Paul Romer on the Pandemic

Full episode transcript -


Welcome to E Con Talk, part of the Library of Economics and Liberty. I'm your host, Russ Roberts of George Mason University and Stanford University's Hoover Institution. Our website is e con talk dot org's where you can subscribe. Find other episodes. Comment on this podcast and find links. Another information related to today's conversation Our email address is male Addy con talk dot org's We'd Love to Hear from You. Today is May 12th 2020. My guest is economist and Nobel laureate Paul Romer, University professor of economics at New York University. He previously served as the chief economist at the World Bank and is the founding director of N Y Use Marron Institute of Urban Management. This is Paul's fifth appearance. Any contact having last been here in April of 2019 talking about growth cities and the state of economics or topic for today is the Cove in 19 Pandemic and where we stand in mid May 2020. And as I have done recently, I want to remind listeners because the pandemic we're doing some different stuff with audio. We're also trying to record this as a YouTube video for those who want to watch it. Paul, Welcome back to E con talk.


It's good to be back. So am I. The a my in the like the top and return visits or No. Okay.


You're like, you're like Henry Aaron's brother, Tommy. Ah, you know, the two of them, I think, hold the record for most home runs by a two brothers in the major leagues. Okay, I think Tommy, yet it might have under 50. Might have under 10. I can't remember, but you get the job anyway, as we as we record this, it's mid May, as I mentioned and were Ah,

there about 80,000 dead in America. As far as we know, there's a lot of uncertainty about that number. But that's the current sort of best guess, due to the Cove in 19. And unemployment is just under 15%. But people expected to go dramatically higher. What do you think? It's important to recognize this stage of the pandemic. What? What have we learned?


Yeah, um, I think that it's important recognized that things have. We've suffered a very serious shock. When this virus jumped over the barrier and started spreading amongst humans, we just lost a permanent a large fraction of our opportunities. I think it's hard to appreciate that something like this could happen for a reason that are completely out of our control. And it's even worse when we think, Oh, you know, if we had done something, we might have prevented this from becoming so bad. But the bygones are bygones, and we've suffered a big loss, a big shock. And I think we need to get past denial on this and come to terms with what are the best of some bad out outcomes or all the bad alternatives. But frankly, the alternatives facing us right now are very grim.


Why do you say that? I mean, in particular, there's a lot of worry about a quote. Second wave. There's a lot of worry about that. A vaccine may not be forthcoming, period, or it might be months away. Ah, you've suggested that we're still at a risk of massively larger numbers of death. I'm a little bit skeptical about that, but we lay out your pessimistic case


Well, I think the way this played out was that there was some consensus about an emergency response which was locked down, then made sense amongst people who believe in basically what they call mitigation, which is you accept that you cannot stop this virus from spreading through the population. You try and keep it from spreading too quickly. So so you don't overwhelm your hospitals. But you just accept that it's going to spread through the population and some people will die from it. The other strategies suppression that you take active measures that will keep the number of people infected to a small enough number and keep pushing that number down so that you don't spread through the whole the whole population. The disadvantage of suppression is you have to stay with it. There's never a time when you can stop because when you stop, you go right back to exponential growth like we had in the beginning and it zooms through the through the whole population. And what we're learning right now is that the strategies were used thing for suppression are very, very costly were we're losing something like, you know, like I'm estimating 500 month in foregone output. You go back to the so you think. OK,

well, that's the only alter. Maybe we should go with the mitigation but spread throughout the whole population. The thing I think people aren't recognizing about that path is that one's very slow. It takes more than a year toe have this virus to spread all the way through the population. If you're if you're mitigating so we don't overwhelm our hospitals. So, uh, you know it like roughly speaking, if this virus spreads to the whole population, probably about a 1,000,000 people will die. Um, that's using 1/2 a percent as the infection death rate, which is, you know, that kind of at the lower end of what we believe before,

Um, if you're gonna limit death to 2000 people a day, then it takes like 400 days Are 500 days t get to a 1,000,000 deaths, so it could be 500 days till we get past the point where people are dying. We get to herd immunity and we're past this crisis. So both the mitigation strategy where we let it spread or the suppression strategy right now look like they impose enormous costs on on society, and arguing between the two of them seems to me to be almost kind of irrelevant because they're both so awful. What we need to do is figure out something which is sustainable, but a lot less costly.


Let me push back against the 1,000,000 deaths because I really think that's I don't agree with that. I thought that that was what I thought the early days it was certainly the I would call that the consensus and I interviewed Tyler Cowen on this program. I remember when it was, I think was sometime in the Middle Ages. But it was probably a month ago at the very beginning and in the very beginning of this Ah, you know, Tyler, I could sense it's an interesting that was, I sensed in our conversation. He was very careful not to be optimistic in any dimension. And I think part of that he felt, was like a social service that we had to make sure that people were worried. And I came very close to asking him toe whether he thought a 1,000,000 people would die or not. Ah, what was the over under? Would he take the over the under meaning? Do you think there be more than 100 million deaths or fewer?

