Tyler Cowen on Liberty, Art, Food and Everything Else in Between
Tyler Cowen, co-blogger (with Alex Tabarrok) at, talks about liberty, global warming, using the courts vs. regulation to protect people, the challenges of leading a country out of poverty, the political economy of cuisine, and a quick overview of...
Paul Romer on the COVID-19 Pandemic
In this Bonus Episode of EconTalk, economist and Nobel Laureate Paul Romer discusses the coronavirus pandemic with EconTalk host Russ Roberts. Romer argues that the status quo of shutdown and fear of infection is unsustainable. Returning to normal requires an...
Explore audio transcript, further reading that will help you delve deeper into this week’s episode, and vigorous conversations in the form of our comments section below.


Linus Park
Mar 19 2020 at 10:17am

Russ, I really appreciate you going out of your routine in releasing this conversation. I’m desperately looking to have my opinion changed on the deadliness of CoV-SARS-2. My main issue is with the prevailing assumption: “no one is immune.” There are evidences that show that people can get infected without symptoms and get better without getting sick. I may be wrong, but wouldn’t these cases show that people (maybe a large proportion) can contract the virus and develop antigens without showing symptoms? The recent NBA testing controversy tells us at least one thing: majority of infected are not showing symptoms.

What if symptomatic cases only represent 10% or 1% of all infections? When you brought up the Diamond Princess case, I hoped you were going to delve into the stratified data and challenge the assumption on the current visible cases.

I would love to see data or evidence to disprove this hypothesis. Is it possible for you or Tyler Cowen to explore this critical aspect that seems to be missing from most narratives?

Todd Schanel
Mar 19 2020 at 11:02am

Thanks for this episode.

When Russ mentioned that it is easier for him to deal with the impact of a quarantine than many other people, I think that’s right.

I was a bit surprised by Tyler’s response, which was I believe was “no, it will be hard for you”.

I think the people urging everyone to stay home should also make the case that the economic consequences (possible recession or depression), are worth it.  Particularly because the economic fallout may cause a new set of public health problems -weakened immune systems caused by stress and anxiety and depression, obesity, drug and alcohol addiction, and a worsening of the opioid epidemic.

Ben Riechers
Mar 21 2020 at 10:22am


While I can’t site them, I believe there have been several studies that link economic health to physical health. I have suspected from the beginning that there will be more deaths from wrecking our economy and the economy of the world than there will be from the virus. That said, my gut feeling, in the absence of data, is not a foundation to build a policy response upon and the reaction by political leaders is understandable so far.

I cringe when I hear governors claim that they know the consequences of these emergency directives.  They don’t know.  In counseling against debt and especially debt for wants as opposed to needs, I have shared the centuries-old wisdom that financial challenges make every problem substantially, if not exponentially, worse.

Like using margin for investing (hedge funds come to mind), debt-driven economies like ours are going to be punished in ways we have not considered. Spending the prosperity of the future today is always a problem, but especially if that prosperity just took a hit.  The advocated solution is more debt.  I wish I had a plausible alternative acceptable for a society that believes debt is a right regardless of ability to pay.

Todd Mora
Mar 21 2020 at 3:33pm


I think that you have brought up some insightful points we should all think hard about.  I don’t think any government official has insight as to the economic future of the country given the unprecedented actions being taken.


Mads Lindstrøm
Mar 19 2020 at 11:34am

In Janurary the USA made a travel ban on people coming from China. What effect do people think the travel ban had on the development of Coronavirus in the USA?

I am asking as I cannot really figure it out myself. If it did delay the crisis by 3-4 weeks, then Trump if fact did more than any other leader in the western world. And yes, it would make up for all his bizare statements, blustering, and so on – At least as compared to other westen leaders. And compared to Joe Biden, which I am sure Trump will point out in endless commercials come November.

Mar 19 2020 at 1:53pm

I was surprised there was no mention at all of the influence of heat and humidity, which typically creates a seasonal cycle for viruses, including coronaviruses.  Low humidity (e.g. during heating season) hurts immune defenses.

Humidity helps in the fight against COVID-19, virologists report
Published: Mar 13, 2020

Thus it is reasonable to think we will get a summer respite.  Meanwhile, future seasons of Covid-19 will not be just like this first due to

accumulating herd immunities and developed resistances that will inhibit future spread, unlike this first encounter (recall native populations and first exposure to germs from the old world),
understanding the value of humidity control,
having had more time to build up healthcare capacity (e.g. more available ventilators), and
the identification of effective treatments (e.g. I believe Russ mentioned Remdesivir, marketed by Gilead Sciences, which is beginning clinical trials in Nebraska and is beginning to be mass produced in China; another example: There Is A Drug Already Used In Japan Which May Treat COVID-19, Says New Study).

In addition, there are positive prospects for a preventive vaccine, such as one that is being tested in Israel based on a new vaccine approach they have been developing for the past four years.

Israeli-made oral vaccine for coronavirus on track, but testing will take months

Note that some say a more cautious estimate is more like a year to availability.

In any case, these months between now and summer are a special case needing special caution to weather through without overwhelming our health care systems.

Victoria Pirs
Mar 19 2020 at 3:44pm

A 5 month quarantine is impossible,  specially for developing economies.

Mar 19 2020 at 4:27pm

Seeing how this mania of handwashing and social distancing has caught on so quickly finally makes me understand how something like killing sparrows in China happened.

Mar 19 2020 at 7:59pm

Great talk to you both!  Many thanks.

One question (and I’m not trying to minimize the impact of deaths and illness):

Right now in the USA we have about 13,000 confirmed cases (3/19/20, 5:00 PM) and 207 deaths.  In the whole world we have under 10,000 deaths.

As I understand it, we have at times 50,000 die in the USA from the flu.  Are we saying the trajectory is so steep that eventually from these 200 we will go beyond a normal flu season?

If so, what caused the trajectory in China and even in Hubei province to turn down long before these sorts of numbers were realized?  Would these factors (social changes, better protections for seriously ill people, a less strong virus perhaps, etc.) not also apply here in the USA?

Mar 19 2020 at 9:50pm

I can always rely on Tyler Cowen to recommend aggressive and large scale government intervention in every Econtalk podcast.  He has yet to let me down. Even when he doesn’t know what form said intervention will take and he dislikes every opinion he’s heard save the “give everyone $1000,” he is quite certain something must be done.  Central planning is like a reflex with him. His faith in government solutions would make a Pope jealous.

On the flip side to the problem solving coin, Russ pointed out the sweeping, enormous, and rapid response by the sports industry which surprised him. I was also surprised. The money they have forgone by restricting fans is jaw dropping. Even more jaw dropping is the forced ban on restaurant services. We just lost considerable freedoms, but to what end?  Viruses are invisible and extremely contagious. We are all going to get this virus, it is only a question of when, not if.  Perhaps we are stalling for a vaccine? One doctor I spoke with suggested we are trying to spread out the illness so the ICU beds and ventilators don’t get overwhelmed. Still, to sacrifice freedom and to trigger a recession voluntarily all while promising to expand the reach and expense of government at every level… Truly mindboggling. Where do we imagine that money will come from?  Especially with interest rates going up and people forcibly out of work? The doomsday recession promised by the US Federal debt of 23.5 Trillion looks like it is going to happen. I would never have guessed it was a tiny virus that overbalanced the scale.

