“Think of the grandparents”

Doesn’t the 21st century feel depressing? I don’t think that’s because it is worse that the 20th century, which had far worse disasters. Rather it reflects the aging global population.

In 2000, we entered the century with Japan at the zero bound, partly due to its low birth rate (reducing real interest rates) combined with a zero percent inflation target. This low birth rate contributed to its aging population. The low global real interest rates (and Asian CA surpluses) were blamed for the housing bubble in the US. Today, millennials can’t buy homes because selfish older boomers refuse to have new construction in their towns. And now the epicenter of the coronavirus epidemic has rapidly moved from China to the oldest country in Europe.

In 1919, few people would have cared about coronavirus. It’s not very dangerous to the young, or even to the middle aged, and there were relatively few old people in 1919. Dying at age 67 or 73 or 76 was completely normal in 1919, indeed expected. We are likely to have a fear recession, a recession that would not have occurred in 1919 when we were less fearful of death at an old age.

BTW, I frequently have to remind commenters that this is my “bad blog”. The good blog is at Econlog, where I have a good new post today. This blog contains my “drunk in a bar” observations. I throw them out there to get your response, and learn more about the issues. So don’t tell me to avoid subjects on which I’m not well informed. If I do so, how will I ever learn?

Here are today’s observations:

Switzerland has been hit hard; it’s just 2 or 3 days behind Italy. But that’s probably an artifact of more testing in Switzerland.

Denmark continues to show progress.

Worrying signs of exponential growth in South America (but not Africa). Another concern is that Australia and Canada have very similar outcomes. Is summer actually going to help?

East Asia has avoided exponential growth, but its linear growth has shifted up a notch. But this was entirely predictable (in retrospect; I never predict anything in advance.) 🙂

Today, the problem in East Asia is imported cases. Taiwan, Singapore, Hong Kong and China will gradually import more cases as the global caseload soars much higher. As long as they avoid community transmission they can avoid exponential growth. But can they avoid community transmission long enough to get to a vaccine? That’s the 6.4 trillion dollar question.

By “East Asia” I mean roughly “Confucian Asia”, say ethnic Chinese, Japanese, Koreans and Vietnamese. South and Southeast Asia better hope that warm humid weather helps.

In the developed world, East Asia is the place you are least likely to contract Covid-19.

PS. Some in my comment section are in denial about the UK’s abandonment of the “herd immunity” approach. This article confirms what I predicted yesterday over at Econlog.

Update: This caught my eye:

“I don’t think we’re going there [down the path of Italy, which has the largest number of cases outside China] if we do the kinds of things that we are publicly saying we need to do, we need to be very serious about,” said Mr Fauci, speaking on CBS News.

True, but very misleading. What matters is active cases. Italy has twice as many active cases as China, and within a week will have ten times as many active cases. China has 20 times more people, which means Italy will soon have 200 times more active cases per capita. What a disaster for its hospitals.

Even the US has more active cases than China, on a per capita basis.



14 Responses to ““Think of the grandparents””

  1. Gravatar of Student Student
    15. March 2020 at 11:46

    Shut up. This is your good blog. Always has been. Econlog makes you register to comment. Lame…. that’s why the comments here are more “fun”. Certain people’s comments you can skip, but come on. It’s more fun here.

  2. Gravatar of Aleksander Aleksander
    15. March 2020 at 12:25

    “But that’s probably an artifact of more testing in Switzerland.”
    Why do you assume this in Switzerland, but not in other countries? Growth in confirmed cases is almost always an “artifact” of increased testing. In some cases, increased testing may have been caused by an increase in the real number of infections; but it’s probably often caused by a mere perceived increase in infections. How do you tell the difference?

  3. Gravatar of Bob Bob
    15. March 2020 at 12:52

    I think the global demographic profile is the most under-reported driver of 21st century socio-economic issues. Older populations will grow more conservative politically, economically, and culturally. Economists keep scratching their heads about the perpetually slowing economies, but the most obvious answer is that Japan, US, EU, have aging populations, and older populations are unlikely to want to make big long-term investments. They think they’ll bear all the cost and see none of the benefit. Why aren’t Americans being more innovative, more entrepreneurial? Because every year, more of them are just waiting for their 401(k), pension, social security payout, and don’t want to risk all of that for a questionable business venture.

