legal viewpoint, and second from a philosophical viewpoint.

You’d think I’d want to answer this question from an economist’s point of view, considering my “profession” and “qualification”, but honestly, this is best viewed and thought about from the prism of philosophy.

 

But legal aspects first:

As best as I can tell, the right to livelihood is guaranteed by Article 21:

Article 21 reads as:

“No person shall be deprived of his life or personal liberty except according to a procedure established by law.”

Although Article 19 also deserves a closer look, especially sub-clause (g) of clause (1) of Article 19:

19. Protection of certain rights regarding freedom of speech etc
(1) All citizens shall have the right
(a) to freedom of speech and expression;
(b) to assemble peaceably and without arms;
(c) to form associations or unions;
(d) to move freely throughout the territory of India;
(e) to reside and settle in any part of the territory of India; and
(f) omitted
(g) to practice any profession, or to carry on any occupation, trade or business

But both Articles 19 and 21 have far too many loopholes, exceptions and what-have-yous. Again, I am not a legal expert, but this, with regards Article 19 seems pertinent:

(6) Nothing in sub clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub clause, and, in particular, nothing in the said sub clause shall affect the operation of any existing law in so far as it relates to, or prevent the State from making any law relating to,
(i) the professional or technical qualifications necessary for practising any profession or carrying on any occupation, trade or business, or
(ii) the carrying on by the State, or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise

And Article 21 ends with “according to a procedure established by law”, and so I’m sure the legality is not, therefore, an issue at all.

 

Now that the legal aspect is out of the way, let’s try and figure out the philosophical issue at hand here.

Seen Sophie’s Choice? (I haven’t, because the one of the premises is so horrifying that I have never been able to get myself to watch it). Spoiler alert, consider yourself warned!

She reveals to him that, upon arrival at Auschwitz, she was forced to choose which one of her two children would be gassed and which would proceed to the labor camp. To avoid having both children killed, she chose her son, Jan, to be sent to the children’s camp, and her daughter, Eva, to be sent to her death.

Seen Eye in the Sky? Again, spoiler alert, but here’s the core dilemma of the movie:

You can kill three terrorists who have committed unspeakable crimes by ordering a drone to shoot a missile at a home in which they are hiding. BUT: you will also end up killing a little girl who is selling bread right outside that home, blissfully unaware that there are terrorists inside. Do you order the strike?

Heard of the trolley problem?

There is a runaway trolley barreling down the railway tracks. Ahead, on the tracks, there are five people tied up and unable to move. The trolley is headed straight for them. You are standing some distance off in the train yard, next to a lever. If you pull this lever, the trolley will switch to a different set of tracks. However, you notice that there is one person on the side track. You have two options:

Do nothing and allow the trolley to kill the five people on the main track.
Pull the lever, diverting the trolley onto the side track where it will kill one person.
Which is the more ethical option? Or, more simply: What is the right thing to do?

Here, as simply put as possible, is the dilemma in front of the leaders of almost all nations on the planet:

Let people move about freely, letting them earn their living, BUT also be spreaders of COVID-19, thereby putting themselves, and an untold number of others at risk

OR

Confine people at home, therefore saving at least some lives, BUT therefore deny people, especially the poor, the chance to earn a living.

Put another way:

do we optimize for health and life, at the cost of untold economic suffering (Team Lockdown)…
..
..

…or do we optimize for the opportunity to earn money, at the cost of people (for no fault of theirs) losing their lives? (Team Get Back to Work)

 

My personal opinion? A human life is a non-negotiable. That, to me, is axiomatic. And on first blush, you might think that therefore I am Team Lockdown.

But will the lockdown, at the margin, cause deaths inflicted by the imposition of the lockdown? Almost certainly yes. So both policies will result in the loss of some lives. That’s just the hard truth.

Then, morally speaking from my perspective, we ought to choose that policy which minimizes death and suffering.

Can Team Get Back to Work minimize death and suffering, or do a better job of minimizing death and suffering than Team Lockdown?

