Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A shorter version appeared in Project Syndicate May 1st.
“Those who do not study history are condemned to repeat it.” And the rest of us are condemned to repeat George Santayana.
Will the Coronavirus Recession of 2020 be V-shaped? Or U-shaped? If we fail to heed the lessons of history it is likely to be W-shaped, with incipient recovery followed by successive relapses into sickness and recession.
As has been widely noted, we would have been better prepared to cope with the Covid19 pandemic in the first place if everyone had paid more attention to the past history of epidemics. Be that as it may, the world is now deep into the pandemic and its economic consequences, the most severe such events since the interwar period, 1918-1939. As decision-makers in every country contemplate their next steps, they would do well to ponder the precedents of that interwar period.
Don’t expect a V-shaped recovery
As recently as March, a pattern of V-shaped bounce-backs in individual economies seemed plausible. The argument was that once the rates of infection and death peaked and declined, people will eagerly go back to work. Economic activity might even get an extra boost, as consumers release pent-up demand and firms rush to fill back orders and to re-stock inventories. The macroeconomic effects of earthquakes and hurricanes and other natural disasters usually exhibit V-shapes of this sort. When China was hit by SARS in 2003, for example, there was a clear negative effect on output in the second quarter of that year, estimated at 2 %, but the subsequent recovery was so fast that there was little observable impact on the year’s GDP.
Indeed, China itself reports that industrial production bounced back sharply in March from the February plunge.
But it is clear by now that a V-shape forecast would be too optimistic overall.
For one thing, even in a rosy scenario where the health effects of Covid-19 in individual countries faded quickly and allowed people to go back to work safely, the aggregate global outlook would not be V-shaped. Different countries are in different time phases, with the epicenter having started China, then moving to other East Asian countries, then Europe, the US, and the developing world. Even a country that is in a relatively healthy phase (either before or after the worst of the attack) is adversely impacted by the loss of trade with other countries that are in bad phases.
A U-shape, then?
More likely than a V-shape, the best we can hope for is a U-shaped recovery. Certain segments of the economy go back to work, with employees spaced out spatially as well as spaced out over time in shifts, if possible. Meanwhile other segments remain shut down for longer. One would think that some of the lowest candidates for early re-opening would be stadiums, theaters, bars, beauty salons, bowling alleys and tattoo parlors. 60% of business leaders expect a “U” shape, according to a poll of 3,500 chief executives reported by the World Economic Forum April 24.
Under the U-shaped scenario, a full economic recovery would have to wait until we achieve a health recovery that is more solid than a mere peaking in the reported rates of infection and death.
We need massive, frequent, convenient, free testing for the virus, which is technically perfectly feasible (at least, in high-income countries). It has been delayed in the US, UK and some other countries by poor government performance. Contact-tracing should complement testing, with which countries such as Singapore and South Korea have had success. Effective tests for anti-bodies would also make a big difference, if they could reliably identify workers who are immune to contagion. The big game-changer would of course be the discovery of a proven vaccine; but we are told that in the best case this is likely to take a year or more. Another important technological breakthrough, which could come sooner, would be the discovery of an effective treatment.
Spending a year with economic activity severely depressed would confirm the status of the current recession as by far the worst since the 1930s. But there are worse possible scenarios than the U-shape.
Repeating historical mistakes would give a W shape
I worry about a prolonged W-shaped recovery, arising out of mistakes by our political leaders. Two likely policy-mistakes are well-illustrated by events of the inter-war period: 1918 and 1936, respectively.
Under mistake #1, leaders sound the all-clear signal on contagion too soon, resulting in a second wave of infections. Many politicians in many countries have shown in their words and actions a grave bias towards optimism with respect to this coronavirus. This over-optimism has already done tremendous harm by delaying action. It can do a lot more harm if they try to re-open the economy prematurely.
The 1918-19 global flu pandemic is an informative precedent. The sickness first hit the United States in early 1918. But there was a second wave in September 1918, far worse than the first, and then a third wave which lasted into 1919-20. (Negative economic impacts were statistically associated with the fatality rate across countries and were estimated at 6% of lost growth in the typical country, in a recent paper by Barro, Ursua, & Weng.)
