The Discourse Report: December 8, 2020
Welcome to DiscRep, your guide to the public discourse. I’m Berny Belvedere, editor in chief of Arc Digital.
Arguments
The core argument of an interesting recent article
Economics is Going Through an Intellectual Revolution on Public Debt by Charles Lane in The Washington Post on 12/7/20
The Washington Post’s Charles Lane argues that the field of economics is currently undergoing an intellectual revolution on the matter of public debt. It used to be thought that the government taking on lots of debt would result in interest rates skyrocketing. That’s no longer the view. In fact, the consensus now seems to be the opposite: public-debt accumulation is seen as such a good practice that it would be foolish for a government not to engage in it.
What changed? Recent history has seemed to contradict earlier theory.
For example, in a new paper, Obama era economists Jason Furman and Larry Summers show that in 2000 U.S. debt as a share of total output was 6 percent, and that in 2020 it was 109 percent, but the interest rate on U.S. bonds during that same period went from 4.3 percent (2000) to negative 0.1 percent (2020).
The big fear used to be that accumulating lots of public debt meant burdening future generations. But if the new economic thinking is correct, then the government taking on more debt can actually significantly contribute to the well-being of those future populations, if the borrowing is used wisely.
Obviously no entity can infinitely borrow, so what are checks by which we can know whether we’re taking on too much debt as a country? In their paper, Furman and Summers suggest that total public debt as a share of total output is not a good metric. It’s been a popular one, but it’s misleading. Instead, they argue, we should look at annual interest payments as a share of annual output — if we stay under 2 percent (and we’re currently well below that), we should be good.
It is possible, though, that this view of debt is contingent on certain global realities remaining as they are. Currently, there are (a) abundant global savings and (b) a non-ideal global economy for private investment. That could be why the wealth is staying with governments, and why interest rates are behaving as they are. And if things change, one would hope the field adjusts just as it seemingly has in this case.
Tweets
My roundup of some of the most interesting recent tweet threads
Audio & Visual
A collection of clips on topics of interest
Joe Biden’s Ambitious Tax Plan Faces Reality (The Wall Street Journal)
Martin Wolf: Is This the End of Trumpism? (Financial Times)
Why the U.S. Waits So Long to Swear in the New President (Vox)
Why the Economy Needs More Spending (Bloomberg)
Links
My roundup of some interesting recent reads
- Are the Covid-19 Vaccines Safe? by Gideon Meyerowitz-Katz in Medium Coronavirus Blog on 12/8/20
These studies are nothing short of incredible. If you had asked me whether we could go from identifying a new pathogen to a working, more-than-90% efficacious vaccine in under a year before 2020, I would’ve giggled nervously because the idea was just so ridiculous. And yet, the science behind these phase 3 trials is some of the most amazing, well-done work that I have ever had the good fortune to read. The people conducting these trials really did know what they were doing and did it very well.
- Facebook Struggles to Balance Civility and Growth by Kevin Roose, Mike Isaac, and Sheera Frenkel in The New York Times on 11/25/20
In the past several months, as Facebook has come under more scrutiny for its role in amplifying false and divisive information, its employees have clashed over the company’s future. On one side are idealists, including many rank-and-file workers and some executives, who want to do more to limit misinformation and polarizing content. On the other side are pragmatists who fear those measures could hurt Facebook’s growth, or provoke a political backlash that leads to painful regulation.
- Europe is Starting to Beat the Pandemic’s Surge. The U.S. is Not. by Ishaan Tharoor in The Washington Post on 12/7/20
A month ago, the pictures on both sides of the Atlantic seemed similarly grim. The numbers of coronavirus-related infections and hospitalizations were spiking in U.S. states and European countries. For all the dire press the American mismanagement of the pandemic had received, positivity and death rates in parts of Europe were higher than much of the United States through most of autumn. … As we enter the second week of December, Europe appears to be rounding the corner. … The story in the United States is markedly different.
- ‘This Must Be Your First’ by Zeynep Tufekci in The Atlantic on 12/7/20
Maybe in other languages, from places with more experience with this particular type of power grab, we’d be better able to discuss the subtleties of this effort, to distinguish the postelection intervention from the Election Day injustices, to separate the legal but frivolous from the outright lawless, and to understand why his party’s reaction — lack of reaction — is not just about wanting to conclude an embarrassing presidency with minimal fanfare. But in English, only one widely understood word captures what Donald Trump is trying to do, even though his acts do not meet its technical definition. Trump is attempting to stage some kind of coup, one that is embedded in a broader and ongoing power grab.
Thanks for reading,
Berny Belvedere
Editor in Chief, Arc Digital
