Category: Economic Crisis

Covid-19 May Make New York City “Cheaper, Messier, More Diverse”

(p. B1) Cities are remarkably resilient. They have risen from the ashes after being carpet-bombed and hit with nuclear weapons. “If you think about pandemics in the past,” noted the Princeton economist Esteban Rossi-Hansberg, “they didn’t destroy cities.”

. . .

So even as the Covid-19 death toll rises in the nation’s most dense urban cores, economists still mostly expect them to bounce back, once there is a vaccine, a treatment or a successful strategy to contain the virus’s spread. “I end up being optimistic,” said the Harvard economist Edward Glaeser. “Because the downside of a nonurban world is so terrible that we are going to spend whatever it takes to prevent that.”

. . .

(p. B5) Mr. Glaeser and colleagues from Harvard and the University of Illinois studied surveys tracking companies that allowed their employees to work from home at least part of the time since March. Over one-half of large businesses and over one-third of small ones didn’t detect any productivity loss. More than one in four reported a productivity increase.

Moreover, the researchers found that about four in 10 companies expect that 40 percent of their employees who switched to remote work during the pandemic will keep doing so after the crisis, at least in part. That’s 16 percent of the work force. Most of these workers are among the more highly educated and well paid.

. . .

“Everybody agrees on what are the key forces,” said Gilles Duranton, an economist at the Wharton School of the University of Pennsylvania. “The question is which will play out, and where are the tipping points?” One of the big remaining questions is whether remote work will prove sustainable. The productivity increases captured in the surveys examined by Mr. Glaeser’s team might prove fleeting.

. . .

Consider life in a reconfigured New York City. Rents are lower, after the departure of many of its bankers and lawyers. There are fewer fancy restaurants, but probably still many cheaper ones. People with lower incomes, including the young, can again afford to live in town. City services may be reduced, but if a fifth or more of workers aren’t going to the office on any given day it will be easier to get around.

Mr. Duranton argues that the cities that will be devastated by Covid-19 are the ones that have been falling for a long time: the Rochesters and the Binghamtons, which lost their sustenance once the manufacturing industries that supported them through much of the 20th century folded or moved away.

But for a city like New York, he said, Covid-19 offers an opportunity for redemption. “New York was running into a dead end, turning into a paradise for the rich,” he said. “Culturally dead.” Moving back to a cheaper, messier, more diverse equilibrium may carry a silver lining.

For the full story, see:

Eduardo Porter. “If Workers Opt Out, Star Cities May Dim.” The New York Times (Tuesday, July 21, 2020): B1 & B5.

(Note: ellipses added.)

(Note: the online version of the story has the same date as the print version,s and has the title “Coronavirus Threatens the Luster of Superstar Cities.”)

The study co-authored by Glaeser and mentioned above is:

Bartik, Alexander W., Zoe Cullen, Edward L. Glaeser, Michael Luca, and Christopher Stanton. “What Jobs Are Being Done at Home During the Covid-19 Crisis? Evidence from Firm-Level Surveys.” Harvard Business School Division of Research Working Paper #20-138, (July 2020).

Capital-Intensive Toilet Paper Firms, Already Near Capacity, Unable to Quickly Fill 600% Surge in Demand

(p. 4) As the chief executive of a company that makes toilet paper, Joey Bergstein has been through an intense few months.

. . .

You’ve mentioned that you anticipated some demand, but nothing like what was about to come.

The week of March 8 [2020] we saw a surge in demand of somewhere between 600 and 750 percent. When you build a supply chain and package, you normally have about a 30 percent buffer to be able to meet a surge in demand. Nobody built a supply chain to be able to respond to that kind of surge in demand. So the team has been in a constant state of triage ever since, and we’re still in that.

. . .

What was it about toilet paper that made it so hard to come by?

First of all, nobody anticipated the level of stocking up you would see on toilet paper. That shocked everybody. But any of these paper businesses are very capital-intensive businesses. You only make money in that business if you’re running your machines pretty close to capacity. So when you have a big surge in demand, it’s hard to increase more than you’re already producing, because you’re generally producing pretty close to capacity. You don’t have the kind of flexibility that you would normally expect to have in another business.

For the full interview, see:

David Gelles, interviewer. “Selling 2-Ply in a Pandemic (It’s Harder Than You Think).” The New York Times, SundayBusiness Section (Sunday, June 7, 2020): 4.

(Note: ellipses, and bracketed year, added; bold in original.)

(Note: the online version of the interview has the date June 5, 2020, and the title “Selling Toilet Paper and Paper Towels During the Pandemic.” The first sentence and the bold questions are from the interviewer David Gelles. The answers after the bold questions are from the interviewee Joey Bergstein.)

Vaccine Progress Gives Hope That Pandemic Will Begin to End in September

(p. A1) In a medical research project nearly unrivaled in its ambition and scope, volunteers worldwide are rolling up their sleeves to receive experimental vaccines against the coronavirus — only months after the virus was identified.

Companies like Inovio and Pfizer have begun early tests of candidates in people to determine whether their vaccines are safe. Researchers at the University of Oxford in England are testing vaccines in human subjects, too, and say they could have one ready for emergency use as soon as September.

