
The Great Pause Was an Economic Revolution - williamsmj
https://foreignpolicy.com/2020/06/22/the-great-pause-was-an-economic-revolution%e2%80%a8/
======
twblalock
The article cites the rapid changes to supply chains, particularly Walmart's,
as a reason the economy kept going. What else is that, other than the
mechanisms of a free market at work? The government didn't tell them how to
run their supply chains.

Nor did the government tell companies how to shift their workforces to remote
work, they just did it, and they did it pretty well, even though some of them
had never tried it before. Some companies even introduced remote work in
March, before the government ordered any lockdowns!

In doing these things, businesses have relied heavily on technology (also a
product of the market) which enables far more people to productively work from
home than would have been possible a few decades ago. Small, local businesses
quickly pivoted to social media and online ordering to survive.

Given all of that, how can the author say, with a straight face, "None of this
has anything to do with the spontaneous interplay of individual economic units
that economists like to talk about." It seems like _exactly_ that.

~~~
Klinky
The government dictated who could operate in the market. The government doled
out trillions in stimulus money to keep the market going with consumer demand.

There are many businesses still teetering on the edge who have not
transitioned well. There are many businesses who laid many workers off.

Also there were major failures in how quickly PPE production could get ramped
up, I wouldn't call that a supply chain/market success.

There was some corporate autonomy going on, but I wouldn't say we saw a
miracle of the "free market" at work.

~~~
omosubi
I don't necessarily agree with OP but the degree to which the private market,
without any government intervention, was able to get masks into the hands of
consumers across the country and world quickly was extremely impressive. I
don't remember the exact timeline but there was a non-chain corner store down
the street from me that was able to get masks within 3 or 4 weeks of the local
shutdown. Of course it would have been much better if the federal government
had started ordering masks in January and encouraging their use sooner but was
still amazing to witness the invisible hand at work to an almost unseen
degree.

~~~
Klinky
It would have been more impressive if it predicted demand in advance, so they
were actually available when needed. It would have been more impressive if
there was a domestic source, but that no longer made economical sense in the
market. It wasn't 3 - 4 weeks for many, it was months for some. Likely
healthcare workers could get them within weeks, but initial supplies ran out,
likely costing lives. While government should hold a strategic supply, our
private healthcare system should have also put in the orders sooner. I
wouldn't deem it a success at all.

~~~
pmiller2
I agree with you, but I suspect you and the GP comment are referring to
different things when you say "masks." I'm thinking of the N95 masks that are
proven to offer pretty good protection from respiratory droplets. I believe
the GP may be referring to either disposable surgical masks, or some sort of
other mask that is not rated for any sort of specific protection.

~~~
Klinky
They'd have to have had their head in the sand if they didn't understand all
PPEs(N95/non-N95 masks, shields, gowns) were in short/critical supply. There
were also shady deals being made at high prices, and counterfeits flooding the
market. Once again the market optimized for the profit of a few and not
preparedness or quality of life.

~~~
omosubi
Of course I understand that there was a shortage of N95 masks but much of the
government isn't setup to buy enormous quantities of stuff in a few days in a
market where there a lot of bad actors.

[https://open.spotify.com/episode/5x8WrjXmV9RnluuHr1ZOcR?si=F...](https://open.spotify.com/episode/5x8WrjXmV9RnluuHr1ZOcR?si=FiEVD9W_QmWqId0tqNHYXQ)
Notice that this was made April 3rd

------
secstate
Is it just me, or is it a little silly to compare the 1919 world economy pre-
mass production/consumerism with today?

The irony to most of this shutdown is that "essential" businesses are still
open. What the Great Pause has exposed is the shallowness and fragility of
mass production/consumerism. During the pandemic of 1919, 80-90% of household
income was spent on food and essential needs.

Can you even imagine if we spent 80-90% of our income on essential needs? Well
shit, we wouldn't hurt so much when non-essential business was put on pause,
that's for sure.

~~~
clairity
> "Can you even imagine if we spent 80-90% of our income on essential needs?"

most american households (as in >50%) do spend 80-90% (or more) on essential
needs.

~~~
twblalock
In the early 1900s most American households spent 80% of their income on food,
clothing, and housing -- and the food was by far the largest expense, more
than housing.

The picture for American families today is much better.

