Back in the early spring, we were told that without fiscal stimulus we would have an economic disaster. In fact, Congress produced by far the largest peacetime fiscal stimulus in history; indeed nothing else even comes close. And this was followed by what was by far the worst quarterly collapse in GDP ever.

In fairness, it’s quite possible that the Q2 collapse in GDP would have been even worse without the stimulus, although I suspect that some elements of the stimulus such as giving $2400 to upper middle class families that were terrified to go out shopping were mostly “wasted ammunition”.

In recent weeks there has been a drumbeat of hysteria on the internet claiming that without another massive fiscal package by August 1st, the economy will falter. So here’s my question. What is the conventional wisdom of Keynesian macroeconomists? What exactly are they predicting will happen if Congress doesn’t pass another package this month?

Here’s the latest data on new unemployment claims, which began edging upward in July with the second wave of Covid-19, but fell sharply below expectations in the week of August 8:

Too soon to draw any conclusions (and other data is weaker), but not too soon for Keynesians to make their predictions. It might also be fun to revisit 2014, when Keynesians predicted a slowdown in job growth after the end of extended unemployment compensation, and job growth actually accelerated by 700,000 (from 2.3 million to 3 million).

Matt Yglesias has a cute tweet showing the silliness of claims that Trump produced a great economy, but missed an opportunity to highlight the 2014 acceleration in employment, or the non-recession of 2013 after major fiscal austerity.

PS. Speaking of Yglesias, he also directed me to a article exposing that fact that the sexual witch hunt in Amherst had was motivated by political considerations. So does that mean I was wrong about stupidity in my recent post? No, because the bigger problem isn’t that there are a few nuts at Tulane and Amherst, it’s that they now control the universities. That means the administrators are stupid. And if they are controlled by trustees, then the trustees are stupid. The point is that someone is stupid. (And not just me.)

As an aside, I vaguely recall reading that the Salem witch hunt also had a hidden political agenda. Is that right?

PPS. By the way, I’m going to recommend Yglesias’s new book “One Billion Americans”. I have not actually read the book, but I know it’s good. How do I know? Because Yglesias is a very smart progressive who wrote a book with enormous appeal to national greatness conservatives (more people than China by 2100!), libertarians (Yimby! plus mass immigration) and religious conservatives (more babies!) How can such a book not be interesting? It’s as if Scott Alexander wrote a book on psychiatry or Tyler Cowen on the sociology of intellectuals in the 21st century. It literally cannot be bad.

Scott Lincicome has just published a paper at Cato on the effect of liberalizing trade with China. He clearly demonstrates that much of what you’ve read on this topic is wrong or misleading. It’s the best economics paper that I’ve read in quite some time—comparable in quality to the trade research of Doug Irwin.

Also note that I have a new column at The Hill. It discusses the recent proposal to add a racial equality mandate to the Fed’s responsibilities.

I have no comment on Kamala Harris. Her views don’t matter, just as Mike Pence’s views don’t matter, and just as Joe Biden’s views don’t matter. There’s only one issue in the campaign.

Two more scandals:

1. It looks like the intelligence service’s views on Russia are changed to reflect the political preferences of Trump:

The White House last year forced changes in a pointed intelligence conclusion that the Kremlin wanted President Donald Trump reelected, according to The New York Times Magazine.

Wording was dramatically watered down concerning Russia’s strong backing for Trump shortly after then-Director of National Intelligence Dan Coats was forced into early retirement when he refused to make the changes, the Times reported. The classified document reportedly also discussed Russia’s ongoing efforts to influence U.S. elections in 2020 and 2024.

“I can affirm that one of my staffers who was aware of the controversy requested that I modify that assessment,” Coats told the Times. “But I said, ‘No, we need to stick to what the analysts have said.’”

A short time later, Coats was surprised to learn in a tweet by Trump that he was being forced into early retirement, several weeks before he planned to leave his position, the magazine reported. The language was changed after Coats left, according to the Times.

Let’s all remember this when Trump tries to gin up some sort of “Gulf of Tonkin crisis” right before the November election.

2. The Trump administration likes to blame China for covering up the Covid-19 epidemic. They also like to suggest that Taiwan is our friend and mainland China is our enemy. But actions speak louder than words.

