Tyler and Russ Roberts joined forces for a special livestreamed conversation on COVID-19, including how both are adjusting to social isolation, private versus public responses to the pandemic, the challenge of reforming scrambled organization capital, the implications for Trump’s reelection, appropriate fiscal and monetary responses, bailouts, innovation prizes, and more.

Watch the full conversation

Recorded March 18th, 2020

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Note: This transcript has not been thoroughly checked for accuracy. If you notice an error, please email the team.

RUSS ROBERTS: Okay. Welcome, everybody. Today is March 18th, 2020 this is a special edition of EconTalk to be released more or less simultaneously with Conversations with Tyler. And that’s because my guest or co-conspirator in this conversation is long time EconTalk guest, Tyler Cowen of George Mason University. We’re streaming this live on the YouTube channel of the Mercatus Center, George Mason. In general, I try not to do timely episodes but somehow something felt different this week. For one, I felt an urge to connect with my audience as we all are hunkering down, sheltering in place, self quarantining, self isolating.

I’m releasing EconTalk episodes every Monday and they were recorded weeks and weeks ago, which is the way I like to do it because there’s nothing particularly timely usually and what I release, but this seemed that there was a lot to talk and think about. Tyler, you are a self-described infovore, you’re such a creative thinker. I want to try to learn from you about where we are and to share my thoughts when possible about where I think we are and to try to learn from each other and hope that that’s of some value to those of you listening out there.

I want to start with on a personal note, my father passed away on March 2nd of this month. March 2nd of this year, a little over two weeks ago. The last eight days of his life he was on a ventilator and we removed him from that contraption and he lived for about an hour with his family in the room. It was a very powerful moment. But I think that probably colored some of my reaction to this crisis when it started to ramp up. My dad had pneumonia, he had MERS at that point, he had a bad lung.

I’m starting to look at his, at the data as they come out. I’m looking at the China data and it says if you’re 60 to 69 and I’m 65 you got a 5% chance of dying in that early data if you get the virus. That’s a pretty high … because I don’t think there’s anything that I do that has a 5% chance of death in my daily life or if there is, I need to find out and stop doing it.

So I think my original reaction, plus the melancholy mood I was in and the natural tendency for media to over-hype things on Sunday, when I reached out to Tyler, I was in a pretty anxious state. Felt an urge to encourage people to self isolate. I got back on Twitter at that point. I’d been back on Twitter for a little bit after my father passed away and just was in a very bleak and crisis oriented mood. I’m in a much more relaxed mood now. We’ll talk about that, but I want to just mention that because I think a lot of our reactions to this are colored by our own personal experience. So tell me where you’re at.

TYLER COWEN: Well, first of all Russ, my condolences for your father. I know he was very important to you and a very sad event. So we’re all with you and your family at this moment.

ROBERTS: Thank you. Thank you.

COWEN: I have been hunkered down at home every day with some quick trips outside typically to use the printer at work or maybe to refresh some grocery supplies as quickly as I can. But I wake up, I move to my sofa, I get into information absorption mode and just let it rip until it’s time to go to bed at night. I’ve been blogging and writing about this the whole time and really not doing very much else. Although, I am spending more time cooking. So what I see as the data come in is we ought to have greater concern as to the possible risks here for this being a very large scale negative event. I’m not sure my personal mood has changed that much, but I am taking this more and more seriously. Does that make sense to you?

ROBERTS: Yeah, and I want to confess another personal matter which is that I work from home every day. The only difference really in my life right now is that I have my two sons home from college and my wife who teaches high school math will be, after our session is done, Tyler, she’s going to take our broadband and use it to teach online to her class.

COWEN: That’s what I’m doing with my Law class, yes.

ROBERTS: When I encourage people to self isolate, which I did in the early beginning as a response to what I felt was not much of a governmental response initially, I felt there’s a lot we could do to reduce risk individually and voluntarily. So I was encouraging people to do that. Being aware of the fact that for me, it’s not much of a burden. I mean the whole crisis for me right now other than anxiety and worries about the future of the country and death of my loved ones who are even older than I am and other people’s loved ones, they main effect is that on Friday I impulsively went to Costco, which was better than Sunday I think. Spent an hour waiting to check out. It was really a fascinating cultural experience.

The lines went to the back of the store and then snaked around a little bit. There was plenty of stuff on the shelves except for maybe toilet paper. I think everything else was pretty much in stock, but it’s not a hard burden for me. I think it’s just important to say that up front. It’s not hard for me to work from home. I have no financial worries in this crisis. I think it’s important to try to remember that other people are not like us. That’s a good rule generally, but it’s especially important I think right now.

COWEN: I agree with that, but I think it will become hard for you most likely and hard for virtually everyone. So imagine keeping on doing what you’re doing through a some greater number of months, imposing similar restrictions on your family, having to make some number of fairly stressful decisions along the way. Let’s talk again in June how hard or easy this is, right? So we’re used to going outside and interacting with people face to face and-

ROBERTS: Not so much though.

COWEN: Mostly we’re being cut off from that.

ROBERTS: Yeah. I’m instituting, I think Skype coffee is a really good thing. I recommend that to everybody. People you might normally have coffee with, get a cup of coffee and sit on Skype or Zoom and chat with them, and that way it’s not so bad. It’s not great, but it’s not so bad.

COWEN: What are you doing to get into that quarantine state of mind, if I may ask?

ROBERTS: What do you mean by that?

COWEN: The understanding that it may be really some period of time before you are able to resume normal movements and interactions. Any given day it may seem fine, but what mental readjustment are you making?

ROBERTS: For me, the things that I’m anxious about, I usually spend the summer in California. I wonder if that’s going to be possible. My son’s getting married in August in Australia. That seems uncertain. A good friend of mine’s son was scheduled to be married. They’ve just postpone the wedding. So those kinds of things they weigh on me a little bit. The way I try to deal with that for me is it’s just an adventure. I don’t to minimize it, it’s just part of the incredible experience. A life that we have this experience together with my … The two sons are home with my wife. This is just something that we get to experience. I try to look at it that way. I don’t know what’s going to happen.

It’s obviously going to have cultural, social, economic and political implications, which I hope we’ll talk about. I’m just trying to … Here’s the hardest part. I was talking to somebody yesterday about this who’s worried about her aging parents. I’m worried about my 87 year old mom who just lost her husband and isn’t as worried about this as I am for a lot of reasons. But I think the challenge is you’re not in charge. Most of my life, I’m in charge and I love that feeling and the acceptance of the idea that you can’t control your mom’s safety and you can’t control when your son’s wedding will actually be, it’s just hard to deal with. I’m not used to that. Don’t like that feeling. So for me, it’s trying to cope with that. How about you?

COWEN: With that in mind, I’ve tried to stay as busy as possible and in fact I don’t think I’ve ever, ever been busier in my entire life. Reading materials, writing, passing along advice, just processing information every day feels like an enormous sort of rush of things I have to do. Even though in the sense of my physical surroundings, it’s quite static. So I think that’s given me maybe an illusory sense of control, but it’s made it bearable for me. And again, I don’t think my personal mood has changed that much other than just feeling much, much busier.

ROBERTS: Well, about a week ago, my wife was a little concerned with how focused I was on it, I was on the whole issue. And I realized this. That’s just the way I deal with it. That’s part of my anxiety control mechanism. It’s just, I think my human reaction to it and it sounds like it’s yours too.

COWEN: One striking fact about all of these events is I think it really drives home the difficulty for people of thinking in exponential terms. So you and I have both been talking today about the importance of economic growth, compounding returns over time. Having an economy growing at 3% is much, much better over time than having an economy growing at 1%. How hard it is for people to grasp that. That’s old news to the two of us.