And e. I could sense he didn't want to talk about that, so I didn't ask it. But that was the number that was on my mind that it might be a 1,000,000 people dead. And that number was based on, you know, roughly 50% of the population getting it. And, ah, death rate of 1%. And you've done the we've done the same thing you've said. Well, actually 100% good to get it, and the death rate


is gonna be the person to be there. I was assuming 60% infected and 1/2 a percent Okay, the infection death


rate. So the reason I think that's growth grossly and over a gross overestimate that I bring this up out of intellectual curiosity more than policy purposes. And I think for educational reasons, they could support to talk about it. I don't because I don't. So just to be clear, I'm not saying that. Well, if it's only 250,000 it's great. It's obviously a horrible tragedy. Regardless, um, the overwhelming numbers of deaths right now in the United States are there. There's two things that jump out to May. About half are in the new York metropolitan area. There, in New York,

Connecticut, New Jersey Ah, 60 to 70% are people over the age of 70. Um, and a normal number off of exponent amount of the exponential growth appears to have occurred from a handful relatively small, at least on a handful, but a relatively small number of people who infected large numbers of people in social gatherings like parties, celebrations, conferences and acquires and religious services. So it seems to me that if if we did nothing dramatic and we're gonna mend a little bit were you are dramatic things we could do or could have done? But if we did nothing dramatic and we told people wear masks. If the ocean over the age of 70 stay in self isolation, the equivalent of quarantine, and don't do anything with more than 25 people don't hold religious services. Do not hold concerts, etcetera,

etcetera. Ah, I don't understand how we're gonna get anything close to a death rate of 1/2 a percent. In fact, you know, in New York City right now, the my understanding is the best guess is 20 to 25% of the people in their city have had the VAX have had the virus? Yeah, and the death rate isn't it? Is it 1/2 a percent in


New York among with its? That's where I got the half of percent from yeses from your But But let me say I think you and I don't disagree on the facts here. It's really just a matter of how we break these down into cases. So what I was saying is that if we want to get to this point where we have heard immunity so the virus just dies out because it has trouble finding people to interact. And to get to herd immunity, you have to get to it least 60% infected. And then if the death rate is, ah, 1/2 a percent, that caused leads to, ah, a 1,000,000 deaths, so but it's it's that if we want to get to herd immunity now, what I think what you're articulating is a suppression strategy. There's a way we can keep this from spreading toe everybody, and it's a suppression strategy, which is less costly than, say, locking everybody down the way we're doing right now. And the reason I'm the reason


Oh, yeah, the reason I'm saying that Paul's I don't think the the half percent numbers and average it's actually 1/10 of a percent or less for people under the age of 25 or 40 even. Maybe, and it's 5 to 20% horrifically for people over the age of 70 and maybe 60. And and so we could bring that number down with some that that infection fatality rate, the so called dia far we could bring that number down well below point half of a percent. If elderly people were we did, some elderly people were careful, which they will be. Trust me, I'm 65. I'm gonna be more careful. And if we treated nursing homes very differently than we did tragically in the first few weeks of the crisis,


which were so yes, so again, I think we're not disagreeing. But let me be clear what I'm trying to say. There is a vision which is a time in the future where we don't have to do anything differently. We go back to life as of 2019 that you could get to because of herd immunity. Yeah, and that is logically possible. I'm just saying it means a lot of infections, a lot of deaths, and crucially, it takes a long time. So when people are saying we want to get back quickly to 2019 going for her herd immunity doesn't get us back quickly. Now where you're going is where I think we should go is say, we can't just like, lock everybody down. Just say everybody's got to stay home and we can't do that indefinitely because it's way too costly.

But there may indeed be a series of measures which we have to stick with forever, or at least until there's a vaccine that's, you know, widely deployed. But there's a series of measures that could be a lot less costly than just locking everybody down, but that suppressed the suppress the virus. So I think we're on the same page, and then the conversation is about what are those measures that will actually at moderate cost, make it impress the device, And keep in mind that that we have to be willing to stick with those forever.


It's when it one more caveat to the discussion about ah, the costs of the current so called shutdown locked down everyone to call it. Actually, they could support. Have to call the lock down. It's not a lock down. It's a government imposed shut down, much of which happened before the government opposed it voluntarily. And as you have correctly pointed out and I have tried to push, it is a point at which has nothing do with the government. People just afraid they don't want to eat out, that if you get on the airplane, if they can avoid it, they don't want to go to a hotel. It's an enormous part of the economy that's not gonna be fixed with The government just said Okay, go back. You know,

this is there's a lot of dimensions to this, but I want to talk about your, uh, back of the envelope calculation of which you made earlier of Ah, 500 month. There are costs that our government spending costs that air birds on the fisc, so to speak, their physical costs of government paying out money that will have to eventually will be funded by that is being funded by debt eventually had to be paid back to some dimension be attacks is that is risky because there's uncertainty about at some point whether that is sustainable. But there are other costs which are I think, what you're mainly referring to, which is the reduction economic activity, the lost GDP from the fact that people are doing ah, sheltering at home, many of whom cannot work, many of whom have no demand for their services. There's 1/3 cost which is not measured,

which is unmeasurable, which I know you're also worried about. I think it's important to make sure it's heard and put on the table, which is the loss of dignity, the fear of of the future, the inability to plan the mental, ah, burden on people of anxiety and depression, potentially suicide. Ah, and worse, potentially tragically, as you have pointed out, also the political consequences of this when people are voting for the in the next up. This election, which is already he debate how pleasant unpleasant is.

But the 2024 election is the one I'm really thinking about, which is the potential for demagogues. No candidates demagogue demagogic candidates to mobilize people who correctly correctly believed they were betrayed in this response to the pandemic. And as you said earlier. I don't blame their people to blame. It's really complicated. I think there's some easy people to blame, some of which is merit merited. But a lot of it. It's were complicated and and yet the political process nuances and it's strong suit. So I think it's really important to get that point out on the table that the cost of this r ah potentially much more than 500 billion and that the current situation, which is this sort of open ended, ah, mix of government mandate and individual fear or return and then worst fear because it grows again, is really to be avoided, Aziz. Much as possible, if it is this any way possible.