Mark Bahner
Mar 21 2020 at 8:36pm

We are all going to get this virus, it is only a question of when, not if.

Do you think all 1.4 billion Chinese and all 51 million South Koreans are going to get this virus?

If so, how long do you think that will take (since the Johns Hopkins website as of today shows only approximately 81,000 confirmed cases in China, and only about 8800 cases in South Korea)?

Mar 19 2020 at 9:58pm

I found this table extremely enlightening regarding this pandemic. The source is Worldometer. The numbers are probably markedly elevated due to lack of testing. Only the sickest and highest risk are getting tested and included in these numbers. Even so, the pattern is what I would expect for any virus, albeit especially high at the top age range.  I suspect this may be do to other chronic illnesses in the higher age groups or the lack of frequent exposure in those age groups to school age kids.  It is probably exposure to other coronavirus strains would give some immunity to a new coronavirus strain.  Either theory would explain this pattern though.

all cases
80+ years old  14.8%
70-79 years old  8.0%
60-69 years old 3.6%
50-59 years old 1.3%
40-49 years old 0.4%
30-39 years old 0.2%
20-29 years old 0.2%
10-19 years old 0.2%
0-9 years old no fatalities

Todd Mora
Mar 20 2020 at 1:32pm

Thank you for the mortality data.  I thought this interview was excellent and done by someone who seems to be knowledgeable on the subject.,7340,L-3800632,00.html


Todd Mora
Mar 19 2020 at 10:51pm

During the podcast I thought about the statement “there are no solutions, just trade offs”.  Are the actions we are taking today going to reap worse outcomes down the road?

The inevitable recession or depression going to cause the financial ruin millions of young people? Will the resulting financial cause those people to have higher drug overdoses, become victims of violent crime, premature deaths?   Are our current actions a transference of mortality from one group to another group?

It was a very thoughtful podcast and I by no means have better ideas than anyone else, just have a lot of time to think.

Mar 20 2020 at 6:36am

I loved your comment.

Jerry Brown
Mar 20 2020 at 3:23am

Very sorry about your dad Russ.

Chris Screwtape
Mar 20 2020 at 5:35am

Was almost too terrified to even listen. But I am glad I did. My wife and I are teachers living in Shanghai. We have been social distancing for around 60 days. It is hard. Watching the number of known cases overseas skyrocket makes it harder. Watching the increasing number of cases discovered by the airport quarantine procedures here in Shanghai also makes it hard.

I thought I was over the denial phase. Early on I thought this might go global. Watching it actually happen, however, has shattered a lot of my beliefs. I am still terrified. I’m just thankful my wife delivered in November. That we both get to spend so much time with our son.

The last grade of middle school and high school have resumed on campus lessons in Qinghai province and Jiangsu. I hope that the easing of restrictions does not result in a new spike in cases as predicted by the Imperial College model. If they can pull it off, I will feel a lot more optimistic. If they can’t, I hope people will notice and not repeat avoidable mistakes.

It has been so frustrating watching so many Americans working in Shanghai disregard State Department advice and return. I wish people would just shelter in place as best they can.

My condolences.

Tyler Wells
Mar 20 2020 at 7:05am

Enforced social isolation of the young for longer than a month is unthinkable and a certain failure.  I am old (50) and I am still absolutely shocked at how lightly Russ and Tyler take a major reorientation of our civilization in order to, hopefully and possibly but not probably, prevent the spread of  the disease (but they don’t really know, Russ cited an absolutely ridiculous mortality rate that someone as smart as him must certainly know better).

Expect massive discontent from the under 30s if this forced social isolation continues for more than a month.  The virus is already called the “Boomer Remover”.  Russ and Tyler are rich and have big houses and will suffer little with social isolation.  The under 30s will be the biggest hit economically (service sector jobs), socially, and in their health.  Resentment will grow steadily as the young pay the price for what they will see as the Baby Boomers struggling not to admit their mortality.

Mar 22 2020 at 3:17am

Do you see what appears to be a ‘Trolley Problem’ as an inter-generational one?

Is it almost a ‘collective’ decision? It is the people on the tracks making the decision which way to send the trolley but within a scholastic process.

My daughter (24) tells me many of her friends have already been made redundant.

I’m your age (53), so only moderately at risk and have a nice big home to self-isolate in.

Don’t we have a moral obligation to self isolate?

Sorry. Only questions and no answers…



Todd Mora
Mar 20 2020 at 1:26pm

Dear Dr. Roberts,

I apologize for not including my condolences in my previous comment.  It was a terrible oversight.

I wish to express my sincerest sympathies to you and your family.  the stories you shared of your father were heartwarming and helped teach people about the personal side of economics.  To have a son like you, he must have been a great father.  The world is less today because of his passing.  My prayers for you and your family.  God bless.

Todd Kreider
Mar 20 2020 at 3:02pm

Russ said: “You’re 60-69–and I’m 65–you’ve got a 5% chance of dying, in that early data, if you get the virus. And that’s a pretty high–I don’t think there’s anything 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.”

This is not true for Russ unless he has a serious health condition.

Mar 20 2020 at 10:49pm

So is the text in the right column the extent of the transcript? You generally share the entire conversation.

[It takes time to produce the Highlights, which you are calling the transcript. We wanted to release the audio as soon as it was available rather than delaying it just because we didn’t have the Highlights finished. We apologize for inconveniencing you. We take pride in the quality and accuracy of our Highlights section, and it will be available as soon as we are able to provide it. We usually release it in chunks, as soon as each chunk is finished, so as to not delay any more than is necessary.–Econlib Ed.]

Mar 21 2020 at 1:11am

First, my deepest sympathy to you re: the loss of your father.

Second, I just out of curiosity came to your site this evening to see if by chance you might be discussing this momentous event that is unfolding. I was grateful to see that your site did have discussion of this situation. I haven’t yet listened to your discussion with Tyler whose podcasts I also listen to but I have read the above comments and likewise share their concerns that panic and politics are driving a lot of the decisions being made without thought to what the long term economic consequences will be for the younger generations.

I think the people should be given the opportunity to decide for themselves whether to chance going into bars, restaurants; likely most would do take out and stay away but at least that might generate some income for the business owners vs. their having to close down completely (although I know not all states have mandated shutdowns of restaurants.)

I am a boomer in pretty good health except I have myasthenia gravis, an autoimmune disease that cause muscle weakness which can affect breathing; luckily mine is a mild case so far but according to the MG Foundation, antibiotics which might be used for bacterial pneumonia can cause a breathing crisis for MG patients as do many other drugs. So I am loathe to contract this virus yet I do think we have to think of our freedom and the economic burden we are placing on the young and old by restricting them from work and thereby causing a much greater need for economic help from government which is already hugely in debt. This virus is going to be around for months and I don’t see how we can possibly continue for that time period the scale of federal assistance that is being proposed. Perhaps we as individuals must bravely decide what chances we want to take given the situation. We all must die sometime.

Todd Mora
Mar 21 2020 at 3:36pm

Excellent points,  thank you.

T. J. Wolff
Mar 21 2020 at 4:21pm

“I think the people should be given the opportunity to decide for themselves whether to chance going into bars, restaurants; likely most would do take out and stay away but at least that might generate some income for the business owners vs. their having to close down completely (although I know not all states have mandated shutdowns of restaurants.)”