[https://www.theatlantic.com/business/archive/2012/04/how-
ame...](https://www.theatlantic.com/business/archive/2012/04/how-america-
spends-money-100-years-in-the-life-of-the-family-budget/255475/)

~~~
clairity
that article makes the point that basically all the savings from food from
1900 went to housing and transportation in 2003.

~75% of 2003 household budgets went to food, housing, transportation, clothing
and healthcare ("essentials"). among non-essentials, only ~5% to
entertainment.

those are aggregate numbers, so you'd still expect more than 50% of american
households to be spending 80-90% of their budgets on the essentials (said
differently, the median household is most certainly above the 75% figure
because of the highly disproportionate skew of the top 1%).

you could argue that we own too much house and too many cars on average, but i
doubt that makes much difference to the big picture, because that's also
disproportionately skewed to the top 20%. most american households are still
spending most of their money on real essentials.

~~~
naeemtee
Yes, except we’ve replaced beans and rags with Big Macs and Nikes

“Essentials” is flawed in your argument. Americans in 1919 actually had to
struggle to survive.

------
js8
I am not sure what is there to wonder about. Change has always been possible.
It's the elites in power who are conservative, claiming that there is no
alternative, they want to (for the most part) keep their position.

It's funny to read that Hayek compared parts of the economy to organs. I often
use analogy of money being blood in human body, to illustrate that from the
perspective of each individual cell, blood is a resource, but from the
perspective of the whole body, blood is just a transport medium of which it
can create any amount required.

And accordingly, body can decide to vasoconstrict (shut down) certain organs
in times of crisis. It is a collective decision, not a decision of an
individual cell.

So of course, you can shut down parts of the economy. You can also put those
people in parts that shut down on a kind of helicopter money support. All
those things have always been possible, it's just people were conditioned to
think they are not.

~~~
twblalock
There is a big difference between "possible for a few months" and "possible
indefinitely". A lot of what we did during the lockdowns was never going to be
sustainable.

By the way, the "helicopter money" thing was proposed by Milton Friedman, a
libertarian economist who was influenced by Hayek and who was highly critical
of most forms of government intervention in the economy.

~~~
fuvkthisguy
> There is a big difference between "possible for a few months" and "possible
> indefinitely". A lot of what we did during the lockdowns was never going to
> be sustainable.

I would be interested to see an argument for this point, because I don't think
it stands on its own.

------
pochamago
I feel like this article is simply premature. I think its headline is likely
accurate, but all it can really do is cite the events we have been and are
living through, not give any concrete suggestion of the consequences. I'm
eager to see what kind of interesting theses economists will devise from
studying this time period, but I don't think the article offers any in this
moment.

------
carapace
The "Economic Revolution" of the title is fascinating and exciting:

> About 35 percent of food expenditures—more than $2.5 trillion globally—is up
> for grabs as consumers shift to dining at home and experimenting with new
> buying channels.

This could be the end of cruel factory farms and the resurgence of smaller,
healthier and more humane farming.

Check out "SPIN farming": it stands for "Small-Parcel INtensive", a kind of
turn-key farming business that is meant for small (down to 1/4 acre) _urban_
farms. Combine that with "Syntropic farming" and you've got the makings of a
economic revolution.

(Normally I would supply links but I've only just recently learned about them
so I don't have anything in particular to recommend.)

~~~
redis_mlc
I come from a farming area. When I read the drivel on HN about urban farming,
my response is, "Talk is cheap" and "What are the details?"

\- 1/4 acre in SV starts at $1 million

\- farming is a job. My family's small garden (30'x30') was like a part-time
job in itself.

\- when there's an immigrant farm labor shortage and unemployed locals are
recruited for farm work, they don't make it to lunch on the first day - it's
back-breaking and often dangerous work

Thanks to the ag insider who did the 2-part post on ag economics earlier this
week.

~~~
082349872349872
Our farms were doing fine with underemployed locals. One article I've read
indicates they simply used twice as much field labour as they had with guest
workers, so the work was only half as back-breaking.

~~~
redis_mlc
Serious question: what city and what year?

~~~
082349872349872
Switzerland, 2020. So far I've read articles about asparagus and leeks. There
are probably more stories in the ag coop magazine, but I haven't been by the
coop since February, having my feed delivered instead.

[https://www.srf.ch/news/regional/basel-baselland/corona-
ernt...](https://www.srf.ch/news/regional/basel-baselland/corona-ernte-
spargelstecher-aus-der-region-statt-erntehelfer-aus-polen)

The newbies need not work as hard as harvest workers from the east. "We're
twice as many as in a normal season. So everyone has only half the work."

