It’s Good Friday and the markets are closed, but given that everyone has been working from home for the past several weeks, it feels like the start of every other day. Here are the reads I am occupying myself with as I shelter in place.

• We Were Planning an Inequality Project. Then History Lurched. from The New York Times. The New York Times Opinion section is running a series called “The America We Need” (introductory editorial below) and this is the editor’s letter.
• From The America We Need by The New York Times Editorial Board:
  • Advocates of a minimalist conception of government claim they too are defenders of liberty. But theirs is a narrow and negative definition of freedom: the freedom from civic duty, from mutual obligation, from taxation. This impoverished view of freedom has in practice protected wealth and privilege. It has perpetuated the nation’s defining racial inequalities and kept the poor trapped in poverty, and their children, and their children’s children.
  • The United States does not guarantee the availability of affordable housing to its citizens, as do most developed nations. It does not guarantee reliable access to health care, as does virtually every other developed nation. The cost of a college education in the United States is among the highest in the developed world. And beyond the threadbare nature of the American safety net, the government has pulled back from investment in infrastructure, education and basic scientific research, the building blocks of future prosperity. It is not surprising many Americans have lost confidence in the government as a vehicle for achieving the things that we cannot achieve alone.
  • Corporate action and philanthropy certainly have their places, particularly in the short term, given President Trump’s feckless leadership and the tattered condition of the government he heads. But they are poor substitutes for effective stewardship by public institutions. What America needs is a just and activist government. The nature of democracy is that we are together responsible for saving ourselves. // Americans need to recover the optimism that has so often lighted the path forward.
  • A critical part of America’s post-crisis rebuilding project is to restore the effectiveness of the government and to rebuild public confidence in it.
  • This moment demands a restoration of the national commitment to a richer conception of freedom: economic security and equality of opportunity.
• Coronavirus Crisis Legacy: Mountains of Debt from WSJ
  While I agree and know that the monetary and fiscal measures taken are absolutely necessary (and there may even need to be more), I do wonder how it all plays out and gets paid for in the end (increase taxes on the rich?). I’ve been reading Ray Dalio’s Navigating Big Debt Crises and from that I know debt creation ultimately is not sustainable if you do not have the income growth to meet the increasing debt payments. With unemployment set to reach record levels, we obviously won’t have the necessary level of income. At some point, we will need to de-lever until the economic growth rate returns to a level higher than the interest rate. Dalio points to four different methods of deleveraging: 1) debt reduction 2) austerity 3) printing money and debt monetization and 4) wealth redistribution. Right now, 1) and 2) are out of the question. The Fed is already doing a incredible amount of 3) debt monetization. They’ve purchased an unprecedented amount of US Treasuries and MBS (QE) and also expanded its usage of powers under Section 13(3) of the Federal Reserve Act to finance a broader range of loans and financial products. With the multiple rounds of fiscal stimulus coming through, the government is also ‘printing’ money. However, some of the stimulus package is in the form of loans (the small business loans are technically still loans backed by a government guarantee) and not actual free money (like the stimulus checks). As for 4) wealth redistribution, I wonder how and when that comes into play.  As Dalio himself is quoted to say in the article, “After the dust settles in the U.S. there will be arguments over who should pay for all of this spending and absorb the burdens of the debts, which will be political arguments.”
• The Thing That Determines a Country’s Resistance to the Coronavirus by political scientist Francis Fukuyama (who wrote End of History)
  • The crucial determinant in performance will not be the type of regime, but the state’s capacity and, above all, trust in government.
  • The capacity of people at the top, and their judgment, determine whether outcomes are good or bad.
  • And in making that delegation of authority to the executive, trust is the single most important commodity that will determine the fate of a society. In a democracy no less than in a dictatorship, citizens have to believe that the executive knows what it is doing. And trust, unfortunately, is exactly what is missing in America today.
  • Trust is built on two foundations. First, citizens must believe that their government has the expertise, technical knowledge, capacity, and impartiality to make the best available judgments. The second foundation is trust in the top end of the hierarchy, which means, in the U.S. system, the president.
  • What matters in the end is not regime type, but whether citizens trust their leaders, and whether those leaders preside over a competent and effective state. And on this score, America’s deepening tribalism leaves few reasons for optimism.

Update: This day off has effectively turned into a workday. Work-life balance worsens when your office is in your bedroom and you are stuck at home with no escape.