And here we have a totally new event where, by some estimates, the number of actual cases is doubling say every five to seven days in many parts of the country or world. It right now doesn’t actually quote unquote “look that terrible.” And there are many people who have coronavirus but no symptoms and they’ll probably just be fine.

But nonetheless, if something is doubling every five to seven days, some very bad events are not so far away. But because they’re not vivid people, including a lot of economists I know, they’re not able to make that mental leap. I think my background with thinking about economic growth is a significant reason why I think I’ve seen some of the dangers here coming.

ROBERTS: Well, I’m going to think about that a different way. I, like you, I spend a lot of time thinking about uncertainty and risk and growth, linear versus exponential. And I’ve been struck by how hard it is for me to get my head around this. I was alluding to that earlier that I have relatives who watch Fox News and they were telling me a week ago, this is just like the flu. Maybe eight days ago, 10 days ago. I lost it. I said, “1.5 million people dying in America is not like the flu.” And I was looking at these numbers, 40% to 70% of Americans will likely get coronavirus. Let’s say that’s half. So that gets you to about 150 160 million. And that “1% will die,” that gets you to 1.6 million, presumably extra deaths.

So that concentrated the mind wonderfully or whatever the opposite is, right? I started to think, oh, we’ve got to act right now. We got to spread the word. People are under appreciating it and I think they did for a while. I feel like they’ve kind of gone back the other way now. I think we have to be very careful right now. I think it’s really appropriate most of the things that everyone’s doing. Staying at home as much as possible, wash your hands, not touching your face, staying six feet away from people. Those are all crucial over the next two weeks and maybe the next month, maybe longer. We don’t know.

But I do think there is an apocalyptic reaction to this that that is also very natural. That is the opposite of what you’re talking about. That people just, they see the curve going like this. They say, “ We’re 10 days behind Italy.” I don’t think we are. I mean I don’t want to be eight days behind Italy or 12 or whatever the right way to think about that is. But I think it’s really hard to think about this. I’m not so good at it and I think about it a lot.

COWEN: Keep in mind this affects the world as a whole. Most countries do not have a public health system as good as ours. Ours is far from the best we’re seeing, by the way. We’ll get to that. But also I think it’s now becoming fairly clear there’s quite a good chance that soon we will have say 20% unemployment in financial markets. People are hoarding cash. Our real interest rates are rising.

Even if the Fed supplies as much liquidity as possible, there’s a danger that either the liquidity is not deployed or the only way to get it deployed is to have centralized government as a truly major allocator of resources. Far beyond anything we’ve seen so far. Almost as if we were on a wartime footing. And the chance of those events happening seems to be rising. So of course we should take the deaths very seriously. Even many younger people might have some kind of permanent damage to their lungs. We’re not sure yet.

COWEN: There seem to be many open questions, but the risks do seem to be rising and I would include the global front, the economic front. Tensions between the United States and China are much worse than they had been. China is calling it a virus from America. Trump is calling it the Chinese virus. It’s even possible, that’s the single worst outcome of all of these events. So there are many different angles here. I think too many for any person to really take in and follow or grasp. But again, to me the risks do seem to be rising.

ROBERTS: Yeah, well those other parts I think are very relevant. The economic and social pieces, political pieces. Let’s focus for a few more minutes on the medical epidemiological side of this before we move on. What are your views? Do you have anything to say about this accusation, which is true, that we’ve been very slow to roll out testing? A lot of people are arguing, South Korea figured this out, solved it. They’re basically almost done with this problem. We’ve been slow to test and as a result it’s we’ve opened up a huge Pandora’s box that we can’t fix.

COWEN: It’s very true that we have been slow to test. Some of that is because of FDA restrictions. Some of that is the administration simply not responding quickly enough. Some of it is reasons that still seems somewhat mysterious as to why we didn’t have better tests handy. There’s a very good article in Wired a few days ago on this. We don’t know the full extent of what happened, but I would not be so quick to assume that South Korea or any of the East Asian nations have it under control. There’s some very recent data suggesting that the number of cases may be rising in those countries.

A downside of controlling it quickly is that you have a very large pool of people who have in essence no immunity. So which countries exactly will do how well? I would say we don’t know yet. I do think Taiwan and Singapore most of all, and then South Korea probably have had the best responses, but they are by no means in the clear. The question is how many waves there will be, what kind of immunities are built up, for how long does this stretch? What I am seeing from informed opinions is just a high degree of uncertainty and I find that worrying. We’re in a position where we need really quite a number of particular things to go well for any country to be in the clear.

ROBERTS: It’s just hard to know. I think what people seem to have missed in this testing conversation is that there appears to be an enormous number of false positives. So I’m encouraging people not to focus as closely on the caseload as more perhaps on the death count, unfortunately. I assume there’s false negatives too, but this idea that people are walking around who are asymptomatic, I’m sure there are some. But I wouldn’t be confident it’s all the people who have tested positive.

My thought, it’s hard to have a Libertarian moment or a classical liberal moment in these times. But it seemed to me that when the administration and Trump underestimated the seriousness of the problem and they downplayed it, which I thought was a terrible mistake. But when they did, people like you and me and others said, “Hey, this is a real problem.”

And the private voluntary reaction to the crisis was quite strong. The NBA shut down very quickly. The NCAA shut down very quickly. Baseball shut down very quickly. Nobody had to order folks around. I think what’s been underestimated in this, in the demand for this sort of top down, fix it, solve it, make everybody hold. Don’t let anything bad ever happen. We’ve missed the role that we can play individually. It’s going to be very imperfect. Of course, people cheat on self quarantining. I know that. But the idea that we can test perfectly as if that could solve it is unrealistic in a country of 330 million people in our number of square miles.

It just seems that the advantage of this bottom up voluntary response to the crisis is it allows for nuance. The top down says everything’s closed and that means that there’s going to be enormous economic and human results from that, that we’re just sort of ignoring. The advantage of the private response is it allows for people to be more flexible, to take into account when they can and should, when things are more dangerous to some than others. And I just think that that’s been lost in this maelstrom.

COWEN: Maybe I have a different point of view on a number of those points. I’m not sure the rate of false positives is very high. I see papers arguing it both ways. If you look at the cruise ship testing-

ROBERTS: 50%. 50% in the one I saw.

COWEN: Well, there may be 50% who don’t have symptoms and who are just fine. But I don’t think there’s anything close to 50% false positives for tests well done. So if you look at say testing in Singapore, I don’t think they have anything close to a 50% rate of false positives. Might the drive through tests in South Korea have a much higher false positives rate. Certainly, I would expect that. Even there, we don’t know. But I think it’s very important to be shutting down as much as we can right now.

ROBERTS: Agree. Agree.

COWEN: With the number of cases rising exponentially, if you’re going to apply testing and isolation and giving people ICU care and hospital beds and ventilators, you need for that problem to be manageable in size relative to your healthcare infrastructure or you do end up being like Lombardy in North Italy. So we could end up in that position say two weeks from now.

I’m not sure we have to, but I think the single biggest thing we can do to stop being there given that the tests are not in our labs at the moment is just for people to interact with others as little as possible. And it’s as if we’re trying to put the economy in a coma, to cite an analogy Larry Summers gave. So I think we should be trying to put the economy in a coma. I’m okay with government doing that, but I think personally we need to be doing that quicker than what the government is up to.

ROBERTS: Yeah, I mean a lot of things got put in, I would call it a deep freeze very quickly. Sports being the obvious one. Broadway I think followed shortly after that. I think the place where the biggest hole was bars and restaurants and the government did that. Most of our restaurant owners and goers I don’t think particularly were excited about self regulating there. But certainly, churches, synagogues, mosques all just very quickly shut down, which is pretty amazing.

