Follow-up to my previous post:

Suppose that in 2019 I had told you that during the spring of 2020 America would plunge into the deepest depression since the 1930s. Would you have expected to see this news story in late May?

Walmart said “unprecedented demand” for essential products during the pandemic had caused its sales to spike as the world’s biggest retailer disclosed it had taken on 235,000 workers in the US to cope with the surge.

Sales of toilet rolls, surface cleaners and grocery staples helped Walmart’s like-for-like revenues in the US, its largest market, jump 10 per cent in the last quarter from a year ago.

Doug McMillon, chief executive, said on a results briefing call that Walmart had been selling in two or three hours what it would normally sell over two or three days.

After the initial rush to stockpile essentials, customers in lockdown later spent heavily on entertainment, education and exercise products, Mr McMillon said. Categories to perform especially well included video games and bicycles. Sewing machine sales also picked up as customers took to making their own face masks.

Don’t get me wrong, it’s a horrific depression. But it’s also an extremely unusual one. The term “unique” is overused, but it actually does seem to apply to this business cycle.

The DYI face masks made me recall the story of the Texas factory for making face masks that still has one assembly line shut down. Aren’t anti-price gouging laws (and norms) wonderful?

The following are not predictions, rather indications of how this recession (actually depression) might be different:

1. Length: The shortest recession that I can recall was in 1980, and lasted for 6 months. Some economists believe the economy bottomed in April, which would make this a 2-month recession. Even a May bottom would represent an unusually short recession.

2. Unevenness: With appropriate monetary policy, we should see many booming industries. I’m not saying this will occur, but it might. Take-out food. Online shopping. Netflix. I recently had a new automatic garage door opener installed. Any and all types of consumption that can be done safely ought to be booming. In contrast, during a normal recession almost all industries will experience decline.

Then there are grey areas like real estate. I’d be willing to buy a house right now, especially with the low mortgage rates. Is my preference typical? This summer I’ll probably take a vacation by car, rather than by air. Perhaps eating takeout food while visiting a National Park. Again, I don’t know if this is typical, and hence I don’t know how vacations by car and real estate will do this summer. Just that I could imagine them booming.

And what about boats and RVs? Camping? I’ve recently been doing more biking. What about backyard play sets for your kids, which can be delivered to your house?

Of course all of this is influenced by aggregate demand. If the Fed doesn’t provide enough NGDP, then almost all industries might suffer. If they do provide enough money, then some industries will boom while others suffer.

PS. The Bloomberg editorial board agrees with me on challenge studies for a vaccine.

I have consistently criticized authoritarian regimes all over the world—in Russia, China, Vietnam, Turkey, India, the Philippines, Saudi Arabia, North Korea and elsewhere. I also criticize the US government for aiding and abetting foreign atrocities, and Trump in particular for frequently praising foreign despots while mocking our democratic allies.

In contrast, many of my critics have a very selective sense of outrage. While they share my criticism of the Chinese atrocities in Xinjiang, they are completely silent on the Ukraine, or Kashmir, or the Saudi atrocities in Yemen:

Thousands of civilians have died in Yemen, and American-made bombs sold to the Saudis have played a key role as the White House has sought to boost the arms industry.

Many of my commenters have such a blind and irrational hatred for China that anything other than single-minded focus on China as the one great evil in the world today is not good enough for them. Pointing to crimes committed in other parts of the world is seen as excusing China. Criticism of the US government is always viewed through the China lens. It’s always about their Ahab-like obsession with the Chinese. Nothing else matters. They lap up any and all conspiracy theories about China, no matter how far-fetched. (A few are probably true, but why believe them on faith alone?) They excuse the many Trump administration lies about China.

Ironically, the US is finally beginning to turn against Saudi Arabia, but not because of human rights. Rather the problem is that Saudi oil production is hurting frackers in the US. Money drives US foreign policy, not human rights.

The coming decimation of America’s shale-oil firms could eventually lead to renewed dependence on Saudi oil. American production is predicted to fall to 10m barrels a day, around half the country’s pre-pandemic consumption. In the meantime near-universal anti-Saudi feeling in Washington is putting the bilateral relationship under great strain. Last month Republican senators in oil-producing states, who had been almost the Saudis’ last defenders on the Hill, turned furiously against the kingdom. Kevin Cramer of North Dakota and Dan Sullivan of Alaska introduced legislation to withdraw American troops and missile-defence systems if it did not cut its oil production. Reports this week that a fleet of laden Saudi tankers was en route to oil-glutted America caused fresh fury.

Note how the “fury” is not motivated by the Yemeni babies being murdered with our bombs. It’s the fear that the richest country the world has ever seen might be deprived of a few billion more in oil industry profits.

So pardon me if I don’t share your highly selective moral outrage.

PS. Peter Navarro has been an especially strong cheerleader for selling weapons to the Saudis.

It has proven surprisingly difficult to explain regional variations in Covid-19 prevalence. Whenever you find one factor that seems important, a counterexample crops up.

Vietnam is one of the big success stories, with the nation of 97 million people not having reported a single fatality. Even if a few cases were missed, that’s pretty impressive.

But the explanation for that success is over-determined. A young population? Tropical weather? BCG vaccine? Effective test/trace/isolate? Mask wearing? Less obesity? Luck?

The Economist has a new article that discusses two success stories, Vietnam and the southern Indian state of Kerala:

Kerala was the first place in India to be impacted, and its caseload soared in March. But as India’s caseload continued rising rapidly higher, Kerala’s peaked and then began declining sharply. Why?

