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[Music] the back row lively history Landers and John David an of HBU before we begin I just want to try to put my thoughts in perspective on this it's very important that we look at the coronavirus in the context of history why because right now all of us are like virus junkies we watch the tube they repeat themselves at nauseam they repeat ads that are unrelated ad nauseam and we we don't have the perspective of knowing how this how this connects thoughts with other times other places other experiences of other countries and we need we need the perspective of history to appreciate just you know sort of back out for a minute take a breather from all that informations being thrown at us and put it in context welcome to the show John it's so nice to have you here yeah it's good to be here it couldn't agree more we need more history yes yeah history so Chum today we talking about the history of epidemics and pandemics and right we know about that is very important so tell us about really don't consciousness about this right so I'm not a I'm not a coronavirus junkie like you are Jay but history is very important and what we want to do today is we want to look at the economic impacts of these epidemics not just you know so so here's the question a question of the week I think is I mean of course the death toll is increasing and you know people are getting sick and you know some very serious cases I know people who are in the hospital on you know ventilators and stuff so this is really serious stuff but I think the question that we're all asking is where in the heck is this going to go how long is this going to go on you know what where are we going to be six months from now I mean and then for baseball fans are they're really good play baseball the season in Arizona it's not what they're gonna do they're actually considered playing the baseball season in Arizona no this is intra just read this no fans the baseball team will not sit in the dugouts they'll sit in the stands social distance no umpire behind the plate because of course you know you don't want him to close and they've been playing the game that way I don't always good luck with that yeah yeah no so what we're dealing with is this rolling thing and it's really it's disturbing markets you know looking at the economic impact it's disturbing markets we don't know where the stock market's going to go let's let's take the stock market first so stock markets down it was down 30% now now it's about 20 20 percent and so you know what is it gonna go down some more is it gonna go up so and and we're looking at I mean some of these other estimates when we you know GDP looks 30 percent dropped by July 1st oh my gosh unemployment right now we stand at you know 10 million new on employment by effect and then you know where is this going to go some economists say we're at about 10% unemployment other economists say because not everybody applies for unemployment claims that work probably at 15 to 17% unemployment already and one one estimate from a bank when these Wall Street banks says we can't be looking at you know 35 40 percent unemployment at least temporarily so so it's it's really frightening because you know these things these epidemics when you look at history they can be civilization Enders so it's very concerning for instance the Justinian's flag this is a plague that took place in the Byzantine Empire Constantinople which is today Istanbul in 541 542 yeah this is this is Justinian this is a mosaic of Justinian in a church in Ravenna I think and so Justinian was this kind of he led of renewal of the Roman Empire you know by this time the Roman Empire the capital is is Constantinople in and he won all these battles and he was an effective effective administrator and such and then the plague comes and the plague came so this is also interesting to me plague came from the same spot it came from the steppe region via the Silk Road but then we think it came this particular plague this is your seniya pestis came from from ships that were sailing the Persian Gulf and then into the Red Sea and dropping stuff off and then it being transshipped across on the Nile into into Alexandria and then from Alexandria into Constantinople because of course the plague travels by rats and and you have rats on ships and you know that's always that's how it was transmitted so the other interesting thing about this and I'll give to the economic impact in a second is that this particular this particular plague was so strong that we think that about about half of the population of Constantinople died and the reason why so so the plague virus had been around for four centuries before this according to research and what happens is there's a kind of mini ice age that takes places around 1540 pardon me 5:40 and it gets colder we have records of colder temperatures in Italy and the rest of the Mediterranean and and so what we have is and this is an environment in which rats multiply and the you know the the fleas on the rats multiply when it gets a little colder when it gets too hot then and the rat population declines so and then they're eight so of this little ice age contributed to it oh my gosh we're learning so much about this so the plague makes its way to Constantinople and Justinian gets sick he lives actually you know he's sick verbs several weeks but then it breaks out in the city and oh my gosh dying is incredible they run out of space and the cemeteries to bury people they're stocked stacking bodies up they actually and I know this is this is a story that was told in the book called Justinian's flee is that troops actually that there was these towers that were