You Cannot Fix the Economy Until You Fix the Pandemic
1. The Future
If you haven’t, you should read Charlie’s piece from this morning about Trump’s coming pivot to “restart the economy.”
I don’t want to dunk on this idea, because it’s not crazy. I understand where the president and others are coming from.
Here is the crux of the argument as charitably as I can put it: The economic pain which is here already is real. More is coming. If you lift all the health restrictions, maybe you get some dead people. But maybe not. And if you don’t lift them, well then, you know you’re getting massive economic dislocations, for sure.
I get this. Because the economic pain is real. Hell—not only is what we’re seeing right now real, it’s only the start. It will get worse. People need help and not the half-measures that are in either the House or the Senate bills. They need the full force of the U.S. government backstopping the entire economy.
Here is the problem with the argument that it’s time to restart the economy: It assumes that all we have to do is flip a switch and then we’ll be able to go back in time.
We live in a new world. The old reality—and by old, I mean the reality as of December 2019—is gone. Going back to that that reality isn’t a plan. It’s a fantasy.
We cannot return to the economy of three months ago by simply “restarting” it, as if it was a machine we just happen to have left idling in the driveway.
We will have to rebuild the economy. This will take a great deal of time and effort. It will be expensive and painful. And we cannot even begin to set ourselves to the task until the underlying problem has been managed.
Because here is the plain fact: You cannot reconstruct the economy until COVID-19 is under control. Period. Full-stop.
This does not mean that you have to wait for the virus to be solved or eradicated. It should not mean we need to be on lockdown for a year. We just need get to a point of manageable control over it.
But understand that at this point we still don’t even have a handle on what the scope of the contagion is, because we still don’t have enough tests.
There are a number of milestones that need to be passed before we can seriously begin rebuilding the economy:
(1) We need to have a clear epidemiological picture of the scope of infection and ojr transmission rates.
(2) The healthcare system needs to be in a place where it has the resources to manage the demand load.
(3) We need to have the capacity to rapidly test (and immediately process) a hugely elastic number of people on a moment’s notice.
Once those benchmarks have been met, we can start to rebuild. To attempt to “restart” the economy before they have been met will give us the worst of both worlds: An out-of-control pandemic plus a ravaged, non-functional economy.
Think for a minute how small the external shocks are that have hobbled economies in the past: Regional wars in the Middle East; real estate bubbles; banking scandals. Now imagine how the economy would function with large numbers of Americans hospitalized; with many others sick; with people afraid for the lives of their loved ones; with large percentages of children pulled from school; with workers calling out sick for fear of infecting their workplaces; with international travel severely curtailed; with supply chain disruptions across the globe; with demand—especially international demand—decimated.
To believe that you can have a robust—or even a functional—economy with a pandemic raging in the background is a fantasy.
And it’s a dangerous fantasy, because acting on this belief will cause both more death and more economic pain.
2. Where We Are Now Doesn’t Matter
I’ve been banging on about this for weeks now, but I want to hammer it again:
Where we are today doesn’t matter.
As of this morning, we had only 46,481 confirmed cases of COVID-19 in the U.S. and 593 deaths. When people say, “Oh, it’s just a few thousand people, it’s no big deal” they are not wrong, exactly. If we were only talking about 46,481 cases, we would be in manageable territory.
But the problem is not the number of cases. It’s the rate of increase. Have a look at some charts helpfully compiled by the New York Times:
Yesterday’s new-case total was double the number from four days ago. The four-day ago total was almost four times the number from four days before that.
That’s a very short doubling time.
So again: Today’s numbers are not alarming if today was the end point. The worry is: What happens if four days from now we double, and four days after that we double again? That puts us at 40,000 new cases per day in eight days’ time, with a total addition of somewhere in the neighborhood of 180,000 news cases added during that period.
And the curve would still be active.
Until the new case curve begins to flatten we can’t have any sense of what the steady-state looks like.
And if you care about deaths, well, this is what the death curve currently looks like:
That’s right: Our number of deaths is currently doubling every three days.
So is 500-some deaths worrisome? I mean, sure, in the sense that every life is precious. But that number isn’t what’s really scary: What’s scary is the curve and where that projects out to 8 days, or 16 days, or 32 days from now.
Also, if you think that this contagion is local, or easily contained, the map of confirmed cases should convince you otherwise:
If this is what your case distribution looks like, then you can safely assume that the virus has achieved break-out and is basically everywhere. The places without positive results are most likely just places where tests haven’t been available yet.
Until you have control over these curves, any attempt to “restart” the economy will fail because the underlying economic problem—a global pandemic which has the United States in its grip—has not yet been brought to heel.
3. Pandemic History
Yesterday I shared a snippet from John Barry’s magisterial history of the 1918 pandemic. In response, a reader sent this link to a presentation Barry gave at the Virginia Museum of History and Culture. It’s long, but worth your time.