COWEN: Plenty have not, right? Plenty of religious ceremonies are still up and running. You can walk around different parts of Virginia and see people intermingling at a large scale. We’re not really quite there yet in my view. If 30% of Americans, if you poll them, they say they’re not even worried. So there’s been a huge failure of communications. Some of that comes from our President, but it’s really not just that there are so many businesses, institutions in the nonprofit world that just have been very, very slow to respond.

ROBERTS: Yeah, fair enough. I do think staying home is the single biggest thing we can do right now and obviously, closing some things through regulation and government is going to make it more likely than not.

COWEN: I know one of my proposals is we should have things that make it more fun for people to be at home. So some of the entertainment companies are having free streaming on cable of some of their back catalog. Maybe that’s a marginal effect — but if it saves a few lives? So whatever we can do so that people are willing or indeed maybe even in some cases eager to stay home, making childcare issues easier. If you just think through all the different logistical issues with staying home, it’s actually quite complex. I would like to see our nonprofit sector get on the ball very quickly with delivering supplies to people who need it and who shouldn’t be going out or can’t get out. We’re starting to solve on this, but on almost all fronts, we’re starting way too late. Ideally, we should have been doing this at some point earlier in February.

ROBERTS: Let’s move to the more economic side of things. I’m not sure how important those things. I mean, I really liked that … Again, I have Amazon Prime, so I have lots of stuff to watch. I have Netflix, I have lots of stuff to watch. But if you don’t have those, YouTube has oh what, only about a trillion hours of entertainment. I think the stir crazy aspect of this … Now you’re right, you suggested earlier that after six weeks, this might feel differently than it does now. I think the financial side of this for people who are not being able to get to work, can’t go to work as is the much bigger issue obviously.

COWEN: Of course.

ROBERTS: Let’s turn to that. You said unemployment might be 20%, of course, it’s higher than that right now in a real sense, in an unmeasured non-quantified sense. A lot of people “aren’t working” and I would as I’m sure you would, I’d encourage you to look at employment as opposed to unemployment in the coming weeks and months. But if the economy took a break, if government had announced, irrespective of this virus, that everybody has a forced two week vacation. Everybody goes home for two weeks, stays home, it’s good. We’re going to have more family time. You know GDP would go down in those two weeks if we could measure it in a two week period. We don’t. Some of that would be made up for in the two weeks after because people would be buying or creating things that weren’t made during those two weeks.

Some things are not replaceable. The meal out versus the meal in, right? Eating out versus cooking yourself. You don’t make that up or you could a little bit. But in general, what are your thoughts on, on that sort of extreme version of this, right? That would be a stylized way of thinking about what we’re going through now. Well, what would be the con the impact of that, if everybody just stopped making stuff for sale, that commercial life stopped for two weeks or four weeks?

COWEN: Well, two to four weeks, those are easy cases. If you think of many service sectors as having to shut down say until August, which is quite a possible scenario in some cases even later. That to me is greatly concerning and it may vary across sectors. So if you think about the NBA, whenever the NBA is ready to play games again, I mean the players will show up the next day and there’ll be ready, right? That will come back very quickly. But if you think of small businesses, say restaurants, the big chains aside, they’re typically thinly capitalized.

Let’s say a significant portion of those are gone forever. And then when things are somewhat normal again, how does the economy re-scramble and re-constitute the organizational capital that was in those ongoing enterprises? That to me is a hugely difficult problem and whatever you think the government should or should not do, just spending a lot on fiscal stimulus will not ease that problem. That’s the actual destruction going on is the relationships, the organizational capital, the intangibles that will decay. Not over two weeks, probably not over four weeks but over four or five months or longer. Then I think that’s a matter really of great concern.

ROBERTS: Well, I’ll make a bet with you right now, Tyler, that this four or five months from now, it won’t look like it does now. In terms of the expectations of sub quarantining and self isolation and things being closed. I think we’re going to get to see Tom Brady in a Tampa Bay Buccaneer uniform. For example-

COWEN: On TV, but not with a crowd. Yes. It’ll be on TV. They’re playing basketball games to be televised and people watch them. But even in China where the number of new cases is really in most parts of the country, genuinely very low, they are not returning with live sporting events. Keep in mind we will have a pool of never infected people, which will be fairly large in absolute numbers and what risks we will be willing to take. Insurance companies would allow, our liability system and corporate lawyers would be willing to allow. When you think through all of that stickiness, I think we’re really not so close to resuming many of these shutdown activities.

ROBERTS: Yeah, I’m a little more optimistic than you, but if you said to me, “How do you know?” I’d say, “It’s probably just empty optimism.”

COWEN: But you agree there’s far too much litigation in American society, right? Far too easy to sue people for random reasons. Why won’t that-

ROBERTS: Yeah. I assume that’s part of the reason. I say that’s part of the reason businesses are overly aggressive about shutting down. Disneyland, my understanding was Disneyland got a special exemption. They could stay open and then they shut down anyway because that’s a litigation nightmare I assume.

COWEN: So I think the reopening decisions, especially in more bureaucratic corporations, it will be very hard for everyone to sign off and agree. Yes, we’re going to go ahead. There’s going to be an open Disneyland again. We’re going to have spectators at NBA games. The risk of bad publicity, social media storms against companies whether true or not, someone might have died as a result of going to a game. Over some time horizon social norms may shift and a lot of people might just say, “Look, we’re just going to take these chances and deal with it.” But I don’t think we’re close to that. And certainly, our legal system is not close to that. And human resources departments are not close to that.

ROBERTS: I guess I disagree a little bit. I mean, I saw an earlier interview you did on this where you suggested some larger cultural changes and I think are likely. I base that partly on the idea that right now, people under the age of 25 were having trouble self isolating. Part of it’s because they think they’re not at risk. Part of it is maybe they don’t worry so much. They don’t have as much of a forward looking thought process. Part of it is, hey, I want to have a good time. I think the human impulse of that is going to be strong, but the legal part is huge. I agree with you there.

I’m going to talk about organizational capital because I don’t fully understand that. You used the word destruction. I think it’s important to make a distinction between what we would call wartime destruction and economic, quote, destruction, Schumpeterian destruction. The way I think about it is this real estate developer said to me, very successful… He said this to me 10 days ago. That’s when I started to started thinking, “This is troubling.” He said, “I’m going to lose all my buildings.” I said, “Why are you going to lose all your buildings?” He said, “Well, the people who live in them aren’t going to be able to get work. They’re not going to be able to work.

They’re not going to have a paycheck, some of them, not all of them. Some of them are going to keep receiving a paycheck anyway, but some of them aren’t going to be able to get a paycheck. I’m not going to be able to pay my loans off. The bank’s going to foreclose. I’m going to lose my buildings.”

Now, that’s a personal tragedy for everybody involved, but buildings are not going to be destroyed though. Right? Someone else is going to buy them up at some point in the future, maybe the same person eventually, but the buildings aren’t destroyed. Who owns them is destroyed. The stream of revenue that they provided for that person might be reduced or end. That restaurant that goes out of business, there’s going to be a restaurant there again. It just might not be the same person. They might not have the opportunity to do that. When you talk about the organizational capital being destroyed, what do you have in mind?

COWEN: Well, think of the labor market as being a very complex matching problem. Right? After the financial crisis of 2008, 2009, unemployment was much higher. It took really a very, very long time for labor markets to come back. That was work over a decade, and that was not 20% unemployment. It was not with any kind of public health crisis going on. Some workers will want to be laid off to collect unemployment insurance or collected it more quickly. Revenues for many businesses will go down. The ties between employers and workers will end up weakened. People will go off and do other things.

Reconstituting an enterprise, think of it as putting together a great sports team, like those old San Antonio Spurs teams. That took them quite a few years of drafting and training and playing together as a squad, having the right coach in place. Our economy had been doing a fairly good job of that, but there’s a big reset button being pressed on all those activities. That’s what I mean by the organizational capital going down. In some ways, it will spur efficiency, so firms having to get rid of their less-productive workers. Right? But in the short run, I think it will be fairly dire and our bounce-back could be slower than many people are expecting.

