As the COVID-19 pandemic continues, it’s becoming more apparent that using a paradigm generated by the American Enterprise Institute might not be the best way to proceed. Unfortunately, all of the think tanks, including the Democratic aligned ones, appear to be working from the same framework (i.e., kinder, gentler AEI plans). I’ll admit I wish I had figured this out when the plan came out, but I didn’t (though my prediction that state governments would goose the numbers was dead on target).
This is not a dig at the scientists and policy experts who were involved with the AEI report: they haven’t shown any inclinations to fudge data or lie in their comments in various media, and they are taking this seriously and not covering for Trump et alia. The problem is that the AEI plan is fundamentally affected by policy constraints. There are certain policies that a group like AEI can not and will not consider, and those policy constraints affect the range of policy responses.
Consider what a program put forth by a lefty think tank would look like. On the left, construed somewhat broadly, there was a general consensus on four policies:
- Rent and mortgage suspension, for businesses and residents.
- Temporary universal healthcare coverage, including for those who lost their jobs.
- Some kind of significant income supplements for households.
- Mandatory sick leave, so essential workers wouldn’t feel obligated to work when they are symptomatic.
There were other things too, but the overall goal was to use massive federal spending to place significant swathes of the U.S. economy into what multiple commentators, including Paul Krugman, referred to as a ‘medically induced coma.’ And not for a month either, but for as long as it took.
If that is your framework, you stop worrying about fourteen-day declines which allow you to tentatively reopen some businesses in order to keep them afloat. Instead, you focus on crushing the curve, and, critically, the prevalence of COVID-19 (the proportion of the population that is currently sick). Everything else is commentary. Prevalence is what should determine if various activities are safe, and, as importantly, it will determine if people feel safe partaking in those activities. Nobody cares if something is less dangerous than it was two weeks ago if it is still reasonably dangerous.
Since an AEI-backed plan that would result in massive federal intervention in the economy is an impossibility, we’re left with second-best options of relative improvements leading to partial reopenings. When massive federal intervention is off the table, then we’re left with these other metrics, such as decline for a couple of weeks followed by hoping for the best, because there’s no way to support the economy long enough to reach a meaningful low level of prevalence.
This unfortunate policy framework stems, in large part, from a ‘think-tank gap.’ The more centrist think tanks also were unable to countenance massive federal intervention, while the left-ish ones never really hit the ‘crushing the curve’ point hard (crushing, not bending). No one was discussing prevalence benchmarks (including me–I’m not claiming special wisdom here). That’s unfortunate because a low prevalence strategy is good public health policy and good economic policy. On the public health side, the best way to not get infected is to not come in contact with someone who is infected. While that sounds like something Yogi Berra would have said, it does have the virtue of being true.
On the economic side, while lots of people keep saying that we can’t restart the economy without defeating the virus, the converse is true as well–we can’t defeat the virus without backstopping the economy. When you need to pay rent or a mortgage, crushing the curve becomes extremely difficult because you can’t wait that long (boldface mine):
America’s hasty reopening is doubtlessly attributable to a variety of cultural and political factors. But for many U.S. cities, erring on the side of public health — by keeping the economy restricted for a week longer than absolutely necessary — would have meant jeopardizing their capacity to maintain funding for schools and basic social services. Republicans could have empowered state and local officials to make decisions about reopening on the basis of what was best for public health. Instead, they engineered fiscal scarcity that forced states to choose between prudence and solvency. Which may have been the point. The president and his advisers pressured states to reopen quickly, so as to expedite the onset of economic recovery. Instead, our austerity-induced haste has bought us a new wave of outbreaks and a deeper recession.
As we’re not going to ‘induce coma’ in the economy, we’re left with second best policies, and I’m not certain they’re up to the task.