This summarizes my thoughts exactly on this matter, and I was heartened to read this from someone who is clearly in a high risk category for this virus.  I am a young adult in excellent health, and as such I am in a very low risk category for this virus.  My outlook regarding personal responsibility and COVID-19 is surely colored by this bias.

Also, “We all must die sometime.” is very true and something I came to accept long ago, and is certainly another factor in my reaction to this event.

Larry Karper
Mar 21 2020 at 10:15am


My condolences for your loss.

I lost my mother last year from a pulmonary condition.

Thank you so much for your podcast. It is a godsend.

T. J. Wolff
Mar 21 2020 at 4:41pm

First Russ, I would like to add my condolences on the passing of your father.

Second, my thoughts on this matter are in line with the other posters who worry about the longer term economic consequences of our current response. The death and poverty created by the economic impact of shutting down economies may be relatively large or small, but it will be essentially “unseen” in regards to the “seen” COVID-19 death toll.

As Tyler points out, exponential growth is difficult to grasp for many, so the exponential economic losses and their associated human losses will go entirely “unseen” by many. Tyler seems to ignore this fact, and focuses only on the exponential growth of the COVID-19 death toll in his response to this event. This is important and I would never trivialize the deaths caused by this virus directly or indirectly via the overwhelmed medical system, but the reaction currently only takes these factors into account. When looking at this event through this lens, it is not difficult to see why a “lockdown” is an attractive choice. However this policy choice has a multitude of negative side effects which will not be felt in full force by those making these decisions.

Russ makes this point quite clearly when he states that he normally works from home anyway, and that he continues to be employed through this event. So overall, self-quarantining has little affect on his life. However, many have recently found themselves unemployed and at the same time are prohibited by the government from seeking employment in their profession. This is made worse by the fact that those who find themselves in this position are relatively poor and are less likely to be able to finance a prolonged bout of unemployment. Finally, these people are in lower risk categories for this virus, so their economic liberty is being greatly infringed while their risk is very low. The top down solutions proposed by central authorities are unsurprisingly blunt and suffer from Hayek’s knowledge problem.

Third, I find it disheartening that this episode did not discuss the regulation and regulatory capture of medical care in America at greater length. Certificates of need, licensing, residency requirements for doctors, and the enormous regulatory burdens put on medical professionals and facilities. All of this government interference has constrained the supply of medial care, while preventing or hampering bottom up solutions. Looking to the same political actors which constrained supply, ignored the problem, and have no incentive to value life at anything other than infinity in this situation, will not lead us to reasonable or prudent decisions. The removal of some regulation was discussed, and that is what the national discussion should be focused on.

Specifically, “what barriers can be removed to allow entrepreneurs to innovate?” This unleashes humanities greatest resource, human ingenuity. It will be messy, as all bottom up systems are, but it will be voluntary, and I think would prove to be better in the long term.

Fourth, no one seems to want to discuss the fact that shutting down “non-essential” businesses will cripple “essential” businesses and people’s lives in general. For everything that exists in this world, someone had to produce it. As the essay I, Pencil demonstrates, our world and supply chain is complex, so there is no clear line between “essential” and “non-essential” work.

What happens when the farm/factory machinery, trucks, or forklifts break down, how will our essential supplies be produced and shipped? Someone must be there to fix it, and the parts needed must be available, and the inputs into those parts need to be available and so on and so fourth. How about when your refrigerator, freezer, washing machine, water heater, or HVAC unit break down, who can you call to fix this, are they locked down? Where are the parts to fix these items to come from? Everything we have and that most take for granted come from the production of others, and intentionally crippling that production is short-sighted and will have enormous costs to people’s lives, and quality of life.

Lastly, the economy is important, but liberty is the priority in my opinion. The powers being asserted by governments at every level to control people’s movement and business operations are completely unconstitutional in my opinion. The Fifth Amendment makes clear that:

No person shall be… deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

When this is all over I think we will look back at the panic and increase in government power in the same way that the PATRIOT Act is viewed by those of libertarian persuasion today. That is to say, an overreach in government power instituted at a time of great fear and panic, which soon becomes entrenched and causes great harm to liberty and freedom.

Todd Mora
Mar 21 2020 at 6:14pm

As I hear the term “non-essential” services, I always think to myself “well the income that service provides is essential to someone” and “eventually that service is essential because it exists.”

Excellent points made in your post.

Apr 13 2020 at 8:10pm

Well put T.J. I am a lover of both econ talk and Tyler’s podcast, but as a working person I was appalled at this episode. Maps are not the territory and models are not reality. Numbers cited like Russ having a 5 percent chance of dying are probably off by an order or magnitude. It shows that he is just scared. They say that us plebes can’t do exponential math, but the numbers in reality certainly aren’t exponential. What “experts” need to admit is that they don’t know much about this. If Russ and Tyler are scared and want to earn their high six-figure or even seven figure incomes from their couches and interact with the world through a computer, God Bless. Many folks don’t have that option. Getting sick for a week is a lot better than losing our livelihoods. To have government officials tell us what is essential and non-essential in a free society and accept it is shocking. This cannot go on. Academics may be scared. Most Americans are not. That is why the officials have to police their stay put edicts. We have constitutional rights in this country and soon some entrepreneurial politicians will tap into this sentiment and cash some checks at the ballot box.

Tom Post
Mar 21 2020 at 5:09pm

Russ – my condolences to you on the loss of your father.  It is particularly poignant that it involved a ventilator at the end.

Tyler and you always provide thought provoking conversations.

I am curious if you have read the analysis of another one of your frequent guests – Richard Epstein.   He and Michael Levitt have both expressed skepticism about the modeling of the outbreak:

Bertram Lee
Mar 23 2020 at 2:26am

The jpost article is missing. Mr Epstein claims that deaths will level off as people voluntary adapt responses to slow the spread of disease and that the virus will become less virulent so that it is more likely to spread to a new host before the current host dies.

This overlooks the fact for 90% of the people under 40 it seems to suffer nothing more than a cold and these are the more social group so there is not much pressure for it to become less virulent and not kill the less social order people.

His actual prediction ” In the United States, if the total death toll increases at about the same rate, the current 67 deaths should translate into about 500 deaths at the end. ”

In ten days the US has reached 457 deaths, his model is clearly off.

Kristopher Marsh
Mar 21 2020 at 11:33pm

Sorry to hear about your dad, Russ. I appreciate all the effort you put into this program, and its contribution to my life is significant.

Condolences from Australia.

David Seiver
Mar 22 2020 at 12:34pm

My deepest condolences on your father’s passing.  Stay strong.

Mar 22 2020 at 12:45pm

I’m CFO of a small brewer in SoCal.  I’ve told my team we are trying to address – thread the needle, more accurately – three clearly-related crises: health, employee wages and employer solvency. Simultaneously.

Similar to the old consultant adage…  Speed, quality, cost; choose two.  We could likely solve any two of the three crises without massive societal and economic upheaval. All three is materially more challenging.

I’ve argued against the distinction between essential and non essential businesses.  Anyone employer that can safely operate, should.  Society and the economy could do without ball point pens and hair gel. But if you own the pen or gel factory, you should/could be safely operating. You’d be threading the needle.  Zero risk to your workers?  No. Flattening the curve, paying workers and remaining solvent? Probably.

