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Three Big Ideas

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Three Big Ideas

Three Big Ideas

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UNIDENTIFIED PERSON: This is PLANET MONEY from NPR.

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JACOB GOLDSTEIN, HOST:

We are living through this moment that is just so big in so many ways - the human suffering, the change in our daily lives, the economic disaster are all so vast and we need to respond with comparably big ideas. We need to try things that would have seemed completely absurd just a few months ago. I mean, yes, sure - obviously, we need to dramatically increase testing. We need to hire an army of contact tracers. But that is not going to be enough. We need to think bigger than that. We need to think maybe weirder than that.

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GOLDSTEIN: Hello and welcome to PLANET MONEY. I'm Jacob Goldstein. Today on the show, we are going to look at three big ideas. One is an idea to fight the virus itself, another is a way that may make the economic consequences of the pandemic less awful. And the third is an idea that I think perfectly reveals just how strange the world has become.

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GOLDSTEIN: The first big idea - big idea No. 1 - comes from Susan Athey. She's a Stanford economist who's been spending a lot of time lately working on pandemic-related problems.

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SUSAN ATHEY: So imagine that your life depended on completing a home construction project on time. And if you didn't have the project completed by, you know, December 1, you would literally die.

GOLDSTEIN: I love this metaphor. So let's just let it run for a sec before we get to the idea itself.

ATHEY: And in order to be completed, it has to go through all the inspection processes and have every aspect, you know, be approved by the county boards and the city boards. Well, anyone who's ever done a construction project knows that none of them had ever been completed on time. And so if you - literally, if your life depended on it, you might try to build five houses...

GOLDSTEIN: Yes.

ATHEY: ...And hope that one of them was finished on time.

GOLDSTEIN: I would spend all my money to build as many houses as I could in hopes that one would make it - right.

ATHEY: Yes.

GOLDSTEIN: OK. Now, forget about the houses. Let's talk about vaccines. We know there are a lot of vaccines being tested. We know most of them won't work. The government is funding research into a bunch of them. Great - so far, so good. But Athey's point with this metaphor - it's not about studying the vaccines or testing the vaccines - it is about building. Specifically, it's about building out the factories we'll need to actually produce huge quantities of vaccine more quickly than anybody on the planet has ever produced vaccines before.

And here is the problem - all these vaccines that people are studying and testing - they're all really different from each other - like, profoundly biologically different. You know, some of them use an inactivated form of the coronavirus itself. So to make those vaccines, you would need to grow huge quantities of the virus. Other vaccines require, like, a special booster that makes the vaccine work better, so you've got to make the booster. In other cases, the vaccine is built with genetic engineering where you splice coronavirus DNA into a different virus then you've got to grow that virus to make the vaccine.

So it's not like you could just go out and build a bunch of generic vaccine factories and then when you figure out which vaccine works, be like, great, flip the switch - make all the vaccines. Because the factory you need to build one type of vaccine is going to be really different from the factory you need to build another type of vaccine. And tailoring a factory to build the vaccine you want takes a long time. There's a lot that can go wrong.

ATHEY: By the time you go to produce a specific vaccine, you still have several months of work for that specific vaccine. And it's not even just for the specific vaccine - it's for a specific manufacturing facility to manufacture a specific vaccine.

GOLDSTEIN: So there is a world where everybody is racing to find a vaccine that works. There is some big study and we find, great - we found a vaccine that works. And then, there's a moment where you're like, oh, my God - we don't have a factory ready to make that vaccine.

ATHEY: That is the problem we are worried about and what we're proposing in the U.S. would be spending about 40 billion to directly finance the capacity installation.

GOLDSTEIN: So you're saying the U.S. government should spend $40 billion to basically build factories, production lines, refrigerators, all the stuff you need to build a vaccine for many different vaccine candidates, most of which probably won't work, but one of which we hope will?

ATHEY: Yes - 15 to 20.