. . .

(p. A11) The coronavirus itself has turned out to be clumsy prey, a stable pathogen unlikely to mutate significantly and dodge a vaccine.

“It’s an easier target, which is terrific news,” said Michael Farzan, a virologist at Scripps Research in Jupiter, Fla.

An effective vaccine will be crucial to ending the pandemic, which has sickened at least 4.7 million worldwide and killed at least 324,000. Widespread immunity would reopen the door to lives without social distancing and face masks.

For the full story, see:

Carl Zimmer, Knvul Sheikh and Noah Weiland. “Tests Fuel Hope That Vaccine Is Months, Not Years, Away.” The New York Times (Thursday, May 21, 2020): A1 & A11.

(Note: ellipses added.)

(Note: the online version of the story was updated June [sic] 10, 2020 and has the title “A New Entry in the Race for a Coronavirus Vaccine: Hope.” The online versions says that the title of the New York print version is “Labs Step Up Race to Be First, Or Even 4th, to Find a Vaccine.” the title of my National print version was “Tests Fuel Hope That Vaccine Is Months, Not Years, Away.”)

Like During the Great Depression, Wages May Now Be Sticky-Downward

Economists have sometimes claimed that the reason that the labor market did not quickly clear during the Great Depression, was that wages were sticky-downward. The result of sticky-downward wages can be long-term high levels of unemployment.

(p. 7) Much as now, in the Great Depression people were very focused on maintaining a “fair wage” in the face of economic distress. But this led to nationwide resistance to nominal wage cuts for anyone, even when retail prices were falling rapidly.

This appears to have had the unintended result of inducing employers, who could not afford to keep everyone working at their former wages, to lay off many people. The economists Harold L. Cole of the University of Pennsylvania and Lee E. Ohanian, of U.C.L.A., have shown that this may explain some of the extreme duration of Great Depression unemployment.

For the full commentary, see:

Robert J. Shiller. “ECONOMIC VIEW; Looking Back for Clues About What’s Ahead After the Pandemic.” The New York Times, SundayBusiness Section (Sunday, May 31, 2020): 7.

(Note: the online version of the commentary has the date May 29, 2020 and has the title “ECONOMIC VIEW; Why We Can’t Foresee the Pandemic’s Long-Term Effects.”)

The Cole and Ohanian paper mentioned above, is:

Cole, Harold L., and Lee E. Ohanian. “New Deal Policies and the Persistence of the Great Depression: A General Equilibrium Analysis.” Journal of Political Economy 112, no. 4 (Aug. 2004): 779–816.

In Most Red States, the Benefits of Opening Economies Exceed the Costs

(p. A4) Two-thirds of confirmed coronavirus cases are in states with Democratic governors. When states are measured by the sheer number of coronavirus cases, six of the top seven have Democratic governors. Together, those six blue states have about half of the nation’s cases, though only about a third of its population.

. . .

“A red-state governor is losing his business in exchange for blue-state lives,” said Angus Deaton, a Nobel Prize-winning economist at a Brookings Institution seminar last week. “So for him, opening up is a no-brainer, which is sort of why it is happening.”

He added: “It is a lot to ask those governors to kill their businesses and their GDP for people who live far away, and who they may not even like very much.”

For the full commentary, see:

Gerald F. Seib. “CAPITAL JOURNAL; Virus Exacerbates the Red-Blue Divide.” The Wall Street Journal (Tuesday, May 19, 2020): A4.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date May 18, 2020 and has the title “CAPITAL JOURNAL; Why Coronavirus Increasingly Exacerbates the Red-Blue Divide.”)

Deaton’s comments quoted above, are consistent with the central message of his co-authored book:

Case, Anne, and Angus Deaton. Deaths of Despair and the Future of Capitalism. Princeton, N.J.: Princeton University Press, 2020.

Small Is Not Always Beautiful

(p. A16) Zaid Kurdieh has so many fava beans growing at his farm in upstate New York that he could send 4,000 pounds a week to the best chefs in New York City. In Kentucky, Robert Eversole and Thomas Sargent planted enough winter greens to fill the all the salad bars at the University of Kentucky and still have enough left over to feed fans at the state’s two major spring horse races.

But the coronavirus pandemic has postponed the Kentucky Derby and shut the university. And in New York, chefs who would normally be shelling Mr. Kurdieh’s fava beans for their spring menus have closed their restaurants.

So these small farmers, like many others across the country who spent decades building a local, sustainable agricultural system, are staring at their fields and wondering what to do now that the table has been kicked out from under the modern farm-to-table movement.

. . .

Farm-to-table — the term has become a fixture in the culinary lexicon — started in the 1970s, when Chez Panisse and a handful of other restaurants hatched what then seemed like a radical notion: Build menus from food grown by nearby farmers who are thoughtful about everything from the seeds they select and the soil they grow them in to the communities they feed.