John Drake
Mar 22 2020 at 7:41pm

Russ – Enjoyed listening to you and Tyler discuss and in very pleasant way disagree with each other on certain points. In the spirit of disagreeing with both of you in a pleasant manner –

Both of you referenced the 2008/09 downturn as an example of the how long it can take  labor  to match with the right job. It did take a long time and one reason was the federal government “released the great regulatory virus.” It spread across the land and with little fanfare infected many industries and businesses.

The previous administration tried to shrink the petroleum industry with regulations, tried to shut down pipelines, tried to eliminate the fracking industry just name a few.

I suspect once we get this epidemic under control that many business leaders will begin to move production out of China and back to the US. We will have a new episode of matching labor to the right jobs, which will take less time given the reduction in job killing regulations.
One last thought which I think you both downplay and that is America is ground zero on this planet for entrepreneurs. We may have more big businesses than any other country, but our competitiveness and growth is driven by our wealth makers, women and men in small, private endeavors. These big businesses more often than not simply purchase them for the technologies they bring into existence.

Thank you for your econ talk, love the show.

Ajit Kirpekar
Mar 23 2020 at 11:25am

As others have pointed out, there are real tradeoffs at work here.

Everything I’ve read has suggested that it would take a 6 month to a year lockdown to really quell this virus from spreading further.

One month of lockdowns has already had a devastating results on small businesses and local services. A 6 month lockdown would be horrendous on the economy. I have to wonder how much as a nation we can tolerate a voluntary depression like this in the name of saving lives. In my opinion, I don’t think the coronavirus is lethal enough for us to do that. I don’t see this lockdown continuing beyond 2 months.

Stephan Ware
Mar 23 2020 at 4:06pm

Based on this episode I’d give Tyler credit for at least 50% predicting this one, his primary error was in in over-estimating how long it would take.
Bottoms-up entrepreneurial innovation of the type Russ is so fond of at its best:

Vijay Hegde
Mar 23 2020 at 6:43pm

Russ and Tyler got into discussion about how good the tests are and I want to clarify a few points. 

Test specificity: DNA/ RNA amplification based tests such as qPCR and NextGen sequencing are essentially 100% specific. The only possibility of false positives is through sample contamination or mislabeling. 

Test sensitivity: If the viral load is low, then qPCR based techniques will not detect the virus. But we are rapidly moving into deep sequencing (using NextGen sequencers)  – this will enable us to detect viral particles at a much lower viral load.

The above two tests (qPCR and NextGen sequencing) will detect current infection. We also want to determine if a person had been infected in the past and if they have developed an immune response to it. Thus we need antibody based tests to detect  immunoglobulin G (IgG) to the virus. Testing for IgG’s on a population wide basis will give us an idea about the extent of herd immunity. I can also envision a scenario where you may need to have a copy of your IgG titers, proving you are immune and not likely to be a carrier, to be able to travel internationally. 

Unfortunately this comments section is filled with the same laments, common to republican leaning sites, that the cure for this global infection is worse than the disease itself. They ignore the fact that every country which tried to shrug this off, from China to the UK, eventually realized that strict physical distancing was the only way out. Until we have an antiviral agent, or other medicines that reduce the morbidity/mortality of infected persons, physical distancing is the only way to slow this down. If we cannot slow this down then the healthcare system will break down.  New York unfortunately did not come to this understanding soon enough and is following Lombardy’s trajectory. 

Todd Mora
Mar 25 2020 at 10:40am

I would be careful to discount the impact of the economic contraction caused by the measures taken to mitigate the spread of the COVID-19 virus. As Dr. Roberts points out continually on his podcasts, “It’s complicated” I am not against protecting people, however, I am concerned about what happens to those people whose lives are destroyed by the economic fallout of the actions taken unilaterally by the government. It doesn’t take much research to discover that poverty is highly correlated to many pathologies (e.g., suicide, drug overdose, violence, etc.) I would hope we would at least give those millions of people who will experience the equivalent of the “Great Depression” on a personal basis a passing thought.

Also, I’m not a Republican or Democrat, I’m a person who cares about people and the suffering that economic collapse brings

Vijay Hegde
Mar 25 2020 at 11:26pm

 Let us, for arguments sake, take a purely utilitarian approach, and assign a value to the years of productive human work lost through death from the virus (cost of disease), and balance it against the years of  productive human work lost through the current work stoppage (cost of the cure). Let us for arguments sake assign a value of zero to all of the retired population. The contention from the ‘free market’ side is the following; the monetary cost of cure is greater in magnitude than the monetary cost of disease. . 

Let us assign X as the value of one year of production from the entire population. Let us consider a scenario where people are willing to go to work with mild symptoms, and other people are willing to risk getting  the infection. That is similar to Wuhan in the early days of its epidemic, and the EU from a week ago. Under those circumstances, there is about a 2% mortality among 45- 55 yr olds (published data, NEJM and Lancet). Assuming that these people would otherwise have had 20 yrs of productive life, the calculated loss is  40 X. 

Let us now consider the alternate strategy, one where we shelter at home for 2-3 months. Three months of lost productivity(¼ of a year) multiplied by 20 % of the population (size of leisure and hospitality + retail sector) =  5X, clearly a much smaller number. You can plug in your estimates on the size of the affected sectors of the labor force, it will still be a lopsided outcome when you compare the two approaches.

The second order effects will be definitely worse if you allow the virus to rampage through the population. A loss of 2 % of the population will lead to a collapse in real estate prices, will stop all new construction, and will bankrupt residential and commercial real estate companies. A surplus of used cars from estate sales will lead to the collapse of the new car market. If you let this infection rage freely, It will go on for the next 6 months: there will be no travel or leisure industry for that period.

The correct way out of this mess is for everyone to take 2 months off. Go write the book you always dreamt of writing. Go exercise and build the body you always intended on building. Learn a new skill. Hike the vast open spaces. After 2 months we can slowly get back to work. The government can play whack-a-mole whenever there is an outbreak in a community. 

We have the scientific capacity to develop the tests needed to be able to monitor the population and detect outbreaks at an early stage. We just need to buy some time. In a few months we will have increased our medical capacity, and will be able to provide optimal care to all patients with covid-19 infection. We just need to buy some time.

Joe Kash
Mar 26 2020 at 4:14pm


I would love a discussion about the economic issues concerning supply, hoarding and price. There is the issue with supplies that likely were not going to be short such as food and paper but there also is the issue of global shortage of medical supplies such as PPE. What happened and is happening with price and supply?


Joe Kash md

lawrence nilssen
Mar 29 2020 at 12:44pm

I was surprised when Russ  said “Trump underestimated the seriousness of the problem and 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 [National Basketball Association] shut down very quickly. The NCAA [National Collegiate Athletic Association] shut down very quickly. Baseball shut down very quickly. Nobody had to order folks around.”

Is this not exactly the correct, healthy response?  Given uncertain, evolving knowledge, a centralized response should be on the conservative side: avoid panic.

Individuals will, correctly, act in their self interest.  Exactly what we saw.