====

Ganz so hart arbeiten, wie die Erntehelferinnen- und Erntehelfer aus dem
Osten, müssen die Neulinge aber nicht. «Wir sind doppelte so viele, wie in
einer normalen Saison. Also müssen auch alle nur halb so viel arbeiten»

------
jhallenworld
IMHO, the revolution is the quick fed and congressional response in terms of
stimulus. The mindset allowing it was a very long time coming, going back to
lessons learned from the great depression, the dropping of the gold standard,
observations of Japan's lost decade, but more recently the observation that
all of the quantitative easing from the 2008 crash did not lead to horrible
inflation.

------
jennyyang
It's hard to say that this Great Pause actually "worked", since the
governments of the world had to dump trilions into stimulus to make businesses
not simply die. We and our children and our childrens' children will be paying
for this with our taxes for decades to come.

If we have another Pause in the next few months, then it will be the body blow
that completely cripples the economy, especially in the US. I can't see many
small businesses surviving on a fraction of the income, especially when their
margins are razor thin already.

~~~
lefrenchy
Why would we (assuming you mean the US) have to pay for this with our taxes,
who do we owe the money to? The US issues it’s own currency and we printed
money to keep the economy afloat. We don’t owe that debt to anyone?

The only reason extra taxes would be needed is to curb inflation.

~~~
jackcosgrove
Inflation caused by currency debasement is a flat tax, which is comparatively
regressive. It raises the prices of all items faster than wages, and everyone
has to buy food, buy electricity, etc.

Someone will have to pay.

~~~
lefrenchy
I agree with the premise, but printing currency in the midst of a large
economic crisis to keep consumers afloat is not guaranteed to result in
inflation though, is it?

~~~
jackcosgrove
Supply chains were already starting to fray. There's a diner near me with a
sign up front apologizing for raising their prices because of a beef shortage.

Borrowing money to fund consumption now won't result in long-term inflation if
we consume less in the future to account for the pulled-forward demand. I
doubt that will happen.

~~~
lefrenchy
Fair enough. Isn’t that just a result of supply chains being hurt as a result
of COVID? Those prices aren’t raising as a result of stimulus or wage growth,
and should normalize as we return toward some sense of normalcy.

~~~
OkGoDoIt
When was the last time you ever saw a restaurant lower their prices,
regardless of the reason? Price increases have a tendency to stick.

------
ptero
> With the Spanish flu a century ago, people adapted their individual
> behavior, but social life proceeded more or less as before. “Public places
> of amusement” were shuttered, but work and business were little affected
> overall.

This is a pretty telling difference with how we perceive the world today.
During the last decades most people living in the "first world" (however you
define it today) lost ability to rationally think about small additional
chances of dying. Even though the usual set of killers, from old age to cancer
to traffic, are still around us and take a lot of lives every year (I believe
CDC estimates 650000 US deaths from heart disease per year), they do not
prevent us from living and enjoying our lives; we seem to mentally zero those
deaths out. But a very small unusual danger can cause widespread panic.

As a non-coronavirus example, in 2002 a "DC sniper" killed 10 people in 3
weeks. When I was going to DC during that time for business folks from Chicago
were calling me crazy, even though Chicago has way more people fatally shot
during average 3 weeks. All my attempts to argue that additional risk is
minuscule got nowhere.

We need to re-learn to make rational decisions about risks. Otherwise we will
be constantly hiding under the table for any loud noise and destroy our
economy, fun of life and long-term life satisfaction. My 2c.

~~~
mjevans
I agree with you about rational weight of risks.

However there is a possibly implicit meaning that you consider the current
efforts of preventing transmission of the virus to be overkill.

Possibly in other parts of the world a little more measure and give might have
been the best response in hindsight, but knowing what we did know then, rather
than now, I believe most places* (in the 'first' world) made the correct
adjustments.

The USA is one of the places that had a fragmented, and insufficient overall,
response. History will record how things were historically the worst in this
country due to many factors.

Among those factors, anti-intellectualism as a driving force in politics,
which contibuted to rigidly sticking to bureaucratic processes rather than
scientific evidence and results oriented decision making. Another is an
absolute failure to modernize and take a long-term investment stance across
many government agencies and processes: often lead by a reluctance to be
socially responsible.