In my opinion, no.

Therefore, Team Lockdown for me.

But that being said:

Can Team Lockdown try and ensure that those most impacted by the lockdown get all the support we (all of us) can possibly give? That, in my opinion, now becomes a moral imperative.

Beginning with tripling the current stimulus!

That’s just my opinion, for reasons explained above. That doesn’t necessarily make it right, and I’m more than open to listening to opposite points of view. Here’s one from the other side, for example. The-Pensford-Newsletter-3.23.2020

But right now, and at the current margin?

I’m Team Lockdown.

 

My thanks to the anonymous reader for raising this question; it helped me clarify my own thinking on the issue!

Links from Folks About the Corona Virus

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Prashant Jain sends in this website: Covidlive.info

Rohit Kumar (not Srivastav, my apologies for the error!) sends along this PDF: The-Pensford-Newsletter-3.23.2020: I don’t agree with most of it, but it does provide an interesting point of view about the cost benefit analysis.

Also from Rohit, a podcast in which economists from Goldman Sachs try to get a grip on where the American economy is headed.

Harsh Doshi has a podcast up about living through the lockdown. The first episode is he interviewing Dr. Sanjay Baru.

Prof. Asawa shared a blog written by SA Aiyar in the TOI about how our stimulus needs to triple from its current level – at least.

Parag Sancheti shares a video about exponential functions

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Parag Sancheti, a batchmate from GIPE shared a video after reading my last post about exponential functions:

I’ve been watching old videos by 3Blue1Brown, and had no clue that these were up! Thanks Parag.

Speaking of new videos on that channel, take a look at this one as well:

 

Pro tip, especially to the BSc students at GIPE (but honestly, the entire planet) – consider subscribing to this channel?

Understanding exponential functions in the times of the corona virus

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Neil deGrasse Tyson spoke for the entire teaching community recently, when he said the following:

So if you were nodding off or were otherwise engaged when exponential functions were taught  in your class – or you just feel like a refresher – here’s some links to help you understand what exponential functions are, and why they matter so much where the corona virus is concerned:

First, from yours truly, in plain simple English: exponential functions essentially imply that y is going to change pretty darn quickly, even for very small changes in x.

“x” thoda si bhi change hone pe “y” legendray change kar jaayega

It means more than that, and there are exceptions, but if you are a non-math person, that line above is what you need to take away.

Here’s Wikipedia on the same topic, and here’s a short videoby Khan Academy:

(The link before the YouTube video will also have other, related videos and a practice set. Recommended)

If you want to play around with exponential graphs yourself, try Desmos:

Do you see the little “play” buttons next to a, b and c? Try clicking them and see what happens. “a” and “b” are crucial for social distancing. The lower those values, the slower the spread. Try it for yourself! (Note, this will work best on a desktop/laptop, rather than a phone)

So why does this matter in times of the corona virus?

On Monday, March 15, the US had about 4,000 confirmed cases. You might have said “Hey, that’s a tiny fraction of the country’s population. What’s all the fuss?” By Wednesday it had grown to around 8,000. So then you might think the total will grow by 4,000 every two days. That would be wrong; that’s linear thinking. It’s much worse than that.

That is from a Wired article, from which I will continue to quote below as well. So if four thousand becomes eight thousand, eight thousand becomes twelve thousand, and twelve thousand becomes sixteen thousand… not so bad, right?

Well…

With exponential growth, the number of new cases each day constantly increases—graph the total over time, and you’ll see that the line curves upward—and that can get you into big numbers real fast. What you need to look at is the percentage increase. In this case, it doubled (an increase of 100 percent) in two days. At that rate, it will grow from 8,000 on Wednesday to 16,000 on Friday, and 32,000 by Sunday.

Please read the rest of the article, and take your time doing so. This is important!

By the way, I’ve said this before on these pages, and I’ll say it again – don’t be confused when you look at a graph that shows a linear growth, but the chart says growth is exponential. First look at the axes!