American cities instituted public health interventions, such as face-mask requirements and the cancellation of public gatherings and school classes, but varied widely in the length of time that they maintained them. Research in 2007, such as a study from the National Academy of Sciences, found corresponding effects on excess mortality across cities. The success in reducing the number of deaths “was often very limited because of interventions being introduced too late and lifted too early.” San Francisco, my original hometown, takes first prize with the most effective interventions, which reduced mortality by an estimated 25 % or more. (The next most effective interventions were in St. Louis, Milwaukee, and Kansas City.) But controls were withdrawn too early in all cities. If the interventions had been kept for longer — assuming that were feasible — the death rate would have been further reduced, by an estimated 95 % altogether in the case of San Francisco.
Instead, by November 1918, with mortality down sharply in the City by the Bay, the public health authorities relented. The masks came off on November 21. One can imagine the residents going out into the streets to celebrate the Armistice ending World War I. As a result, another flu wave arrived in December-January and the death toll cumulated to one of the worst in the country.
Thus, the lesson of the first mistake is not to declare victory and abandon public health measures too early.
Mistake #2 is abandoning economic stimulus too soon, resulting in a renewed economic downturn. Here the best US precedent is 1936-37. The Roosevelt Treasury, satisfied with the recovery from the Depression that had begun in 1929, prematurely curbed federal spending and raised taxes to restore a balanced budget (which it achieved in 1938). At the same time, the Fed also tightened monetary policy in 1936. It doubled banks’ reserve requirements (which Friedman and Schwartz identified as the key mistake in their famous Monetary History of the United States) and began sterilizing gold inflows. Probably as a result of the premature withdrawal of stimulus, the US went back into severe recession in 1937-38.
This could happen again. We have a more recent US precedent in the US, revealing something about the politics of how we could see a repeat of premature withdrawal of economic stimulus in 2021.
The response to the Great Recession of 2007-09 was fiscal stimulus, relatively rapid by historical standards. I believe this fiscal policy, particularly President Barack Obama’s Recovery Act of February 2009, along with the Fed’s response, explains why the economy’s freefall ended in the first quarter of that year and the recovery began in the second quarter.
The recovery was slow, however, with unemployment still at 9% in 2011, from which it came down only gradually. A premature end to fiscal stimulus in 2011, the result of a new Congress, helps explain the unsatisfactory speed of the expansion.
Why might one fear a repeat in 2021? The US entered 2020 with $1 trillion budget deficit – which was awful fiscal policy at a cyclical peak, by the way. Fortunately, that did not stop Republicans and Democrats from coming together in March and April to respond to the coronavirus with unprecedented fiscal measures, matched with unprecedented monetary measures from the Fed. That economic relief and stimulus is helping. But the job is far from finished.
It is easy to see how yet another premature withdrawal of stimulus could come about in 2021, for the same political reasons as 2011: namely Congress suddenly discovers the evils of debt when the opposite party holds the presidency. The scenario is that the White House changes hands in November, but the Senate does not. It is easy for politicians to remember the virtues of counter-cyclical policy if their party holds the White House during a recession, but hard to remember them under any other circumstances.
In short, if our political leaders are too quick to declare victory – hastily lifting lock-downs and social distancing or ending fiscal support – we could see a nascent economic recovery cut short by a second downturn. That is the W scenario, where “W” stands for withdrawal of measures prematurely. It is all too plausible.
This post written by Jeffrey Frankel.
It is easy for politicians to remember the virtues of counter-cyclical policy if their party holds the White House during a recession
I’m not sure it was a case of Republicans failing to remember the virtues of counter-cyclical policies after 2010 so much as it was a case of Republicans fearing that those very same policies would work. Remember that Sen. Mitch McConnell unapologetically said that his first priority was to make sure Obama was a one term president. Presumably the economic welfare of the country ranked somewhat below the importance of McConnell’s personal pique. What a guy.
I’ve said this before, but I’m not terribly interested in questions about whether or not we’re in a recession (we are…let’s just move on), or questions about the shape of the economic recovery. What we need are concrete proposals to guide us through the worst of the COVID-19 pandemic, and then another set of strategies to guide us toward economic recovery after the pandemic has waned and we’ve got a vaccine or some effective therapy. The answer to the first problem, (viz., getting us through the worst of the pandemic) is pretty straightforward. The Treasury should just write trillions of dollars in checks to keep people in their homes; keep people formally attached to the labor force; and keep businesses out of bankruptcy. The Fed has already said it will do whatever it takes to support massive fiscal stimulus. There’s no good economic reason why anyone should lose their home or their job or go hungry. We should be so lucky that the worst outcome is that people are bored. The tricky part is the second set of strategies; viz., how do we reopen the economy in a balanced way? Okay, at the risk of sounding like some neo-Austrian, I do think we need to worry about demand evolving across various sectors in an uneven and lumpy way that could be destabilizing. Do we want to stimulate demand towards the downstream end of the economy and then let the upstream end respond to demand? Or the reverse? Or do we want to balance the stimulus across the intermediate and final output sectors of the economy?
