The Fiscal Policy Response to COVID-19

Econ Buff Podcast #12 with Rex Pjesky

Dr. Rex Pjesky talks with me about the fiscal policy response to the novel coronavirus. We discuss how severe the economic consequences of social distancing and other anti-virus social measures are likely to be. Dr. Pjesky gives his view on how hard the real economy is going to be hit and argues that the more pertinent issue is what the recovery looks like. We talk about the 2 trillion dollar CARES act designed to combat COVID-19 and discuss each of the broad categories of the bill. We consider the ramifications of the bill and whether it is truly an economic stimulus or if it is more of a social safety net. Dr. Pjesky lays out the factors to consider when thinking about how the economy will bounce back after the crisis, and what role the stimulus bill might play in that. We explore the way private firms have responded to crisis with and without government intervention and how Dr. Pjesky views life in a “virus safe” world.

Transcript

Stitzel: Hello, and welcome to the EconBuff Podcast. I'm your host, Lee Stitzel. With me today is Dr. Rex Pjesky, Professor of Economics at West Texas A&M University. Rex, welcome.

Pjesky: Good to be here Lee.

Stitzel: So, we live in exciting times. We're all facing this coronavirus pandemic. And so, I'm going to start us off with the question, I think, everybody who's thinking about economics is pondering right now. And in your opinion what are the potential economic consequences of social-distancing, workplaces shutting down, and large events and gatherings being canceled because of the Covid-19 pandemic?

Pjesky: Well, I think, probably the impact of the/the impact of this virus, and the impact of social-distancing and the other policies that we're experimenting with right now depends on how long the crisis lasts. So, if this is, you know, one or two months, [then] certainly, I think, life will probably go back to normal fairly quickly. If this is a long crisis, [and] if we have to, you know, have these social-distancing and associated policies for, you know, a year --- and I've even heard some people say 18 months, [so] if we have to sustain this for a year [or] 18 months --- [then], I think, the impact they could have on us long term would be extremely, you know, extremely profound.

Stitzel: So, maybe I'm just ceaselessly optimistic. I just can't see it going more than six or so months. And I'm not an expert on such a thing, but it's just really hard to imagine the rate at which this thing is spreading around with how infectious it is. And it may be a terrible six months, but I just really have a hard time seeing that we could potentially flatten the curve sufficient to make this an 18-month thing. Am I out in the weeds there in your opinion?

Pjesky: Oh. I I'm not an expert at this at all. So, I wouldn't even venture a guess as to how long the current state of affairs is going to have to last until we're able to try to go back to normal. But, you know, if the crisis is a month or two --- which is probably on the short end of what most people are estimating right now --- then life will go back to normal very, very quickly. You know, six months --- it's kind of an intermediate case. But, you know, when [and] if we were going to have to do this for a year or longer, then, I think, that you've got some pretty serious supply side and demand side changes that we will see in the economy; and whether or not it ever gets back to, you know, January 2020 would be really, really questionable. I think on the supply side [then], sort of, what you have to think about as an economist is, you know, what kind of social capital are we losing the longer this goes on. I think more than anything else, [is that] economics is about how strangers coordinate their activities with one another. So, you know, when we think of economics, I think, that's what we should think about. So, an economy, or the study of economics, is basically, you know, how did the 7 billion people on this planet cooperate with one another in order to produce and consume and distribute the goods and services that we have? So, if this situation goes on, you know, do we lose that ability? How quickly will the economy basically forget how to cooperate and coordinate with one another the way that we've been doing for, you know, for a very long time? So, you know, just take the simple, you know, example of a restaurant. You know, if this persists for a little while, [then] a lot of restaurants are going to perhaps go out of business. And when the economy reopens, so to speak, then if we haven't forgotten how to do restaurants, then the only thing that will happen is that, you know, that they'll be owners of restaurants might be different owners of restaurants than we have right now. But, you know, somebody will own restaurants, and they'll put help wanted signs up in the door, and [then] people will go and cook and serve the food. They'll have supply chains basically already established. So, if they, you know, need to order meat and vegetables and everything else that they serve in the restaurant, [then] they can basically just recreate that very, very, very, very quickly. But, you know, over time what will happen to those supply chains? Will they deteriorate? Will the world have to reinvent those? And if the world has to reinvent those, then we could have some serious economic disruption for many, many years as we relearn to cooperate with one another. On the demand side, you've got something, you know, you've got something entirely different. The longer this persists we don't really have any idea how people will react to it. So, my family generally eats out quite a bit. In the past month or so we haven't eaten out at all. So, the question becomes when the economy goes back to normal, how will we react? And how will everybody else in the world react? Will we go back to normal eating out like we always have? Or will we just decide that hey, you know, it was just better for us to eat at home. And if the world decides that it's better for us to eat at home, then restaurants won't come back like they were, you know, because of the decrease in demand. And on both of those questions we really don't know what will happen. But it's a very, very interesting thing to think about. But those kinds of questions are the most important thing as we go forward. You know, we've had stimulus --- which will, you know, which we'll get to in a little bit, I imagine. But we've had stimulus. But people really need to start thinking very carefully about how to reopen the economy, and what will happen when that is able to be done in a, sort of, virus safe manner (whenever that is) whether it's three months from now or 18 months from now.

Stitzel: So, I'm really glad that you teased out the two separate things that we have --- supply side things or supply chains, and relationships between employers and employees, [or] between producers and customers could break down. And also, you know, this idea that, literally, our preferences might be shaped by this event. I'm a little suspicious of that. Like, I suspect the first thing I'm gonna want to do when we lift social-distancing or shelter-in-place here is go out to my favorite restaurant. Now maybe some people won’t. Maybe some people will have that lingering fear, and they don't want to. They they're worried about a flare-up. They're worried about --- O.K., it's just really changed the way that they view the world. I had, you know, I've had some conversations with some people, and they said: I'm not sleeping, like, I'm just stressing out all the time; and I can't, but I just almost can't cope, you know. And, I think, most of us --- we’re probably not to that level of stress. I'm not entirely sure that isn't a valid response on that individual’s part; but that person may be changed by this more than me. So, I think, it's obvious that different people would respond different ways. But I do, kind of, want to dig into that demand-side thing, because there's this potential for our preferences to be changed and shaped in a way that says: well, I'm more cognizant of risks, [and] I'm more risk-averse, [so] I maybe I avoid large public places. You know, my guess is that our memories are kind of short, and so maybe it won't be like that. I could be wrong. And then, the other thing is how we entertain ourselves, how we connect with each other, [and] how we do these kinds of things could be changed. I want to tell an --- I'll be brief because the listeners heard it on the previous episode --- you know, but I have a colleague that I'm working with, who we've worked completely through email. This morning we shared a Zoom conference, and we talked about research, and we worked on it that way. So, this --- because they're, you know, self-isolated [and] when I'm shelter-in-place here, [and] we live in different states --- and we had a conversation this morning. And it was more than just normal --- that emails would be, like, very to-the-point, you know. O.K., how should we shape the intro? Should we focus on this piece of literature, that piece of literature, [and] this kind of thing for academic papers [are] extremely focused. You know, this morning, like, we kicked off just: hey, how are you? You know, my kids came up to the screen because I was doing this at home, and my colleague hadn't seen them in a while [and] said: ah, he's getting so big. And we talked about this Tiger King show on Netflix and everything. You know, so, it changed that relationship in it. Who knows? Maybe as soon as she goes back to her life, and I go back to mine, [then] maybe it/that is what it is, and we never go back. And maybe it's just a temporary distraction. Or maybe it permanently changes the way that we view work, and how we relate and communicate, and perhaps even entertainment, right? It would be hard for us to imagine that we would take in more interactive online digital entertainment, but maybe this is it? Do you have a thought about either of those two things?