Yeah, yeah. No, you're exactly right. My 500 billion tried to capture that. Just the things we're not producing right now. The restaurant meals that aren't produced, dental services not provided, and then a little allowance for the fact that, um, a lot of the that supply chains, the connections, the jobs, the positions are going to go away. So the longer we stay in this depressed state, the lower our future ability to produce output will be a swell. I didn't try and put a number on the political risk.

But that's the one that dominates this decision for me, because if somebody said to me, we have to just stay where we are in the economic, you know kind of phrase when we have to stay with this as long as it takes to get a vaccine and that might take five or 10 years. My answer, my response them as well. If this means a threat that could really undermine our whole democratic system and our whole rule of law, I don't think it's worth running that that risk. We got to find something else that doesn't threaten to destroy everything about the foundations of our society.


Yeah, I made that observation toe someone recently, and they looked at me like I was a lunatic, like I was some kuku. Yet this actually is someone who I think does know something about the Weimar Republic, for example, or other situations where really a breakdown fundamental breakdown in civilization occurs. Open the door to many, many, many unpleasant things. And I think the other thing I would point I want to make, which drives me crazy, is that I don't know about you, but I suspect it's the same. My hardship in this ordeal is that I have to share by broad beat on my bandwidth, with two kids home from college and my wife teaching on Zoom during the day to her high school calculus students, My income is secure.

I have plenty of everything, uh, their love things I miss. But I'm not enduring any quota hardship. It's just it's frustrating, annoying. It's a little bit of a dimensional emotional challenge at times, a lot of wonderful things. I'm playing a lot of chest with my kids and their prey in Puerto Rico and really getting good at it. But there's an enormous part of the population, and I worked by the way I work from home, are ready with the contact and writing and other things. So so so there's tens of millions of people who can't pay their mortgage and they're getting a $1200 check. I mean, that's if they're lucky. Now there are some people in unemployment.

They're doing well. They're small businesses or get loans. It's slowly starting toe to work a little bit, but I think a lot of the chattering class. The pundit class underestimates the the human side of this. That's devastating for people not like them.


I haven't gone back and re read this carefully. But my recollection is there there were developments like, you know, the Wobblies, the workers of the world who are gonna more on the left and then Huey Long And you know, even the United States. You could see incipient signs of this rebellion against the current system. This sense that we had to just tear everything down because it's so, so broken. And that's just incredibly dangerous when society gets to


that point. Oh, yeah, totally agree. So let's let's talk about what you've been writing a lot about which I'm extremely interested in, and I'm agnostic on it. I don't understand the strong case for, but I'm eager to hear from you, which is the potential for testing eso uh, just to throw into the mix. There was a tweet this morning, um, from somebody was living in, um, living an American living, thinking American, living in Wuhan.

Yeah, and he said, you know, Wuhan was in a shutdown is a lock down it waas martial law barbwire guards in front of every apartment complex. You could only go out with a pass. Um, if you were positive, you were sent to Ah, and this is also true in South Korea. Sent into a quarantine dormitory, you had to wear an ankle bracelet, I think, in South Korea and be followed and tracked. These options for aren't really available in America. Uh, so when you talk about so in an authoritarian state,

which China is more or less or a, um, a different culture, maybe a more homogeneous country like South Korea or Israel, which also had very strong close to lock down situations, that people accepted the testing and in tracing, I don't fully understand. So tell me what you see is the role that testing would play in getting us out of this and making it move. It is forward.


Well, the first thing I have been saying recently to people is that if if the Paul Romer of May 2020 I talked to the Paul Romer of 2019 and said to the Paul Romer 2019 we got to spend 100 year on tests, Um, get everybody tested every 14 days in cases of academic Well, I mean, the whole rumor 2019 would not have bought this argument. You know, I just it just the things they're not that bad. It's not that serious. Why do you gotta go all this trouble? All this problem and the difference is that now, in the face of this particular crisis, I just realized that the alternatives of letting them are spread through the whole population or trying to suppress it indefinitely through other means are both so unattractive that now 100 year, which seemed like way too much before. Now it seems kind of like a walk in the park. The first thing now the second thing is there's reasonable people can differ about what's the right low cost way to suppress this virus indefinitely. And by the way,

how are we going to suppress the next few viruses that come down the fight? Things like wearing masks. If we have a social consensus and can sustain that indefinitely, you know, that could go a long way towards, uh, you know, protecting us in suppressing this this this virus. But the idea what testing, though, is that if there's some information we don't have. What we'd like to know is whose infectious right now. If we knew that information, what we could do is say we're going to isolate those people for, ah, a short period of time,

a few weeks and weaken, then suppress the virus without interfering with anybody else's daily lives. Now how you work the deal, where when you find somebody who's infectious, you get them to go into quarantine. We don't have to use a trance solution for that. Steve Levitt and I wrote it would be in Bay people to go into quarantine when they test positive. So we got other tools that can happen, is consistent with freedom on this. But right now what we're missing is the information now one way that people have proposed to get that information, and the only thing that was available in the past was this idea of contact tracing. When you find somebody who's infected, you traced back their contacts and you try and essentially test them to see which of the context are also infectious. That was the cheapest way to Vera, whose infectious in the past, because we didn't have tests.

What's happened is that cost. The tests have been coming down radically and are still going down. So my claim is it's actually going to be cheaper and more effective and more efficient for us to just scale up the testing and do it for everybody. And it's partly colored by our experience. Which was the contact tracing system. Was the system we were using in January when this virus exploded and it just completely failed the people. It's OK, we'll contact tracing is gonna work, get it, give us a do over. I don't see the evidence that it's gonna be different if we if we do it again. So I think we need given the low cost of testing now, relatively, I think we need to just invest in that that capacity for testing and then with this information whose infectious right now we've got a lot more options for managing this at at low cost.