The Fed is irrelevant. Stimulus and not understanding that word is practically trash is another problem. By July, it will become clear how bad the damage is. Your consumption based stuff is just not worth much. It doesn’t solve anything and just kicks the can down the road.
Maybe, let the situation develop until after the election so you can see the forest from the trees.
One not so obvious concern – credit spreads spiked around March 20. They have partially retreated a bit. Why? The FED stepped in.
Nope. The panic subsided, which was going to happen anyways. The Fed simply had little to do. The Fed(really the FOMC)sadly has become a political institution. Consistently butting in. Now it’s shareholders are tiring of it.
Nope, Rage, you have dug yiourself into aa hole and now look not just ignorant but outright idiotic. The correlation of your “The panic subsided” and clear actions by the Fed is very strong. We could have seeen Seprtembe 1931 when the Fed engaged in incompetent policies as panic mounted, with the gretest collapse of the internaitonal financial system and what had been basically a bad recessin into the Great Deptression. You clearly have no idea what you are talking about.
As for the FOMC “has become a political institution,” since when? The governors are presidential appointees and certainly the Chair pays attentioin to the president. But that is not a recent development. But the siatrict presidents are not political appointees and generally pay lilttke attention to current politics. Probably the most important current figure now is St. Louis Fed president, Jim Bullard, who signaled in February what was coming and the Fed’s attitude while TRump was still in a dreamworld lala land. He does not pay attenton to what presidents say, especially incompetnet fools like Donald Trump.
Rags,
If you had spent years tracking IOS spreads, structural change in the repo market and credit stops in developed economics, I’d be interested in your view of the effectiveness of Fed policy. Your writing suggests you have none of that experience. What, pray tell, is your justification for having any opinion at all about monetary policy effectiveness?
Rage,
In case you were unawware of the fact, it is widely viewed that the Fed has more influence over investment through its control of interest rates and general credit conditions than consumption, which relies more on personal income. Sorry, but the Fed is very important, although it tends to be more noticesd when it messes up, which offhand it seems to be avoiding for the moment.
Reasonable piece, Jeffrey.
@ Barkley Junior
So are you saying a “lazy J”??—-or a “W”??—or “a J that imitates an L”, you know–the “L” shaped recovery you have stated at least twice doesn’t exist. It’s not like I actually give a crap WHAT you think, but it would be nice if you weren’t covering the entire world map and then telling us you picked the exact GPS location at some later date, as per your usual modus operandi.
Like most highly intelligent men, Professor Frankel makes his most high odds conclusion clear. Like most fakers and self-preened delusionists, you do not.
Wow, you have really lost it since I mentioned the spouse of your revered father, Moses, haven’t you?
I have been consistent in what I have said about this, despite your attempts to claim that I have not been, and Jeffrey Frankel’s post says nothing about it, given that his possible W, which is certainly possible, is not an L, although it is also not a “lazy J” (again, my concoction, although really that is just the most common macro fluctuation with a downturn, showing the common asymmetry of going down faster than it goes back up, so not a V and certainly not an L). Frankel says nothing at all about an L, unless you want to posit his possible U as an L with an upturn tacked on its end.
In any case, yet again, after proclaiming that I was out to lunch on all this because I said we have never seen an L in US history, to which I challenged you to tell us about one that ever happened, yet again you do not do so because you cannot do so because there has never been one. That there has never been one does not mean that one cannot describe a pattern that might sort of resemble one without being it, such as a lazy J.
So, are you going to tell us about an L that happened in US history, or are you going to repeat your previous nonsense that if one never happened one cannot talk about any pattern sort of resembling an L? That was certainly completely idiotic.
Again, just to be clear, I was wrong when I wrote that “we have never seen an L.” I was thinking about the US, not the world, and have since pointed out twice now that we have probably seen some in other mostly poorer nations, with Mexico in the 1980s after the 1982 debt crisis a pretty clear example. So, Ls can happen. We just have not seen any in the US.
