| The Coronavirus and its Impact on the Economy The 1960s were the era that Galbraith wrote the best-selling Affluent Society and taught it to me at Harvard by reading chapters' word by word in his classes. It permanently estranged me from Harvard. Intellectuals are always on a hair trigger in detecting excesses in economic growth and longing for a "stationary state" without pollution or progress. Exiled to such a situation by being made Ambassador to then indigent India during the Kennedy Administration, Galbraith developed the idea that economic growth was impossible except where it is already taking place. In a country like India, the poor all "rationally accommodate themselves to their poverty" and there is no demand for growth. Galbraith's attitude fed on the idea, still trumpeted daily by economists and their echo chambers in the media, that 70% of the economy is consumer spending, mostly on trash and trivia. From the Wall Street Journal to Barron's and Forbes, even conservative columnists pore through the data of consumer demand for portents of future economic conditions. The chief threat of coronavirus, to read the pundits, is not killing people or stopping factories but discouraging consumption spending. Barron's worries that the fall in the stock market will result in a collapse of spending by the wealthy on big ticket items that fuel economic growth. Consumption spending in itself, however, has nothing to do with economic growth. It is purely a figment of demand side theory. Whether people "demand" something is irrelevant, unless they are simultaneously supplying goods and services that others demand. Supply ultimately creates all demand. The demand side model, however, is popular on campuses because it leads to a cartoon of capitalism as driven by greed and gluttony. Cherished by authoritarian regimes that revel in their own personal consumption and are hostile to the freedom necessary to growth, demand side theory frees dictators of their dependence on entrepreneurs. A static economy favors totalitarian regimes that do not have to gain the support of their people. The ideal of the stationary state has been popular throughout the history of capitalism. But it stems from the basic Marxist assumption that the production problem has been solved. All we should worry about it redistribution by the state. The various images of glut and waste are typical of upper-class angst from people who already preen in costly merino wool and dappled denim, electric Teslas and vacations on remote beaches and wasteful organic cuisines, while disdaining the plastics, cheap cars, polyesters, and fast foods of the lower classes. All the worry about "trash" like the worry about "homelessness" represent memes for pejorative cartoon capitalism. There is no trash problem. Trash can be disposed of or reused in a tiny portion of the planet. These concerns too spring from upper class resentment toward the bumptious masses. Economic growth is always dynamic and springs from supply side learning. It expresses the creativity necessary to the survival of the race as population grows and faces such threats as meteors, plagues, real environmental disruption and terrorist movements. Life on earth is always beset by threats and disorders. They are the signals of new opportunity and learning. Today's Prophecy A crisis like the coronavirus spurs economic growth by evoking new creativity in pharmaceuticals, home entertainments, food services, and communications. Far from discouraging investors, panicky stock market selloffs should be seen as a rare buying opportunity. Focusing on trash and trendiness diverts both media and markets from all the important developments that we try to cover in our prophecies. Bibi Netanyahu's Monday reelection in Israel, where much of our technology originates, was far more significant for growth than all the binge-babbles of American political commentators today and tomorrow on the "excesses" of consumerism. Netanyahu's Israel is a global fount of the innovations that fuel economic growth everywhere. As Dennis Prager recently wrote in disparaging the coronapanic: "There are things about which people should be panicked. For example, the contempt for America and capitalism taught to a generation of young Americans from elementary school through college is worthy of panic." Panicking over normal changes in weather or outbreaks of disease or trivia of trash and pollution distracts the world from an era of exciting opportunity. Forget the US politicians' panders to the voters' mostly unearned "demands" for free goods and services. Dismiss their summoning of ever more exotic refinements of rights and entitlements. What matters is the continuation of the world's efflorescence of creativity and invention that is manifest in all our time-price measures of innovation and progress. We are finding more and more intriguing companies around the globe, which we will be following in the weeks to come. Regards, 
George Gilder
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