Jared Szymanski
Apr 1 2020 at 6:01pm

I work at a hospital in a state that has had only 4 deaths so far from COVID19. We have seen surgical case volume fall by about 50% because the hospital policy is to delay any “elective” procedures as they are trying to conserve supplies and beds for the expected wave of COVID19 cases. But just because we aren’t operating on cancer patients, or doing biopsies to diagnose cancer patients doesn’t mean they aren’t suffering and dying from their diseases. How many people are going to die due to delayed care because we are more afraid of a pandemic that may or may not become a problem here?

There is the argument that those cancer patients are probably not going to die in the next 30 days, but the COVID19 patients (should they appear) would die in the next 30 days. Does it make sense to  suspend life-saving (or prolonging) care for actual patients in favor of preserving capacity for potential future patients? The hospital thinks so and it’s hard to blame them because they would come in for a lot of criticism and bad publicity if the pandemic hit them hard and they didn’t have capacity because they were too busy treating the usual patients.

brennan reilly
Apr 1 2020 at 11:23pm

Condolences on your father’s death.  Amazing how I feel like I know him from your stories over the years.

Just wanted to pass along an anectdote about cultural change.  My oldest daughter is a college freshman at Notre Dame.  Not only has she quickly adapted to online zoom classes, but she and her friends from around the world now have nightly zoom social calls.  They even have themes.  This is a big deal.  Young people are moving to a virtual life even more deeply as a result of the pandemic.  My Rotary club is also moving to zoom.  Many of these changes will become permanent/routine in the future.

Apr 12 2020 at 11:51pm

Just catching up on podcasts and while I have a lot in this interview I disagree with and vehemently so so I just wanted to focus on one of them and quick comment on another.  But first let me say you have my sincere deepest condolences Russ on your father.

What I wanted to circle back on though is the quick dismal of the moral hazard of bailing out the Thai restaurant on the corner.    The response is “yes we can expect them to plan for unexpected events” and not “give them money”.  It’s amazing how many Thai restaurant owners drive their kids to $40K a year private schools in Teslas back and forth to/from their three-million-dollar house in the hills.  They aren’t poverty living roadside stand operators in Mexico living the lifestyle as their customers.  It’s morally bankrupt to bail them out with no etiquette loss or ruin to effectively subsidize their extravagant lifestyles and poor planning.

You seemed to understand that point back when you talking about real-estate but then I think you and Tyler both forgot it when moving on to non-real estate.  We aren’t going to stop flying period.  If all those shares go to junk you will see new airlines spring up overnight jets for pennies on the hundreds of dollars.  Too bad so sad if our Thai restaurant owner has to put his kids in, the HORROR, public schools with his workers or even, God forbid, lose his house and have to RENT like the rest of us.   The world won’t end if a landlord has to live among his tenants or even worse, become a tenant to one his previous tenants who did plan and had the money to purchase the property have he lost it.  Might even do the world some good to know him down his pedestal.

It is perfectly reasonable to expect that Thai restaurant owner to plan for unexpected events to include zero revenue for an entire year but he won’t because why should he when people like you two want to bail him out on the backs of his employees. For example my local unnamed Mexican restaurant could operate just fine for a year zero revenue full expenses including paying his employees had he not sent all four kids to the K-12 most expensive private school in the state and then all four to NYU .. but nah we just subsidize that out of my mother’s paycheck from Home Depot making fifty cents above minimum wage cuz “fly over country and we don’t have tea with them”

Which goes to the second quick point Tyler made about “if we don’t give everybody X money ($1000 in this case) the electorate and history will damn you” and that is a joke.  All you need is PR or what was the saying “Tell a big lie often enough and everybody will believe you”.  We aren’t even giving everybody money now under CARES Act.  The middle class (depending your locality) is often getting nothing nor are the poorest in our nation (homeless, retired, students, etc) so let’s not pretend it’s “all Americans’, not even close.  It’s simply wealth redistribution away from the middle class to the working at the detriment of those in poverty with good PR optics so folk like Tyler can laud it and use it to excuse to bailing out the Thai Restaurant owner on the side.  Or basically business as usually, screw the middle class and poor by throwing red meat to the working class but feeding the wealthy lobster and brisket.

That Thai Restaurant owner can crash and burn like everybody else. He is no more deserving than my mother, my kids, or the homeless laying in a pool of his own urine whom I walk by every day on my way to get coffee.  And TBH he’s less deserving IMHO given he had the actual cash flow to plan for this unlike our homeless friend or the folk our Thai owner paid to wash the dishes.

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Intro. [Recording date: March 18, 2020.]

Russ Roberts: This is a special edition of EconTalk with Tyler Cowen, talking about the coronavirus pandemic. We recorded this on Zoom with video and you can watch the video version of our conversation on YouTube. Because of the way it was recorded, the audio of this bonus episode is not up to our usual standards. Sorry about that. And, for those listening with young children, there is a brief mention of adult activity. You may want to screen. Thanks for listening.


Russ Roberts: Okay. Welcome, everybody. Today is March 18, 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 are streaming this live on the YouTube Channel of the Mercatus Center of George Mason.

Now, 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. You know, 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 in what I release. But, this seemed that there was a lot to talk and think about. And, 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 on a personal note. My father passed away on March 2nd of this month, March 2nd of this year, a little over 2 weeks ago. In the last 8 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 [MERS-CoV, Middle East respiratory syndrome]. At that point, he had a bad lung. And, I'm starting to look at the data as they come out, and I'm looking at the China data and it says: You're 60-69--and I'm 65--you've got a 5% chance of dying, in that early data, if you get the virus. And, that's a pretty high--I don't think there's anything 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 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 right 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.

Russ Roberts: Thank you. Thank you.

Tyler 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 get onto my sofa; I get into information-absorption mode, and just let it rip until it's time to go to bed at night. And, 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?

Russ Roberts: Yes. 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. After our session is done, Tyler, she's going to take our broadband and use it to teach online to her class.

Tyler Cowen: As will I, to my law class. Yes.

Russ Roberts: So, when in 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. 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, the main effect is that on Friday I impulsively went to Costco, which was better than Sunday I think, and 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. And, 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.

Tyler 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 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. So, we're used to going outside and interacting with people face to face--

Russ Roberts: Not so much though--

Tyler Cowen: Mostly we're being cut off from that.

Russ 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 that way. It's not so bad. It's not great, but it's not so bad.

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

Russ Roberts: What do you mean by that?

Tyler 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?

Russ Roberts: For me, the things that I'm anxious about--you know, I usually spend the summer in California. I wonder if that's going to be possible. My son is getting married in August, in Australia. That seems uncertain. A good friend of mine's son was scheduled to be married; they just postponed the wedding. So, those kind of things are--they weigh on me a little bit.

The way I try to deal with that for me is: its just an adventure. And, I don't mean to minimize it. It's just part of the incredible experience of life that we have this experience together, with the two sons who 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.

But, here's the hardest part. I was talking to somebody yesterday about this, who's worried 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, is 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?

Tyler Cowen: With that in mind, I've tried to stay as busy as possible. And in fact, I don't think I've ever been busier in my entire life. Reading materials, writing, passing along advice, just processing information. Every day feels like an enormous rush of things I have to do, even though in the sense of my physical surroundings it's quite static.

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.

Russ Roberts: Well, about a week ago my wife was a little concerned with how focused I was on the whole issue. And, I realized: 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.