~~~
tathougies
Overall... The vast majority of the states have done really well. The us
average is thrown off by a few states -- not even the largest states. I'm not
sure where people get this idea the us has done poorly. New York and surrounds
did terribly mainly due to not following issued guidance. But even with them
pulling up the average, the us has done fine. If new York had closed down when
told and then followed federal guidance about sending people to nursing homes,
the US would be lightyears ahead of other countries

In terms of testing, death rate, positivity rate, death rate amongst confirmed
vases, the us has done as well or better than many developed nations.

Could the us have done better? Absolutely. But we also are doing at least
average... If not downright better. Can you cite per capita numbers in
relation to other developed globalized countries?

~~~
awinder
[https://www.washingtonpost.com/graphics/2020/world/mapping-s...](https://www.washingtonpost.com/graphics/2020/world/mapping-
spread-new-coronavirus/) you’re gonna have to nav down and play with some
toggles but I’ve enjoyed using their data. Also you’re gonna need to tune your
radar towards Texas, Florida, Arizona and others, the New York line is only
going to have a couple more weeks of legs.

~~~
tathougies
So Texas and Florida have 7-day moving average daily death rates lower than
New York. Texas's has been stable for a few weeks now. Texas and Florida have
fewer exposures, so less herd immunity than New York.

But really all of this is a _distraction_. The point of the shutdowns we were
told was to prevent cases from growing out of control so as not to overwhelm
hospitals. No region of the United States, including New York had overwhelmed
hospitals that required patients to be triaged out of the ICU. In other words,
no one who needed an ICU bed in the US was denied one. That was the point of
the lockdowns. It is still the point. That Texas and Florida's rate is rising
is not an indication that they are mismanaging their states. Even with the
rising cases they have hospital capacity. In fact, before cases were rising
they were at a very low historical hospital capacity. While the numbers seem
scary (one hospital in TX is at 97% utilization), they also have plans to add
a lot more ICU beds. Thus, they have been successful in accomplishing the
initially stated goal -- not to overwhelm hospitals.

Unless a vaccine is found -- and this is still a big if -- at some point every
geography is going to have to come to terms with the fact that you have to
either choose between never opening up to anything resembling freedom of
movement or letting the disease take its course -- hopefully controllably. The
US -- and most countries -- have currently chosen to let the disease take its
course in a controlled manner. For the most part, that goal is being achieved,
it would seem.

~~~
awinder
Deaths trail cases, Texas and Florida currently have 10x the new cases as New
York not adjusted for population. You’re making very basic mistakes with
numbers, presumably to coach them towards the point you want to make.

~~~
tathougies
You're also coaching numbers. The point of the lockdowns were to not overwhelm
hospitals. 10x new cases in Texas and Florida while new York is trending down
is not hugely surprising. It also doesn't say much both states are also
testing more. Also population wise both are more populous.

Either way... The point being to not overwhelm hospitals.. The question isn't
whether they have 10x the amount of cases as ny now. Its whether they can
handle the hospital numbers.

~~~
awinder
No, some people actually understand how the numbers interplay with a real
scenario, which is why I gave you the raw numbers to see what you did. And you
immediately jumped in and drew an illogical conclusion to support your point.

You’re spreading disinformation. If you need to do this to make yourself feel
better, do it. But don’t become a spreader.

~~~
tathougies
What was my illogical conclusion? Can you please reiterate what conclusion you
think im trying to reach? My only point is That the point of the lockdowns was
not to overwhelm hospitals and even with the increases in tx and fl, they are
unlikely to do so? How is that illogical? I do not deny the rise on cases in
those states. What i question is whether that means theyve failed in achieving
their original goal of not overwhelming hospitals.

------
geofft
There's a lot I agree with about this article in terms of the analysis itself,
but I'm amused at the idea that this level of control is a dream of the "the
radical left and radical right." The economy / world order we _have_ requires
significant amounts of regulation and control. We fear, for instance, China's
disrespect of intellectual property law precisely because respect for
intellectual property isn't an emergent artifact of a free market; it requires
a complex and well-funded legal system with an equally well-funded enforcement
arm. An economy where copyright and patent and trademark and trade secret law
are effective may be a "living organism," but it's a manicured lawn with a
trimmed hedge, not an old-growth redwood forest. You can prefer its shape and
appreciate its beauty, of course, but be sure to ascribe agency appropriately.