So let's just give us an overview. What you see is the state of testing right now, right now, here in Maryland, where I live. Ah, I think it takes. It's still a swab up your nose, which everyone says is really unpleasant. Not something people are eager to do. And it's, I think, a three day wait there. Two problems with that, obviously, one is it's just a long time. Second is in.

Between those three days, you could go get in fact it again, but you could come back negative and then get infected. The three days you're waiting and dangerously affect people. So where are we on the testing?


Well, there's, um there's two types of tests and, you know, I don't find the terminology very helpful here, so I won't. I won't use it like antibody versus adage in one test just asks, Are there signs of your body's response to an infection, which tells us you were infected at some point in the past. So has your body responded to an infection? That's one class to test The other class of tests are Is there virus present in your body right now? And so the swabs, you know, the PCR. But there's some other versions of that kind of anti gen testing test for the virus, not your body's reaction to that. The anti gen testing is the thing that can identify you early in the process of being infectious


and what you're asymptomatic.


Yep. And it has the best shot at catching you when you don't have symptoms but your infectious and infecting other people. So right now, that's mainly PCR, although there's one other adage in dust that's just been


interred. Explain what PCR


is. Well, PCR is a way to take a sample and then toe amplify the to try and amplify a particular string string of are in a from the virus. So if there's a little bit of that are in a in the sample, this amplifies it up to the point where it's easy to measure and says, Oh yeah, there was are in a from the virus in this sample. So PCR is ah is a way to do that. Um, androgen tester. Another way to see Oh, yeah, there was a string of that are in a from the virus in the sample. Um, one of the big holdups, as you described it, is that the approved tests require the swabs that,

you know, go way up the nose towards the back your throat and there were in short supply. Now, now here we get to the heart of why we haven't expanded testing more rapidly. There are university researchers who said, We don't need swamps. We can actually just test it in test saliva. So they there's a group at Rutgers that showed you can just test yourself. People spend the tube and you test the saliva. Another group at Yale that said, You know, actually, you know, the saliva samples are actually even better than using the nasal pharyngeal swabs


if you were false positives and false negatives


perceptibly now, now slightly better than hugely better but ah, like way more convenient. And there is no shortage of self. So why hasn't everybody started switching toe the saliva tests? Well, even under the expedited process of giving emergency use authorization? E way at the FDA, the FDA said to the group at Rutgers. Okay, you contest saliva samples, but Onley with this particular kit for collecting. There's this particular type of tube that people spit in and Onley your lab. We're not approving anybody else to do what you just discovered, how to dio and and even worse, they said, and only if the person spits into a tube in under the supervision of a health care professional and then It's like OK,

well being can be do telemedicine. Can they spin to do? But you watch him. No. It has to be in the physical presence of a health care professional to spit in the tube. Now why they mandated that? I have no idea. After four weeks, they finally said, Okay, they let you do the swabs at home without supervision, so we'll let you spit in a tube now without supervision. But it's still the case that the Onley lab that can process those samples is at Rutgers. And if anybody else wants to be a good citizen at some university campus and start doing this, you just have to come ask us and we'll take several weeks and we'll no decide whether we're gonna let you. And we will never get to the level of testing we need if we operate under that kind of regime under under the FDA. So that has got


to change because I hate to defend the FDA thing, This situation


I hate to attack


them, but yeah, well, you are a little bit different, but but I think the just 100 80 degrees, but But I think the I think the issue ultimately might be if proving that your negative is valuable, people could obviously think and use other people's spit and all that. So the presence of a health care professional, I kind of get Yeah,


I think I was told it was like chain of custody. Yeah.


There you go. Okay. Can I have a little


bit? That's that's not the FDA is problem here. I something else shouldn't be


worried about that problem. Not great. I agree with you there. And But let's let me ask you this, um, with the saliva tests that you know of it, you know, of two. And maybe there's out there are others. One


what is? Actually, I think it's just one. But you could now do it at home. That's


just what changed. But I think you said at Rutgers and at Yale


Oh, yeah, I'll use the Rutgers. Little got did the test of


the Rutgers says. Okay, so But there is a saliva test. So the question is one how much does it cost? And by cost, of course, we need mean, administer and evaluate, not just administer. And then secondly, how long does it take?


Yeah, um, my understand, there's a logistics challenge. Like, how do you get the sample to the lab? I think the lab can do it in about four hours. But other people I've talked to in the labs say that this is something that could be, like dramatically scaled up both the throughput. How maney samples can we test, You know, start down the line, and then how long does it take to go down the line? There's a little bit of a trade off between throughput and, you know, the waiting time. But the people in the lab say they think that this both of these could be speeded up quite quite substantially.


So if I make, we could call it. We're gonna call it. Sorry about this pub. I'm gonna call Jiffy Tube. So with Jiffy Tube, you you show up to a ah freestanding kiosk or ah, storefront. You spit in the cup, and then you wait in the room with the magazines, The TV playing a really bad cable reality show, which is what my Jiffy Lube looks like. And you stay isolated for those four hours. It's not fun, but work this broadband


in you again. I think we you know, we can sort out all of those issues if we move as fast as we can to speed up the testing, Both more throughput and shorter, shorter waiting times. And you know, for example, if there if there's a wait time, people can always get the results over, You know, over the Internet


out. I like this idea of that. While you're waiting for the test, you can't go get reinfected by someone else, at least for now. So