Pjesky: Well, I mean, the world right now is --- it's conducting a massive natural experiment. I mean, how long have we heard about telecommuting for instance? You know, that might not be the best word to describe what we're doing right now, but, you know, how long have we heard that technology is gonna enable us to work at home, and to work remotely either from our office or with other people like we've, you know, not been able to do before? And that's never really caught on as quickly as say we may have thought it would have caught on 20 years ago? Well now, we're forced into that. And so, everybody is going to get a chance to figure out whether or not they like it. So, I mean, I'm on to, you know, I'm too new to it myself to know whether or not I like it. I see the ability to talk to my colleagues face-to-face and to see them in in the office from 8:00 a.m. to 5:00 p.m. every day as being valuable, incalculably valuable. So, we'll just see. I mean, in terms of the changes of preferences in other ways, you know, are people going to go out to eat again? Are people going to go to movies again? Are people gonna go to concerts again? What exactly will happen? And we don't know. I mean, if I were betting, [then] I would say that things will go back to the way that they were --- that, you know, commuting from home (telecommuting or whatever you want to call it) it's not going to become extremely widespread, you know, any more than it was --- before. So, you know, the world before the virus emerged in a certain way, and those same forces are in play even after the virus. I think what you said a few minutes ago, sort of, is the key factor. How are people going to react to the risk? So, and that's something that we've/we just don't know. And this is going to be something that's incredibly important for our public health system in the United States and around the rest of the world to deal with; [accordingly], is how can we move life forward in a virus-free way, all right, whether it's our economy, whether it's our entertainment, [or] whether it's the narrow focus of how we work and interact with one another? People for a long time now are going to be first and foremost concerned about how we can move forward in a virus safe way, [and] in an infectious safe way. And this is nothing new. You know, we've known of pandemics and epidemics for, you know, for a long time. We've --- the world has had several active epidemics and pandemics in its past. But, you know, and maybe each one of those seem different; but and if not being, but, you know, the question is this going to be the one that radically changes the way that we live our lives [and] in the way that we think about our interactions with one another?

Stitzel: So, I want to go back to the timeline that you said. And, I think, this may be the critical thing so far that we've drawn out is how long this is --- is probably everything. Because if we're here for a month or two more --- and I see these predictions online to say the peak in the United States is going to be the middle of April ---[thus] if we peak, and then it still be several weeks after that, [then] I’m sure/I'm assumed that we would be to taper off. And then who knows what the situation is gonna be after that? If that's really the timeline, and then sometime early midsummer we're going back about our lives, then this is something we just, kind of, look back on, and that was a blip (a long blip, but a blip nonetheless). If we're here in social-distancing, self-isolating, quarantining, shelter-in-placing land for 18 months. I could genuinely see products and firms popping up to try to fill a need. Since so many things in my life have been removed, and now I have time, and, you know, for many of us money. Maybe there will be a lot of people that are hurting. We did see record unemployment numbers in March. To fill some of those things that we find new ways to interact, and that's where I could see --- you know, it's hard for me to imagine what even that could be but, I think, that's part of the point of --- why markets work. If somebody is out there with some idea right now, [and] probably ramping up saying: if we're here for six months, [then] people are gonna want something to do in their houses, [so] let me try this. What do you think about that?

Pjesky: Well, yes, of course there's going to be, you know, people are gonna come up with new ideas to serve the customers that exist. So, you know, whether it's for another month or another several months, there's massive changes in the demand structure of the economy right now. And that's going to give opportunities for firms to come in and do things in different ways in order to gain customers, all right, in order to, you know, satisfy people's wants and needs. That's just basic, you know, that's just basic Econ 101, I think. So, you know, and I think existing businesses are probably going to spend a lot of time --- and our government needs to be doing this of course, but our existing businesses are going to spend a lot of time --- trying to figure out how they're going to proceed in a virus safe way. So, in other words, if you run a restaurant, how are you going to serve people food in a virus safe way? And, you know, the quick stopgap measure that everybody's come up with is they just simply bring it to your car when you when you drive up. And so, I don't see that being a long-term solution for, you know, for this. Maybe it will be, but I think that there's going to be, you know, new protocols that need to be developed in order for businesses of any kind to be able to convince customers: hey, you can come, and you can shop with us. You can do business with us, and we're going be safe from, you know, safe from viruses. This isn't a new problem for this, you know, for the economy. We do dangerous stuff all the time. And what the goal of market economies often is, and what the goal of, you know, public health or regulation or any other kind of government activity that you might be able to think of is often focused on how can these activities be done in a relatively safe way? So, you know, your car is a --- you know, it's a very, very dangerous thing to get a car and drive for instance. So, our automobiles are designed in such a way to minimize that risk to make us safe [in order] to be able to drive from one place to another in a safe way. I think moving forward [that] markets, public health, [and] government regulation needs to now incorporate, in a very big way, infectious diseases. So, you know, how can we go to restaurants and movies concerts, the park, you know, [or] anywhere else that we want to go? What kind of protocols can we put into place to make these activities much safer? And that's --- going to your original question --- that's going to create a lot of entrepreneurial opportunity I think.

Stitzel: So, I'm interested in your take, because some economists seem to think that the GDP dip is gonna be pretty small. This would be economists that I admire like Russ Roberts; while others whose work I also follow like John Cochrane in Chicago thinks that the current GDP dip is liable to be quite large. I think I can anticipate your answer a little bit. It'll depend on the length of this layoff. But just, sort of, give us some commentary on what you think will likely fall out; or what might be things that we look at to see which of these two ends of the spectrum we would expect to be right.