And that's the real thing the centrists don't want the radicals to realize -
that the center is where it is because of careful pruning and grafting, that
in so many things from immigration and work visas to tax policy to trust funds
to zoning to policing to military spending to labor law to (as the article
mentions) how we deal with the homeless and the destitute, we're not taking a
natural or default position in any meaningful sense, we're taking the
_current_ position, and working hard to keep things that way. The radicals
aren't wrong simply because they are radicals and they demand change, so don't
argue simply that their position is infeasible, or you may find that it's not
as infeasible as you thought. Argue, if it's true, that their position is
_morally_ in the wrong. (And "Your proposals will certainly lead to economic
collapse and suffering" is really an argument about feasibility.)

Another world is possible. For those who benefit from the current one, that's
a scary thought. It's a thought that's driven countless restorationist or
reactionary movements through history, from the Confederates to the Bourbons
to Tokugawa to the well-funded fall of communism - but they fight so hard
because they know that the other world can actually survive.

------
neonate
[https://archive.vn/OCTOk](https://archive.vn/OCTOk)

------
taneq
Sadly, any interest I had in the topic has been overwhelmed by distaste for
them letting me get halfway through the article before throwing up a paywall.

If you want to charge for content, that's fine, but this kind of bait-and-
switch is just rude.

------
hyperborealis
The demand shock prompted by the pandemic is hardly a suspension of
capitalism. The lockdowns followed the combined decisions of individuals, per
a Hayekian model. Government's mainly commanded what people were already doing
themselves.

~~~
js8
No. Individuals are less efficient in doing shut down than government, because
of the
[https://en.wikipedia.org/wiki/Coordination_failure_(economic...](https://en.wikipedia.org/wiki/Coordination_failure_\(economics\))
.

We can see that play out in practice, comparing how different nations dealt
with the pandemic.

But I do agree with the premise, government shut downs happened because people
by and large wanted them, not because the government wanted to impose some
random restrictions.

------
fallingfrog
Exactly correct. I would go a bit further even though: not only is it possible
to deliberately engineer the way the economy functions to achieve specific
goals, but this has _already been done_ and the supposedly naturally self
designed, self regulated free market economy is anything but. Rather it has
been engineered to benefit someone, it’s just not you and me but a small
percentage of excessively rich people.

~~~
twblalock
You're kidding, right? This "engineering" of the economy has put tens of
millions of people out of work and destroyed many small and medium businesses,
and that was only after a couple of months! Imagine how bad things would be if
we locked down for an entire year.

~~~
geofft
I think you're misreading the comment - the person you're responding to is
claiming that the engineering of the economy started way more than a couple of
months ago.

~~~
twblalock
I read it right. It's a conspiracy theory about capitalism deployed as proof
that "engineering" of the economy works, despite the obvious fact that the
past few months of "engineering" have destroyed businesses and ruined many
lives.

The "self designed, self regulated free market economy" which the OP
insinuated is a myth or a lie is actually the only reason the economy still
functions. Businesses didn't shift to remote work and radically alter their
supply chains in record time because some government central planner told them
to.

~~~
fallingfrog
I’m not talking about conspiracy theories, just mundane things like like urban
planning, real estate and industry lobbying, choices about policing and who
makes them, I mean just check how many members of your local city council were
funded by the chamber of commerce. There’s no conspiracy, it’s all done right
out in the open. Why do we drive cars instead of taking mass transit
everywhere? Because the big auto companies lobbied to make it that way. Why do
real estate prices keep on rising? Because the Fannie Mae and Freddie Mac
interfere with loan pricing. You don’t think all this stuff just happens, do
you? Most of the laws governing the financial sector were directly written by
lobbyists working in that sector. Most of the new technology, the basic
research that happens, is funded by the federal government. And then handed
off to corporations in the private sector who happen to fund political
campaigns. It’s not some secretive cabal or some silly thing like that. It’s
just how business is done. The whole economy is like that. Somebody made each
choice. It was somebody who had a stake in the outcome, somebody with money.

~~~
geofft
By the way, I really liked this article that was posted here couple weeks ago
about how the USDA has been leading a battle against an entire species of
worms - and has quite successfully driven them to a defensive line they
maintain in Panama - for the sake of the cattle industry:
[https://www.theatlantic.com/science/archive/2020/05/flesh-
ea...](https://www.theatlantic.com/science/archive/2020/05/flesh-eating-worms-
disease-containment-america-panama/611026/)

Nothing hidden, but unquestionably central planning on the part of multiple
governments.