  4. Gravatar of Tom Brown Tom Brown
    15. March 2020 at 12:55

    O/T: Scott you might get a kick out of this: Noah Smith in disbelief at ignorance about repos by a few people who ought to know better (Yang, Sanders and Reich): https://twitter.com/Noahpinion/status/1238314131641364481?s=19

  5. Gravatar of ssumner ssumner
    15. March 2020 at 13:17

    Student, No, this is my bad blog.

    Aleksander, Compare the mortality rates for Italy and Switzerland—that’s one indication.

    Bob, Don’t underestimate the lack of good investment opportunities. At these low rates, we still aren’t building many new homes due to NIMBYism.

    Thanks Tom.

  6. Gravatar of Ray Lopez Ray Lopez
    15. March 2020 at 13:24

    I agree with Student, this is Sumner’s good blog. I’ve been banned at the other place.

    Sumner: “So don’t tell me to avoid subjects on which I’m not well informed. If I do so, how will I ever learn?” – give credit to the professor, he’s a lifetime lerner…

  7. Gravatar of Bob Bob
    15. March 2020 at 16:20

    Scott, I know that there are many great potential investments. As you say, nimby-ism (again, primarily a function of an older society trying to keep things as they are), is a major drag on economic growth. In my city, average rent is $2,000, which means that just by building a triplex and renting three units, you could make your money back in ~5 years. Yet there’s hardly a surge in construction. There’s some construction, but it’s hardly at the scale that will redefine the housing market. The Weeds had a good podcast episode on Friday “Meet the YIMBYs” that made a pretty good argument about housing as the root of most social problems. If we added 500,000 housing units to any US city tomorrow, and the rents plummeted by 10-20%, that would go a long way to solving poverty and homelessness. It makes sense that you can regulate where an industrial facility goes in, but the idea that neighborhoods can regulate out residential units is obscene. Unfortunately, mobilizing younger people to show up and vote on these issues has been difficult. At some point, the issue will flip, and we’ll get back to building affordable housing.

  8. Gravatar of Benjamin Cole Benjamin Cole
    15. March 2020 at 16:30


    Great Britain is moving to a policy of self-isolation for seniors. That is not inconsistent with building herd immunity and is far less destructive than shutting down the economy and collapsing our financial system.

    I am sorry that hysteria is ruling over science and regret that even otherwise intelligent people seem to be gloating about this.

  9. Gravatar of Student Student
    15. March 2020 at 19:27

    Cole wants to just let 2 million 60+ years olds die. Fuck um he says, he has a 401k to worry about. Kyrie Eleison

  10. Gravatar of stevehb stevehb
    15. March 2020 at 21:50

    About Denmark: I think on Mar 11 they changed their testing strategy to test only those with severe symptoms. They don’t want to spend time/resources on those who aren’t seriously ill, and they’re fine with the cases being significantly under-reported, since it means focusing on those that need attention. If I understand the article correctly (I’m reading it in Google Translate), this could account for the recent drop-off of new cases.


  11. Gravatar of Aleksander Aleksander
    15. March 2020 at 22:04

    “Compare the mortality rates for Italy and Switzerland—that’s one indication.”

    Exactly, so why look at confirmed cases at all, if you’re going to check if they’re “right” by looking at mortality rates anyway? Just look at mortality rates first, and extrapolate number of cases from there. They indicate that there are about 10,000 cases in Switzerland, and several hundreds of thousands in Italy.

  12. Gravatar of msgkings msgkings
    15. March 2020 at 23:36

    @ssumner and Bob:

    Isn’t the rising power of NIMBYism almost entirely due to aging population? For reasons Bob said, no desire to invest in the future.

  13. Gravatar of Adam Adam
    16. March 2020 at 07:17

    *****Stop trusting any numbers coming out of China, especially if used in any kind of analysis*****

  14. Gravatar of tp tp
    16. March 2020 at 12:23

    @stevehb You are reading the article correctly. Denmark has cut testing drastically, so the recent daily numbers can’t be compared to those of a week ago.
    In all likelyhood Denmark is not making progress right now. But drastic measures have been put in place in the last couple of days, and there’s a good chance of real improvement in 2-4 weeks time.

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