As it is, I shall modify Frankel’s proposal a bit. I doubt we shall see a strict W. That would imply a short-term V that then turns around, but I see little reason to expect a rapid short-term bounceback. I shall stick with my lazy J for the short term, thank you, but I accept his more important point that whatever form the bounceback takes, there is a serous chance that it will stall out and turn back into a downturn due to a renewed outbreak of the virus. This is the point of the W possibility, although I suspect it will not be a strict W, if it happens, but one with some asymmetries, thus, as I said earlier, maybe a “wiggly W.”
@ Barkley Junior
You have copyrighted the complex polysyllabic terms “Lazy J” and “Wiggly W” already, yes?? Surely?? I don’t want that Puh-hud shyster Paul Krugman screwing you over on your economics innovations….. again. I say a person with persecutory delusion can only stand so much, and until you shake it, I stand with you Junior.
Moses,
As a matter of fact, Krugman did claim credit for something done before him by somebody else, indeed it was half his Nobel Prize, the new economic geography part. He published a paper in 1991 applying the Dixit-Stiglitz model to economic geography/regional economics (Dixit has not received a Nobel). But Masahisa Fujita did it before him in 1988, but in the more obscure journa, Urban Economics and Regional Science, with Fujita’s English being poor, although his math skills are outstanding, better than Krugman’s by a mile. Fujita was never recognized by Krugman, certainly not in his Nobel speech, although he did later coauthor with him.
For the first part of his prize, Krugman was the first to apply the Dixit-Stiglitz model to international trade, and I think the committee was focusing on that, as there was nobody who knew regional econ on the committee at the time.
I had about a decade earlier exposed this problem of Krugman not giving Fujita credit (as well as some other people for some other things related to all this) in a book review I published in JEBO. My review concluded with the line, “If Paul Krugman is the emperor of the new economic geography, then he is an emperor without clothes,” which got spread around the internet by others when Paul got his Nobel (knowledgeable people largely agree it was deserved but should have been shared with Dixit and Fujita, as it is no Japanese economist has gotten a Nobel).
About a year after Krugman got his Nobel, I gave a talk in Sweden at a conference on this matter where several of the leading regional economists in Sweden were in the audience. At the crucial moment when I read my quote, there was a thunderclap. I was a bit nervous that some of those tegional ecnoomists might give me a hard time, but in fact afterwards I was told that I had not come down hard enough on Krugman for what he did.
BTW, I have never claimed he stole from me, just for the record, but it is kind of funny that you have brought this matter up, even though it is quite irrelevant to this thread.
Oh,Krugman’s 91 paper was in the top 4 Journal of Political Economy and got lots of attention, including in the press. He is a much better writer than quiet Fujita.
I have long said, the fed is independent in the government, not independent of the government.
If we listen to Kevin DOW 36000 Hassett, a W-recovery is assured:
https://www.cnn.com/2020/05/02/politics/coronavirus-stimulus-congress-kevin-hassett/index.html
“White House economic adviser says additional coronavirus stimulus package might not be necessary”
This angered my mayor today. So what is Kevin’s logic?
“”I think right now, because there’s been good news really, that the opening up is starting to happen faster than we expected, appears to be doing so safely, then there is a chance that we won’t really need a phase four,” Hassett said on Fox News Saturday morning.”
He really wants us to open early. I thought about this when I read:
“I worry about a prolonged W-shaped recovery, arising out of mistakes by our political leaders. Two likely policy-mistakes are well-illustrated by events of the inter-war period: 1918 and 1936, respectively. Under mistake #1, leaders sound the all-clear signal on contagion too soon, resulting in a second wave of infections. Many politicians in many countries have shown in their words and actions a grave bias towards optimism with respect to this coronavirus. This over-optimism has already done tremendous harm by delaying action. It can do a lot more harm if they try to re-open the economy prematurely.”
Jeff is right here. But of course we can ask Hassett about his DOW forecast some 21 years ago. 36000 any time soon. Hey Kevin – how is that working out?
https://www.msn.com/en-us/news/politics/trump-defends-the-uss-bungled-coronavirus-response-by-claiming-fauci-told-him-its-not-gonna-be-a-big-deal/ar-BB13ypGd?ocid=spartandhp
Check this out. Trump is blaming his slow response on Dr. Fauci. You see – Fauci said it would be no big deal. But of course that was what he said three years ago. What was he saying 3 months ago? Oh yea – Trump was ignoring him.
