Five things you should know today
1) Puerto Rico lags behind in per capita testing for COVID-19
As of March 31, Puerto Rico was the second to last jurisdiction in testing for COVID-19 per 100,000 people in the United States.
According to data collected by the COVID Tracking Project analyzed by CNE, Puerto Rico is only testing 72 persons per 100,000. This rate compares unfavorably with other relatively poor states, such as South Carolina (111 per 100,000 people) and Mississippi (150 per 100,000). The importance of testing cannot be emphasized enough. Without adequate data, we do not know if the shelter in place policies are working; cannot allocate scarce resources efficiently; cannot calibrate statistical models accurately; and generally cannot make informed public policy decisions.
2) Is the U.S. economy more vulnerable to an economic shock because of the coronavirus pandemic?
Mark Blyth, Professor of Economics at Brown University, makes an interesting argument in Foreign Affairs about the vulnerability of the U.S. economy to shocks generated by the coronavirus pandemic. According to Professor Blyth, European economies, which depend more than the U.S. on international trade for growth, are better prepared to adjust to external shocks by activating relatively large social safety nets.
The U.S., in contrast, which depends more on domestic consumption for growth, has a relatively limited social safety net and relies more on lower wages and employment to adjust to a crisis. According to Blyth, “The assumption is that with no shock absorbers in place, prices and wages will adjust quickly, capital will be redeployed, and growth will return without the need for state intervention.” Yet these are not normal times, as the professor reminds us:
“Although Congress finally passed a $2 trillion economic stabilization package, its continuing inability to agree on whom to bail out—companies or consumers—reflects tensions in the underlying growth model. The United States typically opts to protect capital and to simply let labor adjust through unemployment. But this instinct—to protect the big players and let workers take the hit—is also a key reason why the coronavirus pandemic is a disaster amplifier for the U.S. growth model in a way that is not true for Germany or even the United Kingdom.”
You can read the article here.
3) Which only highlights the need for a true economic stimulus
The rapidly forming consensus is that the three relief packages already enacted by Congress are not sufficient to bring the economy back after the COVID-19 pandemic ebbs. Some Congressional leaders are calling for including a large infrastructure component in any future emergency legislation package. And while not all Republicans are on board, the Trump Administration has stated it is willing to seek more money for small businesses and expand other emergency relief programs. Meanwhile, other economists are arguing for the Federal Reserve to take a more proactive stance, either by monetizing U.S. debt (buying US bonds directly from the Treasury) or even sending money directly to businesses and people. The so-called helicopter drop still appears to be very much on the table.
4) The race for a vaccine is on
Scientists all around the world are working overtime on developing a vaccine against the virus which causes COVID-19, or at least some treatment for the disease. Laboratories and research institutes are working along parallel tracks trying everything from repurposing old vaccines to developing new techniques using genetic engineering. At the same time, big drug-makers are facing strong pressure to share the patents on any new vaccines or treatments developed specifically for COVID-19 patients. This may seem to go against the traditional pharma model, but these are exceptional circumstances. Furthermore, firms should weigh carefully the prospects of short-term profits against the long-term increase in its goodwill. They are being asked, essentially, to find a balance between stellar short-term income statement and building a stronger balance sheet over the long-term.
5) India and its fight against the coronavirus
Analysis by Deepak Lamba-Nieves, PhD, CNE Research Director
Last Tuesday, the President of India, Narendra Modi, ordered everyone in the world’s second most populous country to stay at home for three weeks. This measure which affects 1.3 billion people was put in place without prior notice. The impact has been especially devastating for the informal workers who make up 80 percent of the 470 million-strong workforce—many from different parts of the country. As of last Sunday, India had reported 1,024 positive cases of the new coronavirus and 27 deaths. Faced with the closure of public transportation and extreme poverty, millions of Indians have migrated on foot, in some cases for hundreds of miles.
The ordeal the poor face in India reveals how risks are magnified in the face of extreme vulnerability. In addition to losing their jobs and exposing themselves to the coronavirus on their long walks, many migrants wonder how they will earn a living and feed themselves, and if they will find housing in the same places they once left because they lacked opportunities. Social distancing is saving lives, but its implementation has consequences that, if not effectively addressed, will be especially severe for the most vulnerable.
Quote of the Day
“Death be not proud, though some have called
Mighty and dreadful, for thou art not so.”
Note from the editor
According to the Greek historian Thucydides, what happens outside or around our life changes greatly with time, but what happens inside does not. We all fall prey to our internal demons; the motives for even our best actions are always mixed; and we consistently fail miserably to understand the complex geography of the human heart, with all its lights and shadows. Hence, wrote Thucydides, we are bound to repeat the same mistakes throughout history, unless we are shown “that such a course in other days ended disastrously.” In that sense we can say Thucydides was an optimist. But I wonder what he would write if he were alive today. Yes, interest, fear, lust for power, and honor still guide human interactions, just as he expected. But have we really learned from actions that “in other days ended disastrously”? Alas, I have my doubts.
This is the end of today’s briefing.
Stay safe and well informed!