RWL #173 - debt, chimps, China, etc.
Greetings from the University of New Hampshire - Forward Operating Base Last Homely House (FOB LHH)! Well here it is, Sunday morning, and I am just putting together my Friday newsletter. I’m glad I don’t have the problem of being bored during this lockdown, but maybe I could borrow a little of that free time from someone. I suspect my fellow academics feel the same as me, as we sprint toward the semester finish line.
I’ve been thinking about the impact of the federal government’s response to the pandemic, in particular the CARES Act and the $2.2T bill that it comes with. I’m skeptical of any law that gets passed as quickly as CARES did and with as big a price tag as it came with. As it turns out, Congress has already approved another $484B package that will go to the President shortly to be signed into law, bringing the total to almost $2.7T, and there is already discussion of more spending. Since we were already operating at a $1T deficit this year, all of the $2.7T will be debt financed. The problem we face as a country is that we have been accumulating debt at an increasing rate since the 80’s. Historically, the Federal debt was about ⅓ of GDP.
Year Debt as % GDP
1970 35%
1980 33%
1990 55%
2000 56%
2006 62%
2010 92%
2014 104%
2016 103%
2019 104%
2020 118%
In 2014 the debt passed 100% of GDP. With the additional of $2.7T in debt, the debt to GDP ratio will be about 118% of GDP, and that assumes GDP does not collapse, which it clearly has. If we had been operating at a debt to GDP ratio that we had in 1980, this emergency spending would have been unpleasant, but would have left us with significant capacity. Having spent the first half of my career in the Army, the question I wonder about now is, what if we have a major war and we are already in debt up to our collective eyeballs? For those of us who are worried about the long term threat of climate change, we need additional financial capacity to deal with that threat, and we don’t have it. We won the Cold War because we spent the Soviets into submission, hence the increase in debt in the 80’s. Financial capacity is a major source of national power, and ours has been eroding over the last 30 years, hollowing out our reserves. After the Cold War ended, we should have brought our debt ratio back down, but instead we spent even more. I think we need to be spending more right now. I just wish we weren’t starting from a bank account that is already overdrawn. My data and image is drawn from the Federal Reserve’s FRED web site. You can see my data source here: https://fred.stlouisfed.org/graph/?g=qS4l
Enough doom and gloom. On a completely different and more fun topic, how about a chocolate mug cake? Yes, a cake you cook in a coffee mug in the microwave. Craving something chocolate? You probably have these ingredients in the pantry. My wife and I made one this week as an experiment. It’s an experiment we will definitely repeat. We shared it steaming hot right out of the microwave. https://www.allrecipes.com/recipe/241038/microwave-chocolate-mug-cake/
Still continuing with more links. I hope you find them useful - as usual, feedback is welcome. I am feeling hopeful about the near term future. I’ve had several conversations with healthcare leaders and generally they seem to think that the worst is behind us and they are preparing for the “new normal”, whatever that is. We will see.
Read
What: City Journal, Cities and Pandemics Have a Long History, by Ed Glaser.
https://www.city-journal.org/cities-and-pandemics-have-long-history
Why: I’ve been a fan of Harvard Economist Ed Glaser’s work for a long time. He has been studying the economics of cities, and written quite a bit about their efficiency, including, Triumph of the City. In this short piece he talks about how cities had been ground zero for pandemics throughout human history until the last century. He also talks about the value of city living, and the cost of losing it.
What: Evil HR Lady, Why It’s Okay to Hate Working from Home
https://www.digitalhrtech.com/working-from-home/amp/
Why: Suzanne Lucas, AKA the Evil HR Lady, is a freelance HR writer whom I have been following for a while. She’s always insightful and funny. Here blog is http://www.evilhrlady.org/ Anyway, this article will make you feel better if you hate working from home. As a professor, I have the flexibility to work from home and often do on the weekends. But I like to come to the office because of the benefits that Ed Glaser talks about (above) - proximity generates ideas. I have some really smart colleagues and I get to talk to them about things I am working on and their insight is often really valuable. I can still talk to them, but it takes more deliberate effort now. I live in a small, rural town, so I have a comfortable house and a big yard that I can walk in if I feel cooped up, but it’s nice to have some place to go. I miss my office. When the time comes, I’ll definitely be closing up the FOB-LHH.