built on the wall the wall of Constantinople and these towers were actually how in other words they were built as a square but then with a hollow opening in the center and they were dumping bodies down this hollow opening because they couldn't find places for the bodies so so they the plague in the Roman Empire of Justinian really takes out the Roman Empire I mean it leads to a pretty rapid decline in the Roman Empire within a few decades the Roman Empire is shrunk so that it it's you know goes beyond the borders of continental constantinople but not that far it also affects the Persian Empire in this time period so so so if we go back far enough we can see that the economic impacts are really devastating meat trade stopped the even the ovens the bakery ovens in and ennoble were stopped because people couldn't go to work because they were either so sick or they didn't want to get sick and so you know there was a lot of starvation in the city during the plague time so yeah so it's it's really rough and you know so but let's just comment on a couple of things there go ahead you know what number one is yeah if you loosen half the population of a big city that city's going to be different and it's going to be changed and if you if you have big cities that are you know currently part of a large say Roman Empire that romanum are the civilization around that Roman Empire will decline and I guess if I were in your class I would say well professor David Ann I guess I guess one of the one of the known and understood and agreed factors for the decline of the Roman Empire was this kind of plague disease it was one of the things and and thus any civilization which loses a lot of people which becomes discombobulated because of a plague type pandemic is subject to that possibility the other thing I wanted to mention to you is that it seems to me that we forget that we are affected our lives are affected I mean collectively the Roman Empire was definitely affected but say two or three hundred years down the road absence another another plague in the interim we can't even remember we don't want to remember you know they say that that what this war is the story of the war is told by the survivors not the victims the story like the plague followed by the survivors not the victims it's true it's true in and in in the histories of the Roman Empire the the plague has not received really that much attention you know Givens classic history of the decline and roll of the fault decline and fall of the Roman Empire he doesn't really talk that much about the plague so it's something that were you know we're understanding now that we need to do more of more study of than our kind of our rent and getting to our regular kind of history texts or text books so but that this plague actually was around a lot longer it was around until about 750 C II and you know with the plague the thing about the plague that's so kind of unique is its of course it's a bacterium and the plague is so devastating that it will burn itself out eventually I mean it did in Constantinople and then it spread to other cities but you have to have the right kind of conditions and then you have to have the you know honestly you have to have live people in order to spread the plague and so in eventually burned itself out and now when we look at the the black depth is the Great Plague of 1349 the source the origin is the same but when we look at the economic impacts of the play of course we talked before about the great death ball you know maybe half of Europe died from this plague and it but when we look at the economic impacts uh you know you have to imagine half of your population gone and really historians estimate that this plague set Europe back maybe 300 years to about a thousand seee it's certainly in population terms that's what it did it push it back to about 1000 CE II then and then of course it created all kinds of problems in in the European economy so we we actually have a new law the text of a new law that was passed in England in 1351 if we can bring that one up this one yes so so let's leave this up for lilah let me look at it and read it so this is called the statue of labourers 1351 and and this it's called what happens if you get a lot of people dying and now labor is scarce and it becomes more valuable so workers want higher pay now they want higher grade to take the risk and they want higher pay because honestly they're they're in demand and they're getting some largely but this the state the the crown does not like this and the nobles are complaining about this because they'll have to pay their workers more money and so they pass a law and the law says because a great part of the people has now died some seeing the straits of the Masters and the scarcity of the servants are not willing to serve unless they receive excessive wages and others prefer to bag in idleness we have seen fit to ordain that every man and woman are Kingdom Kingdom in England who is able bodied low the age of 60 years not living from a trade or carrying on a fixed crap shall be bound to serve him who has seen fit so to seek after him and she shall take only the wages which were accustomed to be paid in 1346 before the plague and if any man or woman who does not do this she should be sent and taken to the jail okay so they're putting people who want hard wages into stocks I mean you can't make that up so believe you know at least we're not doing that this time around I think the government we could say income by comparison the government is responding better than that but so what happens to the European economy is the European economy is of course its agricultural you have this early agricultural revolution that