Izabella Kaminska warns ‘An absolutely enormous output gap is forming’
https://ftalphaville.ft.com/2020/05/01/1588344147000/An-absolutely-enormous-output-gap-is-forming/
which is going to flatten out the right side of your V shape…
a backwards square root shape might be a more appropriate descriptor..
Terrific link rjs, thanks for sharing.
I saw that George Soros had used similar terminology as used in your last sentence to describe a prior recession.
Or a lazy J as I have described it. Let us stick to using letters from the alphabet, please, rjs, even if they are distorted.
@ Barkley Junior
I thought you said a “Wiggly W”?? Why don’t you just tell the truth that you don’t have the manhood required to make the prediction without tagging on 15 other hedges. Everyone reading regular here will take that, and we can move on from you insulting people with higher scholarly status for winning a Nobel. Or you could just stick with one answer. No worries, in the future I’ll be linking back to the roughly 5 different answers you’ve given to this question in the last 10 days.
Moses,
You just misrepresent everything I say. Will you cut it out if I stop mentioning the spouse of your beloved father?
The “Lazy J” describes what the US pattern was during and following the Great Recession. I have said it is more likely for what we are in now than a V or on L, with the latter especially unlikely given that we have never seen one in the US, John Cochrane notwithstanding.
Regarding the “Wiggly W” I view that as possible, and more likely than either a V or an L. I put this forward in respoinse to this post by
Frankel posing the possibility of a W, but noting that a strict W implies a V at the front end, which I view as extremely unlikely. So I noted that most likely if there is another downturn soon is a lazy J at the front end, which is the possible if a turndown due to a second wave of covid-19 hits, it will show another sharp drop following the slow recovery with the lazy J front end. A W that has these sorts of asymmetries I described as a “wiggly W.”
As of now I am not making any predictions regarding whether or not we shall have a second or third wave, and I have not made any such. Have you made any? Are you making any? I have posted on Econospeak regarding how this virus is “A Very Grey Swan” with a lot of statistical noise associated with it, not to mention that we still do not understand it very well at all, so it is highly unpredictable.
So, I am making conditional forecasts based on these two possibilities: 1) no second wave, 2) a second wave. My conditional forecastts are that if it is 1) then we are most likely to see a lazy J, and if it is 2) then we are most likely to see a wiggly W, although keep in mind that what makes that W wiggly is the lazy J on its front end.
As for Krugman, do please keep in mind I never claimed he stole anything from me, although yet again you made a false accusation that I did. Well, you declared that I have a “persecution complex” supposedly because I had claimed Krugman stole from me, but I never made such a claim, so this is yet more lunatic lying garbage out of you, Moses.
As for “insulting” someone with higher scholarly credentials, if thattis bad, why are you insulting me with false accusations all the time, Moses? I sure as heck have higher scholarly credentals than you do. As it is, I believe in speaking truth to power, and there is a large number of people who know about this who were aware of what Krugman pulled, the full details of which I have not listed here and see no point in dredging through all of it further now, although you were the one who brought this up with your false accusation against me. As noted, people in the know at the time complimented me and said I had let him off easy. There really is quite a bit more to this matter.
I will add one morsel. After he got his Nobel all by himself without Dixit or Fujita, and my infamous quotes about his work from my 1998 book review went around the econoblogosphere, put there by others (and you may have seen it back then as it showed up in quite a few blogs, including probably this one, although I do not remember and am not going to go digging to check), I answered direct queries as carefully as I could, but did not spread it myself. However, at a certain point on one of the blogs, I think it was probably the unfortunately now defunct Economists View where I think there were a lot of comments on the matter, an anonymous individual showed up there and said, “OK, you have made your point, now stop it,” or something like that, not that I ever saw Krugman comment on any of this ever anywhere publicly.
BTW, for the record, I think he is a smart guy and he is not hurting at all, and I agree with him probably 95% of the time. But his record of not giving proper credit to others is notorious.