the way. But the way this works is that if you're testing frequently, you just accept. Even the test is going to miss some people who eckstrom who are truly positive and you might get, you know, reinfected before before you you know, you might be infected. You know, even as soon as you get a negative result, you still might get reinfected. So that's why you have to retest frequently, thinking that the key is that this is not gonna like wipe out the virus. But it means that the number of people who infected will be steadily decreasing over time. This R zero number is less than one, so you get a steady decrease and that's really all we can hope


for. Arzo zero Being the number of people that one person in facts, Esso though Super Spreader could have an R 0 50 you show up at a party with it, and you kiss and hug. A lot of people and 50 people end up contagious. But this would that person would be moved removed from the party effectively wouldn't show up at the party to start with, and the R zero would fall. So let's, um, you're suggesting that testing could become the equivalent of, you know, stop stopping off to gas up your car. It's just something you do every once a while to make sure you're not endangering other people that you're not at risk yourself. So, um, why is that gonna make such a big difference? Why is that a game changer for how we move forward economically? And when I say economically again, I don't like that word. Our ability in Iraq with one another in every way that we used to do in January 2019


of 20 20 We'll whether you're trying to use just population testing or where they're trying to use testing, plus tracing The goal here is to figure out who's infectious because the only way toe stop air suppressed this virus is to find a large enough fraction of the people who are infectious. Get them isolated so they don't infect more people. And then you're on this path where the number of people infected is falling over time. So you just have to find enough of the people who are currently infectious and get them get them isolated. If you do that, you don't have to interfere with the activities of anybody who's not infectious. It's a lot of the value of the test is you know, as you were just alluding to, is that when you get a negative test results like if I got a negative test result and my dentist had a negative test result in the last couple days, I could go to the dentist and have him checked. Check my teeth and he'd be safe and I'd be safe.


Yeah, I guess the, um, I could see it being a very powerful reducer of R zero and death if ah, we made all okay, I don't like I should have said we made all. If nursing homes chose your sporting sport. Sports teams chose to use these tests frequently. They were cheap enough, quick enough, and that would allow again you could, and there you could be tested before the game. You could show up at the game as a fan, you could. There could be a tailgate party for people waiting for their assaults. The ones who were positive would to be told they have to go home. That would be allowed in.

There'll be a lot of different ways that a test that was cheap, quick and relatively painless could make life better. But I'm wondering about the ah, I'll call it a civil liberties issue. Would you require people with a positive test to go home? Would you pay them to go home as you alluded to a little bit ago? Ah, would you force them to wear an ankle bracelet or have install an app on their phone that would allow people to monitor where they're keeping the, you know, quarantined?


So the basic answer that I want to give to this is that until we have the capacity to test and get this valuable information, it's it's premature toe worry, too, much about what we do with that information. Fair enough. But I do agree that we want to use that information in ways that protect liberty and protect our freedom and don't encumber us to too much. I think their ways to do that. This is part of why I'm very suspicious of the digital contact tracing. I just don't see how you do that without further eroding notions about, you know, privacy and without further entrenching the power of a few, just a couple of very powerful firms right now it have been in discussions where people are saying, Well, you know, just a new world is we're gonna have to force everybody to carry a cell phone when they're out on the


street. With that app on installed, that'll be that'll beep If they failed to test


several. I don't want I don't want to live in a world where we're forcing a couple of firms were forcing everybody toe carry and use the product of a couple of firms. So, um,


we're on the cell age.


I'm not happy about that bad outcome. Now on the on the the other kind of test results, I have some co authors on a paper who are from Scandinavia. Their attitude was that there could be a version of this testing that you do at home. Is this really the progress is so fast that very soon you'll be able to do a version of the the molecular PCR like test that at home


like a pregnancy test


to strap Well, I'd like a pregnancy test or the molecular tests involved putting things in a little that and letting a little pot and keeping it warm for a little while. But, you know, we could. We had managed just, like, simpler than a bread maker. But their attitude was give people the ability to find out whether they're infectious and then just trust them to do the right thing


and knowing that some of them won't That's okay. It's better


than you think. It was sort of like these. These Scandinavians were instructing me the you know, the guy from the U. S. The Home of Freedom about you know, actually, if you just let people know information, they generally will do things, and it turns out okay.


Yeah, So we understand that not everybody well, but that's not the that there is no solution short of full martial law, which I think most of us don't want that is going to eradicate, fully suppressed this. And by the way, of course, as we're recording this today in Wuhan, it was announced they have a few new cases. So it's not clear how well some people have done and with other techniques. And


but so that the modest the modest version of this just make it possible for everybody to know if they're infectious and most people aren't gonna want to infect their colleagues are gonna want infected grandmother, so they'll take Haydn precautions. So I think that's the simplest way to do it. The next step up would be to say, Well, there's certain things where, you know counter parties might not agree to do things with you unless you can show you gotta test result like my dentist may not want to see me, because they didn't gonna work for me to wear a mask when I'm in the dental chair. So you know, my dentist may not want to see me unless I get a test. That's his choice. I don't think you need the government toe force that you could even say, you know is part of like our security screening stuff at the airport. You gotta have either recent tests or take a test at the airport to fly in an airplane, so that could involve a little bit more coercion. But there's lots of incremental steps we can use take to use this information that could save a lot of lives and also bring back the economy. Like one of things I would do if we could just get a little bit more testing online from one of these university labs.

Just get him free of the FDA, get him so they can produce in, like, 20 50,000 test today. Just have them test everybody involved in baseball and restart the baseball season. You know, maybe don't bring fans into the stands yet, but you could televise games in a stadium. You could test all the players, all of the coaches, the umpires, any of this service workers who support them so you could easily start televised baseball games without any risk that we're gonna cause a big spreading event that, um, uh kills other people and makes the virus spread faster.


