How a Princeton Economist Teaches Resilience

An oak is strong. A reed is weak. But in a terrible storm, the oak is uprooted and the reed survives. Markus Brunnermeier, an economics professor at Princeton University, takes that metaphor from the French poet Jean de La Fontaine as the theme of his new book, “The Resilient Society.” His message: Like the reed, we must bend, not break.

There are a lot of books on resilience for sale, including “Resilience for Dummies.” What makes Brunnermeier’s special is that it’s informed by an extraordinary series of video seminars that he conducted with leading economists during the pandemic.

Demonstrating a degree of entrepreneurship for which Ivy League professors aren’t generally known, Brunnermeier lured big names who might not have made it to the Princeton campus but were happy to appear by video, especially during the forced idleness of the pandemic. These thinkers include a dozen or so Nobel laureates in economics and dozens more leading economists, as well as noneconomist luminaries such as Jerome Powell, the chair of the Federal Reserve. The book has more than 200 citations of presentations at what Brunnermeier calls Markus’s Academy. (I wrote about the series earlier this year, when I worked for Bloomberg Businessweek.)

In distilling all that braininess, Brunnermeier covers a lot of material, somehow managing to relate all of it to resilience. There are discussions of pharmaceutical innovation, vaccination strategies, fiscal policy, monetary policy, debt, racial justice, global trade, deflation, inflation and climate change.

“I argue that resilience can serve as the guiding North Star for designing a post-Covid-19 society,” he asserts.

Risk is not to be avoided, Brunnermeier argues. It’s only by taking risks that society achieves breakthroughs. And a society that doesn’t take risks becomes fragile. “Perhaps paradoxically,” he writes, “enduring a small crisis from time to time can be preferable to avoiding them at any cost. A crisis is an opportunity to make needed adjustments.”

Another theme is that there’s much to be learned from others’ experiences. Covid-19 has been a spur to experimentation. To stimulate its economy, the Chinese city of Hangzhou sent digital coupons to residents’ phones that could be used only for consumption and had an expiration date. Indonesia focused its vaccination on the working-age population early on. Germany preserved workers’ ties to their employers during the Covid-19 recession through its traditional Kurzarbeit, or “short-time work.”

Brunnermeier doesn’t necessarily endorse any of these initiatives. Kurzarbeit, for example, could stall the needed reallocation of workers from dying industries into growing ones, he says. His point is that there’s strength in the diversity of approaches. “A forest that consists of only one type of tree might fully die out if a disease to which those trees are susceptible emerges,” he writes.

Resilience is easier to muster for the rich than the poor, who have no buffers against shocks, Brunnermeier writes, citing work by the economists Sendhil Mullainathan and Eldar Shafir. “In the long run,” he writes, “the ability to take risks amplifies the initial level of inequality because wealthier households usually earn higher returns on investments than poorer households.”

Come to think of it, Brunnermeier has proved his own point by writing this book: “The Resilient Society” itself is a manifestation of resilience in the face of adversity.

Number of the week

$28.4 trillion

The statutory limit on U.S. public debt, which took effect on Aug. 1, after the expiration of a suspension that began in 2019. Treasury Secretary Janet Yellen warned Congress on Sept. 8 that “the most likely outcome” is that her department’s extraordinary measures to finance the government in the absence of a congressional increase in the debt ceiling “will be exhausted during the month of October.”

Quote of the day

“Let me tell you something that we Israelis have against Moses. He took us 40 years through the desert in order to bring us to the one spot in the Middle East that has no oil!”

—Prime Minister Golda Meir of Israel, at a state dinner honoring Chancellor Willy Brandt of West Germany (June 10, 1973)

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