Pjesky: Well, I don't think that we’re going to be able to avoid a massive decrease in measured GDP. I think for this quarter the numbers are going to look pretty rough. Now, I think, those numbers need to be interpreted very, very carefully. I heard someone say this morning that it was likely to be a 20% dip in GDP; and other people have said and, you know, if we're talking about a 20% decrease in measured GDP in a short period of time, like, ¼, [then] that's huge. That's pretty much unprecedented. And but in the normal sense, I'm not sure that really makes any difference, because what we’re experiencing right now is a real shock. So, people are making the best decisions that they can make given the circumstances that they face right now. So, I wouldn't put too much --- you know, when GDP numbers start coming out that span this crisis, regardless of what they are, I wouldn't be too pessimistic or optimistic by them. You know, so if for some miracle GDP just decreases by a percent or two, I don’t think that that's a cause to be optimistic. If GDP decreases in 10-20% range, then I don't think that that's a cause to be entirely pessimistic either. So, I think things are moving so fast. They're changing from day to day in a way that we've not really seen in any other recession; that, you know, sort of, a wait-and-see attitude is warranted here. But we’re experiencing an unprecedented real shock, and we absolutely don't know how the numbers are going to shake out. My guess is they're going to be pretty bad, because, you know, you have unemployment rates (or unemployment applications) going through the roof. I think what were there Lee? Like, 3.3 million new applications…

Stitzel: Hmm mmm.

Pjesky:…last week? Some just unbelievably high number. You have evidence that I've seen, you know, [where] payroll companies that, kind of, contract out people clocking in and out; that the people who work by the hour, their hourly [time or] their hours worked last week, [and even] in the last couple of weeks have just plummeted. So, if people aren't working, [then] they're not producing stuff. And if they're not producing stuff, [then] that is the very definition of GDP. And so, we're gonna see a humongous fall in gross domestic product. But I don’t think that that’s cause for alarm yet. What would be cause for alarm is that in the next several months we are unable to figure out how to proceed with our economy in a virus safe way, or a virus safer way. That's going to be key. If we can’t do that, [and] if we can't interact in a meaningful way economically, then commerce will digress a lot I think. And we will forget over time how-to cooperate with one another, and, you know, all of the wonderful things that we’re able to do; [whereas] all the wonderful things that we're able to produce will, you know, could start to unravel. Now, that’s the absolute worst-case scenario. And I don't think there’s any reason right now to place a very high probability of something like that happening.

Stitzel: So, I’m a little curious. I'm gonna go off on a small tangent here, just to get your thoughts on this. One of the things that’s talked about quite a lot inside economics -- and I think talked about almost not at all outside of economics --- is, you know, how do we measure and define and think about GDP (or gross domestic product); and how that has certain biases towards things that are that are produced, and it misses a lot of, sort of, intangible things. Can you comment briefly on how, like, a more digital world how we might measure that (or fail to measure that) using GDP going forward?

Pjesky: Oh, you know, again, that's really tough. And that’s been one of the questions about measuring GDP that economists have had for, you know, for quite a long time. Are we actually capturing the value of the things that we produce? And, I mean, that's a huge question. I don't have much [of an] answer for that. But we --- I mean, if we're gonna make massive policy decisions based on, you know, how GDP is doing for instance, then one of the most important things for us to do is to get that measured correctly.

Stitzel: So, one of the things that's very interesting to me, as I have some siblings that play some of their high school/college-age, and they play some of these video games that can be quite immersive. And perhaps they spend money to get items or skins or something like this, right? Now, and, I think, I'm not a big video game player, and so that's a bit foreign to me. And yet, I can very much see how if I were investing a lot of money into a game and a character or something, [then] it's not that much different to pay to have some digital item or skin on that character than it is, you know, my hobbies are things like lifting weights and playing baseball. Is it really that much different if I, you know, buy a new barbell versus they, you know, spend some money in a game; and then yet, those could be very rich and complex things that are happening inside a digital world that aren't really, like, captured. And that you and I probably have some sense of this, because even social media, kind of, functions in this way. Or it's, like, we capture the value of that company. But there's not a whole lot in the way of actual measurable transaction between me and, like, Instagram; and yet, I probably spend, like, an hour scrolling through pictures every day. That's a meaningful part of my life. Now, maybe I could be better off spending my time in other ways; but my revealed preferences suggest I don't think so. How do you --- if we got a big transition towards people living more online --- or you and I could record a podcast every week here as we're doing remotely, rather than once however often we might do it in a studio --- and that might not be well reflected in GDP in terms of buying items in “real life,” if you will, (I’m using scare quotes there) versus what happens in a digital environment. That could have an entire richness and complexity that that we don't pick up at all.

Pjesky: Yeah. I don't know. I mean, on one end, you know, on one hand you might say: well, those things should be no different. So, I, you know, I pay a subscription to a videogame or something like that, and it’s like $10 a month. I don't know if any video games actually price themselves like that. And, you know, whether I spend, you know, 30 minutes or 40 hours in that month playing that video game, GDP is increased by $10. That's how much value that we’re able to measure because of that transaction. The same thing to be true by/with your barbell O.K. So, you know, you go out and buy a barbell for $10 (I imagine more than this), but you go out and buy a barbell for $10. And whether you use that for 40 hours in a month --- or whether or not it just sets in your garage, and you don't use it hardly at all --- we measure GDP is increasing $10 because of that purchase. And I'm not really sure that that moving things into the digital world, or considering digital things, have to be thought of differently in order to measure its impact on how we measure GDP or what we call GDP. In both instances there's a potential for a humongous consumer surplus to exist that is absolutely impossible to measure. So, we just measure what people spend money on. We're not able to measure the utility that they get out of it. And there could be widely divergent levels of utility that the two consumers get from the same good --- whether they're digital goods or whether or not they are, you know, they're physical goods. So. I don't think that that's the source of the measurement problem. I think that the confusion comes in are things like Instagram and Facebook and the other things that we get digitally, that are absolutely free to what we would call consumer. Now those things now can be measured, because, you know, Facebook still is a company [and] Instagram still is a company, you know --- they have costs [and] they have revenues; and we can use those figures to calculate GDP in the normal way. And so, I don't know if that's going to be a problem going forward. You know, GDP is a measurement of well-being. It's, kind of, problematic anyway. And as we move more towards a service economy (and even further than that), [and] as we move towards a digital economy, [then] those problems of measurement and interpretation still remain.

Stitzel: So, I want to ask one more thing on, kind of, in this broad area of topic before we turn to the specifics of what we're seeing as far as fiscal response. As it occurs to me, as we are talking, that we're saying things like: well, if this ends in 3 months, or this ends in 6 months, or this ends in 18 months. As if somehow we're just gonna one day wake up and then go back to normal, right? They're gonna say: O.K., life goes back to normal Monday at midnight. And I think we think that way. Third person we. Maybe not. Just you and I.

Pjesky: Right.

