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        <title><![CDATA[Flexibility Is Necessary for Economies to Cope With Chinese virus, Not $2K Checks]]></title>
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            <media:title type="html">Flexibility Is Necessary for Economies to Cope With Chinese virus, Not $2K Checks</media:title>
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        <content:encoded><![CDATA[<p><strong>True economic resilience comes from the ability to adapt to changes, not ignoring or masking them.</strong></p><p>Economic downturns are very strange creatures. Regardless of what  causes them, the effects are usually the same—people losing jobs,  income, and wealth.</p><p>It’s not uncommon to see war metaphors used to describe an economic crisis—“<a href="https://thehill.com/opinion/healthcare/488345-war-in-the-time-of-coronavirus">War in the Time of Coronavirus</a>,” “<a href="https://www.bbc.com/news/world-us-canada-51955450">Coronavirus: Trump puts US on war footing to combat outbreak</a>,”
 etc.—yet many people who lived during actual wars point out that in an 
economic crisis the factories are not really bombed out, the warehouses 
are not actually burned down, and the railway lines are not sabotaged.</p><p>Severe price drops of stocks, which <a href="https://www.cnbc.com/2020/03/15/traders-await-futures-open-after-fed-cuts-rates-launches-easing-program.html">we’re currently witnessing</a> amid the COVID-19 pandemic, <em>seem </em>like
 destruction, but then again, to continue the war metaphor, the 
factories and machinery are still there and able to produce things.</p><p>The real issue boils down to what economy actually is—people 
producing things that other people want and purchase. It is more 
complicated than merely producing things. Nail factories in planned 
economies got very good at producing large nails because success was 
measured in the kilograms of nails produced, but they largely failed in 
their true economic purpose—satisfying customers. If we look at economy 
as an exercise in satisfying customers’ needs, rather than a tally of 
economic activity, then the real damage becomes clearer.</p><p>With the coronavirus lockdown, certain goods and services that people
 would otherwise buy and enjoy are off limits, since restaurants and 
bars are shut down. It does not mean, however, that you have stopped 
eating. Instead of going out, now you make your food at home and are 
probably getting the same amount of calories at lower cost. You reduced 
your consumption of dining services (bad for restaurants), you consume 
more store-bought food (good for supermarkets), and are spending less 
money on food calories.</p><p>As a result, you can now spend more money on other things, or save 
that money and spend it later. Switching from consumption to saving 
might appear like a massive GDP drop; but this is not economic 
destruction, merely delayed consumption.</p><p>Obviously, some restaurants might not survive until people are 
willing to spend again on dining. Therefore, some of the proposed policy
 responses attempt to encourage people to spend rather than save. 
However, if you give everyone $2,000, as <a href="https://www.msn.com/en-us/news/politics/white-house-coronavirus-plan-aims-to-send-dollar2000-to-many-americans-includes-dollar300-billion-for-small-businesses/ar-BB11mKpM">some have proposed</a>,
 it does not mean that people will splurge on restaurants or air travel.
 If $2,000 is to help people who might struggle during the downturn, 
then giving everyone $2,000 is a very inefficient way to help those in 
need. It is like trying to empty the lake to help a drowning person.</p><p>If we go back to the idea that the economy is people producing what 
other people want, then even during economic downturns there are many 
things that people want and are able to pay for. It’s not like there are
 “no jobs” or services to deliver, they are merely different—grocery 
delivery to homes, cleaning and disinfection, remote learning and 
countless others.</p><p>Demand for all sorts of different goods and services will increase 
drastically due to coronavirus, one would expect. Indeed, this is 
precisely what we see happening with announcements by <a href="https://www.cnbc.com/2020/03/16/amazon-to-hire-100000-warehouse-and-delivery-workers.html">Amazon to hire at least 100,000 people</a> to help with deliveries, vodka distillers <a href="https://www.nytimes.com/2020/03/19/us/distilleries-virus-hand-sanitizer.html">switching</a> to making hand sanitizer, people using 3D printers <a href="https://www.theblaze.com/news/local-business-saves-lives-using-3d-printer-to-make-essential-medical-equipment-part-for-hospital-icu-in-italy">to make</a> needed medical equipment. Shifting resources to produce what people 
want is the way to avoid situations where people are forced to sit idle 
and hope for helicopter money—which represents a true economic downturn.</p><p>Of course, some shifts are easier than others. It is easy to train a 
bartender to become a grocery delivery driver; it does not work like 
that for doctors. Serving cocktails may pay more than delivering 
groceries. Switching from a job or activity where you have skills and 
experience to something new and uncertain is stressful and may pay less.
 Nevertheless, true economic resilience, both for individual people and 
for entire countries, comes from the ability to adapt to changes, not 
ignoring or masking them.</p><p>The coronavirus crisis keeps unearthing strange and inexplicable 
barriers that prevent people from doing useful things. Laws that prevent
 medical staff from practicing in other states, unnecessary occupational
 licensing, needless bureaucratic red tape that regulates practically 
every economic activity in the US economy.</p><p>Getting rid of all of them could yield economic gains during and 
after the crisis. It also will save countless lives, which is no doubt 
why we’re seeing the government <a href="https://www.washingtonexaminer.com/news/trump-administration-will-allow-doctors-to-practice-across-state-lines-to-address-pandemic">allowing doctors</a> to practice across state lines, backing off <a href="https://www.cnn.com/2020/03/17/politics/federal-government-cutting-red-tape-coronavirus/index.html">of restrictions on trucker drivers</a>, and <a href="https://reason.com/2020/03/11/how-government-red-tape-stymied-testing-and-made-the-coronavirus-epidemic-worse/">slashing red tape</a> to allow private and university research labs to actually provide solutions.</p><p>Contrary to alternatives, such as giving everyone $1,200 or $2,000, 
removal of such barriers allows people to create things that other 
people actually want and need, therefore creating true economic value.</p><p>If there is a silver lining from this whole experience, it is the 
reminder of how important flexibility is. The world will face many 
crises in the future, many with economic (and life-saving) implications.</p><p>We cannot put a giant glass dome on current reality and wish the 
changes away. Rather than spending resources on glass domes, simply 
making the economy more flexible—through deregulation, private 
individual safety nets, etc.—will make it easier to produce what other 
people want.</p><p>That is the formula for a vibrant economy that will allow us to respond to future crises—in whatever form they come.</p>]]></content:encoded>
                <dc:creator><![CDATA[GAGmen]]></dc:creator>
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