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Worries grow over a K-shaped economic recovery that favors the wealthy (www.cnbc.com) similar stories update story
65.0 points by rchaudhary | karma 3665 | avg karma 6.64 2020-09-06 18:02:55+00:00 | hide | past | favorite | 85 comments



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It's almost like forcing businesses not to do business causes them to go out of business..

Shocking.


Don’t worry, we did the same thing in the 1920’s when we had a pandemic that targeted the youth, and was far more deadly, regardless of comorbidities...oh wait, we didn’t...

We also suppressed knowledge of it early on due to the war. That’s literally why it’s called the Spanish Flu, as a non-belligerent they were the only ones willing to report about it.

Yeah, that worldwide pandemic sure is a pain in the ass.

It's not guaranteed that keeping businesses operating would stop them going out of business either. It's possible that a better strategy is to force everyone to shut down and get it over with quickly, so that customers can feel comfortable going out and spending money again.

force everyone to shut down and get it over with quickly

On a purely factual point, the way to get it over with quickly is not to stop people coming in to close contact with one another. Everyone seems to have forgotten what the original and only purpose for the lockdown was: to avoid overwhelming hospitals.


I don’t think that’s as purely factual as you make it out to be. Maybe that was the purpose for the US, but other countries did it for the purpose of eradication (eg New Zealand) or to get it to a point that the contact tracing workload was manageable. The hospital capacity threshold is just one of many arbitrary targets.

It's not entirely arbitrary - the fact that the US is not a small island about 1000 miles from its nearest neighbour seems to comprehensively eliminate the New Zealand-style elimination option, given the trouble they're having with it. Like, even if you assume an equally competent lockdown in the US would have the exact same per-capita chances of infections slipping through from outside, with no disadvantage from the porous southern land border with a country that has a major outbreak, it still has 100 times the population. Which means that rather than causing a new major imported cluster once in 100 days, the leaks which the New Zealand government can't identify, fix, and reckons are likely an inherent limitation that they'll just have do deal with would cause them roughly daily. That means no elimination, not even if the numbers worked out slightly better than my rough estimate. And remember, New Zealand was the last big, well-known elimination success story left standing.

Canada manages pretty well with a "porous southern land border with a country that has a major outbreak". I wonder what the difference is. https://www.theatlantic.com/ideas/archive/2020/09/i-crossed-...

100x the size is neither beneficial nor harmful when controlling a pandemic. As demonstrated by the US’s successful reduction in spread before opening things up again.

0.9 new cases per existing case and it goes away. 1.1 new cases per existing case and it grows uncontrollably. There isn’t a true middle ground.


It doesn't even make sense to talk about cases per existing case for imported cases, because by definition they're not caused by existing cases within the country. Like, maybe that could help tame down the clusters from those imported cases, but then you have to impose lockdown restrictions indefinitely and lose one of the big benefits of elimination over the "try and keep R just below 1.0" strategy - being able to lift those restrictions and avoid the ongoing economic and social damage they cause.

Also, I think that in reality this isn't actually as scale-free as the nice simplified models suggest, and having 100x the population would make it harder to stamp out spread within the country. Remember, the number of cases per existing case isn't some fundamental physical constant - it's an average over a bunch of different opportunities for transmission with wildly varying expected numbers of new cases per existing case. 100x the scale means 100x the opportunities for low-probability superspreading events that ruin your day.


Reproduction rates is below 1 mean a small number of new cases from minor outbreaks or border crossings are effectively meaningless. The US is currently reducing the number of active infections with poorly implemented social distancing and minimal mask usage. DisneyWorld for example is open and without becoming a hotspot of infections.

Reaching that point 4 months ago was a completely reasonable goal. Sure, our current situation is improved by some herd immunity, but that’s far from the only effect in play.


The economic devastation here in Iowa seems objectively less severe than in states that locked down more completely.

People shit on Iowa at every turn for our pandemic response, but we've got a functioning economy and a whopping 3% of our population has tested positive for the virus so far.


Unfortunately, Iowa also has a relatively high positive test rate, which indicates that most cases there aren't being tested.