takes place from about 1000 CE II to the time of the the plague and this what happens is you they instituted to field system or you leave one part of the field falen and a sorry a three field system where you leave one-third fallow you plant two thirds and then you're you're actually able to improve upon the two field system and get more food and so the population of Europe goes up there's more trade there's more kind of local and regional trade and many of these townspeople are actually engaged in it's some sort of manufacture associated with those local and regional trade all of that stops in the plague just kind of like what's happening right now Commerce basically grinds to a halt and sold those trade networks well you know you first of all you need a population involved in this kind of handcraft manufacturing mostly technicals and you know other handicrafts and so you need a population to manufacture the goods and you also need those trade network and merchants and middlemen and you know the merchants are dying like you know flies as well so so what happens is it's really only in the 1600s with what we call the putting out system that European economy begins to come back and and and what accompanies that is a dramatic increase in population growth in there in the rise of population in Europe and the 69 so you're talking about of 300 years or 250 years after the plague for Europe to recover from this it's devastating yeah it's right am i right just looking at the dates for a minute the first one you spoke about the justinian one was that i-15 560 was I I'm unimportant the next one was thirteen hundred and fifty or so that's they do the math on that that's eight hundred years later so right I would imagine that people had completely forgotten what happened in Justinian's day and that time we get went to 1350 it's a big surprise to them and they they really weren't prepared for it yet so what you have is you have chronicles that are written about the plague one of one of the most famous chronicles from that time period by procopius from Caesarea and but this manuscript is lost in the kind of the early medieval period and it I think it probably was available to people by the time of the of the the plague and in 1349 but so you so so yeah there is some lock knowledge and honestly it wouldn't have mattered that much because the way that you know in terms of the the medicine that was practiced the medicine is basically the same in 5:42 as it is in 1349 and it's not very effective if you don't know what causes the plague and this is the key if you don't know what causes it then you can't really kind of stop the epidemic and so yeah that's that's it definitely a problem so the other thing is we're going to examine you know pandemics and I take it that neither the plague in in 550 in change or the plague in 1350 and change we're really pandemics they were more regional they were limited to oh you have been a Middle East baby but not they were I think she's making all another world right they weren't they didn't go all over the world that's true but they weren't contained within one nation so I mean we can debate about how you define a pandemic but I think that I think you probably could call them a pandemic so the thing is so here's the real kind of controversy is what about the Spanish flu of 1918 that's the kind of the best comparison to the present day in terms of okay what happened in the Spanish flu what happened to the American economy like the Spanish flu took place 1918 and really kind of lasted until early 1920 with various phases of it but so the short answer is we don't have a lot of information about what happened because there's not very good economic data from that time period for instance we don't we don't know what the unemployment rate was because that was that was statistic was actually not gathered by the Federal Reserve or by any of the states and so we have to rely on newspaper reports that's really there was this study done by the Federal Reserve in 2007 and the study actually they were forced to rely on newspaper reports in from Arkansas and Tennessee and some other places the study was done of the Southern District of the Federal Reserve and and when we look at those you know shopkeepers were seeing a decline of you know forty percent fifty percent so in the short term when the when the influenza was at its worst then things were shut down and shopkeepers were you know they were having could just you know live without income fifty fifty percent of their income was simply gone and so i'd ever had an impact but interesting the studies that we've done of it have shown that those cities and those places that crack down early and shut everything down their economies came back quicker and much more successfully than those places that tried to prolong you know try to ignore it remember the the philadelphia example w ere the mayor and the director of the city just simply ignored it and it spread like crazy well philadelphia was its economy was much kirk much more deeply than need economies well it's interesting in Minneapolis where I'm from they they shut everything down when the economy came back well in st. Paul which is right across the river they didn't do as many quarantine measures and they had more trouble with their economy and more long-term damage from their economy so let me talk you about in years I built a economy back well so I walked here take a note like here's one more interesting thing about all of these is that because people die in workers die then essentially you have inflation taking place you have higher wages for workers because the labor becomes more scarce and it becomes more dear but you know so is that