Tyler Cowen: One striking fact about all of these events is: I think it really drives home the difficulty for people in thinking in exponential terms.

Russ Roberts: Yeah. Talk about that.

Tyler Cowen: So, you and I have both talked 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 5-7 days in many parts of the country or world. Yet, right now it doesn't actually "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 5-7 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. And, 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.

Russ Roberts: Well, let's think about that a different way. 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. 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. And, I lost it. I said, '1.5 million people dying in America is not like the flu.'

And I was looking at these numbers: half Americans--40-70% of Americans will likely get coronavirus--let's say that's half. So, that gets you to about 150-160 million. And, "1% will die," that gets you to 1.6 million, presumably extra deaths.

So, that concentrated the mind wonderfully, or whatever the opposite is. I started to think, 'We 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, washing 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 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.

Tyler 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. 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. 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, you know, '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.


Russ 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 we've opened up a huge Pandora's box that we can't fix.'

Tyler Cowen: It's very true that we have been slow to test. Some of that is because of FDA [Food and Drug Administration] restrictions. Some of that is the Administration simply not responding quickly enough--

Russ Roberts: Yep--

Tyler Cowen: Some of it is reasons that still seem somewhat mysterious as to why we didn't have better tests handy. There was 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. And, the question of how many waves there will be, what kind of immunities are built up, for how long does this stretch, what I'm 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.

Russ 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.

And 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 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 [National Basketball Association] shut down very quickly. The NCAA [National Collegiate Athletic Association] shut down very quickly. Baseball shut down very quickly. Nobody had to order folks around.

And, I think what's been underestimated in this, in the demand for this sort of top -down, 'Fix it. Solve it. Make everybody whole. 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 if we could test perfectly, as if that could solve it, is unrealistic in a country of 330 million people, and our number of square miles. It just seems that the advantage of this bottom-up, voluntary response to the crisis is that 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 ignoring.

The advantage of the private response is it allows for people to be more flexible, to ta ke into account when they can and should, when things are more dangerous for some than others. And, I just think that's been lost in this maelstrom.

Tyler 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 --

Russ Roberts: 50%. 50%, in the one I saw.

Tyler 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 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. Because with the number of cases rising exponentially, if you're going to apply testing and isolation, and giving people ICU [Intensive Care Unit] 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 Lombardi and 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 that, being that the tests are not in our laps 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--

Russ Roberts: I totally agree--

Tyler Cowen: 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.

Russ 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--the biggest hole was bars and restaurants, and the government did that. Most bar- and 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 was pretty amazing. So, I think--

Tyler Cowen: But, 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. 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's so many businesses, institutions in the non-profit world, that just have been very, very slow to respond.

Russ 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 that happen, make it more likely than not.

Tyler Cowen: 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 only 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. And, I would like to see our non-profit 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've been doing this at some point earlier in February.


Russ Roberts: Let's move to the more economic side of things. I'm not sure how important those things--I really like 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 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, is the much bigger issue, obviously.

Tyler Cowen: Of course.

Russ Roberts: So, 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, quote, "aren't working." 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 we had announced, 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. GDP [Gross Domestic Product] 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--well, you could a little bit.

But, in general, what are you thoughts on that sort of extreme version of this? That would be a stylized way of thinking about what we're going through now. What would be the impact of that, if everybody just stopped making stuff for sale? That, commercial life stopped for two weeks? Or four weeks? What would be the impact of that?

Tyler Cowen: For two or 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, you know the players will show up the next day and they'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 reconstitute 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.

Russ Roberts: Well, I'll make a bet with you right now, Tyler, that this, in four or five months from now, won't look like it does now, in terms of the expectations of self-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.

Tyler Cowen: On TV [television], but not with a crowd. Yes. It'll be on TV. In China, 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 shut down activities.

Russ Roberts: Yeah; I have a different--I'm a little more optimistic than you, but if you said to me, 'How do you know?' I'd say, 'Oh, it's probably just empty optimism.'

Tyler 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--

Russ Roberts: And, I assume that's part of the reason people--businesses are overly aggressive about shutting down. You know--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.

Tyler 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 where, whether true or not, someone might have died as the 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.


Russ Roberts: I guess I disagree a little bit. I saw an earlier interview you did on this where you suggested some larger cultural changes that I think are likely. And, I base that partly on the idea that right now people under the age of 25 are 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.' And, I think the human impulse of that is going to be strong. But, the legal part is huge, I agree with you there.

I want to go back to your comment, though, about organizational capital, because I don't fully understand that. And, you used the word 'destruction.'

I think it's important to make a distinction between what we would call wartime destruction and economic 'destruction,'--Schumpeterian destruction.

You know, 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 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, people that 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 on me, and I'm going to lose my buildings.'

Now, that's a personal tragedy for everybody involved. The buildings are not going to be destroyed, though.

Someone else is going to buy them up, 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. So, when you talk about the organizational capital being destroyed, what do you have in mind?

Tyler Cowen: Well, think of the labor market as being a very complex matching problem. Right? So, 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, and it was not with any kind of public health crisis going on.

So, if you think of--some workers will want to be laid off, to collect unemployment insurance or collect 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.

So, reconstituting an enterprise, you know: 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. And, our economy had been doing a fairly good job of that. But there's a big reset button being pressed on all of those activities. And 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.

Russ 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, and I'm not sure how important is the organizational capital of a, you know, 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--

Tyler Cowen: I think restaurants--

Russ Roberts: Do you think there's such a big--do you really think there's such a big--the matching problem--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, and, particularly, and then manufacturing--that took a massive hit.

And, 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 know, 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 will be a week, so you wait. And, 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. And, so you don't adjust. And that's a huge problem. This seems a little different. Or do you not think so?

Tyler Cowen: Well not with face-to-face services taking a big hit, which in America is significant.

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 sign up and pay tuition, or at what rate? I don't think anyone knows--

Russ Roberts: Good point--

Tyler 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. And, again, that was only about 10-11% unemployment. Probably now we're talking something much higher.

And, 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 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.

Russ Roberts: How long it will take, yeah.

Tyler Cowen: And, this may not be that. There's not a clear end date in a way you usually see with financial crises. I don't mean to be the downer guy here--

Russ Roberts: But you are--

Tyler Cowen: but our goal is to talk these through honestly. Other people I know are more pessimistic than I am. So, those are some of the factors that worry me. And, as you know, our own economy labor markets are so over-regulated, that will hinder our adjustment.


Russ 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 [Health Insurance Portability and Accountability Act] regulations, privacy regulations on tele-medicine so that older people can get medical care without having to go out into public. Some of these things, of course, are 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.

Tyler Cowen: I'm not sure that's true about Trump. If you think of this as analogous to a wartime event, clearly FDR [Franklin Delano Roosevelt] did not manage Pearl Harbor very well, but he certainly was reelected. So, some electorates, possibly still ours, have a tendency to stick with the incumbent in situations that feel like wartime. I don't know if that's still true, but I wouldn't leap to the conclusion that it's not. So, on that, very tricky.

Russ Roberts: Interesting thought.

Tyler Cowen: And, again, I think we need to think through other parts of the global economy.

So, economic growth in China right now, almost certainly is negative. They are bouncing back, but the Chinese economy has been sustained by momentum. Their 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.