ROBERTS: Okay. I guess I’m not sure. So much of the economy is going to continue humming along in the background, like we’re doing right now. Here we are producing this podcast. Whether universities can successfully teach classes online, of course, is a struggle, but I think a lot of things are going to stay in place. I’m not sure how important is the organizational capital of a restaurant. They’re going to put a sign out for waiters, and people are going to go work there who used to work there before.

COWEN: I think restaurants-

ROBERTS: Let me say it differently. The 2008 crisis was that part of it, a lot of pieces to it, obviously, but the labor market part was that we had two sectors of the economy, construction particularly, and then manufacturing that took a massive hit. Those workers had to figure out what they should do next. A lot of them sat on the sidelines. They couldn’t find anything that was attractive to them. It was a huge matching problem. You’re sitting in Las Vegas, and you’re not sure whether you’re going to have a job in a week, a month, six months, or a year, and you kind of hope it’ll be a week, so you wait. You don’t relocate. You don’t move. You don’t retrain. You don’t imagine realistically that this entire industry that you’ve spent your life in is never going to come back for a long time, at least to the level it was before. You don’t adjust, and that’s a huge problem. This seems a little different, or do you not think so?

COWEN: Well, now it’s face-to-face services taking a big hit, which in America is significant.

ROBERTS: True.

COWEN: I think an advantage the American economy has… We have more big business than just about any other economy, or close to it, and big businesses will be much more stable than smaller ones, say, as you might find in Italy, but you mentioned universities. Let’s say come fall semester universities are still online. What percentage of the students will still sign up and pay tuition or at what rate? I don’t think anyone knows.

ROBERTS: Good point.

COWEN: Universities don’t have a lot of control over their labor costs. When you apply these possible revenue hits to fairly bureaucratized segments of our society, again, I think you’re going to see serious problems, much bigger than during the financial crisis. Again, that was only about 10% to 11% unemployment. Probably now we’re talking something much higher.

The uncertainty of future waves of the virus, which may or may not happen, but I think it’s unlikely that by July or August we will know for sure that they won’t happen, that will be a significant damper on economic activity in a way that… There was some point in 2009… Maybe things were quite dire, but no one felt anymore that another Lehman Brothers event was around the corner. Eurozone aside, that was its own story, but there was a point where we could all breathe a sigh of relief and then just wonder how well the recovery would go.

ROBERTS: How long should it take? Yeah.

COWEN: This may not be that. There’s not a clear end date in a way that you usually see with financial crises. I don’t mean to be the downer guy here, but…

ROBERTS: But you are.

COWEN: Our goal is to talk these through honestly. There are people I know more pessimistic than I am. Those are some of the factors that worry me. As you know, our own economy, labor markets are so over-regulated, that will hinder our adjustment.

ROBERTS: Yeah, I think that’s true. It’s fascinating how many calls there have been in the last couple of days for relaxing various kinds of regulations, the most obvious being FDA approval for testing for the virus, relaxing HIPAA regulations, privacy regulations on telemedicine so that older people can get medical care without having to go out into public. Some of these things, of course, you’re going to have longer-term consequences. We may decide some of these regulations weren’t so productive to start with. I don’t know, but you are painting a much more dire picture than I expected. I would say that if you are right, Donald Trump will not be reelected. You’re suggesting he’s going to be in the middle of a major recession. Accusations that he bungled the opening of this and unemployment in the 20% range, he’s cooked.

COWEN: I’m not sure that’s true about Trump. If you think of this as analogous to a wartime event, clearly FDR did not manage Pearl Harbor very well, but he certainly was reelected. Some electorates, possibly still ours, have a tendency to stick with the incumbent in situations that feel like war time. I don’t know if that’s still true, but I wouldn’t leap to the conclusion that it’s not.

ROBERTS: Interesting.

COWEN: That’s very tricky. Again, I think we need to think through other parts of the global economy. Economic growth in China right now almost certainly is negative. They are bouncing back, but the Chinese economy has been sustained by momentum. They’re kind of off-balance sheet — municipal debts are very, very high. That’s a major problem for them. I know our economy is not so closely tied to the Chinese economy, but European economies are. Many European governments seem to be managing this worse than the United States, certainly worse than East Asia.

This is likely more of a correlated global event than, in fact, 2008, 2009 was, though that had a fairly high degree of correlation. Now that too is a concern, and there’s much less, what you might call, organizational or cooperative capital internationally now than there was in 2008, 2009. Right? Far more nationalism, countries not being nice to each other. The European Union has been, in my opinion, highly ineffective in doing much. Everything has happened at the national level, for better or worse. Leadership in the United States, again, I view that as not having been high quality as of late. I think there are many things to be concerned about, but I think that the view it’s all Trump’s fault, that’s very dangerous, and it’s important to combat that. Trump was very late to the party showing up to do anything, but if you look at Western European governments, if you look at a lot of governors, a lot of private businesses…

ROBERTS: At China.

COWEN: Yes, China, there’s been a systemic failure on this, and Trump is certainly part of it, but sort of just getting rid of Trump or criticizing Trump, I think that’s very much the wrong way to go here. We need to have accountability more generally.

ROBERTS: Yeah. Well, I’m just going to make this observation. You can comment if you want, but I find it… I love Twitter. I have a bit of a love-hate relationship with it, as my listeners know, because it can be a ugly sinkhole of attention, of acrimony, and other things, but I think for me, and I think for you as well, based on our pre-recording conversation, it’s a huge source of information. It’s where I go to find out what’s going on right now. That’s the positive side. The negative side is the number of people who are using the crisis to advance their ideological or political agenda.

COWEN: Of course.

ROBERTS: There are things to learn from this about the proper role of government, the relative level of responsibility of, say, a Republican or a Democrat, but the zeal and ease with which people paint this situation as the result of problem X or Y that conforms with their preexisting worldview, and I include myself in this guilty party, that’s very depressing to me. Does that get to you at all?

COWEN: Yes. I try to follow better people on Twitter, but even following better people, one sees quite a bit of this. But that said, I think we will have to make significant adjustments in a post-coronavirus world. I think the upside is to believe that at least biomedicine will be far swifter and better funded and less regulated, in the good sense of that word, and our response capabilities, when all this is over, for the next event will be far, far greater. We may overreact in some 9/11 kind of ways like we’ve done arguably with airport procedures, but if there’s one part of the economy that will get a huge, beneficial boost, I think it is our biomedical capabilities and our public health infrastructure.

You might think we’re going to make big policy mistakes in many other areas. I do expect that. But in that one area, I think we will end up in a much better place. If you see that as a major sector going forward, in any case, completely aside from the issue of pandemics, that’s one of the major positives likely to come from this, that the next time something like this happens, you won’t have the FDA banning states from doing or approving their own tests. It’ll just happen.

ROBERTS: That’s true. Let talk for a second about a possible upside of the story, a cheerier story. Is it irresponsible to have this conversation, Tyler? Are we risking that people will misunderstand this? I think not. I’m going to take a chance here and talk about what I think is a cheerier story. Is it possible that we’ve overestimated the death rate based on Italy and Seattle, Washington because they’re older populations that got infected? Is it possible that one of the things being tested right now for treatment will turn out to be fairly effective, that a vaccine will be here in not 18 months, but more like something shorter, but that the treatment will carry us over until that happens and that some of these more depressing or a cataclysmic economic changes will be much smaller than you’re worrying about?

COWEN: I think those are very good questions. I think any conversation about these matters has an irresponsible element, no matter how carefully you do it, and I take that very seriously. I think ultimately you have to compare what you are saying or writing to what you think the discourse will be like without you, but I don’t think it’s possible to have a completely responsible conversation. A number of the specific points you raised, a vaccine… Given that most people are not at all harmed by coronavirus, the safety of the vaccine has to really be very high. Right?