going to happen in this case it I'm not sure honestly it depends upon how many people are just you know put out of work and actually actually died from the plague as to whether or not the labor value will go up so the thing is I think the same thing is going to happen with this with covet is that those places that have planned for this that have responded very quickly and in a kind of concerted manner you know everybody working together they're gonna be least hurt so my guess is China is going to recover pretty quickly in terms of its economy South Korea is probably going to experience a boom but some of the other Southeast Asian nations are also going to experience a boom out of this the United States we were late to it the president waited more than a month to implement any measures so even though some states began implementing measures there was nothing systematic about it so I think we could be in for a lot more hurt than some other parts of the world that responded to this more effectively yeah and it may not be a zero-sum game what I mean is if if you recover quickly in a global setting then you you're gonna you're gonna be way ahead of the guy who didn't yeah these are gonna take some of his big you're gonna eat his lunch going forward yeah and I think that's what's gonna happen to us yeah it's possible you know it's uh I mean I think we'll still the United States will still come out of this but but the lack of coordination here the kind of fumbles of the of the the White House and the Trump administration and especially the denial early on my gosh that that just is so damaging to efforts to try to contain this thing now you know the courts the stimulus package you know the payments to people as the payments I don't think are going to be as big of a deal as the loans to small businesses and and the the work of the Federal Reserve you know though the loans of the small businesses are going to be crucial because they have to keep people employed and that's you know what we didn't do in the 2008 Great Recession is we allowed unemployment to spike up very quickly now unemployment of course has spiked up even more quickly than during the Great Recession but you could bring maybe at least some of these workers back into employment once they get this these of these federal loans and so we might see some of that unemployment mitigated because of these federal these loans that required you know their forgivable if you bring back your employees and you keep your employees employed for the time of the quarantine and so that that could prove to be very important now the other thing is the Federal Reserve the Federal Reserve dropped interest rates to zero this I don't think is going to be a effective in really producing much of a stimulus the problem is interest rates were already too low in this economy and this is quite frankly this is something which needs to be laying at the feet of of President Trump because he pressured these he pressure you know the head of the Federal Reserve to keep their trip interest rates low and it looked like the Fed was going to be raising interest rates and in and they should have raised interest rates because now they've got very little place to go to stimulate the economy a term interest rates and interest rates are at zero and does this remind you of another economy that drove interest rates down to zero during a crisis and they've actually had hardly gone up from Japan the Japanese economy since the crash in 1990 have grown very little if at all and without the ability to stimulate economy by lowering interest rates you can lost that ability because they drove their race down to zero and you just you don't have that kind of leverage if for instance if if the Federal Reserve that pushed interest rates up to you know six percent and it would have slowed down the economy some but then when the crisis comes then you drop interest rates down to four or three read it two percent then you can create some room there's some real difference there you know so this is the problem with the Federal Reserve and interest rate but the other piece of the Federal Reserve which is I think going to be much more effective is the Federal Reserve as it can produce money and they are busily producing a lot of money right now they're offering to credit to big corporations these if it sensually become the commercial credit of kind of bender for the entire nation and actually probably for of the globe they're going to be offering credit to other central banks as well so you've got that part of it and then the Federal Reserve is also commenced buying American bonds government bonds tea builds and then give this in after the 2008 crisis and this was actually quite effective in kind of fall stirring up industry and a very distressed time so so the Federal Reserve you know like I say the interest rate thing up I don't think it's going to have much effect and let's hope we don't end up like the Japanese in an economy that simply cannot grow after this in a jam continue to spend they spend their their their public debt to GDP ratio is over two hundred percent is about two hundred twenty percent ours is about a hundred percent but it's going to go up from there and so when you when your debt levels get to a certain point you're spending so much money to service the debt that you're not going to be able to use that money for other kinds of things and you know economic stimulus azar gonna be less effective so yeah that leaves me with one question and that is you know is it a bottomless pit in the lens of history is the bottomless pit matter what your economy is if you spend what you don't have and you keep on spending and printing and spending