The economy is a disaster. Should we stop talking about it?
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There are different ways to talk about the economic impact of the COVID-19 pandemic, but it’s hard news to sugarcoat: Large swaths of the economy are at a standstill, millions of workers have been laid off or furloughed in a matter of weeks and it’s unclear when and how we’ll resume business as usual.
But could concentrating on the turmoil be contributing to our economic woes?
Maybe, according to Nobel laureate and Yale economist Robert Shiller, whose latest book “Narrative Economics: How Stories Go Viral & Drive Major Economic Events” studies the economic consequences of the stories we tell.
“Marketplace Morning Report” host David Brancaccio spoke to Shiller about the power of narratives during a pandemic. The following is an edited transcript of their conversation.
David Brancaccio: That disaster narrative, could it feed on itself? Could I be doing damage by telling it like it is?
Robert Shiller: There’s the inherent conflict. People have to know that it’s serious. Reassuring them falsely is not in their interest. On the other hand, we can also put a slant on it that’s so negative that they’re afraid to go out, even for things that they need. And that means that business collapses.
Brancaccio: People are comparing this to the Great Depression. Part of the danger is if you keep saying the Great Depression is here again, people stop investing, and then you have a greater problem than even the pickle that we’re in.
Shiller: So that narrative is like a disease that is lurking in the shadows, and it becomes a self-fulfilling prophecy. There is a difference this time. People thought that the Great Depression would go on forever and that made them feel nervous about taking any risks.
Brancaccio: Another meme, another narrative that was not as enduring is the so-called Spanish Flu. Now we’re talking about it, but you could have easily quizzed people a few months ago and they may not have known.
Shiller: Right. It’s unfortunately a little hard as a comparison point because it coincided with the end of World War I. The U.S. stock market actually went up at that time. But the one important difference was in 1918, they didn’t have the idea of sheltering in place, so they didn’t shut the country down then. So in a sense, this event differs from past events, not just because we had a horrible epidemic, but also because we have an aggressive way of dealing with it.
Brancaccio: There are emerging narratives of, in this terrible public health emergency, there may be opportunities to rethink an economic system that was not serving enough people. I get that, but turning the narrative only in that direction might be a disservice.
Shiller: I actually feel positive about that narrative. We have rising inequality. We have minorities that are still kept down by prejudice. I think this is a unifying moment. And I think it may actually indeed make for a better society going forward.
COVID-19 Economy FAQs
Millions of Americans are unemployed, but businesses say they are having trouble hiring. Why?
This economic crisis is unusual compared to traditional recessions, according to Daniel Zhao, senior economist with Glassdoor. “Many workers are still sitting out of the labor force because of health concerns or child care needs, and that makes it tough to find workers regardless of what you’re doing with wages or benefits,” Zhao said. “An extra dollar an hour isn’t going to make a cashier with preexisting conditions feel that it’s safe to return to work.” This can be seen in the restaurant industry: Some workers have quit or are reluctant to apply because of COVID-19 concerns, low pay, meager benefits and the stress that comes with a fast-paced, demanding job. Restaurants have been willing to offer signing bonuses and temporary wage increases. One McDonald’s is even paying people $50 just to interview.
Could waiving patents increase the global supply of COVID-19 vaccines?
India and South Africa have introduced a proposal to temporarily suspend patents on COVID-19 vaccines. Backers of the plan say it would increase the supply of vaccines around the world by allowing more countries to produce them. Skeptics say it’s not that simple. There’s now enough supply in the U.S that any adult who wants a shot should be able to get one soon. That reality is years away for most other countries. More than 100 countries have backed the proposal to temporarily waive COVID-19 vaccine patents. The U.S isn’t one of them, but the White House has said it’s considering the idea.
Can businesses deny you entry if you don’t have a vaccine passport?
As more Americans get vaccinated against COVID-19 and the economy begins reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.
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