Stitzel: Because that's the way that it has come on. Is that it comes on sort of suddenly. But I could see where we, sort of, reverse the trend, rather than going from, well, the peak is April 16, so May 16 we just all go back to normal. We just pick up our lives where we left off. I could very well see, you know, we stopped shelter-in-place, and then two weeks later, you know, we go back to more of a social-distancing thing. And then two weeks after that, we have people go back to work and full scale; but we don't allow large public events. Do you see any room for the way in which we come out of this in progressive phases affecting the recovery? Or is that just on the scale of things not going to matter?

Pjesky: Oh. That's --- I mean, that's a hard question. And, of course, you know, several times in this conversation we made this point. It depends on how long this lasts. So, one economist Tyler Cowen has talked about this as possibly being an event like WWII, where the world after it was unrecognizable almost compared to the world before it. So, the way our society, the way our culture, the way our economy was, and the way our government was different in 1946 than the way it was in 1939 or ’40. And if this shelter-in-place of this coronavirus situation lasts for a significant amount of time, then we will be saying the same thing sometime in the future. We'll talk about how 2019 and, you know, 2022 or 2023, or whatever it might be; but we'll talk about how those are very, very different worlds. So, you know, how this ends of course is gonna it is going to matter. You know, if this virus retreats and disappears either through natural forces or through incredibly smart policy, then we will go back to the life. You know, we'll go back to life very, very quickly and very, very immediately. You know, on the other hand, if this thing cycles --- you know, so, if we're in a peak right now and then things calm down, and, you know, in a few months another peak hits, and another flare-up in the world hits, or in various countries hit --- so, if this thing cycles over several months (or even several years) and it takes a really, really long repeated response for us to deal with, then of course that's going to matter. The outcome is going to be different based on this [and] based on those two things.

Stitzel: So, I/we've, kind of, covered what are the potential economic consequences of this. How do we see the dip, and how we maybe see the economy bouncing back, and what some of those factors are. One of the factors at play here is that the government is taking very large steps using fiscal policy to try to intervene. And I'm picking my words carefully here, because I want your thoughts on this $2 trillion/$2.1 trillion coronavirus bill; which I think they call it the Coronavirus Aid Relief and Economic Security Act, which gives us the cute acronym of CARES. What are your thoughts on that bill, sort of, in general? And then, I want to turn to the question of how do we view this as an economic stimulus versus as a social safety net?

Pjesky: Well, I mean, this bill was put together very quickly and very ad hoc. You know, think about, you know, think about the world at March 1st. You know, no one was thinking about the government spending $2+ trillion dollars on anything for that matter. And, you know, here we are, you know, a month later. And the thing has already been designed, passed, [and] signed into law, and they're already implementing it. So, this is an incredibly quick thing that the government did. It's $2 trillion dollars’ worth of provisions. So, there's a lot in the bill to think about. I think the bill can be, sort of, separated, and you can think about the things that are in the bill as, sort of, broad categories. And actually, the government did two things, right? So, there was the CARES Act that was passed. That's the $2 trillion dollar one. And then a few days before that, there was another bill passed. It was a much smaller in scope that also did a whole bunch of stuff. I'm gonna, kind of, be talking about those two things together, because they were, you know, they both have the same goal. So, when you take those two bills together, you know, basically here's what you've got. Here’s what you've got going on though. The first thing, and probably the most interesting thing for most people’s perspective, you know, is/are the direct payments to individuals. So, you know, everybody’s probably heard about this, but, you know, about I think $400-500 billion of this bill are going to be…

Stitzel: So.

Pjesky:…is gonna be direct payments to individuals.

Stitzel: So, I have that in front of me. So, out of the $2 trillion, individuals are allotted 30% of it, or $600 billion ?@34:52:. Of that, $300 billion is in cash payments which are the direct payments.

Pjesky: Right.

Stitzel: The other components --- there are extra unemployment benefits, and then student loans, and what they have designated as other, which are $260 billion and $44 billion respectively.

Pjesky: Yeah. Well, there is something in there for everybody isn’t there? But, you know, these payments are designed, and they have the, you know, they have the goal of helping people cope with it, with the current prices. So, if you need extra money, you know, whether or not you lost your job or not, [then] I guess the government has decided that most of us (almost everybody) needs some extra money. So, whatever expenses comes up for anyone due to the coronavirus, the idea is that these payments are going to alleviate those. So, I think it's $1,200 per adult/individual and then most people’s dependents will get $500 a piece. So, you know, a typical, you know, family of four, for instance, you know, [where] you’ve got two adults and two kids in the household will get, you know, $3,400. So, you know, this is refundable, which means that even if you had no tax liability -- if you had even (if you've had) no income in the recent past --- to get the full amount it is non-taxable on next year’s returns. So, next time you file your taxes, whenever that is, you won't have to consider this money as any income. So, you know, basically the government is writing checks. And this is something that they've done before in 2008 as part of the stimulus package, and part of several stimulus packages that the government passed the deal with the Great Recession. And but, I think, these checks are going to amount to being a little bit bigger. The other thing that they’ve done that the concerns of direct payments [to] individuals are the unemployment provisions. Of all the things in the bill, the things that the government did concerning unemployment are probably the smartest and the most helpful. As many of your listeners probably know, the unemployment compensation programs that we have in the United States will basically pay workers who have been laid off from their job for various reasons a portion of their salaries back. So, you know, if you make a $1,000 a week, and you get laid off from your job, then the government will, you know, send you a check under certain conditions that would amount to, not the full $1,000, but a significant percentage of what you learned before. And the idea behind this is to give people some breathing room as they either retrain or search for a different job. The problem with the traditional unemployment compensation system that we have in the United States in light of the coronavirus is that, you know, just, for instance, in order to qualify for the job, you have to be looking for a job. So, if you've been laid off from your job because of the virus, or for any reason during this time, probably the last thing that we want people to do is hit the bricks (pounding the bricks) looking for another job. We're actually discouraging that kind of activity. So, one of the provisions of unemployment basically relaxes the requirements that you look for work while receiving unemployment. Also, if you're simply furloughed from your job temporarily, you generally don’t qualify for unemployment compensation. But under this new bill, at least for the next couple of months, if your company has furloughed you --- which means that you're not working, or maybe you're not working full-time, [or] you haven't completely separated from your employer, so --- under the old system (or under the normal system I should say) you don't qualify for benefits, but now you do. Now you do. So, if you're laid off or furloughed from your job, it's a lot easier to qualify for unemployment benefits where otherwise you haven’t. And if all the things that the government has done in response to this virus is probably that this is probably the smartest one, because it's a way to get money to people that have been most directly affected by the crisis. So, if you've lost your job, but, you know, we know millions of people have either lost their job or had their hours or worktime significantly cut, [then] the unemployment insurance system can help, sort of, bridge the gap between your expenses and your income during that time. So, the other provisions that it has, you know, like student loans is a relatively small thing, where federal student loans payments can be suspended a lot more easier during, you know, during this time. So, that's the, you know, that’s the $600 billion, $600 odd billion that you're talking about. The other provisions of the bill include mainly things like loans to businesses. So, you know, several hundred billion dollars of this bill will include the government making loans to companies, you know, small companies [and] large companies have different provisions [and] different, you know conditions. But, you know, basically the government will loan you money, and often in most cases under this bill, if you maintain your --- going to put this very, very simply if you maintain your --- payroll during this time, you won't have to pay that money back. So, that's the other large part of the bill. And then finally, there are some provisions in the bill that will have the government directly bail out firms that are struggling. So, you know, firms that are deemed to be strategically necessary or particularly and uniquely hard hit.