and printing at the end of the day you have to somehow you have to pay it back you can't you know pending without some obligation or some secondary effect to pay it back and I wonder in the historical review of xur's what happens when a country hits a crisis like this and they spend everything they have and more and more and more than that that's gonna have an effect on them going forward what what does happiness farming and what would you imagine sure sure so you have the Japan case and they've been able to float that much debt I think and keep in to keep the interest rates or the you know the rates on their bonds relatively low because they still have a viable economy you know they still have a strong manufacturing sector and there's still a lot of money in the economy and almost all of that that debt is actually generated by Japanese it's the bonds are being bought by Japanese so so they can control that and there's some times that okay I'm Japanese I'm investing in Japan I'm not worried about the country defaulting because they won't default on me right there's a sense of loyalty that that drives some of that investing in the United States right now we have our bond markets are still pretty active and there other countries are buying our bonds even now we haven't sold so what could happen is the cost of the federal government to get other people the buyer bonds might go up as people begin to lose faith in the American economy of the global leader and if that happens then people will be less likely to buy those bonds and and then you'll have trouble then you trouble generate this is what happened to the 1970s and you'll begin to have inflation now that we're not there that's not even close to there but so big gets historically you know there's a there's a book that was published recently that was that's called this time it's different and this book actually mapped national debt defaults uh through like from the 1800s through the person and it's astonishing I mean you look at the countries that have defaulted and over time they become weak you know second-rate third-rate powers for instance Germany faked Germany after World War one Germany had massive debt and they were printing money Alex was a little bit like the Fed is doing right now and they continued to print money and the value of that money is typically declined and declined and decline and they had this enormous inflation I mean by 1923 you know to buy a cup of coffee you had to bring a bushel full of rights marks to the store to buy a cup of coffee or to buy a loaf of bread and and so we don't we don't have that we're just the opposite I think we'd like to see a little bit of inflation so that isn't happen yet but over time if we don't demonstrate kind of the the the power of the economy the efficiency of the economy that the faith of the people and its government if we if we lose that and we've lost some of it already actually then you know I'm not saying it's going to happen in the United States but anything's possible over time and and that's it's something to be aware of I mean we could be very quickly become a second-rate power if we get to indebted that's well that goes to the groups to one other thing I think we need to discuss before we close on listen and that is you know you mentioned how the Roman Empire you know it declined and I do at least a substantial part to the plague and so so it does I mean we know that just has political implications now what's really funny this one this one's different because we have a president who doesn't tell us the truth and who doesn't do anything really he hasn't done anything and he's been aside from being late even now he's not doing anything he spends his time blaming everyone and yet you know his polls are up his base till they still love him and I and I wonder I wonder what the natural you know the natural consequence of this is is going to be are they gonna continue to love him to the point where we have more years of Trump or is this going to have a okay again through the lens of history or is this going to have a very serious effect in terms of you know punishing him and the Republican Party for leading us to where we are now unprepared and uncaring and unable to deal with it with the crisis it's just going to change things dramatically but what do you you know I know there are multiple multiple effects all happening at the same time but what does history to us about where the you know the political animal goes in the next say six or eight months the next couple of years right so I can think of two examples one one kind of very different examples so let's take the 1896 election where William McKinley Republican ran against William Jennings Bryan Democrat and and the country was was still in a depression a very serious depression unemployment of over 10 percent a significant drop in GDP lots of businesses closing down lots of unrest strikes and you know violence between labor and and and police forces and just a very disturbing time and and you know one would have thought and and so the kind of the established power of course that the Democrats were in office in in that time for Grover Cleveland was president see so you might say well Cleveland was blamed and then McKinley won because because the Republicans were out of power and now they could come back into power and I think there's some truth in that but the other thing about this is that the Democrats ran as a very populist party in in the 1896 election they ran on the side of farmers and redistributing income and and and adding silver to the monetary system to to increase money supply so that farmers and no other people could make loans at low interest rates and and it didn't