Friday, March 27, 2020

What's in the Covid-19 Bill for FSA?

From Politico:
Special deal: The stimulus provides $9.5 billion in emergency aid for the agriculture industry and replenishes $14 billion in spending authority to the Agriculture Department’s Commodity Credit Corp., a Depression-era financial institution set up to stabilize the farm economy — the same USDA agency sending trade bailout payments to farmers. Producers ranging from dairy farmers and cattle ranchers to fresh fruit and vegetable growers are eligible.
How they got it: Livestock groups have been leaning on lawmakers for weeks to pony up funds for producers who have seen commodity prices plummet since January. Western senators including John Hoeven (R-N.D.), who chairs the Appropriations panel that oversees agricultural spending, made sure those provisions were part of the stimulus plan from the get-go. Then, top Democrats like Michigan Sen. Debbie Stabenow, ranking member on the Agriculture Committee, pushed to include language making specialty crop farmers — like Michigan’s tart cherry growers — eligible for the emergency aid.

Thursday, March 26, 2020

What's the Metaphor for the Covid-19 IMpact

I like metaphors, as I've said before.

The other day I ran across a metaphor used by someone, perhaps an economist, who said the course of the economy will be like driving a car on a highway--you run into a jam, a slowdown where all the traffic slows down, but once the jam is resolved you and the rest of the traffic resume their usual speed.

That's a reassuring image.  Let me offer a differ one, more realistic in my opinion;  In spring and fall you sometimes encounter fog banks on interstates.  In winter you sometimes get a storm which lays down some ice in an area where traffic isn't expecting it.  In these situations you can have a sequence of rear-end accidents, resulting in 20, 30, or more vehicles involved in some damage.  Some cars can run, but are blocked in;; some are a total loss.  Traffic is stopped for a time.

Now I'm not comparing the covid-19 impact to such an accident. Let's imagine a four-lane highway, like the Dulles toll road or the CApitol Beltway. There's a multi-car accident which blocks 2 or 3 lanes and damages some cars.  Rubbernecking slows the traffic in the unblocked lanes. 

That's my metaphor. It seems to me part of the question in sending people back to work is this: how many cars have been damaged in this accident--is the major problem a blockage of the lanes or the damage to the cars.

Damage to the cars in this example equates to impacts on employers and employees. If there's little damage, the economy could easily resume its speed. If there's lots of damage, it will take time to repair it. 

I'm thinking that the more damage we see, the greater the importance of getting the economy going again. 

No Light at the End of the Vietnam Tunnel

"Light at the end of the tunnel" was a phrase made famous during the Vietnam war.  Its initial use is not clear, but it grew to be used sardonically to mean the opposite--there is no way out of this mess.

This history seems to be forgotten by the Trump administration according to this post.

Wednesday, March 25, 2020

Why Trump's Ratings Are Up

My guess of the reason for Trump's approval ratings to be rising is three-fold:

  • he's no longer doing his rallies.  I'd guess independents and Democrats don't like his behavior during the rallies, so that helps.
  • he's talking from the White House in the press briefing room.  While he's still doing Trumpisms, there's a veneer of presidential behavior.
  • Republicans are feeling better about Trump, and Democrats are worried about the virus, which impacts willingness to respond to pollsters and how they respond.

Peeves: Flaunted and Dispersed

"Flaunt" means to show off.  When writing about people disobeying  Covid-19 rules you mean "flout".  Your "aunt" might be showy, a "lout" definitely isn't.

"Dispersed" means to scatter.  When writing about payments from stimulus programs, you mean "disbursed".   (Did your college have a "bursar"? )

Tuesday, March 24, 2020

Epstein Dead and Buried (Metaphorically)?

Gregory Cochran is an anthropologist who is very much a contrarian.  On his West Hunter blog he posts occasionally, mostly on the evolution of humans.  He seems to be on the conservative side, at least in that he argues for the impact of evolution on human traits, etc.  In other words, he's not politically correct.

With that understanding of his leanings, I was surprised to read this takedown of Richard Epstein, who recently speculated on the outcome of Covid-19, arguing that concerns were over done. Most notably he predicted deaths in US would be 500 or les.

I only know that predictions vary very widely, and everyone who positively asserts a prediction is overdoing it.

But Cochran's post is a great example of taking no prisoners.

Sunday, March 22, 2020

Claw Backs on Covid Aid

Personally, my wife and I fall into the category Steven Pearlstein described Friday--people whose income is not siigniicantly impacted by Covid-19. See this more recent post on Politico.

I don't know whether we will receive anything under the measures now being put together in  Congress.

It strikes me that in the absence of the right infrastructure to focus payments you could include a clawback provision. For us, the IRS would know on our 2020 taxes that we received Covid money. If our adjusted gross income for 2020 doesn't show a decrease from 2019, i.e., we weren't hurt by the pandemic, then tax the Covid money, 100 percent or something less.

[Updated:  Here's Greg Mankiw proposing the same thing.]

The Lack of Governmental Infrastructure

One of things crisis  fighters run into is the lack of governmental infrastructure. 

In the Great Recession a bit part of the problem in helping people whose houses were under water was the lack of any infrastructure which had direct contact with mortgagees.  Instead people like Geithner had to design programs to work through banks, but because the mortgages often had been been sold on/collateralized from the original loan maker it wasn't an effective program.

We now come to 2020 and Covid-19.  The programs under discussion now want to make direct payments to people.  But the government doesn't have that infrastructure.  The best we can do is write checks to those who filed a tax return with IRS in the past, but that obviously misses a lot of people: those who weren't required to file, those who joined the country more recently, those who never filed a tax return--i.e., tax evaders.

My Predictions?

I don't really have any, but I just saw a Politico post following up on various predictions made about Obamacare.  They mostly were wrong.  So with that in mind I'll venture this: at least 80 percent of the predictions ever offered about Covid-19 will turn out to be wrong.

Nicholas Kristof at the Times sketched the best and worst cases for the outcome. I'll venture the prediction that the outcome will be closer to the best than the worst.

Saturday, March 21, 2020

Will the Cost of Fighting Covid-19 Exceed the DAmage It Causes?

John Hinderaker at Powerline blog ends a post on the Covid-19 virus (he uses "Wuhan virus" which is an indicator of his viewpoint) with this sentence:
" But policymakers need to consider the possibility that the damage done by the extreme measures being taken to slow the spread of the virus will ultimately prove to be greater than the harm done by the virus itself."
My reaction was--we should hope that's the case.   But I've had to struggle with figuring out whether my kneejerk reaction was valid, or just liberal bias.  Let me try now:

  1. Covid-19 is a case of natural disaster.
  2. Natural disasters vary widely in their causes and destruction: think of Hurricane Katrina or Sandy; earthquakes and tsunamis, droughts, floods, forest fires
  3. It seems to me that forest fires are a decent parallel with forest fires.  Why-both fires and epidemics occur over significant time, not the minutes of an earthquake or the days of a hurricane. That extended time period means humans can fight them, can hope to mitigate effects, limit their scope. 
  4. So consider the Paradise CA fire of a couple years ago.  Suppose, instead of a downed transmission line, it had started as campfire which escaped the firepit. But there was a fire station near enough and someone with a cellphone who saw the escape. In short, the Paradise fire was contained within a couple acres by the exertions of a fire crew over a day.  The cost of fighting the fire would maybe have been $1K, more than the burn damage.  Given that scenario,should we not fight the fire because of a cost-benefit ratio.
  5. In summary, when considering natural disasters the correct cost-benefit analysis is not money expended versus damage incurred; it's money expended versus some combination of probability of damage and the cost of the damage.