@ Barkley Junior
I am sure everyone appreciates you “defending” two-to-three of the economists that Krugman mentioned in his Nobel Prize speech (along with the 20+ others he touched on that you didn’t mention). I feel certain if you didn’t mention the names already mentioned by Krugman in his Nobel Prize speech, all of the economics profession and the world at large would be lost without it.
https://www.nobelprize.org/uploads/2018/06/krugman_lecture.pdf
It’s hard to imagine how people could trace the conceptual lineage here without the great Barkley Junior’s help. Frightening to think where the profession would be. But we DO have Junior’s help, and every night before Paul Krugman goes to sleep, he thanks the good Lord above that the great Barkley Junior “agrees with him probably 95% of the time”. I bet Krugman feels that honor bestowed on him of Junior’s agreement is a priceless treasure, or a “non-tradable good”, if you will.
There was one person Krugman didn’t mention in his Nobel Prize speech though. Oh……… Now I get why……..
Moses,
Curious thing about that speech is that he does in effect make a defense of him getting the prize while Fujita does not. He admits that Fuhjita in 1988 beat him to the punch in applying ideas about “monooolistic competition to economic geography,” but then in effect dismisses Fujita’s work over a minor assumption that it makes about not being able to resell goods. But the prize was for applying Dixit-Stiglitz first to this, as in fact Krugman was the first to do for trade theory, as I said. But it was Fujita who did it first and did it well for econ geography, although in an obscure field journal, not the JPE. And, of course, it remains the case that Dixit has not gotten the prize either, even though his paper with Stiglitz is one of the 20 most cited ever to appear in the AER, more than anything ever by Krugman.
Of course, Stiglitz got the prize, but not for that paper. He had to share it with Akerlof and Spence for asymmetric information, but as far as I and many others are concerned, both Stiglitz and Akerlof deserved to each get it by themselves far more than Krugman did.
As it is, you keep somehow trying to claim that this is somehow about me claiming that I deserved recognition here or even claiming that Krugman “stole” from me. Again, all of that is simply a lie. I simply have strong feelings about people deserving proper credit, and I make no claims for having initiated any of this, although I have written and published on these topics..
As it is, I was mistaken about the year of my critical book review that others quoted on the internet after Krugman got his prize. It was published in 1996, not 1998, Book Review of Paul Krugman’s _Development, Geography, and Economic Theory_, in Journal of Economic Behavior and Organization, December 1996, vol. 31, pp. 450-454.
Again, there is quite a bit more to all this that is not complimentary of Krugman, but I am not going to get into it. This is old hat stuff irrelevant to our current discussions. You were the one that brought this up, Moses, because you somehow got a falsehood into your head, that I accused Krugman of “stealing” from me. Lie, lie, lie. This has just been more lying bs on your part, and it is time to move on.
Giving credit to your peers for helping lay the foundation that Krugman built on and indeed extended and expanded on has now become a “defense” of one’s self for winning the Nobel Prize. Once again proving, Barkley Junior’s real PhD is in self delusion.. Some people wonder how academics get reputations for backstabbing one another when it comes to gaining career progression, tenured status etc. One need look no farther than Barkley’s comment above to see how that impression and perception of university professors pettily backstabbing one another is created. Success for those with superior abilities and efforts breeds resentment by those screaming for attention and not getting it.
On another thread here I promised not to comment further on this idiotic meme Moses has been pushing. Having now come across this silly piece by him, I shall only note that initially he was lying about claiming that I was claiiming that Krugman had “stolen” from me, which he never did, and I never said he did. I will only note for the final time that the ultimate insiders, regional economists in Sweden at the time, told me I was not hard enough on Krugman. I shall for the final time repeat that I am not putting out the worst dirt here, which those individuals heard. It has been my impression that usually Moses supports critiquig powerful pwople who are abusing their positions to imprperly demean others. But in this case, Moses seems to see an excepton for a certain very guilty individual. Perhaps he has a “man crush” on this person?
A fascinating analysis of the cost of producing Remdesivir and what Gilead could charge if it was so inclined:
https://icer-review.org/announcements/alternative_pricing_models_for_remdesivir/
Cost per vial = $1 (it takes 5 to vials per patient.
But Gilead could charge $450 per vial.
Wait until Dean Baker sees this report! Good thing they are donating the first 1.5 million vials!
The ICER has an interesting report on the potential pricing for Remdesivir:
https://econospeak.blogspot.com/2020/05/potential-pricing-for-remdesivir.html
Cheap to produce but could generate $4500 per patient. Someone call Dean Baker!
for all the fools who complained about obama and his trillion dollar spending, trump needs THREE TRILLION DOLLARS this quarter
https://www.cnbc.com/2020/05/04/us-treasury-seeks-to-borrow-a-record-3-trillion-this-quarter.html
THREE TRILLION DOLLARS!!! under conservative republican leadership in the white house. wow. and here i thought kudlow and company would be opposed to such numbers.