ROBERTS: Good point.

COWEN: That will take a while. To the best of my knowledge, we’ve never developed an effective vaccine for any other coronavirus. Now, I do think, from what I read and hear, it is possible to do it now, but it is not a trivial procedure. It is doing something for the first time. It’s doing it in an environment that is highly regulated and bureaucratized, where institutions are slow to respond. Simple issues like scaling up ventilator production and distribution, we are still far behind the curve, even though we are really quite sure that is an urgent matter. Even if you’re relatively optimistic about this crisis, we are to this day performing poorly on that matter. Will we get the vaccine right?

There’s a lot of optimism out there, but I don’t think it’s a likely scenario that simply four or five months from now everyone is getting the vaccine and in essence the problem is vanishing. That seems quite unlikely from what I read in here. It’s maybe more like 12 to 18 months. If we’re extremely lucky, it could be a bit less than that. Then in terms of treatments that work, I think there’s a lot of uncertainty. Many treatments are being tried right now. There’s a lot of experimentation. Hard for me as a non-biomedicine person to judge. We’ll just have to see. But again, there’s still liability issues. There are scaling issues. There’s distribution issues, possibility of secondary harms. Given that most people are not killed or even harmed by coronavirus, it’s very complicated.

ROBERTS: Fair enough. We’ll see, I guess. I spent most of my life as an optimist. Most of that optimism ended or I think around… It’s slowly starting to decline through the 2000s as events… maybe more, and I got older. I think when you get older, you get crankier.

COWEN: I think the 2000s were not nearly as bad as people think, by the way. It’s a separate matter, but they did not dent my optimism maybe as much as yours.

ROBERTS: Yeah. In the face of your gloominess, I found my natural optimism re-arising. I don’t know whether that’s good or bad. I guess we’ll see what actually happens. It’s kind of foolish to talk about it or to forecast it. I do think there’s an interesting dynamic going on now between… It reminds them a little bit of other social issues, climate change, you name it, where people argue that we should be more worried than we might otherwise be because that otherwise will encourage people to be less worried. I don’t know. I find that hard to be sensitive to. There was a big dustup yesterday on Twitter because John Ioannidis suggested that were in the dark here. We might be overreacting. We don’t have much data. Us and Taleb and others responded back, “That’s why you have to be extra careful.”

COWEN: Yes, I agree with Taleb on that. I would say I’ve become much more pessimistic about our ability to respond to climate change, because what we’re seeing with coronavirus is how unwilling so many people are to act until the very last moment, if even that.

ROBERTS: To make a sacrifice.

COWEN: Right.

ROBERTS: Yeah. Sacrifices are hard. It’s not easy. A big free-rider problem there, obviously, socially, it’s in both of those situations, climate change and this, right? The idea that I’m going to make a sacrifice of lifestyle for some promise of reduced external harm is hard for people to… It’s just hard to motivate people that way.

COWEN: I think the thing I’m recommending for a lot of people now is to find a sphere of activity, no matter how small or how local, that you feel you can control and you can do at home and you can contribute to. This feeling of powerlessness may set in, that will cause people to panic more or become too depressed or just make them much less productive, or spread to their families, or maybe cause them to go out and want to get drunk and become a spreader in some manner, so really to think long and hard. I’m not really counseling stoicism. I’m counseling a kind of action, something you can do. Even if it ends up only being a placebo, you will feel more in control. Of course, there’s a chance that will pay off and have some benefits. I think that’s an important idea to promote at this point.

ROBERTS: Well, I like the idea that while you’re home, if you’re not usually at home, to try to have a project that you’re… You’re alluding to that effectively, which is teach yourself a language, an instrument, learn how to draw. There’s just so many wonderful things you can do online now without having to go out of your house. You can make yourself get better at something. That’s your niche idea, right?

COWEN: Yes.

ROBERTS: Work at something. I’m doing a plank every day. I’m getting down on the ground, trying to improve my core. I’m taking a walk every day, which I didn’t otherwise do. I think it’s great to try to create those habits for yourself in this a window of enforced unusual behavior.

COWEN: In terms of policy, what do you expect on the fiscal and monetary fronts moving forward?

ROBERTS: Well, great minds think alike, Tyler. That’s what I wanted to talk about next. Well, I think there’s some confusion between the abatement of suffering and what we would normally call fiscal stimulus. A lot of what people are proposing is fiscal stimulus isn’t going to stimulate anything. People aren’t making things because they can’t come to work or go out of their house. Putting money in people’s hands has no impact on the overall economy. It will help them pay their rent, which will reduce that cascading worry that I mentioned earlier from the real estate developer I had talked to. That’s going to be, I think, extremely important in reducing the set of economic readjustments that you were more focused on than I was in the earlier part of the conversation. But the idea that somehow we’re going to solve the economic disruption through traditional means, either monetary or fiscal, seems to me to be very unlikely.

You can make a case they’re giving people cash right now. I like when people say, “Quickly,” as if we know how to do that. The last time I think we did this, it took two months. It didn’t do much for the economy. The Bush Administration did that… whatever it was called, tax rebate or whatever it was a long time ago. We’re back in, I think, 2001. I’m not sure we have a lot of weapons for this kind of… To come back to my earlier metaphor, everybody go home for a month, maybe six weeks, maybe two months, and when you come back your business might not exist anymore, so find something else. The idea that we’re going to fix that with monetary or fiscal policy seems to be unlikely. The idea that we’re going to, quote, bail everyone out, make everyone whole is going to be really hard to implement. We can say it. You can talk about it like it’s a policy, but I’m not sure how you’d implement it. What are your thoughts on it?

COWEN: I worry that we don’t know how many businesses are bouncing back and how many cannot be kept on life support. Again, if it’s a month or two, I think almost all of them can be kept on life support, and we could throw money at the problem, and then in two months just pick up the pieces and be the America we once knew. But if it’s becoming five or six months or longer, then the amount of money you have to send, and people just being kept in unproductive activities… You actually want some of those restaurant owners maybe to end up as UPS drivers. Right? We don’t know how many. The degree of optimism or pessimism, it really seems to matter for economic stimulus. If you’re a relative optimist about the progression of the virus, I think you should be relatively pro-stimulus, like, “Just keep it running for now. Things will be back.”

To the extent you have a more dire forecast, you even worry a bit about the government’s own budget constraint, and you also start asking, “How many of these people,” it’s like a new world, “need to be doing something else?” Maybe you don’t want to hasten that at the fastest possible speed, but you’re not aiming to just keep every business going, say, with loans from the Fed either. I see people making different arguments, and I get very uncomfortable. I think we should be more agnostic than what I’m seeing. Agnostic doesn’t mean you do nothing, but that to me is one of the biggest uncertainties in this debate that’s hardly ever being acknowledged.

ROBERTS: Now, you have a document you put out, and we’ll link to it, with a whole long list of policy ideas that might make things better. I want to focus on one for a minute that comes to mind as we talk about some of the worst-case scenarios, and that’s maybe of prizes. I know you’re a big fan of prizes. I’m a big fan of prizes too. Let’s put it in this context. I know that the pharmaceutical company Gilead has a drug that’s under possible consideration that might… They’re testing it now to see how it’s going to do. I think they created it for Ebola, and it seems to have some mitigating effect. We’re going to find out. Let’s say it doesn’t. Or no, so let’s say it does. Is Gilead then going to be able to charge whatever they want for that? Very unlikely. Right?

COWEN: Right. Especially globally. Right?