That idea grew into a pipeline connecting farmers, ranchers and chefs that in 2019 had generated $12 billion in income for small-scale producers including cheesemakers and vintners. Governments, hospitals and schools have come to see the value in buying locally grown food. No Silicon Valley tech company worth its stock price would dare to design a cafeteria without local food.

Since the pandemic hit, that conduit has shut down. The loss in sales could run as high as $689 million, with much higher costs in jobs and other businesses that make up the farm-to-table economic ecosystem, according to a report compiled in March by the National Sustainable Agriculture Coalition.

For the full story, see:

Kim Severson. “Farm-to-Table Falters, and Growers Are in Limbo.” The New York Times (Friday, April 10, 2020): A16.

(Note: ellipsis added.)

(Note: the online version of the story has the date April 9, 2020, and has the title “The Farm-to-Table Connection Comes Undone.”)

Each Week, Chinese Children Read “Socialism Is Good. Capitalism Is Bad.”

(p. A11) Many Chinese children of my generation read a newspaper column for students called “Socialism Is Good. Capitalism Is Bad.” Each week, it described the wonders of China alongside the hardships of capitalist societies. The lesson: Socialist China takes care of its people, while people in the United States go hungry and the elderly die alone.

For the full commentary, see:

Li Yuan. “THE NEW NEW WORLD; China Builds Culture of Hate With Selective Coverage of the Pandemic.” The New York Times (Thursday, April 23, 2020): A11.

(Note: the online version of the commentary has the date April 22, 2020, and has the title “THE NEW NEW WORLD; With Selective Coronavirus Coverage, China Builds a Culture of Hate.”)

For Venturesome Amazon Toilet Paper Shoppers, “Like Sandpaper” Is “Better than Nothing”

(p. B5) Where name-brand products sell out, off-brand products sold by third-party sellers have filled the void. Many of the top search results for toilet paper with regular Prime delivery were novelty rolls with zombies or the faces of politicians like Hillary Clinton.

In early April, Arielle Ogletree and her mother, who live near Tampa, Fla., were almost out of toilet paper when they turned to Amazon. They found a 16-pack of the large commercial toilet paper rolls found in public restrooms for $42. A few days later, it was at their door.

“It was the only one they had, and we figured it would last a while,” Ms. Ogletree said.

The roll, too big for a regular holder, sits awkwardly on their bathroom counter. Though the single ply feels “like sandpaper,” Ms. Ogletree said, it was better than nothing.

For the full story, see:

Karen Weise. “Confusion And Chaos At Amazon.” The New York Times (Saturday, April 18, 2020): B1 & B5.

(Note: the online version of the story has the date April 17, 2020, and has the title “When Even Amazon Is Sold Out of Exploding Kittens.”)

To Survive, Venezuelan Socialists Retreat from Socialism

(p. 14) CARACAS, Venezuela — After decades of dominating its oil industry, the Venezuelan government is quietly surrendering control to foreign companies in a desperate bid to keep the economy afloat and hold on to power.

The opening is a startling reversal for Venezuela, breaking decades of state command over its crude reserves, the world’s biggest.

The government’s power and legitimacy have always rested on its ability to control its oil fields — the backbone of the country’s economy — and use their profits for the benefit of its people.

But the nation’s authoritarian leader, Nicolás Maduro, in his struggle to retain his grip over a country in its seventh year of a crippling economic crisis, is giving up policies that once were central to its socialist-inspired revolution.

For the full story, see:

Anatoly Kurmanaev and Clifford Krauss. “Economy Mired in Crisis, Venezuela Quietly Surrenders Control of Its Oil.” The New York Times, First Section (Sunday, February 9, 2020): 14.

(Note: the online version of the story was updated Feb. 18, 2020, and has the title “To Survive, Venezuela’s Leader Gives Up Decades of Control Over Oil.” The online version says that the article was on p. A8 of the print version. But it was on p. 14 of my National Edition print version.)

In Covid-19 Lockdown, Cars Allow a Private Escape from Crowded Noisy Homes

(p. D6) Public spaces are hard to safely navigate, or totally off-limits and, as a result, I haven’t felt this strongly about my car since I was 16 — not just grateful, but deeply attached. Not just attached, but somehow amalgamated.

Every car is a getaway, even when it’s parked.

In my neighborhood, where so many people live in multigenerational homes, parked cars now double as quiet meeting spaces, meditation rooms, listening stations, nap pods, whatever extra spaces we need.

We sip coffee, fight loudly and make out in our cars. We eat snacks and take important phone calls and watch TikTok videos and put the seats way back and just breathe.

I haven’t seen my brother, who lives 15 minutes away from me, in weeks. He uses his tiny car as an office. Never mind that the floor is covered in Cheerios, and the windows are dotted with peeling stickers.

Week Three of lockdown, and it’s a privilege if you can work safely, in isolation, if you can escape momentarily into your car. Even if — especially if — you have nowhere else to go but home.

For the full commentary, see:

Tejal Rao. “Car Culture Has a New Meaning.” The New York Times (Wednesday, April 1, 2020): D6.

(Note: the online version of the commentary has the date March 31, 2020, and has the title “Dining and Driving on the Empty Freeways of Los Angeles.”)