So, this is likely more of a correlated global event than in fact 2008/2009 was, though that had a fairly high degree of correlation. And, 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. So, 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 the view it's like '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 project[?] businesses--

Russ Roberts: China--

Tyler Cowen: China. There's been a systemic failure on this. And Trump is certainly part of it. But, 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.


Russ Roberts: Yeah. 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 an 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. And 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, there are things to learn from this about the proper role of government, the relative level of responsibility of, say, a Republican or 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?

Tyler Cowen: Yes. I try to follow better people on Twitter. But, even following better people, one sees quite 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. And, 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. And, 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.

Russ Roberts: That's true.


Russ Roberts: Let's talk for a second about a possible upside of the story, a possible, a cheerier story. Is it irresponsible to have this conversation, Tyler? Is it--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 their 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 cataclysmic economic changes will be much smaller than you're worrying about?

Tyler 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: You know, a vaccine. So, given that most people are not at all harmed by coronavirus, the safety of the vaccine has to really be very high. Right? So 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 a 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 of 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.

So, 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 and hear.

It's maybe more like 12-18 months. If we're extremely lucky, it could be a bit less than that. And, 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 are still liability issues. There's 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.

Russ Roberts: Fair enough. We'll see. I guess, you know, I spent most of my life as an optimist. Most of that optimism ended around--it slowly started to decline through the 2000s, as events made me more--and, I got older. I think when you get older you get to be a little more--you get crankier.

Tyler Cowen: I think the 2000s were not nearly as bad as people think, by the way. A separate matter. But, they did not dent my optimism, maybe as much as yours.

Russ Roberts: Yeah. I find it--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 forecast it. I do think there's a--an interesting dynamic going on new between--it reminds me a little bit of other social issues--climate change, you name it--where people argue that we should be, you know, more worried than we might otherwise be, because that otherwise will encourage people to be less worried.

And I think--I don't know. I find that hard to be sensitive to. I think it's important. There was a big dustup yesterday on Twitter because John Ioannidis suggested we were in the dark here, we might be overreacting, we don't have much data. And, Nassim Taleb and others responded back, 'That's why you have to be extra careful.'

Tyler 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.

Russ Roberts: To make a sacrifice--

Tyler Cowen: right--

Russ Roberts: And sacrifices are hard. It's not easy. A big provider-problem there, obviously.

It's in both those situations, climate change and this. 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.

Tyler 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.

And, 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, you know, and become a spreader in some manner.

So, really to think long and hard.

I'm not really counseling stoicism. I'm counselling a kind of action, something you can do. And, even if it ends up only being a placebo, you will feel more in control. And, of course, there's a chance it will pay off and have some benefits. So, I think that's an important idea to promote at this point.


Russ Roberts: Well, I like the idea that while your home, if you're not usually at home, to try to have a project. That--you're--you are 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?

Tyler Cowen: Yes.

Russ Roberts: Work at something.

So you're--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. You know, I think it's great to try to create those habits for yourself in this window of enforced, unusual behavior.

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

Russ Roberts: Great minds think alike, Tyler. Let's talk about that. 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 as fiscal stimulus isn't going to stimulate anything. People aren't making things, because they can't go 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. And, 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 our earlier part of the conversation.

But, the idea that somehow we're going to solve the economic disruption through traditional means, seems to me, either monetary or fiscal, seems to me to be very unlikely.

You can make a case for 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 now. We're back in, I think, 2001.

So, I'm not sure we have a lot of weapons for this kind of--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 any more, so find something else." And, the idea that we're going to fix that with, you know, monetary/fiscal policy seems to be unlikely.

The idea that we're going to '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?

Tyler Cowen: I worry that we don't know how many businesses are bouncing back, and how many cannot be kept on life support.

So, again, if it's a month or two, I think almost all of them can be kept on life support, and we can 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, you know, five or six months, or longer, then the amount of money you have to send, and people just being kept in unproductive activities--like, you actually want some of those restaurant owners to end up as UPS [United Postal Service] drivers. Right? And, we don't know how many.

So, 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, 'Oh, 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?' And, 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.

And, 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.


Russ 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 the idea 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.

So, I know that the pharmaceutical company Gilead has a drug that, remdesivir, that's under possible consideration. 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. Let's say it does. Is Gilead then going to be able to charge whatever they want for that? Very unlikely, right.

Tyler Cowen: Correct. Especially globally, right?

Russ Roberts: Right.

But, at this moment, right now--I mean I've talked endlessly now on EconTalk; I have an episode coming up soon on this question of this challenge we have of this 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 just 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, and Roche, and others who developed this new test that's relatively quick, I want them to have a big incentive to really solve this problem.

And, the normal way we do it is we say, '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--

Tyler Cowen: And, with the externality of infectiousness. You don't want the price to be high, right?

Russ Roberts: Correct. Right. Well, you could solve that by letting them charge a high price, and the government funding it. But, I think--

Tyler Cowen: Yeah. At the consumer's side, the price should be low, and it's not going to happen.

So, 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. So, I think those prizes should be large, incredibly promised, and I would like to see us get on this.


Russ 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 this might lead to, that we might be facing: that might be the one thing you'd want 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. Do you agree?

Tyler Cowen: Yes. I do think you have to be a little careful at how you structure the prize. So, a poorly specified prize will encourage people to work in small groups, and not share information. Right? 'Oh I want all the money for myself.'

So, 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, you know, to decide how to hand out $50 billion dollars, and you make sure they are people willing to write a check, like to a big unpopular corporation, if that's whose done the good work--you know, 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.


Russ 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 that it was a time when there wasn't FDA testing that cost--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. Do you think--is there other things you would do to make a prize more effective?

You know, a discretionary prize--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. I mean, 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 saved their grandparent's life. I don't know.

Tyler Cowen: 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 developments. 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.

Russ Roberts: Well, I was going to ask you, if you were "in charge," if you were the Coronavirus Czar today, or President of the United States, besides creating potentially 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 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 airlines should get a bailout? Do you think that's a good thing?

Tyler Cowen: One has to be very careful with that word 'bailout.' People mean so many different things by it.

Russ Roberts: Fair enough.

Tyler Cowen: 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 the shouldn't. So, 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 New Deal squared. And, I think some band-aid 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've been done and weren't, and saying, 'Now is the time to see I was right all along.' 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?

Russ Roberts: Well, I'm not sure--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 it's--actually, it's probably too late. Everyone just expects the government to "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, that's not true.

But, there are a lot of things happening. People are buying gift certificates from their 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 making businesses 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. Do we want to allow every American--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 to work, or shouldn't go to work. There's no "free market" solution to that, that's obvious. So, there may be some of those things that are necessarily to reduce the spread of the virus, but they're so blunt. 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 check from the government.'

Tyler Cowen: Here's one of the tricks when it comes to bailouts. So, it's a common line to say, 'Well we want to keep services up and running, but we don't want to bailout shareholders.' And, 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 flights safe, because they don't want to lose their capital.

So, 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. So, 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.

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 it will be harder next time around. I do think the $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. So, I would do that.

Russ Roberts: Well as I suggest, I think it's palliative more than stimulative--

Tyler Cowen: It's defensive, I would say. It's not really going to stimulate, but fewer people--

Russ Roberts: It can reduce hardship.