We have discussed on this blog in prior threads the supposed dearth of female economists and female economics bloggers. We have also discussed the “exceptions to the rule” with Esther Duflo, Gita Gopinath, Dambisa Moyo etc….. We have a new Jedi strong in the force to keep our eyes on…… Emi Nakamura
You have until the end of May to pick up, for FREE, some of her papers at AEA’s journal:
https://www.aeaweb.org/journals/search-results?ArticleSearch%5Bwithin%5D%5Barticletitle%5D=1&ArticleSearch%5Bwithin%5D%5Barticleabstract%5D=1&ArticleSearch%5Bwithin%5D%5Bauthorlast%5D=1&JelClass%5Bvalue%5D=0&journal=&from=a&ArticleSearch%5Bq%5D=nakamura
Merry Christmas!!!!!
Larry Summers:
https://youtu.be/lpSjPyjDOPo?t=298
Are Trump supporters so incredibly stupid that they would not take an effective treatment for COVID-19 simply because it was not the one Trump first push?
https://www.politico.com/news/2020/05/02/donald-trump-coronavirus-remdesivir-229765
Coronavirus gets a promising drug. MAGA world isn’t buying it. On the heels of positive early signs for remdesivir, several prominent Trump boosters are downplaying the results and continuing to promote hydroxychloroquine … Over three weeks ago, hydroxychloroquine was all the rage in MAGA world, despite flawed and scattered evidence about whether the drug could help cure coronavirus. Now there is another drug, remdesivir, with positive early scientific data. Much of MAGA world wants little to do with it … Hydroxychloroquine bubbled up through the MAGA grassroots — little-known investors promoted it online, got on Fox News and suddenly the president was talking about it from the White House. Remdesivir’s progress came through a government-funded trial that had the blessing of Dr. Anthony Fauci, the bête noire of Trump hardliners who blame the government’s top infectious disease expert for undermining the president and causing unnecessary economic damage with his social-distancing guidelines.
I would have been shocked at this sheer insanity but we get an almost daily dose of this intellectual garbage from Bruce Hall. And then there is Laura Ingraham:
https://www.thedailybeast.com/laura-ingraham-trashes-promising-coronavirus-treatment-remdesivir-to-promote-hydroxychloroquine
Fox News host Laura Ingraham, who spent weeks endlessly promoting the anti-malarial drug hydroxychloroquine as a possible coronavirus cure, downplayed data on Wednesday night that found another antiviral drug has shown actual promise as a treatment. Noting that top infectious disease expert Dr. Anthony Fauci declared on Wednesday that results from a National Institutes of Health study into the Ebola drug remdesivir show a “clear-cut positive effect in diminishing time to recover,” Ingraham said that while it “certainly sounds encouraging” she’s not sure why Fauci wasn’t as bullish on hydroxychloroquine. She went on to question the safety of remdesivir, which has been through numerous clinical trials over the years as an Ebola treatment. “We don’t know,” she stated. “It hasn’t been approved by the FDA. They might do emergency authorization. Hydroxychloroquine was approved decades ago.”
Hydroxychloroquine was not approved for COVID-19 while Remdesivir has been. Where did Laura get this lie? Oh yes – Bruce Hall! Laura continued:
She also wondered aloud about remdesivir’s cost-effectiveness, insisting it is expensive and will be hard to scale up for production. As for hydroxychloroquine, Ingraham helpfully explained that it is “cheap and already widely available.”
I posted on the pricing for Remdesivir. Getting production up to speed is an important issue and some have suggested Gilead charge $4500 per patient. Laura is too cheap to pay this to save her live but she is willing to take something that does not work? Just wow! She tend discussed these issues with Dr. Ramin Oskui who strikes me as being almost as dumb as Laura. Huh – I bet Bruce Hall thinks Laura is hot. She certainly is as dumb as he is. They just go out on a date!
This Oxford/AstraZeneca thing seems like a pretty good solution to me. The problem is how long does it take, to use the worn out cliche, to “make it scalable” or to manufacture it in mass quantities. Probably multiple months. I get the feeling here that if anyone is going to get this up and running fast, it is this outfit:
https://www.astrazeneca.com/media-centre/press-releases/2020/astrazeneca-and-oxford-university-announce-landmark-agreement-for-covid-19-vaccine.html
If regular commenter Alan Goldhammer is out there reading this, I would love to hear/read his thoughts on this particular long-term solution.
