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Pandemic perspectives: Elizabeth Bogan and Alan Blinder ’67

<p>Senior economics lecturer Elizabeth Bogan (left) and Gordon S. Rentschler Memorial Professor of Economics and Public Affairs Alan Blinder (right).</p>
<p>Courtesy of Elizabeth Bogan; Courtesy of Princeton Office of Communications.</p>

Senior economics lecturer Elizabeth Bogan (left) and Gordon S. Rentschler Memorial Professor of Economics and Public Affairs Alan Blinder (right).

Courtesy of Elizabeth Bogan; Courtesy of Princeton Office of Communications.

In recent weeks, University researchers in fields ranging from epidemiology to urban planning and computer science have abandoned their usual work, as they turn to the global threat posed by COVID-19. As researchers grapple with the unprecedented crisis, the pandemic has given rise to new angles of study and insight. 

In this series, ‘Pandemic Perspectives,’ The Daily Princetonian sits down with University professors who study the same discipline but whose views on coronavirus diverge. We began by speaking separately with senior economics lecturer Elizabeth Bogan and professor of economics and public affairs Alan Blinder ’67, who served as Vice Chairman of the Board of Governors of the Federal Reserve System from 1994-96. During their interviews, Bogan and Blinder reflected only on their own views; they did not directly respond to one another. 

On-campus, both faculty members teach ECO 101: Introduction to Macroeconomics. Now, they stand on opposite sides of the “epi-nomics” debate — with dramatically different ideas about proper economic strategy in the wake of the coronavirus pandemic. 

Bogan had never before considered the economic complications of a previously healthy economy grinding to a halt. But as news of the novel coronavirus began to spread, she felt she had a responsibility to reach out to her students. Over spring break, Bogan emailed her current and former students, expressing what she called a “somewhat contrarian” concern about the decision to close down schools and businesses across the nation. 

“The data looks to me,” she wrote, “like nearly closing the economy will cause more suffering and deaths than would the COVID-19.”

“We should have left the schools open and let the coronavirus run through the schools,” Bogan continued. “It appears that most kids who get this virus don’t even know they are sick. But that would build ‘herd immunity’ to the virus.”

“I felt that if I was thinking something,” said Bogan in a later interview, “I should be sharing it with [my students]. And I was very concerned that decisions were being made without data at all or based only on the very few tests we had — tests that didn’t include people with only mild cases.”

In the weeks since Bogan’s initial email, COVID-19 has overwhelmed American cities and led to more than 16 million claims of unemployment. For Bogan, these data points serve only to bolster her earlier stance. 

“I am genuinely concerned that a lot of what the cameras are getting is a self-created emergency,” Bogan said. “I think that the world has been panicked, and I don’t think a whole lot differently now.”

Someone who does think a whole lot differently is Blinder. In his mind, an early economic shutdown was the best course of action. 

“I think the likelihood, given how quickly this spread, and how poorly our national government has handled the epidemic,” said Blinder, “is that the economy would have shut down by itself, much more slowly and messily.”

And while Bogan insisted that young people infected with the virus would likely suffer little more than a “cold,” Blinder hammered home this message to Princeton students: “You are not invulnerable.” 

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Bogan and Blinder diverged, too, about striking a balance between reopening the economy and avoiding health-care systems being overwhelmed. 

Blinder cited the importance of “mass testing” — an option he said was “light-years away” —  before being able to send Americans back to work. 

Bogan expressed a nearly opposite view.

“I know this is a minority point of view, but my instinct would be to open it up now,” she said. “I completely agree with washing hands well, avoiding crowds, sanitizing metal and plastic surfaces and extending sick leave. But I worry about how [shutdown] snowballs through the economy. The longer this goes on, the more devastating it is.”

And in regards to the threats that lifting restrictions on an infected society could pose to societal health?

“I think that the health-care problems are largely New York and a number of the hospitals in California,” she said. “And I think that those numbers will begin to fall off fairly quickly.”

As both Blinder and Bogan ponder the future, they unsurprisingly describe different technical images of economic recovery. 

“It’s not like a recession is ravaging the whole country with the same timing,” said Blinder. “And the same thing will be true with the recovery. These ‘hills’ we talk about for the pandemic, are going to happen with different heights and different timings in different parts of the country. So that makes it very hard to make a national generalization.”

That said — and as long as there is not a second wave of infection — Blinder predicts a government-induced recession that quickly resolves as an almost ‘V-shaped’ curve. 

Bogan has a different prediction. 

“I think it will look more like a ‘U’ at the end of the day,” she said. “I don’t see how you get it moving quickly enough at the beginning to recover immediately. It’ll be awkward to recover.”

Despite fundamental disagreement over the initial decision to shut down the economy and over the shape of future recovery graphs, Blinder and Bogan agree about the merits of one specific economic policy: the over $2 trillion economic relief bill recently passed by Congress. 

“I would give it a B+,” said Blinder. “By just recent standards of American politics, there was a high level of compromise and it was as focused on relief as it needed to be.”

Bogan is more effusive. “Thank God for the Fed and for Congress and the President,” she said. “I could nitpick, but basically it is very well done. I’ve been very worried about the ‘little guy.’ I was really worried that this was going to be a heavy burden on the lower and middle income Americans more than everybody else.”

She added, “I’m very glad that the Federal Reserve has stepped up and basically immediately done everything they did in 2008, over a period of about six months. And this time, they did it in six days.”

The professors also share logistical reservations about the bill. 

Bogan remains concerned about the large number of workers in the informal cash economy — those whose employment history is far less documented or who earn an income of less that $12,000 dollars a year and thus don’t file income taxes. Blinder mentioned the logistical challenges of identifying freelance workers who make less than $75,000 a year. 

He also thinks the federal government should offer most states in the country more money, and takes issue with the procedure implemented to distribute money in the new bill to small businesses. 

“It’s complicated,” said Blinder, “because like the underprivileged workers, there’s no good registry for these businesses … This is hideously complicated and difficult, even if you were taking your time.” 

Both Bogan and Blinder are working hard to extend their research and offer much-needed advice during an economic period unlike any they have previously encountered. Most of their conclusions are radically different. But in the face of criticisms that economic policies prioritize ‘profits over people,’ they had a similar reaction. 

“Boy does that make me mad instantly. One-hundred percent of the time, I’m trying to talk about the quality of life for all Americans,” said Bogan.

“Economic concerns are largely about the people. The priority has to be the people,” said Blinder.

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