Stitzel: So, let me interject here really quickly. I'm gonna do two things. The first is I want to draw out that idea that you said a couple times -- which gets right at the question that I asked to set this up --- which is this is more of a social safety net in my view. It seems like you agree with that. And I found the points that you made about unemployment really, really quite poignant. And I wanted to ask you this question, because we have, [and] a few minutes ago we said: O.K., we have [these] record unemployment claims. Is that tied to the way that we're measuring unemployment claims, because we've relaxed some of the rules that are surrounding that? And so, that number --- sure, its large, but it's not, it’s misleadingly large, because we changed the way we measure unemployment. Or did that take place before we sort of got this bill in place?

Pjesky: Right. My guess is that I am just guessing honestly. I'm not a 100% sure about this, but my guess is the way that they’ve counted unemployment claims have not adjusted. If that's the case, then the actual number of people who have filed unemployment last week severely understates the problem. O.K. Does that does that make sense?

Stitzel: Yeah.

Pjesky: Because people are gonna start filing for an unemployment under the new rules basically now. They were not doing this a week ago before this bill was passed. So well, I’m not, you know --- don't bet the farm on this. My guess is that the actual number of people who have had their hours cut, or who have been who have been laid off and furloughed, is vastly greater than the 3.3 million that we heard reported from the, I guess, from the last report from last week.

Stitzel: So, you made the point that we relaxed this idea that we’d want to be out for searching for jobs. There’re public health reasons for that. I think, there's practical reasons, and they're probably not a lot of jobs out there to be found. So, under normal circumstances we're concerned about the incentives that unemployment insurance provides. And so, if we don't have a clause that says you need to be actively looking for work, then we may be discouraging people from looking for work by having generous unemployment benefits in this kind of setting; because we're thinking about this as a social shaped safety net. We’re not as concerned about the nature of the incentives for job search. I think that goes hand-in-hand with why this bill was (which they’re calling a stimulus bill) isn’t really a stimulus bill; because you can put all the money in people's hands that you want, and then if you tell them not to go out to businesses, not to go out to restaurants, [and] not to travel, [then] they’re by necessity going to be spending less. Weigh in on that, sort of, the public health versus the idea that this is a stimulus versus social safety net.

Pjesky: Yeah. I think that I agree with everything that you just said. When you have unemployment, you do run the risk of actually increasing the duration of people's unemployment. That's, I think, just basic common sense. The strength of the relationship is, of course, an empirical question; but when you more or less pay people to be unemployed, [then] you're going to get more unemployment. So, that moral hazard problem has always been a concern for economists and for policymakers; but, I think, at this moment in time, I don't think that we need to worry about that. In fact, I don't think that we should be worrying about that at all. The generous provisions of unemployment that we've instituted with this new bill are very specific to this situation, and they are very, very temporary. So, when the economy goes back to being, you know, relatively virus safe, then I don't think there’s any doubt in anybody's mind that these relaxed unemployment insurance provisions are going to also go away. But that is a concern. Now, I don't think this is stimulus, because I don't think right now the economy has a significant demand problem. You know, things could be moving very, very quickly. And maybe that statement is a week old or whatever. So, you know, I see people with a strong desire to go out, and to go out and buy stuff. The problem is --- it’s very difficult for them to get stuff --- to, you know, to buy perhaps. So, right now this stimulus [and] everything in this bill is designed as a stopgap measure. And, you know, I'm being generous to the policymakers right now. It’s designed as being a stopgap measure to help the economy from falling completely into the abyss. So, I don’t see it as a stimulus. And in this particular situation, I think a stimulus bill would be a bill that had many, many provisions in it to try to figure out exactly how we’re going to restart the economy again once it becomes relatively virus safe, all right? To me, that would be a stimulus bill in this circumstance. Right now, what we are doing is --- is we are trying to give people the liquidity, you know, we're trying to give Main Street the liquidity in order to get through this crisis. And we’re trying to take care of the immediate humanitarian needs of the large segments of the economy that has lost their job because of this. So, you know, maybe according to some economists’ definition, that would be stimulus, but to me it's not. It doesn't mean it's a bad idea, right? It doesn’t mean it's a bad idea. And it doesn’t mean that it's necessary or unnecessary either. So, it’s just --- it is what it is. But right now, in this current bill, no one is thinking seriously about how to restart the economy. And maybe we don't need to think about that. Maybe it'll just happen.

Stitzel: So, John Cochrane would disagree [and] says we need the plan to restart the economy [which] is the most important thing we can be doing right now. Maybe that's a myopic view, but it is a thought that's out there. What you said there about, you know, talking about workers losing their jobs, and some of these provisions supporting corporations that keep people on payroll and keep paying people, dovetails really well with the next topic that I have. Before I jump into that, I, kind of, want to give some of the numbers that you referenced. So, $500 billion dollars in the provision go to large corporations. $425 billion of that are in loans. And then the remainder is variations of what you talked about --- to large corporations that keep people on their payroll. So, $25 billion to wages and benefits. $4 billion to wages and benefits for people that work with cargo. $3 billion for contractors. $26 billion for airline specific. So, there's a lot to airlines. There's a lot, sort of, in broad strokes for loans for corporations. I’m in a small business --- also get $377 billion here, $350 billion of which are loans. Then they have some grants and some relief for existing loans. One of the other things that we haven't really touched on is that there's a lot here for the state and local government and for public services. So, I've got $340 billion for state and local governments. $275 billion of which is earmarked for the COVID-19 response.

Pjesky: Hmm mm.

Stitzel: And then there's a much tougher for schools and family programs. And then in the public services there's a $180 billion there, $100 billion of which goes to hospitals. And then, of course, there's a wide variety of other public service and health things that are getting the other $70 billion. How do you view the way that this bill is giving some of this money towards state and local governments and public services?

Pjesky: I think, I mean, those provisions are probably among the better provisions in the bill as well, as long as, you know, as with the unemployment of provisions. I think, you know, a federally funded response that state and local governments administer is something extremely good. It’s something that works fairly well in other areas of our government. And I think the federal government is necessary. The federal government has a really, really important role to play here, because they are the ones that have, you know, more or less the unlimited ability to borrow. So, a state or local government can't borrow. An individual hospital, or the hospital system as a whole, could not borrow the amount of money that might be necessary to, you know, address this crisis. So, the federal government --- that the Treasury borrows the money (probably don’t have time to get in here). The Federal Reserve is involved with this as well. The Federal Reserve and the Treasury has to have a relationship that basically facilitates the federal government being able to borrow and distribute this money to state governments, local governments, individuals, [and] whoever. And the --- if we’re going to do this, [then] it almost has to be done at the federal government level.