Yeah, when we were doing a minute ago about people doing the right thing. Of course, when your livelihood is at stake, I think it's tempting toe take a chance on hurting other people when it's otherwise costly to you. So we could, as you said before, it might be worthwhile. Toe pay people not to work in certain settings once they got a positive test. And if they can't work from home, etcetera, etcetera really poured to remind people that there are a lot of people are going to get a positive test to have zero symptoms have nothing wrong with that. We do not know yet the full long term consequences, but most young people get this. Nothing happens to them. They don't even know they have it. Um, now again, we don't know the long term effects. It's etcetera, but But I think that that has to say front


center. So I think it's going to emphasize to that this is one of these areas where there's big kind of like community or social effects, not just individual effects. The Major League Baseball might actually say you to play. You have to get tested, and if you test positive. We're not going to let you play because this is part of how we protect the reputation of the entire league. Otherwise, you know, people come shut is down or something. So you know what? Various scales. We may have to require people and say, Look, if you're not okay with these rules, it's fine. Just take, take this season off. Come back next year, and maybe we won't have toe require the testing next


year. Yeah. So what do you see? As, um, I see there being, ah, a number of groups here that air desperately, um, working to do something. So let me list them. They're people like you a little bit like may, but more you than May who were freelancing, trying to spread the word, trying to get ideas out there. There's government, which is very slow,

very laborious, very rule oriented, struggling to respond with any urgency, as is tragically the health care system, the medical supply chains. We've exposed a lot of, I think, tragic bureaucratic problems with the medical supply chain, and


we're gonna go today just a break character and say something nice about government. The congress did allocate 25 billion for testing. It's a small part of a much bigger, more complicated response, but but there's been a little bit of positive motion, so


that's good. But so government does some things time. It takes a while for it to I don't know if any, that money has been spent yet. I doubt it. But well, eventually, uh, we got government. We got individuals like you and me trying to spread the word about what we think is the right thing to do are trying to spread information, which is very valuable. Then we have foundations like Gates and others large, still bureaucratic, but in a different way. But with large sums of money available anywhere I think are working very hard to try to do something. And then finally we have people in. I'll call him Silicon Valley.

They're not obviously all in Silicon Valley, but talented creative people who are racing working around the clock right now, trying to find a vaccine trying to friend. You know, all kinds of things were happening that I think will lead to some wonderful things down the road, even when some of them will fail. But we're gonna learn a lot. There's really a what I would call a full court press among skilled people here. And so the question is, is a bit of coordination problem here, which is, and it's also the fact that we've taken all the money out of the medical system, accepted certain places when certain place you could make a lot of money. Still, that's not the places where way want that to be all the time. And here we want to be in testing,

let's say hypothetically and we'd like somebody able to make either a lot of money testing or or some way to get this. The feedback loops correct. So you could overcome that a little bit. Do you have an idea of how we might mobilize either to get the FDA is hand a little less clenched around this to get to take advantage of the economies of scale that you and I both believe it would be enormous Once this got started? Who are the players who might probably got a lot of contacts? People do listen to you. So what are you trying to do? What could


we do? I think the administration has already signaled that the FDA is willing to defer to the states if the state health department will take the lead on some of these questions. So I think the next step is to persuade the governor's toe that they have the freedom to create a different kind of regime for, you know, certifying tests and letting tests unfold. The thing to get the governors to think of themselves as the purchaser of these testing services, many of which they'll probably by from their university laboratories within state, maybe out of state and, um uh, the and use the commitment of the funds together with the regulatory freedom to say to some of these laboratories with all of this expertise and all of this specialized equipment, if you can provide the tests, will pay you and you'll he'll be able to cover the costs you incurred to scale this this activity up. I think the best involves a commitment by the states to pay for a stream of testing services out into the future. In the middle of this depression, the state budgets have been hammered, so ideally, we have, the federal government borrows, they give money to the states. The states use that money to go purchase testing services.


So let me suggest that alternative model because I think that I don't find encouraging. Although a handful of governors would make a big difference, Right? You don't need every governor right away to jump into action of a few could a trial and error here is always good. Let's some people try it. See what happens if their states do better. People who say I want to try that. But don't Wouldn't thing I notice here. Um, Rutgers, I'm sure there's some fine people there. Maybe they can produce 5000 tests. We need 25 million, maybe 50 million. Actually, we need probably more than that. We were gonna be tested often early and often.

So we need a, um, many two things that seems to may a producer of the tests and a reader of the tests. And those people need to have some credibility, ideally, as a way to to stamp you as clean for now. Um, to do that, I think you need a really large sum of money and a set of industrial level production folk either in the pharmaceutical industry testing it, we got to get those folks mobilized. I hate to say it. People pick it on today, but you need an Elon musk. Grab this by the throat and say we're going to make this work and get it done.


Well, let me give you my my second kind of piece of this strategy. So one pieces like these purchase commitments, there will be revenue that, uh, if you scale up to be able to produce test, they'll be revenue for you. If you if you do it another piece. Those I have said we should create a $1,000,000,000 prize. But the federal government will give to the first laboratory that shows that it can process 10 million tests today if they were competing for a $1,000,000,000. I talk to people in these labs that the molecular genomic stuff is actually pretty easy. There really is. The problem they're going to face is the logistics. How do you get that many tubes in the door opened the tubes, get him. You know so and they're gonna need to get services from, you know,

an Amazon or a musk or something. But but they could hire that in if they were competing for a $1,000,000,000 prize, they would do it. And I think there's no question in my mind that that somebody would collect on that price within, certainly within six months. Maybe, maybe sooner,


