How to Jump-Start a Post-Coronavirus Economy

Reuters
March 30, 2020 Topic: economy Region: Americas Tags: CoronavirusSymptomsPoliticsEconomyPandemic

How to Jump-Start a Post-Coronavirus Economy

Those people who have recovered from the coronavirus, whose number will grow over the next days and weeks, should get certificates to this effect from their healthcare provider and be free to go to work and otherwise move about, to help beef up the economy.

Earlier this month, President Donald Trump clearly stated the issue: “Look, you’re going to lose a number of people to the flu. But you’re going to lose even more people by putting a country into a massive recession or depression.” He is not the only one calling to restart the economy in the near future, even if it costs some lives. On the day following the president’s statement, the Wall Street Journal ran five op-eds written by people who supported this view one way or another. One op-ed was headlined “Minorities Bear the Lockdown’s Economic Brunt” and another op-ed declared, “A total shutdown could cost the economy $1 trillion a month. We need more tailored measures.” According to still another op-ed, “A universal quarantine may not be worth the costs it imposes on the economy, community and individual mental and physical health.” Finally, one op-ed suggests, “Half facetiously, we need infection camps where millennials can go and get exposed and frolic for two weeks and then come back and go to work.”  

 

One notes in response that the young are not nearly as immune to the virus as this statement implies. About 46 percent of people who have tested positive for coronavirus in New York City are between the ages of eighteen and forty-four (as of Monday), and the Centers for Disease Control and Prevention reported last week that, nationwide, 38 percent of the people hospitalized with coronavirus were twenty to fifty-four years old. Moreover, once infected, young people take the infection home to their elders. 

Not everyone calls on the young to bear the brunt of restarting the economy. Texas Lt. Gov. Dan Patrick told Fox News’s Tucker Carlson, “I’m not living in fear of Covid-19. What I’m living in fear of is what’s happening to this country. And you know, Tucker, no one reached out to me and said, ‘As a senior citizen, are you willing to take a chance on your survival, in exchange for keeping the America that all America loves for your children and grandchildren?’ And if that’s the exchange, I’m all in.” On March 26, the Wall Street Journal ran a frontpage article stressing the risks isolation brings to older Americans. 

Some economists draw on a cost-benefit analysis to argue that the costs to the economy are higher than the benefits to people’s health. Stanford University’s Walter Scheidel, an economic historian, asserts, “Economists should be doing this cost-benefit analysis. Why is nobody putting some numbers on the economic costs of a monthlong or a yearlong shutdown against the lives saved? The whole discipline is well equipped for it. But there is some reluctance for people to stick their neck out.” Such analysis, ethicists have pointed out, is often colored by the assumptions snuck into the analysis. For instance, how value does one ascribe to human life? Some economists draw on the earning stream a person could produce in order to calculate the income lost if he or she dies. This suggests that income is the sole measure of a person’s worth; it follows that the lives of those who are retired, those who are too disabled to work, and those who are homemakers are worthless. Others rely on the risks people are willing to take, for instance by buying homes next to chemical plants or ammunition factories—which reveal that people put very little value on their lives because they are willing to live next to a plant that creates pollution even if the housing costs there are not much lower than elsewhere. Others make still different assumptions to determine how much value to ascribe to a life. Hence, the results of the cost-benefit analysis, far from a scientific analysis, depend highly on the assumptions one chooses as one’s starting point. The challenges of relying on cost-benefit analysis are highlighted when one considers the case of young offenders. Young offenders tend to re-offend, and incarcerating them costs the public a great deal (keeping a juvenile incarcerated for a year is more expensive sending a student to a private college for a year). Hence, shooting young offenders would be very cost-beneficial! 

Many refer to a new book by two Princeton economists that shows that joblessness leads to suicides and drug abuse. The authors, Anne Case and Angus Deaton, the latter a Nobel Laureate, call these “deaths of despair.” These data are now used to argue that the human costs of social distancing are too high. However, the data cited concerns regarding people who have lost all hope of finding jobs in the future either because they are aging or because they have tried to get jobs repeatedly and failed. Those who are currently unemployed as a result of the coronavirus surely realize that jobs will be waiting for them in a few months. In short, the Princeton data are revealing but do not speak to the current question of when to restart the economy.   

Some hard choices are inevitable, as when there are not enough ventilators to go around, and physicians must decide which patients will get them. However, on the macro level, we have a much better choice than either prematurely calling off most restrictions in order to get people back to work—and thereby causing mass casualties—or staying locked up for months on end. 

The reason Germany has a much lower rate of coronavirus deaths (0.4 percent) than Italy (9.5 percent), Spain (6.8 percent), or France (4.3 percent) is that the Germans are using the same method that worked well in South Korea, Taiwan, and Singapore: they test widely, isolate the sick and those they were in contact with, and let the healthy go to work.  

For the United States to get there, the president must overcome his distaste for ordering the private sector to mass-produce tests, for U.S. labs to adopt Korean tests that deliver results in two hours, provide funds for training many in the use of tests and ventilators, and allow the use of surveillance technology to identify people and enforce three weeks of self-segregation for those who are sick or who have been in contact with someone who is ill. Those who have recovered from the coronavirus, whose number will grow over the next days and weeks, should get certificates to this effect from their healthcare provider and be free to go to work and otherwise move about, to help beef up the economy. (This assumes that the evidence that people who have recovered from the coronavirus will have stable immunity will continue to grow.) 

True, these policies go against the American tendency to prefer to let the private sector work on its own, following public signals rather than government dictates. However, these are extraordinary times, requiring extreme measures. Rather than sacrificing many lives to get the economy going again, the United States should adopt policies that can get its citizens off the horns of this dilemma in a reasonable amount of time, as shown by other nations. 

Amitai Etzioni is a University Professor and professor of international affairs at The George Washington University. He is the author of The Moral Dimension: Toward a New Economics and Reclaiming Patriotism

Image: Reuters