work in the election it's up now the economy improved in 1896 okay that's so complicated but the economy improved in 1896 and that certainly helped I think McKinley who was arguing status quo and probably hurt William Jennings Bryan because in the end of many farmers actually voted for McKinley so you have that situation where kind of the status status quo was look to coming out of a very serious depression and then you have the the Great Depression of 1929 t30 but you have a Republican leader you have Herbert Hoover it's President of the United States and Hoover was one of these guys who just didn't do anything and because the government was controlled by Republicans they didn't do anything and and they just let this thing go on I mean you know it started in 1930 business closures bank runs and Hoover very belatedly puts into place a five hundred million dollar fund for for farmers and gold misses but still Hoover didn't do much of anything to to help people right and Roosevelt runs and says hey I'm gonna help people I'm gonna mobilize the institution of government to help people and Roosevelt's elected in a landslide so now in this case the government has actually acted because it's quite frankly it's a divided government who knows what would have happened if the Republicans Bennett had been in charge of the House of Representatives they might not have done anything because when the when the Republicans in the Senate first saw that this is going to be a crisis what did they say let's give another tax cut corporations it was a very ideological response a Trump didn't even respond that way Trump said well we should we need to get this money out to the common common guide you know we need to go big on this so so so it's it's hard to say what's going to happen in this election Trump has a lot of baggage of course and one would assume look you know you've got a president who's been incredibly unpopular historically unpopular up to this point the one who was actually impeached and there was a trial in the Senate and very clearly did that he you know he abused his power you have a guy who has violated the Constitution with his you know his emergency declaration on the wall so you've got a guy who has a lot and you know after the Charlottesville riots in 2017 said well these these white supremacist there's good people and among them too and you know that those things all are a drag on him and in a normal election cycle you know Democrats once they come out of the the the convention of course you know the old saying is that people don't really think about this until September 1st right after Labor Day and the normal cycle of Democrats could you know pile on him when in do all these ads and everything and break down his numbers so so in a normal cycle I think the Democrats probably I think somebody like body can win the fact that Trump has actually agreed to this big stimulus package and once more has served him well and his numbers are improving he's still losing in important states he's still losing in some polls in Wisconsin and Michigan I'm not sure about Pennsylvania haven't seen a poll on that recently so it's it's hard to say how this is going to play but but you know the thing is we're talking in April and if we have a hundred thousand deaths by July in the economy really craters like it looks like it's going to then how will people feel in November he you know he could he's got some and daily you know briefings so that you know the American people are gonna get tired of looking at him so this is not going to go on forever and so but it I think in the short run is helping him in the long run over six months or nine months it's hard to imagine that that was gonna be if I ever see the virus will have its waves we're in the middle of a dynamic here it's changing every day yeah well you know it could go up to a hundred thousand two hundred and forty thousand fifty thousand if you want to have fun really I think the effect of the day we may have the worst case result an at that point it's going to be the media the social media the way you approach the public how gullible the public may be it's gonna be what Biden has to say what Trump has to say and it's going to be the blame game here we are in a pickle let's see if we'll throw the blame on the wall and see whether it sticks and everybody's going to be trying to do that if if Trump can deflect the blame you know that and I think that makes it different from previous experiences because it's there's so many ways that you could deflect the blame and confuse the public and that's going to be the test between the time the thing it's rock bottom which is probably going to be soon at the time of the election if there is an election would you agree with me on that yeah yeah I think it's no it's it's an incredibly dynamic situation and but the thing about the blame stuff is you know politicians have been doing this for centuries you know in the 1896 election William Jennings Bryan he didn't actually campaign and sat on his front porch and gave speeches but then his campaign lieutenants went out oh and they they sold such fear into the minds of Americans about William Jennings Bryan proposal forests thus silver the minting of silver I mean it they really did they did a very effective propaganda job of you know frightening the population so it's this is nothing new yeah okay well we'll watch it you and me will watch it I'm looking forward to our next discussion because I know there'll be a lot more to discuss to compare it against things that have happened in history and and to look at it through the lens of history thank you so much David in Mississippi okay take care of the day be well [Music] [Music]