When your economy does not have as far to fall before it becomes tragic I guess the drop doesn't feel too bad. Iowa's pandemic response has been pathetic and between Covid Kim pushing for opening things up while the state continues to see increased growth of covid cases and a senator who claims there have only been 10K covid deaths I think Iowa has absolutely nothing to feel good about. I keep calling back to parents who are rightfully afraid to go out with the large number of maskless morons walking around town while oblivious neices and nephews enjoy house parties in Ames and Iowa City for the first week of classes.

You are less than two weeks from a peak of covid cases being diagnosed, schools are being pushed to open, and at this point it is no longer a question of whether you will see new covid diagnosis peaks by the end of the month but rather how high it will jump.

There are states that have had good responses to the pandemic, Iowa is not one of them.


> There are states that have had good responses to the pandemic, Iowa is not one of them.

I work in Ames and live in the next town over.

As I said before, and as I will repeat any time it comes up, for a place that is supposedly doing "everything wrong", there is very little impact on daily life.

As in, literally zero.

You wear a mask to the store. Other than that, life continues mostly as before.

People are in my opinion making a serious mistake holding Iowa up as the picture of failure because Coronavirus is literally a non-event in most people's lives here.

I've been told for months now that we're on the cusp of everything going wrong.

It's been one big nothing after another.


We're just looking at the data and making comparisons to similar situations that have played out elsewhere in the country. That it doesn't affect you right now is irrelevant to the public health concerns. The whole point is to make sure it doesn't affect you.

And all I'm saying is whatever models you are looking at are blatantly wrong.

I've been told every time it comes up since April that Iowa is on the cusp of being the next New York given how terribly we're handling everything.

It hasn't happened.

It's not going to happen.


You sound like an anti-vaxxer.

Maybe you're right, but you're missing the point.


Your post seems more like you are hoping that Iowa is going to suffer some terrible epidemic of cases, rather than talking about the data. You are speaking from the point of view of your parents, who are likely scared. For vulnerable people, they still really shouldn't be going out, and they have every right to be worried. But at some point, we have to say that the majority of the population that is very likely not going to be as negatively affected can be allowed to live their lives.

Looking at the number of cases in Iowa, they are slowly ticking up, but cases are a terrible way to determine if covid is getting to be a problem. You need to look at percentage testing positive, hospitalizations and deaths. And if Iowa is anything like California, Florida, and Texas, there will be a spike in cases among younger people, and a slow increase in hospitalizations. But it won't be as bad as everyone pretends it is, and in many cases, it won't help to start locking things down again or for the first time, you'll simply push the curve out. Nearly the same number of people will get sick, just over a longer time frame. In fact, that was the whole point of flattening the curve, it wasn't to stop covid, it was to push the cases out so that our healthcare system is not overwhelmed. The area under the curve would likely be similar to a non-flattened curve.

I don't see any evidence that Iowa will be overwhelmed, but perhaps you have better data that you can point to that shows everything going wrong.


Only in countries with no functioning federal government to take care of workers.

In countries with a functioning government non-essential businesses shut down fully but temporarily and the government ensured people got the basic necessities without being forced to go out in public and spread the disease.


But... but someone has to produce all these basic necessities while all the businesses are shut down?

Hence the "non-essential" qualifier in their sentence.

I mean, we saw this pattern also in 2010, but then there was no government enforced lockdown, so it is a bit disingenuous of you to blame this on the lockdown it self.

If we did nothing, over 2 million would have died.

We have only had 190k deaths, so we saved 90% of the people that were going to die to date.


> If we did nothing, over 2 million would have died.

We absolutely cannot know that.


There's this field of math called statistics that you may want to look into.

Please don't do this here.

Noted. Apologies to you and the person I replied to.

Appreciated!

How the hell can a graph be K shaped, however one rotates the K?!

The idea is that the outcome bifurcates into rich getting richer and everyone else getting poorer.

Put another way, if the | is the Y axis and you plot outcomes for the two groups as separate lines on the chart.

Oh wow, how crude. Thanks, you all.

My job is stable and my portfolio is up for the year. This is a pretty common situation among most of the STEM people I know.