For example, take a look at the picture below, taken from this post:

Please read the entire post, here is the link again.

Now, every article we’ve read so far has given us cause to worry, right?

Go back to the start of this article:

…exponential functions essentially imply that y is going to change pretty darn quickly, even for very small changes in x.

I used the word “changes” quite deliberately. You see, exponentials go up in a hurry, it is true – but they also come down in a hurry!

And since the number of new cases also depends on the number of infectious people (which declines as folks recover), that will also be exponential, but exponentially decreasing.

Bottom line; While the bad news grows rapidly, the good news will also evolve rapidly. So let’s just hope that by invoking sheltering-in-place and other strategies, we can reduce the infection rate and cause the inevitable bell-shape curve of the number that are sick to turn over sooner.

Think of the corona virus as us chugging up at the start of a roller-coaster ride. That’s kind of where we are right now. The good news is, when we start to “come down”, that’ll be pretty quick too.

But until then, one thing, and one thing only: social distancing!

Looking for Silver Linings

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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!

The Chinese Government and the Corona Virus

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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.

In Conversation with Professor Parchure: Macro in the times of corona

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Speed was key, and Prof. Parchure found talking on the phone (an actual, honest to god conversation over the phone, imagine!) the easiest.

It took me the better part of a day to figure out how to upload it on YouTube. Shows how old I am getting, no doubt.

Still, here you go. Talking with Parchure Sir is always enlightening, as is listening to him – as you are about to find out.

We’ll be doing a follow-up sometime soon, no doubt, so send in your questions, and I’ll try and include them in that conversation.

Five questions from a student at GIPE about the corona virus and economics

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Punyaa, a student from GIPE emails in this list of questions. My answers below.

He says:

I want to know details about:

  • The impacts of free immigration on the spread of the virus.
    ..
    ..
    There are benefits and costs to everything. Think of a spectrum on which you have the kind of global lockdown we do right now, and the kind of unhindered, unimpeded flow of people like me dream about.
    The good news with full labor mobility is rapid economic growth, but as your question implies, also an easy spread of a variety of undesirable things, viruses included.
    The good news with a lockdown is no viruses spread, but neither does economic activity.
    Tradeoffs, in other words. Reasonable people can and should argue about where you want to be on this spectrum, but the world as a whole will favor lesser immigration as a consequence of this lockdown. So on the spectrum, the world will now move towards being less welcoming to people from other parts of the world.
    Tradeoffs
  • Will the world be able to shift from the excessive dependence of it on China?
    ..
    ..
    Again, trade-offs! China, given all of what it has learnt and applied over the last 30 years, remains the cheapest place to manufacture at scale. The purely economic preferences of most corporations the world over will be to base themselves in China, even after the crisis is over. Except we’re now beginning to see the downsides of a lack of diversification. I don’t think it is a question of “will” as much as it is of “must”. Every crisis is also, eventually, an opportunity!
    ..
    ..
  • Will countries change their policy towards international trade. 
    ..
    ..
    Almost certainly yes. Check this post on MR for more details:

    If a good is vital for national security but domestic producers have higher costs than foreign producers, it can make sense for the government to tax imports or subsidize the production of the domestic industry. It may make sense, for example, to support a domestic vaccine industry. In 1918, more than a quarter of the U.S. population got sick with the flu and more than 500,000 died, sometimes within hours of being infected. The young were especially hard-hit and, as a result, life expectancy in the United States dropped by 10 years. No place in the world was safe, as between 2.5% and 5% of the entire world population died from the flu between 1918 and 1920. Producing flu vaccine requires an elaborate process in which robots inject hundreds of millions of eggs with flu viruses. In an ordinary year, there are few problems with buying vaccine produced in another country, but if something like the 1918 flu swept the world again, it would be wise to have significant vaccine production capacity in the United States.