Stitzel: So, you mentioned that the federal government has the potential to have almost unlimited ability to borrow. That state and local governments and definitely individual firms don't have that. How do you view this in the context of the federal budget that we're adding $2 trillion dollars in deficit spending here? Admittedly foreign emergency. How do you view that against the government’s budget constraints?

Pjesky: Well, you know, the $2 trillion sounds like a lot. It probably actually isn't. And, you know, I thought a lot about this in the past week or so. You know, it's not necessarily the $2 trillion that the government is borrowing right now. It's that it's the $20 some trillion that it's borrowed in the past. But I think that we think we need to worry about. But, you know, right now the potential costs of us doing nothing are so large that this kind of response is probably absolutely completely warranted. And, you know, almost every economist thinks, not all of them, but almost every economist thinks, you know, thinks that the downside of this is, you know, first you borrow money, [and] it's going to have to be paid back sometime. You know, that’s, I think, that's the obvious. The other downside to having stimulus packages (even though it’s really not stimulus) [and] the other downside to having, you know, spending go up this much (and in the way that it’s going up) is that, you know, every time we have a crisis we can't be bailing everybody a bunch of checks. So, this is something that can't be regularly done by the federal government; because if we do, then you know sooner or later we will run up against the borrowing constraint. The federal government will run up against the borrowing constraint. That’s real, and that would be a disaster in and of itself. But right now, we’re nowhere near that. The federal government will have no problems borrowing the $2 trillion dollars in a manner in which they are. So, you know, the fallout from this is probably going to be very small at least in the short run. And in the long run, it’ll probably amount to be small as well, especially when you consider the cost of having the entire economy freeze up even for a month or two. The, you know, GDP in the United States is a little bit over, you know, a little bit over $20 trillion. So, you know, just to make the numbers round easily, we have roughly $2 trillion dollars in output every single month. So, to lose half of that (which might be almost the worst-case scenario) for a couple of months --- you're already at your $2 trillion dollar stimulus in a hurry. So, compared to that possibility, the cost of this bill is actually pretty small.

Stitzel: So, how do you view the incentives that this lays down for people to save against emergencies [and] for firms to, you know, have a certain level of cash flow available to them? Ostensibly, that's why we’re bailing out airline industries as they’re running up against cash flow concerns. I've seen some reports of various businesses saying that they’re not gonna be able to make rent this month. And so, they're gonna have to try to negotiate with the people who they’re renting from. If we lay this down as a strategy that we're gonna employ every time this comes about --- which admittedly there's been groundwork for this before, right, Bush had a stimulus, and then, you know, we see some of these similar things happening following 2008-2009 --- how do you view this as the way that impacting the way that firms and individuals will make decisions going forward?

Pjesky: Well, I mean, they weren’t prepared for it this time. So, you know, whether or not them getting a bailout for getting this help from the federal government [and] whether it makes that worse --- I don't know. But that --- just for an example, you know, if you run an airline, for example, you know, you have to know it's no secret that you are susceptible to this kind of systemic risk. So, there are lots of things that might happen [and] that might result, in not just a few of your planes being grounded, but all of your planes being grounded or empty. So, we saw this after 9/11 where, you know, planes were grounded for a long period of time; and we're seeing it now, where, you know, planes aren't necessarily grounded, but certainly people are not flying. And so, the cash flow coming into an airline is very, very low. So, in an ideal world ---- if you ran an airline, [then] you would want to be able to operate your airline and avoid going out of business for, you know, a couple of weeks, or a couple of months at least. Of course, that's not generally how the world works. And whether or not it's that way because the airlines knows that they’re going to be bailed out by the federal government is something that I don’t really think that we know. From big corporations all the way down, you know, to an individual family, it would work this way. I mean, you know, think about in an ideal world. Let's say that every business in every household had, say, three months of expenses stored up in liquid cash in the bank. If that were the case, then this would be absolutely no problems, right? We could just --- the government could just say everybody’s going to stay home for two or three weeks, and, you know, ideally the buyers problem might be over very, very quickly. But that's not the case. Everybody cannot do without their paychecks. Businesses can't do without their revenue stream. And the reason that the government might actually want to do --- essentially what they’ve done ignoring any moral hazard problems --- is that you don't want this Main Street liquidity problem to turn into a Wall Street liquidity problem. So, and what I mean by that is this. To avoid a financial crisis, you know, to avoid this turning into a financial crisis it's really, really important that people need to be able to keep the payments on the debts that they’ve accrued, right? It's very, very important for households to be able to keep paying their mortgages. It's very, very important for airlines to be able to keep paying their bondholders, or whatever their financial obligations are. And so, when you run into a situation where you've got a temporary blip in economic activity that seems to impact almost everyone, then the thinking of the federal government, the thinking of policy makers, and the thinking of most economists in this situation is that the federal government does have a constructive and positive role to play to make sure that those payments keep getting made, all right? And payments of all kinds. To make sure that businesses can continue to make their payroll. To make sure that loans are paid. To make sure that bonds are paid. To make sure that all of these things happen. So, this economic problem is, sort of, focused in one area of the economy and it doesn't spread to other areas of the economy.

Stitzel: Under normal circumstances we would see payments from the government or different types of regulations ---- choices that the federal government, or even state and local, but specifically federal government in this context ---- making; and we would be suspicious of the way that they’re making them, that they're not, you know, --- there's a lot of lobbying going on for airline industries, for example, and we’re thinking maybe those choices that they’re making or not just --- in the American public's best interest. I think everybody acknowledges that there’s maybe --- corruption is a strong word, I’d call it corruption, maybe you wouldn’t, but there's --- a lot of gamesmanship happening on Capitol Hill. What do you think makes this situation different, just because we see what the drivers are here, and we truly believe the airline industry is in trouble right now. That seems pretty reasonable. Is that what’s causing us to not have the same kind of questions? Or we just haven't thought that through all the way?

Pjesky: Well, I mean, again, that's a very, very that's a very, very difficult question. I mean, what makes this different is that this is an extremely profound and unprecedented disruption of our way of life, basically of our economy. And, you know, for the federal government to come in and introduce all of this liquidity, basically across the entire economy into the system, is something that, again, most economists and most policy makers think is incredibly warranted. Now going forward to how many times the federal government can do this --- that remains to be unseen. I think that's always a danger, because if you know somewhere down the road the federal government needs to do this again, and we’re running up against a borrowing constraint, then you know that would be rather disastrous, I think, for the economy. Now, whether or not the government being there with deep pockets, and it being widely known that it’s going to bail out certain industries, whether or not it makes those industries behave in such a way that’s reckless and against the public interest, probably. But I don't know the extent of that, and I don’t know how much of a problem that actually is.

