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Greg Ip Profile picture
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15 Sep, 4 tweets, 2 min read
Many things went wrong with our response to covid, but the fiscal response, to paraphrase Keynes, was magnificently right. The poverty rate dropped last year. GDP will soon be back to pre-pandemic trend. After 2008 it never got back. Column + caveats .... wsj.com/articles/how-t…
1/ The response was expensive. Adding 20 % debt to GDP is not a plausible remedy for every recession, esp since interest rates are likely to be higher in the future, not lower...
2/ Some of it was inefficient. PPP loans that didn't change recipient behavior. UI supplements that outlived their purpose and slowed labor market normalization. A final round of stimulus checks that added to inflation pressure.
3/ So we can probably figure out how to get similar results more cheaply and efficiently next time. But for now, worth celebrating that U.S. got something right.

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More from @greg_ip

Greg Ip Profile picture
9 Jul
1/ There are superficial parallels between Biden Admin's attack on corporate concentration and China's new crackdown on big tech. Both see large companies' agglomeration of information, data, market share, as a threat ....
2/ But Biden's program stems from a view that the government and corporations are among many countervailing forces in our society, and the balance has swung too far in favor of corporations (I'm just describing, not passing judgment, on ... their approach) ...
3/ Indeed, the neo-Brandeisians, as I describe in this week's column, see large agglomerations of economic power as antithetical to democracy. They are spiritual companions with libertarians who feel the same way about government power ... wsj.com/articles/antit…
Read 7 tweets
Greg Ip Profile picture
7 Jul
Antitrust has long focused on efficiency and consumer welfare. A new generation of neo-Brandeisian trustbusters, led by FTC's Lina Khan, want to focus on the threat of concentrated economic power to democracy. A test case: Amazon's bid for MGM. My latest. wsj.com/articles/antit…
Louis Brandeis thought antitrust should constrain bigness for its own sake; true democracy required a multitude of economic actors. This influenced antitrust law for decades. But in the 1970s Robert Bork attacked it...
... for ignoring how size brought efficiency which raised consumer welfare. Thereafter antitrust law has been largely viewed through the prism of consumer welfare. Two big forces are pushing the pendulum back. First, growing evidence of monopoly power (wide profit margins ...
Read 6 tweets
Greg Ip Profile picture
8 Apr
1/ A thread. Underlying the differences between neoliberalism and Bidenomics that I wrote about this week wsj.com/articles/how-b… is a different weighting applied to macroeconomic and microeconomic policy...
2/ If you accept the neoliberal default that macro can’t help when all capital and labor are employed, then microeconomic policy must be designed to use those inputs as efficiently as possible. But Bidenomics assumes we're almost always below potential …
and thus it’s okay to pursue microeconomically “inefficient” channels to raise demand (universal transfers, UI bonuses, high minimum wages, etc) because we are still going to end up with higher employment and incomes...
Read 8 tweets
Greg Ip Profile picture
7 Apr
Bidenomics seeks to lower the curtain on neoliberalism. This column explains key differences between the old and new canon. E.g. Old: scarcity dominates, demand > supply. New: slack dominates, supply > demand... wsj.com/articles/how-b…
2. Old: Don't let fiscal policy push unemployment too low, or inflation will rise. New: unemployment has always been too high. Inflation is a remote risk, and less costly than persistent unemployment.
3. Old: Savings are scarce so deficits crowd out private investment. New: Savings are plentiful so deficits aren't harmful. 4. Old: Transfers should be targeted. New: Transfers should be universal. 5. Old: Incentives matter a lot. New: not really...
Read 5 tweets
Greg Ip Profile picture
6 Feb
1/ @AngelUbide @Austan_Goolsbee It's because this is not a standard recession that "stimulus" debate is miscalibrated. The GDP shortfall today is overwhelmingly caused not by lack of demand but supply constraints: people who can't/won't work/consume because of the virus ...
2/ ... so fiscal focus must be first, getting the virus under control, here & abroad. You really can't spend too much there: if we fail at this, GDP never recovers, no matter how many checks we write ....
3/ second, relief for those who have lost income because of virus, both for pure welfare reasons & to sustain demand. Enhanced UI, other targeted relief, does that. With virus suppressed demand recovers endogenously: recall Goldman, Morgan see 7% GDP with just $1T stimulus ...
Read 4 tweets
Greg Ip Profile picture
22 Jan
1/ China beat the U.S. in 2020 because its authoritarian, centralized system better met the challenge of Covid and economic conflict than the U.S.' pluralistic, decentralized system. Will China keep winning? A thread ... wsj.com/articles/china…
2/ In 2019 experts ranked U.S. #1 in pandemic preparedness, China #51. Covid outcomes were roughly the exact opposite. China mobilized resources and subordinated individual to collective rights in ways the U.S. could not, or would not ...
3/ On the tech front, official China & private cos redoubled efforts to develop a domestic semiconductor base while in U.S. Cisco rebuffed plea to compete with Huawei & Intel moved to outsource chipmaking ...
Read 7 tweets

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