  • How long  can we expect the market to rise again? (sic)
    ..
    ..
    I think this means how long before we can expect the markets to rise again, and by rise I assume above pre-corona levels. Who knows? If you say you do, I don’t believe you.
    ..
    ..
  • How will the government be planning to manage the fiscal deficit?
    ..
    ..
    Easiest to answer: it won’t be planning to manage it. We are clearly in do-whatever-it-takes territory.

My workstation at home

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For what it’s worth, this is what my work station at home looks like:

IMG_20200325_101242

Forgive the poor framing, the idea was to show you that it is a standing desk. Almost all of my work is done standing. The alternative is on the sofa, full-on recline mode, phone in hand.

IMG_20200325_101322

The Gokhale Institute, god bless ’em, has handed out i7, 8GB RAM machines to faculty. That is more than enough for my computing needs, which basically ends up being hajjar tabs open. Speaking of tabs:

  • Chrome browser
  • Google Docs (try typing in doc.new and sheet.new in the address bar and thank me later)
  • OneTab extension
  • AdBlocker Plus
  • OneDrive (I am on the Office 365 plan, 1TB online space)
  • ShareX for screenshots
  • FlashBack Pro 5 recorder for screen recording

… is the software that I use most.

IMG_20200325_101330

A Logitech wireless keyboard and mouse (375s, for the tech geeks among you) for input methods…

IMG_20200325_101340

… and a Blue Yeti microphone for recording calls, YouTube videos and podcasts.

IMG_20200325_102211

A raised stand, no matter how jugaadu, is essential. Your neck will thank you. I use a mix of – as you can see – books and a laptop stand. Whatever works best for you, but I cannot recommend a raised stand enough.

Music is on almost always, unless I’m recording something (thank you YouTube Music and Spotify – I subscribe to both). Music recommendations most welcome.

If you have any hacks you use for your own setup, please share!

Talking Macro With Prof. Parchure

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Dr. Parchure is the officiating director at the Gokhale Institute of Politics and Economics, where I work. He was also my guide during my PhD saga (there is no other word for it), and has forgotten more macroeconomics than I will ever learn.

Tomorrow, at some point of time, I and Dr. Parchure will be sitting down – at our respective homes, of course – for a chat about what India can do when it comes to macroeconomic policy after the worst of the corona virus lock-down is over.

First things first: health comes first, and that’s a non-negotiable. There’s no version of this story in which we can discuss trade-offs about “getting things back to normal” so that “the economy isn’t destroyed”.

As Russ Roberts puts it:

So we’ll be talking tomorrow about an as yet unspecified date in the future, where India might not be as mobile and social as she was before, but not as locked-down as she is right now. But when that day comes, what should macroeconomic policy look like?

Here are two articles that I will be basing this discussion on:

  1. Ira Dugal’s take on India’s monetary policy.
  2. Ananth Narayan’s take on India’s fiscal policy.

Please read both, and don’t worry if you don’t get some details. Just power through both write-ups regardless.

Here are some aspects that I will definitely be asking questions about tomorrow:

  • The advisability of giving a monetary and fiscal stimulus: everybody seems to be taking it as a given (myself included). But is there a case to be made for limiting it, if at all?
  • That out of the way, should both fiscal and monetary policy be wheeled out simultaneously? Either ways, why?
  • What are the major tools in the monetary policy toolbox? Which of them will give the most bang for the buck? Which should we be holding back for later, and why? What mistakes should we be guarding against?
  • Ditto for fiscal policy.
  • What would Keynes have advised? I have this book in mind when I ask this question.
  • What episodes, in 20th century macroeconomic history, have parallels we can learn from? If there are none, are current macroeconomic models good enough to handle such scenario? If not, how might they be updated?
  • If you, Dr. Parchure, were in charge of things – interpret that as you being given carte blanche to handle India’s economy, no questions asked – what would you do? What are the political realities that in reality will stop some of these solutions from being implemented?

I’ll be sharing this blog post with Dr. Parchure, but in the meantime, if you have any questions that I have missed, please let me know in the comments, or email me.

The conversation will be up on YouTube tomorrow at some point of time.

Stay home, stay safe!