Tyler Cowen: Yeah. 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, and 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 a mind as a recapitalization process--to me that's the big question about the bailouts. Not really very well answered as of yet.

Russ Roberts: I don't see that capitalization issue as an equity issue the way you do. I don't think American Airlines, United Airlines, Delta, etc., 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 would be destroyed.

Tyler 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 $1.00 a share. And, even that would be kind of an option on the bailout, right?

And, 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.

Russ Roberts: Well, that's for sure. I think the biggest problem that pundits, and I'll put myself in that class on this level of conversation, we just use words like 'bailout' as if we know what we're talking about, or 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--and, I think there will be strings attached this time that weren't attached in 2008, which probably, might be a good thing. I think some of those things were not good in 2008; and I think it discouraged people's faith in democracy and capitalism, which is part of our problem going forward.


Russ Roberts: But, a lot of this, it's hard to imagine. 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 100 years you could argue, that government should be doing more. It seems to me this is going to accelerate that trend, potentially.

Tyler Cowen: Yes.

Russ Roberts: And, then culturally, so for 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 long run version? The shorter run version, we get some palliative effect of medicine, and treatment, and vaccine, and this becomes a moment that we talk about with laughter. For many of us it'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. So, let's talk about those two things in the last 20 minutes we have left. Choose any of them.

Tyler 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. And, 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, as 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 might call 'Right Wing,' in the crank-y 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 adherents. That when people feel--

Russ Roberts: Whoa. Whoa. Whoa. 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?

Tyler Cowen: People who support Bernie Sanders and Elizabeth Warren, which is a pretty significant chunk of this country's intellectuals. That, 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 coasts 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 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.

And, I think you see this already. And, I think that is a semi-permanent shift that will last for at least a decade, probably longer. And, that is already the case.

Do 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.

Russ Roberts: Yeah, but you don't think he's going to be a lot more eager--Tyler, you just said we should give every American $1,000.

Tyler 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.

Russ Roberts: Yeah. Well--I don't see that, but I want you to keep going.


Russ Roberts: Let's talk about the cultural changes. I'm going to go a different direction. I think people have a great thirst for face to face, and I don't think Zoom--I love Zoom. I love Skype. Big fan of 'em. Love the internet. Love talking to tens of thousands of people through 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 watching this live because they'd rather do that than listen later when it's not live. And, 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.

Tyler Cowen: But, think how much more productive this is, right? Much bigger viewership than our coffee klatch.

Russ Roberts: But you're the guy that 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 kind of time spent--

Tyler Cowen: Oh sure. [?]

Russ Roberts: Yeah. Just doing nothing is very valuable. We underestimate what it allows us to do. 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.

Tyler Cowen: I think there will be a huge wave of promiscuous sex once there's the first break in the virus, for instance.

Russ Roberts: There goes my G-rating on EconTalk.

Tyler Cowen: I'm sorry.

Russ Roberts: That's okay. I do think--I think there's a pendulum here of people who will react to this. And when I say 'this,' I mean the digitalization, the virtualization of daily life. People don't like it.

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 push back. I see it among young people already, and 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. And I just think a lot of that's going to happen with this, as well.

If we really--here's what I'm trying to say. I don't think that X months of self isolation is going to change our habits. It's not going to change our nature.

Tyler 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.

Russ Roberts: Well, I think that--six years ago maybe, whenever it was, when the early MOOCs [massive open online courses] were coming out, online classes--I was all excited that there would be a revolution. That hasn't happened. Now, this is going to give it another chance. Maybe it will spur it along. I think it's equally likely they'll say, 'Boy, that was incredibly ineffective. We've got to go back to face-to-face.' So, I don't know, I'm very agnostic on this.

Russ Roberts: I think the idea that we--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--they're extraordinary. There are substitutes for them that are not nearly as good, but they're a lot cheaper and easier to access, so we access them. But, I can't see those dying out, at all. In fact, they may bounce back stronger than ever.

Tyler 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 average degree of online-ness may not change, but you'll demand more from your face-to-fact encounters. And, I won't use my previous point again. And, then you'll be doing more on Zoom and Skype, and other services. So, 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.

Russ Roberts: Well, I like the idea 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 Apple watch to see who's texting you, I think that's increasingly going to be seen as unattractive. The etiquette of that's going to evolve. I don't know how it will be. But I think increasingly people will put away their phones, because they don't want to be connected 24/7. But, you know, 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. It's a nice idea. I like the idea that it might be true.

Tyler Cowen: I agree completely.

Russ Roberts: It's not really the way we're hard wired, right? 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. It's not simply that there's new things to distract us. It's that we were already very distractable; now we're more aware how distractable we are. Maybe that will help us.


Russ Roberts: 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 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--a foundation, the beauty of having some really rich people who've created these foundations is that 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.

Tyler Cowen: I'm running my own prizes through Emergent Ventures, money I've raised--

Russ Roberts: Oh, yeah. Talk about that.

Tyler Cowen: It is now at about $1.4 million, with some other pledges on the way, and other interest expressed. So, I'm not sure--

Russ Roberts: Describe it. Describe what it is, for people who don't know.

Tyler Cowen: People who do meritorious things to contribute to the end of coronavirus 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. So, this is not a prize that will go to Gilead. The 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.

Russ Roberts: Like a live streaming YouTube with a really important thinker about where we're headed, does that count?

Tyler Cowen: Whatever is effective. So, 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.

Russ Roberts: Can you give one example? Is this public?

Tyler Cowen: Not public yet. So, some of these 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, and I think encourage them to do more. Because this is a marathon, not a sprint, and the people who have already done wonderful things are maybe some of the people more likely to continue doing wonderful things.


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

Tyler 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, worth reading, worth thinking about. So, whatever I know, I'm putting up there. And, the volume of blog posting is much higher. So, by definition, that's what I think is important.

Clearly it's not all true, and I try to indicate when something is speculative. So, 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 Saint Patrick's Day Parade, or whatever.

And, that's very hard. The remedies differ by person. Don't trust everything you read and hear. The degree of misinformation is very high. The degree of uncertainty from the best and most reputable sources is very high. So, there's no magic bullet on how to figure out what's going on.

I can't quite say, 'Oh, trust the authorities.' That's not exactly how its gone. But, there's not any, you know, single way to really know what's happening. And it's very frustrating. I would say do your best, and keep in mind that it'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?

Russ Roberts: A lot of people have--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 have been crowing this week about how, 'Ha! See, you do need these experts.' I don't--obviously epidemiology and understanding the science of this is incredibly valuable and important. I'm a big fan of science. 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 life-saver for 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. And, they're going to have judgements based on the outcomes that are, you know, probably not going to be not so healthy. So, I don't know. I'm very interested in how that, 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. And, 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, not suggesting we shouldn't. But, I find it fascinating how that's almost all we're focusing on.

What this is going to do 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's going to be kind of important, too. We're not so focused on that, because you can't measure it.

Tyler 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 pathologos[?]. Should you just turn on the evening news and listen to your president/prime minister and say, 'Oh, they're channeling the experts.' On that, I don't know. The record's not been 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.

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

Tyler 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.

Russ Roberts: Thank you.

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

Russ Roberts: Thank you, Tyler.

Tyler Cowen: Thank you, Russ.