So does that mean we're all rich?

I mean, objectively we are in most senses of the word.

But that's generally not what people mean when they say "the rich"


Yeah, what people mean when they say "the rich" is "richer than me".

Not at all there is definitely a wealth point. There are classes of wealth its extremely disingenuous to pretend everyone is simply complaining some people have more than others.

You are right, but there is also a sad history of people trying to exclude themselves with e.g. euphemisms like "upper middle class".

Not you but 1 percent of the 1 percent

It's not enough to just have the direction be right. The markets are up, sure, so yes all my STEM friends are also "up" in a strictly directional sense with respect specifically to their bank/brokerage assets.

The gist of it is that if the stock market goes up X% and generates a billion dollars of capital gains, the percentage of that billion that Joe Schmoe gets is vanishingly small compared to Buffet or Bezos or Gates. Sure everyone is up, but most of the gains went to those that already have the most (by definition, since that's how capital gains works, yknow).


This worldview seems like a great way to end up very bitter about life.

And vice versa.

What worldview? This is purely objective point.

If you have 5% of AMZN, Besos has 95%, I have none and AMZN stock doubles in value, you can easily calculate the outcome in terms of dollar gains and how much inequality had risen.


> It's not enough to just have the direction be right.

That's a subjective value statement, not an objective fact.


Are you suggesting that that one should be OK with this kind of world, or simply observing that a world like this ought to make one bitter?

To be clear, I'm not condemning this system. Just explaining that this is what a K-shaped recovery might mean. That those with very little are left out when most of the "recovery" comes from the Fed propping up asset prices while everything that isn't sufficiently similar to a security crumbles.


Well, my portfolio is up by multiples this year because I had lottery-ticket puts on SPX futures in March, and I just bought an investment property at a massive discount. But I don't think that being a lottery winner at the end of civilization is a great position in general. I think it leads to violent uprisings.

Since when were we at the end of civilization?

I give it until January 20, 2021.

Optimist. I'm worried about November 4, 2020. (And I'm worried about it no matter who wins.)

Maybe the trickling in of mail-in ballots will soften the blow.

End of the United States, maybe. Europe will go right on functioning.

I'm sure that having a deranged, nuclear-armed psycho who refuses to step down as dictator of America, who is up to his eyeballs in international crimes, and who is best friends with the Russian autocrat is going to cause Europe at least some slight unease.

Biden?

Yes, you are rich, and that is what people mean when they say "the rich" (maybe it's not what you mean -- almost everyone prefers to imagine they're 'middle class'). You're likely in the top decile: https://www.theatlantic.com/magazine/archive/2018/06/the-bir...

There's always ambiguity. People often say "billionaires" but if things get to the point of executing billionaires, it will probably keep going until the rich includes everyone with a white collar job. Or who wears glasses.

(on the evacuation of Cambodian cities)

"On arrival at the villages to which they had been assigned, evacuees were required to write brief autobiographical essays. The essay's content, particularly with regard to the subject's activity during the Khmer Republic regime, was used to determine their fate...those occupying elite professional roles were usually sent for reeducation, which in practice meant immediate execution or confinement in a labour camp"


Sorry but wake me up when the wealthy have to contend with even a new slightly higher tax bracket, and then I'll listen to their hyperbole about the Khmer Rouge.

If this is genuinely something you're worried about, maybe a good idea to head it off at the pass by supporting a more equal society today.


We have to protect the rich from this fate with more tax cuts.

My salary is in the $50s. But I wear glasses. You're a perfect example of why people who aren't billionaires have something to fear. The billionaires will have their private armies when the revolution comes. And there are only a few of them. I don't care if the billionaires get executed, but there is nobody who wants to do it that will be sated by that.

Ok, well you have nothing to fear from me and my bloodthirsty desires for a 45% tax bracket on incomes >$1mm.

Consider whether the billionaires you're (indirectly, you say) defending are similarly concerned with protecting your own well-being.


Rich is also relative. if you have $100k, and I have $100k we are equal. if my $100k goes to $50k or $0. you are now richer. I'm poorer.