ROBERTS: Right. I’ve talked endlessly now on EconTalk, I’ve an episode coming up soon on this question of this challenge we have of the semi-free market, this weird market we have in pharmaceuticals that I think is poorly constructed. The incentives are wrong. We’re encouraging innovation that adds a couple of months of life at enormous costs of both research and then Medicare payments. It seems like it’s just a mistake. It’s a bad system. At the same time, I don’t want to take the profitability out of the pharmaceutical business, and I want Gilead and other companies to have… and Roche and others who develop this new test that’s relatively quick… I want them to have a big incentive to really solve this problem. The number on way we do that is to day, “Well, you’re going to be able to charge a lot for it,” and I think that’s not going to happen either culturally or legally for legal or cultural reasons.

COWEN: With the externality of infectiousness, you don’t want the price to be high. Right?

ROBERTS: Correct. Right. Well, you could solve that by letting them charge a high price and the government funding it, but I think the…

COWEN: Yeah, at the consumer side, the price should be low, and it’s not going to happen.

ROBERTS: Right. Not going to happen.

COWEN: Buy the patent rights at auction, give them a huge prize, tens of billions of dollars, if they deserve it, I’m all for this. Even if you think it has no impact this time, this is not our last pandemic. It will matter for the next time around. I think those prizes should be large and credibly promised, and I would like to see us get on this.

ROBERTS: That would seem to me to be, given our earlier conversation about the risk of a permanent disruption of social life because of the recurring challenges that we might be facing, that might be the one thing you’d want us to really kind of focus on, is to get a lot of really smart people trying a lot of different ways to mitigate the medical impact of this. You agree?

COWEN: Yes. I do think you have to be a little careful in how you structure the prize. A poorly-specified prize will encourage people to work in small groups and not share information, right? “I want all the money for myself.” Some amount of discretion is required, and you want to favor, when you hand out the prize, institutions that have been cooperating and sharing information. If you simply set up a very credible board of a half-dozen people with real expertise to decide how to hand out, say, $50 billion, and you make sure there are people willing to write a check, like to a big, unpopular corporation, if that’s who’s done the good work, I think that’s what we should do. But simply saying, “Well, there’s going to be a prize for the company that solves this,” you might get a hoarding of information when sharing is appropriate.

ROBERTS: Yeah. I’m thinking about Jonas Salk, the man who cured polio and, I think, created the polio vaccine. I have read, I don’t know if it’s true, that he gave it away when he discovered it. People pointed out that, “Yeah, that was at a time when there wasn’t FDA testing that costs…” People debate what it costs to get a drug approved, whether it’s a mere 500 million, or is it more like 2 billion? But obviously, we live in a world where it’s very expensive to get a drug approved. Is there other things you would do to make a prize more effective? I guess I was trying to say two things. One is that these other pieces of the regulatory puzzle might be part of the challenge. The other is that in the old days, the non-monetary aspects are also pretty important. Jonas Salk is immortal. Maybe we should just say, “Whoever comes up with it, we’re going to have a set of baseball playing cards that we give away to every American child to worship this person who was saved their grandparent’s life.” I don’t know.

COWEN: No, absolutely. I’ve written in the past, “We don’t respect scientists enough,” and that may be hurting us now. One possible silver lining of this cloud is we will respect scientists a lot more if they come through with some pretty big and significant development. I think that’s likely at some point, but just to pre-commit as a culture to honoring those people is something we all can do.

Respect your scientists and prizes. What else should we do?

ROBERTS: Well, I was going to ask you if you were, quote, in charge, if you were the coronavirus czar today or President of the United States, besides creating potential a very large prize, the other ideas that are being bandied about are bailouts of various kinds for certain industries that are particularly hard hit by this.

Do you think there’s a moral industries that are particularly hard hit by this. Do you think there’s a moral hazard issue there in some of those cases? Obviously in a lot of those cases there’s not much of a moral hazard issue. Somebody pointed out, I don’t think you expect the Thai restaurant on the corner to prepare for a pandemic and act accordingly in advance so that, worrying about the impact of a bailout there is probably not the biggest worry. What are your thoughts on these moral hazard issues? Do you think the airline should get a bailout? I think that’s a good thing?

COWEN: One has to be very careful with that word bailout. People mean so many different things by it. I don’t think our government should let all of the major corporations fail, which are likely to fail if we do nothing. That said, at this point, I remain agnostic as to exactly what we should do. On one hand you don’t want to be in a position of picking winners and losers. But on the other hand, I think one needs to realize maybe cruise ships are not really coming back in a big way and maybe they shouldn’t. There is something to be said for some sectoral targeting here, but I think the political economy consequences of just letting all of those jobs go away are too dire and we would end up with much more government. We’d have like a New Deal Squared and I think some BandAid has to be applied.

I’ve yet to see a plan that I find very convincing and they’re all plans based on the premise of, these businesses just need some loans to tide them over. That might be true. It might be the bet we end up having to take because maybe there’s not any other bet, but I don’t feel as good about it as the other people out there pushing these ideas. They seem a little hasty to me.

Like they’re taking tools out of the toolbox from the last crisis. Things they thought should have been done and weren’t and saying now is the time to see I was right all along. It makes me very nervous. I’m seeing high levels of epistemic non-rationality. But that said, I really am not here trying to argue for doing nothing. I don’t think we can let all the cards fall to the ground. What’s your view on that?

ROBERTS: Well, I’m not sure what, I’m like you, I want to minimize what we do particularly if it’s likely to be permanent, makes me really uneasy. We’re at risk that this becomes a watershed moment. I think actually, it’s probably too late. Everyone just expects the government to quote, solve this. Again, they neglect the things that we’ve done on our own. I understand the things that we can’t do on our own to fix macroeconomic cascades.

I’m not suggesting that we’re going to avoid all the problems if we just leave things alone. I know that’s not true. But I know there are a lot of things happening. People are buying gift certificates from their rest favorite restaurants and other things to keep them going. They’re doing takeout. Obviously that’s not going to be enough. If people aren’t flying, there’s going to be airlines going bankrupt.

But the idea that somehow we can make everyone whole. I really don’t like the idea of big business as whole. I’d much rather make individuals whole and I think that’s just really hard to do. This idea of giving everybody $1,000, I don’t need $1,000. Presumably you don’t need $1,000 and do we want to allow every American, you know, is it to make it easy? Should we do that? But it’s clear there’s going to be terrible hardship on individuals who can’t get in to work or shouldn’t go to work. There’s no quote free market solution to that that’s obvious.

There may be some of those things that are necessary to reduce the spread of the virus, but they’re so blunt and it discourages me tremendously to think about the consequences of how that will be going forward. Both in how it affects behavior that everyone thinks, “Oh, I don’t have to worry about fill in the blank because eventually I’ll get a check from the government.

COWEN: Here’s one of the tricks when it comes to bailouts. It’s a common line to say, well we want to keep services up and running, but we don’t want to bailout shareholders. You and I probably share that intuition in a very significant majority of cases. But look, think about the airlines. Why do you feel safe flying? To a modest degree it’s because of government regulations, but mainly it’s because there’s equity capital in those companies and the shareholders want to keep the flight safe because they don’t want to lose their capital.

If you have major or for that matter, minor airlines all operating at margins where that equity capital essentially has been wiped out. I think that’s a world where flying is no longer very safe. The old recipe of we’ll just have the equity holders eat as much of these losses as they possibly can. I don’t know if that works for the airlines.

COWEN: You mentioned a check to each individual for $1,000. That is one thing I would do if only to help people pay their rent or stock up on groceries. I think some of that is just symbolic. There will be other things we will need to do. Maybe we’re not sure what, but if you haven’t sent some aid to every American, you will be damned for doing those other things for all eternity and that will be harder next time around. I do think that $1,000 will genuinely help people, but I think it has to be viewed as part of a broader package and that is what makes the entire broader package palatable to most voters. I would do that.