GOLDSTEIN: Build 15 to 20 different factories for 15 to 20 different vaccines in hopes that one or two will work. Athey says this would not only reduce human suffering by getting us a vaccine faster - it would actually be economically rational. Because, you know, every day we don't have a vaccine, we're, like, enduring a tremendous amount of economic damage - when people don't go to work - when people don't go out to buy stuff. So it actually is cost-effective to spend all this money to build all these factories. Athey says companies should put up some of the money - like, 15% - that way, she says, they won't just take the government's money and build a factory they know won't work. Also, the government has already committed some money to manufacturing. Bill Gates has talked about donating to this kind of program. But what Athey is proposing here is much, much bigger.

Well, just for context, I'm doing this as part of a show where I'm just trying to sort of grab a few interesting and big ideas related to the crisis and the potential recovery and put a, like, borderline-sensationalist kind of headline on each section of the show. And the one I'm thinking of for this section is something like - pay companies billions of dollars to build vaccine factories they'll probably never use. Is that - what do you think of that?

ATHEY: Yes - yes.

GOLDSTEIN: Yes - good. OK, we're rolling - OK.

ATHEY: (Laughter).

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GOLDSTEIN: After the break, a big idea so big it's got another big idea inside it. It's like a big idea Russian doll but only two ideas. So if it were a Russian doll, it would be kind of a crappy Russian doll.

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GOLDSTEIN: Big idea No. 2 comes from Claudia Sam. She's an economist at a think tank called the Washington Center for Equitable Growth. And before that, she worked at the Federal Reserve for a long time. And she told me that a big part of her job at the Fed was studying the effects of all the different things Congress does to fight recessions.

CLAUDIA SAM: And from that research program, I know what works and what doesn't work.

GOLDSTEIN: So what works and what doesn't work? Tell me the answer.

SAM: So what works are sending checks to people and having them be big checks.

GOLDSTEIN: I'm going to give Claudia Sam's big idea the headline - send Americans a trillion dollars with no strings attached. It's not a loan. You don't have to be unemployed or file for unemployment. It's just money you get and you can do whatever you want with it. There is an asterisk which we'll get to. The asterisk is the other big idea. So the headline is actually send Americans a trillion dollars with no strings attached - asterisk. Sam says sending people money makes sense when you think about how the economy works and what happens in recessions.

SAM: What happens in recessions - this is absolutely in this crisis - people get scared, right? When people get scared, they stop spending. So if I was thinking about buying a used car and I decide I don't want to do that right now - I'm going to wait. So that means the owner of the car dealership is probably going to start laying people off. And that person who gets laid off from their job - they don't have a choice. Like, they got to cut back on spending.

GOLDSTEIN: So now we're in, like, a downward spiral. This is a recession...

SAM: Yep.

GOLDSTEIN: ...That is, like...

SAM: Yeah.

GOLDSTEIN: ...Feeding on itself now?

SAM: Yep.

GOLDSTEIN: Sending checks to people isn't enough to entirely stop this downward spiral. But the checks can make it less bad. People have a little more money - they spend a little more. The spiral doesn't spiral down as much or as fast. But Sam's big idea isn't really just about sending out the money. It's about when you decide to send out the money and how you decide to send out the money. So Congress has already sent out one batch of checks to everybody whose income makes them middle class or low income. Total cost of that - around $300 billion. There's talk of maybe sending out another batch of checks but Sam says sending out checks in this kind of ad hoc way is the wrong way to do this.

SAM: What I think is a much better policy - and this comes from experience in the Great Recession - is you say we're going to continue to send checks until the unemployment rate comes down.

GOLDSTEIN: So this is where the asterisk in the headline for this section comes from. Send Americans a trillion dollars with no strings attached - asterisk - means if we recover really fast and the unemployment rate falls back down in the next few months then we won't need to send out any more money and it'll be less than a trillion dollars. If the recovery takes years and years, Sam says we'll need to keep sending out checks to people so it would be more than a trillion dollars. The essential thing is that the payments are explicitly tied in advance to economic conditions. And this detail - the asterisk - is really the big idea behind Sam's big idea. It's to turn payments to people into what policy wonks call an automatic stabilizer.