“Based in Cambridge, UK, AstraZeneca operates in over 100 countries and its innovative medicines are used by millions of patients worldwide.”
Some have suggested Trump makes sure any vaccine is sold primarily to US patients. Trump himself thinks he can personally command Oxford to sped up their efforts. Of course, Oxford and AstraZeneca are producing vaccines even before it is approved by the regulatory bodies. But excuse me Mr. Trump – you cannot command two British companies. Besides I bet most of the production facilities are abroad. What is Trump going to do – send the military to take over foreign manufacturers?
Moses herzog wrote: “This Oxford/AstraZeneca thing seems like a pretty good solution to me.”
Why? What is the advantage in comparison to to other solutions?
@ Ulenspiegel
This is a fair question, and I’m certainly not against cynical inquiry (even if, believe or not, that cynical inquiry is aimed at something I myself had said). Now that I’ve finished that narcissistic conversational aside, uh…..
I can’t give a “definitive” answer to your question, other than to say, it is a vaccine, rather than what I would term “a short-term solution, after the fact, to stave off death”. THAT, …… and that the folks at Oxford University tend to be a sharp group. That is witnessed by the fact even those at American Ivy-leagues often will enthusiastically jump at the chance for graduate studies at Oxford. This is similar to me claiming that “Politico” is one of the better publications when you see many times the NYT has cherry-picked journalists formerly employed at “Politico”—that does not tend to spell out “loser degenerate” like many former acquaintances have tagged Moses Herzog. [insert awkward, “wish that was 100% facetious” chuckle here]
“and that the folks at Oxford University tend to be a sharp group.”
Yes, no problem. However, the issue IMHO is that new concepts often show new issues in the medium term, therefore, the Oxford group is one a of a few with a new concept and have to show that it works. No save bet at the moment. And most of the new concepts have an issue with upscaling.
In contrast, the old approach with inactivated virus has a higher chance for side effects, however, there is no production capacity bottleneck, even in developing countries.
For me the race is not decided, I hope for some new modern approaches which could be used again in the next pandemic, but also hope for an old style cheap vaccine.
It needs help via a cocktail. Of course they are downplaying it, they can’t profit.
Rick Bright’s whistle blower case gives us new insights as to why Bruce Hall pushed that snake oil so hard:
https://www.usatoday.com/story/news/politics/2020/05/05/rick-bright-files-whistleblower-complaint-against-trump-administration/3023905001/
Bright says in the report that he resisted widespread use of hydroxychloroquine, which Trump had repeatedly touted, because the claims of its benefit lacked “scientific merit.” In his report, Bright said he pushed back against the drug “even though the administration promoted it as a panacea and demanded that New York and New Jersey be ‘flooded’ with these drugs.” … The report argues that “HHS political leadership retaliated against Dr. Bright for his objections and resistance to funding potentially dangerous drugs promoted by those with political connections and by the administration itself.” Bright’s attorneys argue in the report that tension with HHS leadership dated to non-Covid contracts earlier in the Trump administration. Bright said he resisted efforts to extend a contract with a company whose CEO, he was told, was a friend of Jared Kushner, the president’s son-in-law and a senior adviser at the White House.
Cronyism over science. That fits Bruce Hall to a tee!
I don’t post much Reddit gunk up because I imagine Menzie would react to it about the same as he does the Youtube videos I link to. The two hosts of this blog may find it a Herculean strain on their personal constitution to believe, but I do attempt to be at least semi-amicable to them (now’s the moment to ask yourself how I would act here if I weren’t trying to be semi-amicable). But anywayzzzzzz, I thought even Menzie might find this interesting as he seems to be interested in the CEA “goings on” and how their standards seem to be different than when he partook in CEA operations and bean-counting. If anyone has any thoughts—whether they view the reddit thread as garbage or interesting, I would love to read them:
https://www.reddit.com/r/statistics/comments/gehyty/q_what_lessons_can_be_learned_from_this/
Also related (You can find it in the Reddit link as well) :
https://twitter.com/NateSilver538/status/1257763205193007104
https://twitter.com/therriaultphd/status/1257724946240942082
https://twitter.com/therriaultphd/status/1257724946240942082?s=20