Stitzel: So, in the wake of 2008-2009, GM gets in trouble financially, and they end up being bailed out. And there were people --- that was that was before my career as a professional economist, again, I was in school at that time, but people were --- saying they shouldn't be bailed out. And the difference there being well, if they fail we would expect that companies that would use their capital better, more efficiently, smarter like Ford would pick up their production. So, there's many car companies are just picking Ford, because it’s the other American company. Why wouldn’t that be viable in this situation? Because we have some airlines that are doing quite a bit better. Delta, I think, is quite financially stable; whereas other airlines like United are not so stable. Why wouldn't it work? Because there's some corollaries there between the level of capital and the stability of that business. And some of that economic coordination (that you and I were talking about) seems to not be quite as high in that scenario, just because the capital intensity vs (excuse me intensity) in that particular industry is so high. Why not let United fail and Delta buy them up, in the way that we might have advocated for letting GM fail and Ford buying them up?

Pjesky: Well, I mean, that's the counterpoint to this. You know, that's the contrarian view of things. And the logic behind that view would be something like this --- look, if an airline or a car company or any business like that --- if it goes bankrupt, then, you know, bankruptcy doesn't mean that there’s, like, a crater left behind with absolutely nothing. So, you know, a bankruptcy is a reorganization of contracts, a reorganization of ownership, [and] reorganization of everything. And if the world decides that it wants to fly again when this crisis is over, [then] I think that we could be relatively confident that somebody's going to have an airline to fly them. And so, why does it have to be the entity, you know, XYZ Airline that we know it today. Why couldn't it be a different airline? And, as you say, some airlines are faring better than others. And if we bail out the ones that are performing relatively poorly, then that might make the airline industry as a whole weaker, and less able to serve customers through situations like this, or in any other situation. And so, I think, that's a, I think, very valid view. I think that's a few that needs to be taken a little bit more seriously by politics. I think a lot of economists take that view very, very seriously. But I don’t know that our political process takes that view very, very seriously. That there’s, you know, but, you know, basically very, very rare, or if ever, that firm is actually too big to fail. So, there’s absolutely no reason why we need XYZ Car Company. There's absolutely no reason why we need ABC Airlines or whatever. So, if people want to fly when this circumstance is over, if people want to drive when, you know, after, you know, a period happens when people aren’t buying very many cars, if things go back to normal, if demand is restored after the crisis, then the, you know, markets will find a way to get people around on planes. And, you know, somebody will organize the capital and somebody will organize the labor in order to make that happen. And so, you know, by bailing out these airlines --- if that view is correct by bailing out these airlines and preventing them or causing them to avoid bankruptcy --- then it's actually counterproductive to, you know, to a great degree, because it prevents them from reorganizing in such a way that might be able to better serve customers when the crisis is over.

Stitzel: Excellent. I'm glad you shared that. So, I want to turn to one last theme here as we close out this podcast, and that’s the role of private firms, and sort of, what they're doing. I have a list of things here that they've done. And there's probably been more things since you and I hammered out this outline, because like you said earlier, this is just moving so quickly. But I wanna start with a little vignette. I actually had a conversation right as the social-distancing thing was coming down the pipe. And then I actually overheard a second conversation just shortly thereafter. So, the first person I talked to told me that his plan was to keep his workers that were good, that he knew who the people were that he wanted to keep. And he had some hard workers, and he was gonna do everything he could to take care of them as long as he could. And then, he had some others that he wasn't so fond of as he was gonna send them home. And if the situation cleared out quickly, [then] he'd bring him back. If not, then he would deal with that when he got to it. And the second group of guys that I happen to sit next to as they were having a conversation [were] a couple of restaurant owners. And I actually agree they were, sort of, talking about what they were doing. And they were both doing something very similar. They were switching to drive-through only, but they were keeping a full complement of workers. So, my guess -- I'm not an expert on this, [but] my guess --- is it takes fewer people if you're just running the drive-through. And if you're running the drive-through, and you're running the dining area, and yet these gentlemen were keeping it. So, it kind of speaks to the way that private businessmen view their employees. Can you comment a little bit on how you view business owners and the role of private firms on that employment/unemployment side?

Pjesky: Well, I mean, I think, every business owner is gonna make those kinds of decisions based on, you know, whatever their values are, and whatever the particulars are there of their case of their firm might be. It might be, you know, it might be the case that a business owner is just, you know, purely altruistic. And so, they're gonna do he or she's going to do whatever is necessary to maintain their workforce. You know, on the other hand, different firms might want to make different decisions concerning their workforce based on the nature of their business and the nature of their workforce. So, you know, let's say that you do have a crew that has really, really specialized skills. And let’s say that you have a current set of employees that contributes massively to your business culture (for lack of a better word). Well, if you have a temporary downtime, and you lose all those workers, [and] you have to lay off all those workers, well then, you're gonna lose all that, all right? You’re gonna lose all that. And if what you think that you had was really, really special, [then] you're going to be much more apt to want to hold on to your current team. If you have a workforce that's more (for lack of a better word) generic, then in that situation you're probably going to be more likely to shut down, all right? So, you know, I, you know, an example of this might, I mean, all of the examples that you mention, I think, involved restaurants. But it might be the case that the restaurant might be a little bit more generic of a workforce, you know, than, say, a law firm, you know, or something like that. So, I think that that's not a new problem. Every businessowner has got to decide what he or she does if their business, whether it's the whole economy or not, whether, you know, when their business falls on tough times, right? Do you let people go? Or do you do whatever is necessary to keep them? And it might also have something to do with, you know, how creative can a business owner be at giving employees something, you know, productive and creative to do. So, you know, how do you trim in a restaurant? How do you transform your staff that is used to cooking food and waiting on tables? How do you transform that into delivering food to people's cars? You know, you might have the cars drive to you. You might turn your waitstaff into delivery people. There’s something to do in one way or another. So, every firm owner is going to make those decisions based on whatever criteria they see they see fit. And, sort of, the glory of having decentralized decision-making in these circumstances is [that] the different stores or different firms are going to try different things. And everybody gets to see to a certain extent what works and what, you know, what works and what doesn't.

Stitzel: So, I’m glad you laid it out that way. And I view that, sort of, as one side of the coin --- the relationship between businesses and employees. And, I think, it’s interesting, you know, we're not gonna see the case that just everybody immediately lays everyone off. I like the law firm example. I hadn't thought of that one before, but I could imagine two rival law firms. And I'm sitting here across town, and I have the best lawyer in the city in my employment. And then I just shudder my doors and fire everyone. And you, the opportunistic law firm across town, are immediately gonna snap up my best employees. And then when things restart, [then] you'll be the best law firm in town, and I'll be the second-best law firm in town. So, that’s very insightful.