On January 14, 2020, Taiwanese officials held a news conference to warn the US (and indeed the entire world) that the coronavirus could be transmitted between humans. This fact became obvious after Taiwanese officials visited Wuhan and evaluated the situation first hand.

But the Trump administration ignored these warnings, choosing to believe the lies of the communist Chinese government. While the Taiwanese installed tight controls to protect their island, US officials took no meaningful steps to prevent an epidemic:

Taiwan was ready. On Jan. 20, a Taiwanese woman returned from Wuhan with a fever, cough and shortness of breath. Health officials knew exactly what to do: She was taken from the airport to a designated hospital by a quarantine officer and treated in an isolation room.

Her test came back positive. Health officials alerted the public and contacted 46 people from her flight, Taiwan’s CDC said in a detailed news release.

Later that day, the United States reported its first case — but did not raise the same alarm. In a Jan. 22 interview at the World Economic Forum in Davos, Switzerland, President Trump said everything was “totally under control.”

“It’s one person coming in from China. We have it under control,” he said. “It’s going to be just fine.”

Trump praised China’s handling of the crisis 14 times in late January and all through February. Today, Taiwan has had 7 deaths from Covid-19. The US toll exceeds 167,000.

The Chinese government is wrong to criticize the visit of a US health care delegation to Taiwan. We need to learn from the Taiwanese. I wish the Taiwan visit had occurred in mid-January. Although I suppose even if we had known of the problem we probably would have done nothing—which is exactly what we did do once we found out (January 23rd) that the disease could be transmitted between humans.

Australia is being hit by a fairly sizable second wave of Covid-19, while New Zealand has no significant community transmission. (Just a few imported cases in quarantine.) As of today, New Zealand has only 22 active cases. Australia has 9238.

Those are the facts, but facts can be misleading. Outside of the two states of Victoria and New South Wales, Australia has only 22 active cases, exactly the same number as New Zealand. And while the other Australian states are not particularly populous, their combined population is close to 12 million, vs. 5 million in New Zealand.

(Taiwan has 30 active cases in a population of 24 million. It is also free of community transmission.)

So while Australia is having a second wave, so far it’s mostly in Melbourne. (Knock on wood.) It will be interesting to see if they can keep it contained.

I know that people will insist that it’s always been this bad, but it hasn’t. Here are two examples from the left and two from the right.

1. The snowflakes, er, I mean the students in Amherst, Massachusetts are outraged that a local mayor had sex with some consenting adults who are college students. That’s it. That’s the “scandal“. Apparently ideological witch hunts are not enough; we will now experience a wave of sexual witch hunts conducted by fragile Massachusetts puritans who are horrified by “power imbalances”, i.e., by reality.

2. Tulane students got their university to ban a speaker promoting his highly acclaimed anti-racist book because they were confused by the title and thought it was a pro-racist book. And the university went along with the ban, even after the issue was explained. The left are devouring their own.

3. Here’s USA Today:

White House trade adviser Peter Navarro on Sunday defended President Donald Trump’s decision to use executive orders to provide relief to people impacted economically by the coronavirus pandemic, arguing his hand had been forced by congressional inaction. 

“The Lord and the Founding Fathers created executive orders because of partisan bickering and divided government. That’s what we have here,” Navarro said on NBC News’ “Meet the Press.”

Jesus also wants Trump to issue an executive order stopping all those refugees and asylum seekers from coming into the country, as Jesus believed that charity begins at home. Didn’t he? 

4. Larry Kudlow was asked to explain the president’s recent executive order, and made one laughable mistake after another. Here is just a small portion of the interview:

“You keep saying $1,200 per person, are you talking about in addition to the unemployment that they’re already getting?” Ms Bash asked Mr Kudlow.

“No, that’s the payroll — no, I’m sorry, I beg your pardon, the $1,200 will come from the payroll tax deferral, on top of this — yeah, I’m sorry,” Mr Kudlow responded.

He then once again asserted that unemployment benefits would amount to “$800 bucks,” leaving the anchor appearing confused.

“$800 or $400?” she asked.

“No, it should be four — it should be $800,” Mr Kudlow said. “If the states step up, we’re prepared to match, that should come out $400 federal, $400 states.”

What difference does it make? Nothing the administration says has any correspondence with reality. You Americans should just wait patiently at home and be happy with whatever amount of money Trump sends you. Just sit tight. As Trump says, it is what it is.