I like definition of rich as those who don't have to work to sustain their lifestyle.

The only problem is with the homeless guy next to the station who also matches this definition. May be he's also rich in some sense?


Personally, I'd call that wealthy. There are plenty of folks who are what I'd consider rich that do need to work to sustain their expensive lifestyle (but might not need to work with a more modest lifestyle).

You are the top 1% of the world.

Where some sectors that make up the overall economy improve while others decline.

Is it sector related, or referring to individuals? Personally I can see the wealthy and liquid-capital types being the top arm of the K whereas the middle and lower classes, as well as all those with small and family run businesses declining on the bottom arm of the K.

Data vis is like cryptography:

It looks hard, but not so hard that you will let the experts do it, so everyone makes the same cliched mistakes, even some of the experts.

This author does not demonstrate a K shaped graph and as near as I can tell there are none in the links either. Frustratingly, one of the first graphs would be a K-shaped graph if they had plotted Group A vs everyone else, but they did not.

You have every right to be confused.


It's a neologism being pushed by democrats meant to stick in people's minds as something that sounds true because you know if it's a graph it must be scientific.

I’m here for the same question so thank you. I’ve seen this “k” shape referred to a number of times now, as if it’s an obvious thing. I guess it’s a headline thing where the limitations cause all kinds of craziness and shorthand.

K, meaning part goes up and part goes down. Those with money will do much better afterwards and those without money will do much worse.

The | is the y-axis. From there you have two lines starting at some point in the middle. One sloping up, one sloping down. Stupid way of saying the wealth gap is increasing.


One of the factors here besides ability to work at home is disposable income that is not being disposed. Bad for the companies that aren’t getting it, and leaving some of us with more savings than we normally would have.

I’m trying to sort out better plans for patronizing businesses, donations and generally investing more locally. Not much else I can do about it.


True enough. I'm taking this opportunity to buy new equipment for the sport I like - it keeps manufacturers afloat, and increases the supply so that second hand stuff becomes cheaper for other people wanting to enter the sport. And the more people, the bigger the economies of scale, and new stuff will eventually get cheaper too!

The marginal propensity to consume is significantly lower for the wealthy who tend to hoard their wealth.

Much of the lower-middle class lives paycheck to paycheck. They have significantly less disposable income currently because they're likely to be unemployed. They aren't shopping because they fucking can't afford to, and because social distancing is important right now - in that order.

So yeah, the pandemic is partially why people aren't spending as much. But it's also just a core problem that existed pre-pandemic.


Now here's an article that CNBC should have published 11 years ago. The way that the CARES Act was basically a rerun of 2008's corporate looting, but with almost none of the same uproar and outrage, is one of the most depressing developments of 2020.

Why does CNBC's website always break for me like no other news website. I have a bunch of ad/flashblockers on -- their site must be filled with junk in a very badly integrated way.

In related news, water is wet.

Many facets here. We need better education.

The wealthy have very good schools.

Democrats protect wealthy schools from undesirables by preventing people from choosing which school their kids can go to. Unions slow societal progress (Police and Teacher’s unions for example)


> We need better education.

Absolutely.

> The wealthy have very good schools.

Yep.

> Democrats protect wealthy schools from undesirables by preventing people from choosing which school their kids can go to. Unions slow societal progress (Police and Teacher’s unions for example)

Aaand you lost me. This sort of poorly thought out Ayn Rand POV is unfortunate to see so often here on HN.

I'd also wager that your blaming of democrats here is obviously flamebait and is against the rules. There's no interesting discussion to be had when you just dismiss an entire portion of the population right off the bat. Nothing to engage with when you've already decided I'm part of some conspiracy to keep kids from having a decent education.


Charter and “school choice” just move problems around. Nothing is solved, while a few corporate school owners get rich.

Stop acting like you know the field - you clearly have only a basic (and wrong) view of the situation.


The fallacy is assuming a given school can be fixed in less than 10 years. There are public schools in Detroit exposing kids to enough lead to cause measured behavioral changes.

It seems reasonable to hand those families a check to help them to escape than to keep perpetuating the injustice.


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