Pjesky: Yeah. I mean it could go the other way, right? You could miscalculate how long and bad the downturn is, and you might let all your employees go. And when things get better far down the road, you might be the only law firm that can start back up, [because] you're the only one that has any money.

Stitzel: Yeah, could play.

Pjesky: I mean, this is not a complicated. I'm sorry, this is a very complicated decision. There's a lot of trial and error involved here.

Stitzel: Right. Now so, one of the things that I love about economics is learning some things that are not immediately obvious. I told people economics isn't hard it's just counterintuitive. One of my favorite things is an explanation from Arnold Cling. I highly recommend his blog. I think it's called ask blog. And he makes the point in some of his writings that wages are sticky, which is a very common economics idea that wages tend not to want to go down. That wages are sticky because employers, instead of lowering the wages of everyone [and] lowering morale which is the usual argument; [therefore] the problem with that is then when you lower wages, [then] your best employees will leave first, as opposed to instead of lowering wages, I just fire one person. I could lower wages to keep everybody ostensibly, but actually, my best worker would be the first one to leave; as opposed to when I need to save on payroll, I actually just fire my worst worker, then I get to pick who leaves, and I get to keep the best employee. There’re elements of that ringing true to me here --- which is part of why I shared that first story about the individual who knows who his good employees are [that] he's gonna take care of them, and he his employees that he’s less fond of, he's less inclined to go out of his way to take care of --- it rings true as in the context of Cling’s story. Did you have comments on that before we move to the other side?

Pjesky: No, go ahead move the other side.

Stitzel: Yeah. So, the other thing that I wanted to talk about in just, kind of, close this podcast out with this is [that] we talked then about the employer-employee side. The other side of what firms are doing in the production side changing what they produce, or how they produce to tailor to the response to the pandemic, is very interesting to me. We've seen a lot of powerful things. We've seen a lot of regulations get peeled back that allow for doctors to cross state lines, for example. And some even puzzling decisions by the FDA to not allow, sort of, like, at-home test kits and things like that. But we're seeing that it's not just the government responding. We like to look to the big shiny $2 trillion stimulus bill and calculate how much is coming to us based on our taxes this year. The private firms are doing a lot. I'm gonna give you a few of these examples. If you have some other examples that you've seen that I haven't feel, free to share. And then, kind of, to close us out, give me your thoughts on this whole thing. One is I've seen that GE is transitioning, or their employees are wanting to transition. And GE is talking about transitioning over to producing ventilators. You know, it's hard to know whether they'll be effective in doing that. Anheuser-Busch is making hand sanitizer. Rogue Fitness, I told you that I like lifting weights, so this is somebody that I follow. They're making face shields for medical use. And then, there's a couple of baseball glove making companies, baseball jersey making companies, that are making personal protective gear. And then, there’s a lot of things that are happening on the front for telecommunications. I'll just give you a couple of them here. Carriers are suspending data caps during coronavirus cause we're gonna be at home [and] we’re use more data. That, kind of, makes some sense that Comcast is making free public Wi-Fi for the next 60 days. And that AT&T is also suspending their data caps. And many of these same firms that are in this area are agreeing not to cancel service for non-payment over the next 60 days. So, I see a wide array of things that are happening on the private side [and] people going: well, we need this, and companies stepping up and producing those kinds of things. Any other stories like that that you have?

Pjesky: Well, I mean, just a general comment about all those things. And, you know, of course companies are going to step up to keep themselves viable, all right? So, if you make beer or if you make, you know, whiskey or alcohol or whatever, and you see a sudden spike in in the demand for hand sanitizer, [then] of course make hand sanitizer, right? Most companies don’t care too much what they make other than money. They just want to make money. They want to make a profit, so they’re going to be willing to sell basically whatever they can. The other things that I’ve seen going on --- the free trials, the suspension of, you know, cutting people off for late payment or non-payment or whatever, you know --- that's competitive forces in the economy are basically giving firms an opportunity to have people try their product out. So, it's like, you know, try my Internet service. I'll give it to you for free for a little bit. And, you know, the hope is that if a person likes it, then maybe they'll keep it for whatever reason then. And then, of course, you’ve got the, you know, the school at home, you know, you’re learning, you know, learning platform A or whatever. We’re going to give you this to you free, you know, for a couple of months or something like that. You know, those kinds of things might be, you know, garnered to or an attempt for firms to build up goodwill with, you know, with the public and, again, try to gain customers. So, I think, that it shouldn’t surprise anyone that the private market is an owned individual decentralized way responding to the crisis, which in almost every case is a win-win, all right? The firm's likely aren't doing this out of the goodness of their heart for purely altruistic reasons. They’re getting something out of it. The goodwill that the opportunity to get more subscribers, or, you know, things like that. You know, and of course, that’s good for consumers too. So, you know, if my phone plan gets the data cap lifted and I don't have to worry about working from home. And so, that’ll, again, build the goodwill that I feel towards company X or whatever that I'm, you know, dealing with. So, you know, that's I think moving forward. There is a significant opportunity here for regulation to actually to do some good. So, what the federal government needs to be doing, and they can be doing this in partnership with individual firms, is they need to be thinking of what kind of protocols the businesses need to be in place in order to operate in a virus safe manner. You know, because, again, think of, you know, think of food service. You know, the chance of getting foodborne illness at a restaurant is pretty great. And if there were no regulations in place, it would probably be even greater than it is right now. But we don't forbid that activity. We don't shut down that activity down because it's risky. What we have are rules in place that if you're going to serve food, [then] you have to follow these rules. And customers go to those businesses and eat hamburger at Blue Sky or whatever, knowing with fairly great confidence that the place that you’re eating is clean, and the establishment is doing everything that's absolutely necessary to keep you safe as a customer. And so, we need some regulation concerning infectious diseases to be put into place relatively soon so that we can start operating our economy in a buyer safe manner. And I'm not an expert at this. I have no idea what that could be. But I'm going to guess that it’s possible. And then once that happens, people will venture out again. They'll be able to venture out again safely, and then the economy will get moving again fairly, fairly strong. And we might see a, you know, V-shape recession. Now, that's why I'm not too concerned with how much GDP is going to drop this this quarter, because, I think, if the policy's done correctly, [then] I think that we can have a V-shaped recovery and get back to the trend that we were on before this.

Stitzel: My guest today has been Rex Pjesky. Rex, thanks for joining us on the EconBuff.

Pjesky: Anytime Lee. I enjoyed it.

Stitzel: Thank you for listening to this episode of the EconBuff. You can find all previous episodes on YouTube at EconBuff Podcast. You can check out our website at www.econbuffpodcast.wixsite.com. You can contact us at econbuffpodcast@yahoo.com.