What: The Atlantic, Two Errors Our Minds Make When Trying to Grasp the Pandemic
https://www.theatlantic.com/family/archive/2020/04/how-stay-calm-during-pandemic/610390/
Why: Short article that raises a couple of cognitive errors that many of us are experiencing during the pandemic. I’m a fan of the risk vs. uncertainty perspective, or I should say, not a fan, but I think it’s more common than we realize. The other bias is prospective outcome bias, which I usually think of as loss aversion. (HT to my wife for this one)
What: STATNews, People are dying from coronavirus because we’re not fast enough at clinical research
Why: Some criticism about the speed at which we are testing treatments to see what actually works against SARS-CoV-2. An interesting point is the amount of data contained in electronic health records. It seems that would be an effective way to learn something quickly, but that is not what EHRs are designed for.
Watch
What: Marginal Revolution University, The Rise and Fall of the Chinese Economy
https://mru.org/courses/everyday-economics/rise-and-fall-chinese-economy
Why: Marginal Revolution University (MRU) is the brainchild of Tyler Cowen and Alex Tabarrok, professors at George Mason University, and authors of the Marginal Revolution Blog. MRU provides free economic education. It’s a pretty amazing resource. The videos and materials are high quality and free. I already said free. Free. Anyway, I hadn’t been on the site in a while, and a colleague mentioned it to me, I went poking around and found this video about the Chinese economy. Chinese economic growth is nothing short of a miracle. How much credit the Chinese Communist Party deserves for that is up for debate, but it’s unquestionable that China has bounded forward over the last 40 years (as we have spent ourselves into a hole). This video presents some of the miracle and also asks whether heavy handed, single party rule can continue to deliver on growth. Catch up growth is one thing, where the recipes are known and just need to be copied; innovation requires something entirely different. At least, I think so, and I think so does Cowen. Check out this video if you are at all interested in economic growth and China, then check out some of the other resources.
What: The Experimenters, Jane Goodall’s Instinct (7 min)
Why: The famous primatologist, Jane Goodall, has come up a few times recently in my various feeds. I listened to an interview with her on the Tim Ferriss show , and read about a new children’s book about her childhood. The book, Me, Jane, has lovely illustration and design components. I’m an occasional reader of children’s books, even though my youngest is 20. The artwork and design of good children's books are often quite remarkable. I also came across this short interview. I’m including this piece because she talks about how she got her start, which I did not know until recently. Of course she was passionate about animals as a child, and very adventurous. But it took the intervention and mentorship of the famous paleontologist Louis Leakey to get her her first field experience. During that field experience, she discovered that chimpanzees used tools. Up until then, science had believed that tool use was a uniquely defining characteristic of humans. Humans were tool-using animals. After that discovery, we had to come up with a new definition of what it meant to be human. I find this story interesting because of the mentoring relationship. It drives home the duty that we all have to the next generation. Goodall might have become Dr. Goodall, world famous primatologist without Leakey. Or she might have given up on her dreams and become Mrs. Smith. As leaders, it’s small things we do that can help the next generation leap forward.
Listen
What: NPR Hidden Brain, How Does The Way You Feel Shape The Way You Think About Your Life? (3 min)
Why: This short story demonstrates how small, chance events can influence major life choices. What is fun about the article is how the researchers used random assignment of students to detect the influence of small things, like being tired on bigger decisions, like choosing a major.
What: WorkLife with Adam Grant, Bonus: The Fall of WeWork's Culture (48 min)
https://www.stitcher.com/podcast/ted/worklife-with-adam-grant/e/69243935
Why: Adam Grant is an organizational psychologist at Wharton, and he does this podcast about how to make work “not suck”. In line with Ed Glaser’s article about cities (see above in “read”), WeWork succeeded by creating density and opportunity for interaction. It was a hot, hipster approach to redefining the workplace. I visited a co-working space in San Antonio (not part of WeWork) and was so jealous of the vibe - all the energy and snacks! It seemed like WeWork was going to eat the world, until it fell apart. There are a bunch of interesting lessons in this podcast. How we identify with our work, how we are identified with our work, how the places we work become branded on our resume, for better or worse. Also building culture, and how buildings build culture. Check it out.
Thanks for reading and see you next week! If you come across any interesting stories, won't you send them my way? I'd love to hear what you think of these suggestions, and I'd love to get suggestions from you. Feel free to drop me a line at mark.bonica@unh.edu , or you can tweet to me at @mbonica .
Also, if you find these links interesting, won’t you tell a friend? They can subscribe here: https://tinyletter.com/markbonica
See you next Friday!
Mark
Mark J. Bonica, Ph.D., MBA, MS
Assistant Professor
Department of Health Management and Policy
University of New Hampshire
(603) 862-0598
mark.bonica@unh.edu
Health Leader Forge Podcast: http://healthleaderforge.org
'It is the small things, everyday deeds of ordinary folk, that keep the darkness at bay. Simple acts of kindness and love.' - Gandalf (The Hobbit: An Unexpected Journey)