ROBERTS: Well, as I suggested earlier. I think it’s palliative more than stimulative. I mean I think it’s…

COWEN: It’s defensive I would say. It’s not really going to stimulate-

ROBERTS: It can reduce hardship.

COWEN: If you want to have forbearance on rents, some amount of forbearance on debt, forbearance on enforcing bank capital standards. These are all risky things, but ultimately you need to recapitalize the economy. The traditional recipe of let all the equity be destroyed can slow down the rate at which you recapitalize, given that once the virus is more or less taken care of, the equity values of many things will bounce back. So just how much we want equity to take a hit. What we have in mind is a recapitalization process. To me that’s like the big question about the bailouts not really very well answered as of yet.

ROBERTS: I don’t see that capitalization issue is an equity issue the way you do. I don’t think American airlines, United Airlines, Delta, et cetera want to take risks with their customers going forward because most of their equity isn’t crashing that plane. It’s their brand name, which can be destroyed.

COWEN: Well then the share value would be high. But if we really let the equity value be wiped out by this recession or depression, it would be very easy for the share values of United, Delta and American to go to a dollar a share. Even that would be kind of an option on the bailout. Right? There’s a lot of corporate debt in America right now. Corporate debt levels were pretty high. It worked fine under the previous level of economic activity where people actually went outdoors. I was not panicked over that.

But corporate debt levels that high in a world with 20% unemployment and we’re all intentionally trying to shrink output and maybe have a quarter where output shrinks by say negative 13%, that makes me very nervous and I start thinking the capitalization of those enterprises is really important. For sure, I don’t know, but I’m pretty sure the debates I’m hearing are not sophisticated enough on this issue.

ROBERTS: Oh, that’s for sure. I think the biggest problem that pundits, and I’ll put myself in that class on this level of conversation, I mean we just use words like bailout as if we know what we’re talking about or if it’s well specified. As you’re pointing out, it’s not well specified. What that means in practice, what strings are going to be attached to it. I think there will be strings attached this time that weren’t attached in 2008 which probably is, it might be a good thing. I think it was some of those things were not good in 2008 and I think it discouraged people’s faith in democracy and capitalism, which has been I guess part of our problem going forward. But a lot of this, it’s hard to imagine. Let’s turn it, we’ve got about 20 minutes left.

Let’s turn to two issues that we’ve started to talk about a little bit, which are whether this is going to have a longer run impact on the way Americans expect government to solve problems versus individuals. Obviously that trend has been going on for about 70 years or maybe a 100 years. You could argue that government should be doing more. It seems to be this is going to accelerate that trend potentially.

COWEN: Yes.

ROBERTS: Then culturally, where people like you and I who wish it were going, at least in some sense in the other direction are going to be increasingly irrelevant. The second question would be what kind of cultural changes do you think this will lead to in the short run version versus the longer version? The shorter run version, we get some palliative effective of say medicine and treatment and vaccine and this becomes a moment that we talk about with laughter that for many of us that’s the time we had to stay inside.

It’s when the lines were long at the grocery, it’s when people were obsessed with toilet paper. It’s when people didn’t shake hands, they did some other weird little gesture with their elbow or whatever. But at the other extreme you’re suggesting a radical realignment of social life. Let’s talk about those two things in the last 20 minutes we have left.

COWEN: I think schools-

ROBERTS: Facing any of them.

COWEN: Yes. I’ll give you my take then you can give me yours. I think some schools will do online education well for a subset of classes and we’ll end up in a world where 20% of what is now done face to face will be done online and that will be cheaper and better. I fully get, you cannot do a face to face discussion humanities class that way, but I think we’ll see much more online education. We will see permanently fewer meetings, Zoom and Skype and how to use them.

We’re doing now, we’ll get much better. This will be a permanent change going forward. I think in general, pandemics make people more nationalistic, more what you call, what you might call right-wing in the cranky sense, not in the classical liberal sense. I think the progressive left in essence will die out as an intellectual force and actually already has as of this week and will never really come back though it will have its adherence that when people feel-

ROBERTS: What does that, when you say the progressive left, what do you mean? Who are those people? What viewpoint are you talking about and why is it dying out?

COWEN: People who support Bernie Sanders and Elizabeth Warren, which is a pretty significant chunk of this country’s intellectuals. Arguing for that kind of redistribution or splitting up big tech or whatever it’s going to be, that is a kind of luxury made possible by people living on the coast in comfortable circumstances who are well educated. But when those people themselves feel threatened and America’s middle-class feels threatened, whether correctly they feel that way or it’s a kind of paranoid overreaction, but I do think that is coming and already here.

Going around and talking about redistributing the wealth, letting in so many more immigrants, whatever you think of those points of view, I think they will have much, much less social impact and we will be more inward looking, more nationalistic, less cosmopolitan. I think you’ll see this already. I think that is a semi-permanent shift that will last for at least a decade, probably longer and that is already the case. You really think Joe Biden is going to get up in the debate against Donald Trump and go on and on about immigration? Of course he won’t, now.

ROBERTS: You don’t think he’s going to be a lot more eager to … Tell me… you just said we should give everybody $1,000.

COWEN: We will have much more government intervention. It will be with right-wing toppings and flavor. I’m not saying this is a good thing. There will be much more intervention in the healthcare system, but it will be a kind of triage and treating healthcare as scarce. Not giving it away to everyone for free and it will be brutal and we’ll feel bad about it and it will make the debates again more right-wing. I don’t mean more libertarian. I don’t mean more liberty-oriented. I mean right-wing in a very particular direction, but those are my takes. You give me yours.

ROBERTS: Well I don’t see that, but I want you to keep going. Let’s talk about the cultural changes. I’m going to go a different direction I think. I think people have a great thirst for face to face and I don’t think Zoom is, I love Zoom. I love Skype. Big fan of them, love the internet, loved talking to tens of thousands of people through my EconTalk once a week.

At the same time, as you know, when you do a live event, people don’t say, “Oh, why would I go?” Like right now I don’t know how many people are watching this, but this is a crummy version of face to face, right? It’s a screen version, but there are people who are watching this live because they rather do that than listen later when it’s not live.

If we were doing this in an auditorium, if it were safe to do it in an auditorium, we’d get a bigger crowd, not a bigger crowd excuse me, we’d get an enthusiastic crowd. The scaling problem would keep it small, but I think there’s still a tremendous thirst for that. I would much rather sit and have coffee with you than talk over Skype with you about this problem. I-

COWEN: Think how much more productive this is. Right? Much bigger viewership than our coffee klatch.

ROBERTS: But you’re the guy who taught me, that’s true. But you’re the guy that taught me that I thought you were going to say it’s more productive because I don’t have to go to the coffee shop. But I think we underestimate, I think I learned this from you that the value of those kinds of time spent-

COWEN: Oh, sure, the process.

ROBERTS: Yeah. Just doing nothing is very valuable. If we underestimate what it allows us to do, but all I’m saying is that I think people like to hug and that’s not going to change. They like to shake hands. If anything, I think we’ve become more physical. We’ve become more European.

COWEN: I think there’ll be a huge wave of promiscuous sex once there’s the first break in the virus for instance.

ROBERTS: There goes my G rating on EconTalk.

COWEN: I’m sorry.

ROBERTS: That’s okay. I think there’s a pendulum here of people who will react to this. When I say this, I mean the digitalization, the virtualization of daily life. People don’t like it. I mean, we like a lot of it. I love a lot of it. I know you do too, but for a lot of people, I think there’s going to be a pushback. I see it among young people already, in my kids and their friends. They have problems dealing with the obsessiveness and addictiveness of online life, but they’re also eager to stay away from it if they can. I just think a lot of that’s going to happen with this as well. Here’s what I’m trying to say. I don’t think that extra months of self isolation is going to change our habits. It’s not going to change our nature…

COWEN: The revenue constraint will change us. Right. So, say you’re running a university and your revenue is down 15% and you have a chance to buy a class online or try to create your own class, which are you going to do? That’s what I think will drive it is revenue constraints.

