Yes, depression, and not the psychological type, although the economic type leads to the psychological type, whether ot not it is the other way around (see Keynes’ “animal spirits).
I often make fun of Robert J. Samuelson in the Washington Post, but in Washington Post today he raised the possibility that we are going into a depression, not just a bad recession. On TV this evening I heard Austen Goolsby throw it out as well. I suspect we are going to hear it a lot more.
The problem is not just that we have seen the highest increase in joblessness ever, but the increasing prospect that there will not be a quick recovery once the virus is under control. This is partly due to the global nature of this pandemic and the economic decline that has come with it.
A sign of what may be coming is what is going on in China. The virus seems to be under control, despite some doubts about their numbers and new cases happening due to people arriving there. But they have been to get their economy started up again, even in Wuhan. Supposedly 98% of firms have restarted. But there are problems. One is that many such places are missing crucial workers still under quarantine somewhere or other. Then there is the other side of this, the demand side. China expects to sell goods through exports, but other countries are not buying. And also domestic consumers are not buying either out of fear and low income. Apparently there are factories running machines and using power even though they are not producing anything just to please the government that is making these claims of 98% of firms operating, but this seems to be an exaggeration.
Clearly at least on the demand side getting money to people and businesses through easy credit and a large fiscal stimulus are the obvious things to try to avoud this D outcome. But Samuelson fears that they may be insufficient to this current situation, with no obvious alternative. I fear he might be right on this one
The economist Samuelson was bad enough with his great compromise, the neoliberal fueling neoclassical fusion Neo-Keynesian theory that buried any resemblance to JM Keynes for the purposes of a financialized, securitized, modern global arbitraged production system. But Paul is dead, though no not the Walrus. The Walrus will live forever or at least as long as he has a younger wife to keep his battery charged. So, then must we turn to Bob, the sensationalist journalist for economic forecasts? Woodward would know better, so we must Bob for Apples, which takes us back to the Beatles again. Bob Samuelson has the same last name as Paul the economist that sold Keynes for thirty pieces of silver, so that must mean something.
Nonetheless, Bob Samuelson may, like a broken clock, have stumbled upon the day that sensationalistic journalism will be correct. The deciding factor will be in the timing of the recovery attempt. Before Tuesday, November 3, 2020 then the political elites will be ready to pull out all of the stops to reboot the US economy. No stone will be unturned. However, after that point in time then fears of crowding out and inflation will become as dire as death itself.
You ask a good question, yet reference a dubious source. There is no definitive answer to your question, but there are likely very many cynical jokes.
If not for the hideous demands of rentier capitalism then China would head into the winds of domestic demand creation and the US would correspondingly restore its own domestic production. This moment could be won or lost for itself by either nation. Only time will tell.
Not sure how closely you have followed here, but I have a long recored of taking RJS to task for his every other Monday or so attacks on Social Security benefits. However, it seems that he and the others at WaPo slowed down on that within the last year or so, perhaps simply overwhelmed by the accumulating awfulness of Trump.
As it is, there are two other Samuelsons besides Paul and Robert, both of whom are actual economists. One of them is William, now an emeritus from the Management Dept. of Boston U., who is actually Paul’s son. Did a lot of stuff in OR and some other topics, a quite respectable economist, although obviously way overshadowed by his dad.
The other is Larry Samuelson, now at Yale, an excellent game theorist who is also a super nice guy and not a relative of Paul’s He was actually asked to be the editor of the AER, but turned it down, although he was a coeditor for awhile. He does evolutionary game theory.
No, I have not followed closely here as I am a bit new to AB, but I do recall your posts at EV. Mostly I am otherwise involved now since retiring in 2015.
There is another more ominous “D” word looming in the future for Florida and Louisiana, especially if one considers how poorly these two states are dealing with the existing Covid-19 crisis. After what is going to happen when unchecked pandemic meets hurricane disaster relief then zombie apocalypse movies are going to seem rather mild in comparison.
