Serious question: is any wealth actually being destroyed by this quarantine and economic shutdown? If certain companies go bankrupt, is there any fundamental reason new ones won’t arise to take their place?
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@tylercowen and@EconTalker covered this: What is lost when these businesses fail? Can they come back? I think of it like entropy and atoms. The units of these businesses (the people, skills, assets) continue to exist, but rebuilding the structure requires a lot of energy.pic.twitter.com/OaVdgSM4Bf
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As in, there's value in creating that order from disorder (the matching problem), and that energy was and is being destroyed.
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Perhaps it strengthens the network, long term.
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This is why the British policy of paying 80% of the salary of furloughed workers is actually brilliant. Its basically putting those networks in a freezer so that when this blows over the can be thawed.
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oh, this is a neat idea. So the economy lattice iteratively found a (local) optima. Disrupting that means another process to find an optima starts and there's no guarantee how quickly a similar or better solution is found.
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Isn't that disruption often the catalyst for innovation?
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Agreed. Disrupt seems like a strong word. Ideally the whole mix up in the economy leads to new ideas.
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This is not an abstract problem. The frictions involved in hiring people, developing systems, building out supplier/customer relationships, negotiating contracts, and doing so within the constraints of whatever funding you can provide and networks you have available ... Is hard.
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Even if the world’s i.e. 2030 GDP etc. are unaffected by the pandemic, the curve over the next ~18 months has moved lower and that’s gonna cause real suffering to real people, also.
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Fully agree but then the networks and structures however good were not meant for the new world and thus got http://extinct.New world needs new structure and new edges/nodes for networks.
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