SAM: Well, an automatic stabilizer means that you have a policy to fight a recession and you don't need Congress to vote on it. Something happens in the economy and we say, OK, send the money out - start up the program to fight the recession. And Congress commits to do that ahead of time. So that's the automatic piece.

GOLDSTEIN: We already have some automatic stabilizers. Every time there's a recession, more people automatically qualify for programs like unemployment insurance and food stamps - SNAP. And, of course, these programs help, you know, help the individual people who they benefit. They also benefit the economy as a whole. They cushion the blow of the recession for everybody. Also, automatic stabilizers make political decisions a little less political.

You know, there's going to be a federal election in a few months. In an ideal world, the government's economic response to the crisis would be based on what's going on in the economy, not on who wins or loses the election. And automatic stabilizers push us in that direction, right? They are Congress saying we're going to send money to people not based on who wins or loses the election but based on what's going on in the economy - based on how much money the economy needs.

So give it to me - like, what is your big idea? How often - how much money until what metric is met?

SAM: I would send out checks again when we hit 20% unemployment, and I would send them out again when we hit 30. I really think we're going to hit 30%.

GOLDSTEIN: Jesus. So that would be a maximum of three checks this year for a family with two adults and two kids - each check would be $3,400.

SAM: And then, continue them every year until the unemployment rate gets back down to 5%.

GOLDSTEIN: In other words, after this year, it would be one check per household per year until the unemployment rate gets back down.

SAM: And so in a severe recession, that means it's going to take a lot of money from Congress to get us back on track.

GOLDSTEIN: Yeah. Yeah.

SAM: Just send the money and send it - send a lot.

GOLDSTEIN: I want to look...

SAM: A trillion is a lot (laughter) too.

GOLDSTEIN: A trillion is a lot. I'm glad we can agree...

SAM: Yeah (laughter).

GOLDSTEIN: A billion used to be a lot and then...

SAM: Yeah - no, no, no.

GOLDSTEIN: ...100 billion was a lot. And now we're to a trillion is a lot.

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SAM: Good luck with the rest of the big thing...

GOLDSTEIN: OK. It's lovely...

SAM: ...The episode.

GOLDSTEIN: ...To talk to you.

SAM: Yeah...

GOLDSTEIN: Thanks for your time.

SAM: No, of course. All righty (ph) - bye.

GOLDSTEIN: Bye-bye. In a minute, an idea that is somehow both absurd and totally reasonable at the same time.

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GOLDSTEIN: Here's big idea No. 3 - put an entire professional sports league inside a giant bubble. Like, instead of your quarantine pod being your family or your roommates, it would be the entire National Basketball Association or the whole National Hockey League. And then, the league would go inside that bubble and live there and play whatever - play basketball in empty arenas and the world would get to watch professional sports on TV and the players and everybody who works for the leagues would get paid. It would be like a little multi-billion-dollar corner of the economy coming back to life.

I'd heard about this in a vague way on and off over, like, a month. But then, recently I saw this story that described a really specific version of this idea. And what struck me is the way this idea is both completely surreal and completely rational all at the same time. Which, of course, is, like, the perfect encapsulation of this moment that we're living through. The story was by Kevin Draper who covers the sports business for The New York Times. And what happened was a few weeks ago, he got his hands on this come play in our bubble pitch deck that had been put together by a company called MGM Resorts and sent out to the NBA and the WNBA. So I called him up and asked him to describe it to me.

KEVIN DRAPER: So if you've ever been to Las Vegas Strip, it's, you know, a number of blocks of lots of casinos. But on the southern end of the strip, the MGM owns a few casinos. They kind of already have NBA relationships. They are the host of a WNBA team. They have a arena...

GOLDSTEIN: Oh.

DRAPER: ...There.

GOLDSTEIN: So there's already a basketball arena, professional-grade basketball arena that's part of this - what? - mega casino hotel complex?