ROBERTS: Well, I think six years ago, maybe whenever it was, when the early MOOCs were coming out, online classes, I was all excited that there’d be a revolution. That hasn’t happened. Now this is going to give it another chance. Maybe it’ll spur it along. I think it’s equally likely they’ll say, “That was incredibly ineffective. We’ve got to go back to face to face.” I don’t know. I’m very agnostic on this.

I think the idea that you don’t need a coronavirus to discourage people from going to sporting events, right? The number of people who watch sporting events live is a very, very small number. It’s a unique experience. A concert is the same way, a concert, live theater, those are all there. They’re extraordinary. There are substitutes for them that aren’t nearly as good, but they’re a lot cheaper and easier to access. We access them. But I can’t see those dying out at all. In fact, they may bounce back stronger than ever.

COWEN: I think we’ll see a kind of polarization. Things will be either very face to face and very exciting and very extreme or things will be very online. The kind of average degree of online-ness may not change, but you’ll demand more from your face to face encounters and I won’t use my previous point again. Then you’ll be doing more on Zoom and Skype and other services. I think we’ll compensate for that by having our face to face be all the more huggy or whatever you think it might be.

ROBERTS: Well, I liked the idea that that norms are evolving now that will encourage face to face to be higher quality. I do think the idea that in the middle of a conversation you can look at your phone or glance at your … increasingly going to be seen as unattractive. The etiquette of that’s going to evolve, but I don’t know how it’ll be. But I think increasingly people will put away their phones because they don’t want to be connected 24/7. But we’ll see. It’s a bit of romance maybe on my part that when we are face to face, we’re going to do it with more focus, intention, presence. So nice idea. I like this.

COWEN: I agree completely.

ROBERTS: This might be true, might be true, right? It’s hard. It’s not really the way we’re hardwired. To suggest that we can interact with each other without distraction is a beautiful idea. But in a way, all that the digital revolution has done is to make it more obvious how hard that is for us.

COWEN: Yes.

ROBERTS: It’s not simply that here’s new things to distract us. It’s that we were already very distractable. Now we’re more aware of how distractable we are. Maybe that’ll help us.

We’re almost out of time. Do you want to say anything about more narrow fiscal monetary stuff that we didn’t talk about that you think is either going to happen that you’re horrified at or that you think is not going to happen that we should do? Things that aren’t on the table. I mean, I think the prize idea is huge, undervalued.

I think we ought to be promoting that with great enthusiasm and we don’t need the government to do it. The beauty of having some really rich people who created these foundations is they can offer that prize right now and maybe they already have. I haven’t been paying close attention, but that’s really a really, really important thing.

COWEN: I’m running my own prizes through Emergent Ventures.

ROBERTS: Oh yeah, talk about that.

COWEN: The money I’ve raised, it is now at about $1.4 million with some other pledges on the way and other interest expressed. I’m not sure-

ROBERTS: Describe it, describe what it is for people who don’t know.

COWEN: People who do meritorious things to contribute to the end of corona virus problems, whether it be coming up with a cure or online blogging or creating a website that tracks information, something that is otherwise under rewarded. This is not a prize that will go to Gilead. This sum of money is not big enough to change their incentives. But for individuals who have done important things, they will receive this as an additional reward…

ROBERTS: Like a live YouTube? A live streaming YouTube with a really important thinker about where we’re headed? Is that-

COWEN: Exactly. Whatever is effective. These are not yet publicly announced, but as of now there were four prizes awarded already and I’m very proud of them. I hope by Friday the information will be out and these are people who have done amazing things and I’m pretty sure they haven’t been paid a dime for it. And I-

ROBERTS: Can you give one example? Is this public?

COWEN: Not public yet, so some of these you’ve you’ve heard of probably, but in any case I think the prizes will encourage more people and just generate attention for those who have done the right thing I think encourage them to do more because this is a marathon, not a sprint, and the people who have already done wonderful things or maybe some of the people more likely to continue doing wonderful things.

ROBERTS: Let’s finish with what advice you give people both personally and ethically for going forward. We talked a little bit at the beginning about niche behavior, trying to get better at things or talk about what information people might access, where you encourage people to go or what you encourage people to do to deal with this going forward?

COWEN: Well, on my own blog, Marginal Revolution, I’m trying to collect the information that I consider to be either reliable or at least interesting or worth reading or thinking about. Whatever I know I’m putting up there and the volume of blog posting is much higher. Sort of by definition, that’s what I think is important.

Clearly it’s not all true and I try to indicate when something is speculative. I can’t not recommend my own efforts, but I think the important thing is for people to be as safe as they possibly can and to develop that regimen in a way that is psychologically sustainable, not just to say it and then a week later be off gallivanting in the St Patrick’s Day Parade or whatever. That’s very hard. The remedies differ by person.

Don’t trust everything you read out there. The degree of misinformation is very high. The degree of uncertainty from the best and most reputable sources is very high. There’s no magic bullet on how to figure out what’s going on. I can’t quite say, “Oh, trust the authorities.” It’s not exactly how it’s gone, but there’s not any single way to really know what’s happening. That’s very frustrating. I would say do your best and keep in mind that’s a highly imperfect endeavor. There’s a lot you won’t know and some of the things you think you know are probably wrong. For you, what do you say?

ROBERTS: Well, I’ve been thinking a lot about the so-called death of expertise. I was really going to ask you about that. Whether you know a lot of people who’ve been crowing this week about how, see you do need these experts. Obviously epidemiology and understanding the science of this is incredibly valuable and important. I’m a big fan of science and not such a big fan of experts. That would include you and me, Tyler. I do think the internet has helped influential people influence people’s behavior to be more worried about this, which I think is probably going to be a lifesaver for, I think, hundreds and hundreds of thousands of people. I think that’s been a very, very good thing. I don’t know what’s going to happen if the death toll is enormously high or enormously low.

I think that’s going to have a lot of ramifications. I think people are paying attention to this in a way that they don’t pay attention to other things obviously. They’re going to have judgments based on the outcomes that are probably not going to be, not so healthy. I’m very interested in what that’s like going forward. I’m thinking a lot, we’ve talked about this before when we talked this last summer, I’m thinking a lot about how we’re influenced by data and numbers. We’re so focused right now on cases or deaths. There’s so many other aspects of life, we have to focus on cases of death. I’m not saying we shouldn’t, but I find it fascinating how that’s almost all we’re focusing on. What this is going to do to the fabric of American life going forward, we’ve spent the last hour and a half trying to get some idea of what that might be. That is going to be kind of important too.

COWEN: I agree.

ROBERTS: We’re not so focused on that because you can’t measure it.

COWEN: I think the internet and the scientific community will both come out of this looking very, very good political leaders, not so much, and I’m fine with saying, go to the experts, but who are the experts? It’s a bit tautological. Should you just turn on the evening news and listen to your president and prime minister and say, “Oh, they’re channeling and the experts.” On that, I don’t know with the records not being so great so far. The true experts, of course, by definition, those are the people you should listen to, but this is an unprecedented event and who the true experts turn out to be is still a bit up for grabs, I would say.

ROBERTS: My guest today, to the extent he’s been a guest, has been Tyler Cowen. Tyler, always great to talk to you.

COWEN: My guest today, to the extent he’s been a guest is Russ Roberts. Russ, always great to talk to you again, my condolences with your family.

ROBERTS: Thank you.

COWEN: We should stay in close touch and wishing you the very, very best and you take care as well.

ROBERTS: Thank you, Tyler.

COWEN: Thank you, Russ.