By Nick Russo | March 31, 2020 at 1:01 PM EDT – Updated March 31 at 1:34 PM
RICHMOND, Va. (WWBT) – The Atlantic hurricane season officially begins in two months on June 1, and it could be a busier year than average for tropical storm and hurricane development.
Forecast model guidance shows a La Niña developing by late summer and fall of 2020. La Niña happens when the sea surface temperatures near the equator in the eastern Pacific Ocean become cooler than average. It is the opposite of El Niño, which refers to warmer than average waters in the eastern Pacific.
In the Tweet below, Dr. Michael Ventrice (PhD in Tropical Meteorology) highlights how this year’s La Niña has potential to be the strongest since 2010.
In terms of the ENSO3.4 index, the CFSv2 climate model is predicting a robust -1C to -1.5C value by Fall 2020… firmly in the “La Nina” spectrum. This would be the strongest La Nina event since 2010 if this forecast verifies.
All ENSO events are unique, as are the impacts. pic.twitter.com/l6hwJW2abG
— Michael Ventrice (@MJVentrice) March 29, 2020
The development of La Niña in the Pacific Ocean can have implications on the weather pattern in other parts of the world.
A La Niña pattern in summer/fall can result in reduced wind shear in the tropical Atlantic. Wind shear creates a hostile environment for tropical development by shearing apart/disrupting the development of low pressure (tropical storms/hurricanes) in the Atlantic. Therefore, a reduction of wind shear caused by La Niña can lead to more tropical storms and hurricanes in the Atlantic. Reduced wind shear can also allow the tropical storms and hurricanes that develop to become stronger…”
BTW, thanks for the other Samuelson refs. In OR I am sort of a fan of Ian Mitroff myself, although I find his adherence to placing his efforts into saving the academe rather than offering an alternative that threads the needle between revolution and conformity that can lead to broad based evolutionary challenge of the status quo both understandable and frustrating. I have a similar complaint regarding Tom Walker of whom you are far more familiar I am sure. When Tom appeals to the reason of orthodox intellectuals, especially economists, then his efforts are wasted on a faith based mission as deeply seated in the biases of establishment intellectualism as are the purchased intellects of those that he refutes. I love Tom’s thinking except for the Pearls Before Swine part. Electoral republicanism and public education when directed with an understanding to both psychology and sociology provide a concrete platform from which to launch social change. The inherent overcompensating introversion of nerdish intellectuals fosters pseudo-elitism than isolates and abstracts them from the general population of society to which they must be able to both communicate and relate to in order to be effective. The adequately fit social scientist is someone that the average Joe would want to drink a beer with. Frederick Perls was such as man as was the far more controversial John Lilly.
This is the kind of thing that I remember you for from the EV archives. I thought quite highly of them.
“I thank pgl for interpreting to Matt Young what my post was about, which indeed said zero about fiscal policy multipliers. I note to MY that there have been many studies and that there are ongoing conflicts and disputes about the size of those multipliers, with more recent studies finding them to be larger than earlier ones, and also larger when economies are well below potential output, but also varying across countries and over time.
I shall simply note further something obvious that MY should be aware of when doing his simplistic bivariate regressions based on “government share of GDP.” It is generally thought that to the extent there are positive fiscal policy multipliers, they work with a lag. So, looking at simultaneous levels or changes is simply not the way to go.
Furthermore, it is well known that both private investment and exports tend to be more volatile than government spending, so if the economy is expanding, those will probably be rising more rapidly than G and just the opposite when the economy is contracting. So, if one is looking at a contemporaneous bivariate regression one would expect to see government share falling when GDP is rising rapidly and government share rising when GDP is falling. But, I would think that someone as brilliant as MY would have already figured this out.”
[Sandy vs. Rosser link below]
For those who do not know who “Tom Walker” is, he goes by “Sandwichman” here.
Fortunately, Matt Young abandoned EV and doesn’t post here very often.
We should all be glad of that.
I personally believe he is mentally disturbed.