maybe 30. I like like the Chico Marx line from, ah, night at the Opera. When they ask, I think retro asked him if he can sail tomorrow, and Chico says, If you pay me enough Aiken sale yesterday the greatest, the greatest cinematic expression of incentives matter If it's a $10 billion prize that might be able to do it in less than six months, it seemed. So here's my advice to you, Paul, and then we're gonna move onto a different topic unless you have something else to say. Uh, I hear I think we need Ah, I went Fred Smith of FedEx Um, or Ryan Pearson of I think it's Flex Port,

where these people are really good at flying tubes around. If you need, you need a transport thing, and then you need, ah, a lamp to do the turnaround. And they needed a place that's producing the tubes and the swap that whatever it is, the cups, the boilers or whatever it is to do it quickly. So I'd like to see you put together a ad hoc committee of extremely talented people who are a mix of logistics production science and mobilized this. You gotta convince them that this is not just like one other thing we need to be doing. But it might be the single best thing we could be doing. And I'm I'm open to them myself, which is good, but I'm not. I don't belong on the committee, so anyway, but I


think I mean, let me just say that I'm writing an op ed. I've written about that. I'm trying to shop around with, um, representative Don Beyer and representative Gonzalez, Democrat and Republican from the House, pushing this idea of big prizes. The price for the big centralized lab is one the price for the device at home. It's another. I think we should use prizes the way to motivate some big mobilized efforts to solve these problems.


Well, the price will get the talent to coalesce without a committee, so that the Okay, uh, let's move on. Let's move to a different topic. If we might, something I think you've thought about. I know everybody's like I'm thinking about it, which is, um, what we might call globalization or free trade. So a lot of very smart people right now are saying that And as I'm not says for our people, I have to say, But a large group of people are saying, you know, this whole trade thing s it was the kind of thing you get and they're right.

Ah, global world is work susceptible to a pandemic than a world of the Middle Ages. Globe world is richer than the Middle ages. You know, I like to say we've tried by local. It's called the Middle Ages. It's not a world most of us want to live in. Um, but I do think that this the aftermath of this, however it ends going forward wherever the next chapter is is going to involve a conversation about our relationship with China is a trading partner. And maybe in other ways, I'm afraid to say I think it will also Ah, you know, diplomatically, militarily worked in for some dark times. But just for economically, just on the trade issue. Um, how do you see the You're I think with me a pretty much a free trader, which your response to this situation is a free trader.


Yeah. So one of the first things is that, uh ah, lot of the problem we face with the spread of viruses right now is just the fact that people want to move around. And unless we're willing, toe, you know, be kind of draconian in limiting people's freedom to move around. We have toe just face the fact that viruses air going to spread all over the world more quickly than they ever have before. I think their benefits from letting people move around. And I think it's in principle, you know, problematic to say We're not gonna let people do something they want to do. So I I think, uh, we just have to accept this, But this is part of why I'm so keen on trying toe. Um, So, uh, let me just start.


Yeah, carry out their good see if you can.


I really problematic spokes down. It's problematic to try and say that somehow somebody is going to decide that other people can't do things they want to do like go see relatives, go see friends, go visit things. So this part of why I'm think it's so important for us to invest in this testing infrastructure so that when somebody says in the future Oh, no, they've got SARS C o v number three or number four, which is emerged in some other country. Um, we'll say what? We're ready for it. Somebody is going to bring that into the United States. But we're already testing everybody every two weeks. As soon as somebody shows up, we'll find out where it is. We'll isolate him. You know,

we're good to go. So I think of this investment in the testing infrastructure is a kind of like health defense that will protect us on a permanent basis from the spread of viruses in the future. And they're going to spread. I don't think there's any way toe. Ah, just pretend that isn't that isn't gonna happen. Order the wish it away.


Well, I guess there is this issue of, you know, we talk about what people might have to do toe for me to trade with you. Toe take you is a patient is in my dentistry office or toe. Serve you in my restaurant or to have you working my nursing home. We might want to say we don't really want to trade with countries so much who, um, have wet markets and really creepy animals. I don't understand why China is not responded to this by saying forget whether whether they're culpable it anyway, for any of this in sinister ways, which I don't think we have any evidence for, but I think it probably came from. At least we know other viruses have come from wet mark animals in China s. Oh, right. We wouldn't.

We want them that when we encourage them to say, maybe not do that, I don't know. Or if you do want to do it because it's your culture, whatever. Which I totally respect. Don't be surprised we don't want people don't want to buy your stuff.


Yeah, well, first, I think the Chinese have a pretty big incentive to get this under control. You Obviously, they may have some incentives to try and sweep under the rug, you know, mistakes or problems from the past. But I think they've got a big instead of disorders. But even if we do decide that, you know they're not doing a good job. But that What are we going to dio? I think buying the goods is really quite separate from the question of the mobility of the people. Fair enough. Restricted mobility. The people is gonna infringe on the freedoms of people, even us citizens who want to go visit places goes to church. So I guess I don't think we can solve this by just saying we're not gonna We're not gonna have people interact with people from China,


but I don't know enough of the the medical side. Maybe you don't either. But if, um if we're it stars Cove 17. Yeah. Ah, right now this is We're in what Sarah's Cove to do, You know so well. Let's take three, then. Sarah's Cove three. The next Corona virus. That is scary and creepy and hurts people. Um, we're not going immediately be able to test, right? We're gonna have to start from scratch again, develop a new test.


No, but actually, this is this is where it really is. Pretty cool that they've made amazing progress in this world of reading, you know, are in a strings, so they'll have all of this. It's like all the hardware ready to go And then somebody needs to just tell him. Here's the or in a string for this new virus. Everybody just plugs it into their equipment and boom, they're ready to go. So well, we could be ready to test out almost a drop of the hat as soon as we identify the new viral


agent. And do you think there's from Do you think if you looked at all into the vaccine situation, or is it just so fraught with uncertainty?