Like Vietnam, Kerala has a young population, BCG vaccination, and a tropical climate. But so does India! That’s what makes the Kerala story interesting. At the very least, it suggests that public policy (or at least culture) plays an important role:

Kerala’s state government has been similarly energetic, from the chief minister, its top elected official, giving nightly pep talks to village-level committees working to set up public hand-washing stations. Aside from showing logistical efficiency in monitoring cases and equipping its health system, it has also emphasised sympathy and compassion for people affected by the pandemic. The state has mobilised some 16,000 teams to man call centres and to look after as many as 100,000 quarantined people, ensuring they do not lack food, medical care or simply someone to talk to. Free meals have been delivered to thousands of homes, as well as to migrant workers stranded by a national lockdown.

Both Kerala and Vietnam are keenly aware that the danger is far from over. Until there is a vaccine or better treatment, Vietnam will remain on alert, says Mr Pollack. Kerala, for its part, is preparing for a huge influx of expatriate workers returning from the economically battered Arab Gulf countries. More than 300,000 have requested help getting home via a state website.

This last point is important. Migrant workers in places like Singapore and the Gulf have been hit hard by the Covid-19 epidemic, so Kerala is certainly not out of the woods.

Nonetheless, the Kerala example suggests that any explanation of Covid-19 prevalence is likely to be complicated. It’s not that age, climate, and BCG vaccines don’t matter, but lots of other things matter too.

Kerala is not a particularly prosperous place, but it does have India’s highest “Human Development Index“, which looks at things like health, education, extreme poverty, etc. On the other hand, hard hit places like Sweden and Belgium also do well with this index. It’s complicated.

Kerala is what Americans would call a “blue state”. But I wouldn’t make too much of that either, as in America itself many of the blue states have been among the hardest hit. It’s complicated.

But at least Kerala makes things a bit less complicated. It’s not like nothing can be done in a country such as India. There are things that work. Whether other states have the required “state capacity” is another question, but at least we know there are some things that matter.

Off topic: New Zealand has gotten a lot of attention for reducing its active caseload to 45. But there’s another success story that’s less well known. The western 60% of Australia is comprised of three states/territories, with the wildly original names of Western Australia, Northern Territory and Southern . . . oops . . . South Australia. (Why not “Southern”?) They currently have a grand total of 4 active cases in an area about half the size of the USA. And even that figure is falling fast. Yes, this is a thinly populated region. But even so it has almost as many people as New Zealand. If I could get there, I think I’d move to Perth right now. After all, I’m working out of my house in any case. But the Aussies wouldn’t want a disease-ridden American like me.

In 1991, I spend a very enjoyable semester (January – April) on the Gold Coast of Queensland.

The two biggest countries in the Western hemisphere have similar leaders. Dumb, pro-torture, dishonest, corrupt, misogynist, authoritarian, disdainful of scientific expertise, etc.

Now both are trying to cover up corruption:

“Moro abandoned a 22-year career as a federal judge to become justice minister and one of the highest profile members of Bolsonaro’s government when he took office at the start of 2019. He quit on April 24 publicly accusing Bolsonaro of attempting to interfere with police investigations by firing the nation’s top cop, allegations the president dismissed as baseless.

In an eight-hour testimony to prosecutors on Saturday, the former judge expanded on his allegations of presidential meddling in the federal police. According to court documents leaked to the press, he described how Bolsonaro asked him to also replace the regional police chief in charge of Rio de Janeiro — the state where the president began his political career and where some police probes may potentially involve his family.”

Moro had led the investigation into corruption in the Lula administration.

In America, Trump is gradually getting rid of any official willing to blow the whistle on corruption:

“I have learned that the Office of the Inspector General had opened an investigation into Secretary Pompeo,” Mr Engel added. “Mr Linick’s firing amid such a probe strongly suggests that this is an unlawful act of retaliation.”

Last month, Mr Trump fired Michael Atkinson, the intelligence community’s inspector-general, who had a pivotal role in his impeachment proceedings last year. Mr Atkinson told lawmakers about a whistleblower complaint regarding the president’s dealings with Ukraine, which sparked the impeachment probe.

The president has also removed other officials involved in his impeachment, including Alexander Vindman, a former National Security Council official, and Gordon Sondland, the former US ambassador to the EU.

Trump also gets rid of cabinet ministers that have quaint ideas about personal integrity, and replaces them with the likes of Barr and Pompeo.

People used to wonder if Brazil could ever become like the USA. Alas, I believe they’re almost there.

PS. Off topic, I like this National Review article:

Trump has remained completely undomesticated in the White House. The idea that he has now, as some of his supporters imply, been seduced, bullied, or otherwise manipulated by a mild-mannered, nearly 80-year-old doctor is bonkers.

The reason Trump issued his shutdown guidance was that the prospect of uncontrolled spread of the virus was too risky to contemplate.

Since populist critics of the shutdowns don’t want to criticize Trump, let alone say that they think he blew one of the most consequential decisions of his presidency, they focus their ire on the director of the National Institute of Allergy and Infectious Diseases instead. . . .

This is what we elect presidents, governors, and mayors to decide. It’s their responsibility to balance the competing considerations, and if they are found wanting, they lose their jobs.

Anyone in this position obviously wants to hear from experts, though. Which is why if Trump really did fire Fauci, some other meddlesome epidemiologist would emerge soon enough. If Fauci didn’t exist, we’d have to invent him.

Trump says that Sweden blew it when they didn’t adopt his “shutdown guidance”. We shall see.