DRAPER: Correct. And they also have, you know, a very big convention space. They build a couple of basketball courts there every year and the NBA's minor league hosts, like, a winter showcase there. So they got that part nailed down. And so all of the staff would live in one of these hotels. So, you know, maids, cooks - because that's, in theory, the only way you can do this. If all the athletes are quarantined but the staff is coming in - going back to their homes...

GOLDSTEIN: Yeah.

DRAPER: It defeats the purpose of the quarantine. So everybody needed to do this has to be quarantined.

GOLDSTEIN: It's so weird, right? It's plausible - it's so weird, it's - there's, apparently, this kind of science fiction called mundane science fiction which is like - it's not like interstellar travel or crazy magic, it's just like the world as we know it tweaked a little bit. And, like, the NBA going and locking itself up in a luxury hotel in Las Vegas for a month and playing basketball there for viewers around the world is perfect dystopia lite weirdness.

DRAPER: Right - right.

GOLDSTEIN: More or less, how many rooms - how many hotel rooms are there on these? (ph)

DRAPER: In those three - Mandalay Bay, Four Seasons then Delano - there's 4,700 rooms.

GOLDSTEIN: OK.

DRAPER: And then, there's more across the street. And many of these are suites because you have Las Vegas high rollers. And so, you know, depending upon if you're an NBA athlete, you're, you know, you're not normally staying at Motel 8.

GOLDSTEIN: Right.

DRAPER: You are used to high, high-class living and these hotels can provide that high-class living as well.

GOLDSTEIN: So at least from, like, a logistical standpoint, this seems plausible.

DRAPER: Yeah, I think so. Or, perhaps, to put it another way, of all of the places in the United States to do it, this is certainly one of the most plausible.

GOLDSTEIN: It's one of the two, right? The two people they're talking about are Vegas and Orlando - basically, Disney World, right?

DRAPER: Yeah, you're looking at Las Vegas or Disney, basically.

GOLDSTEIN: Can I tell you - I love that it's Las Vegas and Disney World because their whole pitch even when it's not a pandemic is that they're a bubble. What happens in Vegas stays in Vegas and whatever - the happiest place on - no - the Magic Kingdom. Like, you need a little kingdom now. You need a place that whatever happens there stays to itself, right? They were built to be bubbles - that's their whole thing. And now, what we all need is a bubble or bubbles, you know? And you hear this NBA thing and you start thinking, well, what else could we put in a bubble? Could we make a Hollywood bubble so people could go off and make movies and TV shows? Can we send Congress to Vegas so that Congress could be Congress in a bubble in Vegas? And, like, with the basketball thing, it could actually happen.

DRAPER: Right. And that's another thing where what is so interesting about these quarantine proposals is you've sort of got two sides of it. As you and I, the person who's not there who's watching these games, you don't hear the fan sounds. So that's a little bit weird. But, you know, it's 95% of the basketball we know and love. On the other end, for the basketball players - for the maids and cooks and hotel staff that's quarantined - for them, they're living a completely different reality in the service of you and I being able to watch mostly the same thing.

GOLDSTEIN: I talked to Kevin last Thursday when it felt like the bubble idea was really a super-long longshot. But two days later, the NBA put out a statement that said the league and the players union are, quote, "engaged in exploratory conversations with The Walt Disney Company." Relevant detail - The Walt Disney Company owns ESPN. ESPN is, of course, desperate to have sports come back so they can put something on TV. According to the statement, they're considering using a single Disney site in Orlando to restart the NBA season in July. The idea is to use the site, quote, "for an NBA campus for games, practices and housing." The bubble lives.

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GOLDSTEIN: We need more big ideas - these are not going to be enough. Tell us what big ideas we should talk about on the show by emailing us at planetmoney@npr.org or tell us on social media, where we are @planetmoney. We're also on TikTok now, where we are making super-weird videos. There's one that sort of takes the stock market circuit breaker and turns it into a kind of a meditation app. I don't - it's weird - I don't even know how to describe it, but I really like it.

Our show today was produced by Liza Yeager and James Sneed. Our editor is Bryant Urstadt. Our supervising producer is Alex Goldmark. I'm Jacob Goldstein. This is NPR. Thanks for listening.

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