Yeah, um, I haven't looked in detail, but But I will tell you that even though I think the FDA should just back off, get out of the way on this testing, you know, process and let the states run with this. I think the FDA actually has to be very careful about approving ah vaccine because we have this very tenuous consensus right now that it's okay for the government to require parents to vaccinate their Children and these Children thes these vaccinations for childhood diseases. We save just hundreds of millions of lives every incredibly safe. We don't want to lose that consensus. True, we have another episode of I got a vaccine with side effects that are unexpected that, you know, kill, kill some people we could weaken in this country. At least just lose the consensus for a timeline and a Tory vaccination. So I think I find they've got to go care.

Go carefully on this. That means it takes time t check all of that out. And so I think we just have to allow for the fact that, you know, it took in many cases, it took five or 10 years to come up with a vaccine for some new disease, so we might get lucky. But, you know, we might not. We shouldn't We shouldn't cut any corners.


I'm guardedly optimistic about that. Just because again, I think there's an immense amount of human creativity being focused on that one thing. But it may not be solvable. Quickly.


Way. No, we don't. We don't have an effective vaccine. To control influenza right now is like a disease. But, you know, we've been working on that one. We don't have one for the cold. It's, you know, it's you know, it's we've got a few successes, but a few failures.


Yeah. Uh, let's close to talk about the labor market, which I think about a lot lately. There was, ah, really beautiful piece in The New York Times, Sunday Magazine a few weeks ago by Gabriel Hamilton. She's the chef and founder of a restaurant into your own prune, and she talked about just the reason I liked it. I liked for a lot of reasons. Beautifully written, I wrecked, recommended to folks will put a lake upto. But I think you know the other reason I liked it. Is it it captured the human dimension of this. The dashing of dreams went up business,

which happens all the time. And capitalism. It's not just during pandemics, but a business that somebody but their life and to put all their hopes, other capital, all their emotional capital. And then it's over just happens. Competition comes along this case. It's a pandemic. Uh, but you think about the cascade of a fax. So, you know, the the bus boys, the waiters, the waitresses,

the suppliers, the truck driver, all the people who through a, um ah, you know, the beautiful tapestry of interactions that emerge out of buying and selling that air. Now, cut and sew, those people have to go re assemble into some other collection of employment. And of course, there's a lot of places are booming, right? If you if you can handle it there many, many jobs that are booming. But they're very specific. They don't usually involve the talents of.

I'm talking about fulfilling workers, driving, delivering packages, some wonderful expansion's going on, obviously that air the economic responses that you'd expect in a market system. But part of the challenge is is that it's really hard to reallocate people, partly because we cushion the blow, which is a humanitarian thing, through unemployment insurance or through other forms of aid. You have thoughts on what we can do to make that reassignment better as a reassignments around word, because it's not. Nobody's doing the assigning reallocation reallocation it. And I say that with the with the important side point, which I think is totally I just don't know how this is gonna play out, but it's possible people won't want to eat in restaurants for five years. I don't think that's true.

I think we'll we'll go back to quote normal quicker than most people think. But all the people who drive uber all the people do these things that are really creative and wonderful are suddenly gonna find themselves with nothing. And the question is, is that that reassignment is, uh frame it one more way. We put the economy in in a freezer, and we when we unthought, it's not like everybody go back to work down. No, they're not. Because a lot of those places aren't gonna work with you. Allow him to go back or not.


Yeah. So, you know, I think one of the strengths of the U. S economy was that we had a system where people's jobs could just go away, But it was It was also a system where it was relatively easy to go get a new job. So that was high rates of turnover of job destruction, doctorate creation. That was a good system to be in. The problem with a period right now is we've gotten a huge surge in job destruction and no offsetting huge surge in job creation. And this is what we run into in most recessions. We just have it in much bigger quantities than we've ever faced before. So I think it's hard to know how to respond to this. I think one side of it is just to recognize that, uh, there's some ambivalence on the part of most voters about just cash transfers is a way to help other people. I think there's a lot more support for the idea that you can offer somebody something in exchange for work that they dio.

So I think we should be looking at things like, you know, possibly even the Civilian Conservation Corps that Roosevelt set up during the 19 thirties, which is, you know, not a particularly attractive job option. But at least it's something so that you can make sure that people aren't just destitute if they just run out of other other options. So I think we may end up thinking about these kind of like job creation kind of government job creation opportunities where the goal is not to make them permanent jobs, not necessarily to make them even particularly attractive jobs, but at least jobs that give people a bare minimum of security and dignity and, uh, and and independence. Beyond that, I think that the most important thing to do is just a stop, the fear which is killing the restaurant business and killing my chance to go see my dentist. And there again,

I think all we need is the information whose infectious right now if we just knew whose infectious right now who's infectious with the next pathogen in the future? We just had that information. We could make some small adjustments and get back to the economy that we had. So, you know, maybe some jobs, like programs. Maybe some continuing, you know, financial help to just people get people from keep you from going into bankruptcy. But as much as possible. Just remove the fear and then let people go back to doing what we do, which is figure out ways toe work together and create value.


I guess that has been Paul Romer, Paul. Thanks for being part of the con. Talk good. It's a pleasure. This is E contact part of the Library of Economics and Liberty for Maury. Contact Jodi contact dot org's where you can also comment on today's podcast and find links and readings related to today's conversation. Sound engineer. Free contact is rich guy, yet I'm your host, Russ Roberts. Thanks for listening.

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