[UPDATE: please also read My case against lockdowns, which spells out why I don’t think lockdowns are saving lives.]
R0 won’t stay [below] 1 for long, even if it gets there at all. We will then have to shut down again within two months, but will then reopen again a bit after that. At each step along the way, we will self-deceive rather than confront the level of pain involved with our choices.
There is some more at the link. Tyler is careful not to say how he feels about this scenario, but one is left with the impression that he believes that it is about the best one can hope for. I am going to protest more strongly.
My own thinking is focused on our economic and political system. I would prefer a much milder government response to the virus. In fact, the only response might be to require people to wear masks in crowded public areas, such as the sidewalks of Manhattan or riding mass transit.
I expect that on their own, without any legal coercion, many stores would require mask use as a condition of entry. “No shirt, no service” would become “No mask, no service.”
I expect that on their own, without any legal coercion, many businesses and individuals would increase teleworking and reduce travel. Large conferences and sporting events will hold little appeal.
Many schools and day care centers would take measures to keep sick children (or sick adults) from coming into their facilities. Parents who do not want to take time off to care for sick children would have to find commercial services that will do so.
Compared with the outcomes of these individual choices, the marginal effect of government-mandated closures and lockdowns on the rate of virus spread is small. It may not even be in the right direction.
Note that it is not certain that slowing the spread rate of the virus has benefits. Because medical treatment seems to make little difference in many cases, the solution to the problem of “overwhelming the hospital system” might be better triage.
Of course, triage is not the American way. Our cultural norms are that keeping someone alive an extra few weeks on a ventilator is better than giving up. There is something admirable about such norms, but perhaps in a crisis they ought to give way in order to conserve resources, especially the health of hospital workers.
The main benefit of delaying the spread of the virus is the likelihood that there will be more effective treatments down the road. But individuals who would like to try to avoid getting the virus until better treatments become available can make their own decisions to act especially cautiously. They do not need the state to impose their preferences on everyone else.
Whether the government response is mild or severe, there will be considerable economic dislocation. Much of the economic dislocation comes from the actions of private individuals and businesses. The idea that the government has the power to “reopen the economy” is as wrong-headed as believing that it is government’s responsibility to close businesses and shut people up indoors.
But I don’t think of the government as a rich uncle with an attic full of toys to give away. Instead, I think of government as an institution for forcibly collecting charity that can be used to help some of the people who suffer the most in this crisis.
I favor giving people and businesses access to credit lines, backed by taxpayer funds. Many individuals and businesses will not need credit to get through the next few months. At the other extreme, many will say that they can never recover financially, and they have to declare bankruptcy. In between will be individuals and businesses able to use credit lines to ride out the crisis and get back on their feet.
I also could support a relief program that gives money to those individuals who are particularly hard hit by the crisis, with the relief checks paid for by reducing government spending elsewhere and/or raising taxes for the next few years. I do not favor deficit spending, which strikes me as catering to the “rich uncle” illusion.
To me, it seems highly probable that in the last few weeks we have discarded American capitalism and individual rights for something that more closely resembles the Chinese model. Unlike China, we will have competitive elections, but both parties will now be more statist than Bernie Sanders.
The rights of the state now take precedence over the rights of individuals. The economy will now be a form of state-capitalism, in which government will direct funding and firms will expect protection from competition and innovation. Where it used to be the responsibility of government to enforce contracts, such as those between renters and landlords, it is now the responsibility of government to tear up these contracts.
Federal government spending as a share of GDP will permanently rise above the 18-20 percent norm of recent decades, to somewhere between 30 and 50 percent (getting to the latter would require crowding out some spending by state and local governments). I predict that inflation will soon be manifest, and price controls will be instituted, at least on some “necessities.”
When someone like me objects to all of this, I am afraid that the response from people under age 45 will be, “OK, Boomer!” Even before this crisis, there was little appreciation among well-educated young people for the liberal institutions of free markets, equality under the law, and civil liberties.
I haven’t heard anyone else say this. Can you say more about why you beleive this is plausible or true?
If widely-cited models like the Imperial College one are right, you’re talking about allowing an extra 1-2 million deaths in America compared to effective government interventions. It sounds like you’re saying “it would be worth it for a million Americans to die to save capitalism.” But is this a case of you not beleiving that the interventions will actuall make a difference (as in the first quote above)? I want to make sure I understand you fairly.
Happy to clarify.
I don’t think that it will make much difference. (a) many people, myself included, started social distancing before there were government orders, and many will continue to do so. (b) I believe that wearing masks and using better hygiene can reduce the spread rate considerably, even if people go out in public.
I don’t believe that going beyond (a) and (b) to enforce lockdowns and business closures saves many lives, if any.
I spell this out more clearly in another post.
I suspect you are overly generalizing from your own experience. Using “many people, myself included” to reason about society can easily lead to totally wrong predictions.
As a similar example, if I looked at my social group of hundreds of online friends, I could have confidently predicted that Elizabeth Warren would win the Democratic presidential nomination with 80% of the vote, and then go on to beat Trump in the general election with approximately 100% of the popular vote.
Even in my social group, many people kept going to gyms (crowded, nobody wears masks, sweating and breathing hard, many shared surfaces) until local governments ordered them closed. They kept going to restaurants.
I think it’s interesting to think about and question this, but I think this is one of the weak links in our argument (including the newer April 9 article).
I actually think overall, the evidence is mostly against your hypothesis. If there were really no difference between baseline scenario and lockdowns, we would have seen a very different story in New York City: by March 11 people knew this was an issue and that Italy was locked down, but it doesn’t look like this led to a massive behavior change. Similar arguments for other places in the US.
“It sounds like you’re saying ‘it would be worth it for a million Americans to die to save capitalism.’”
Even assuming that your numbers are correct, dismissing this as deaths vs. capitalism seem grossly out of touch.
I see this issue as the roughly 30% ( of touch work from home crowd) vs. the 70% ( out of a job crowd).
Until you can come up with a normative theory to balance these justified, but competing interests, then there isn’t really anything interesting to see here.
Consider it this way: “In the longer run, lack of economic activity will kill millions of Americans”. These deaths are are just as preventable as deaths due to corona.
+1
The Swedish approach is something like Dr. Kling’s. Sweden is relying on transparent communication by public-health authorities, private prudence (voluntary social distancing), greater voluntary isolation of especially vulnerable demographics. (But there is a ban on gatherings of more than 50 people.)
IHME currently forecasts that Sweden (pop. = 10.2M) will suffer 4,200 Covid-19 deaths during this first wave of the pandemic (March-May):
https://covid19.healthdata.org/sweden
By comparison, IHME currently forecasts that Massachusetts + Connecticut (similar combined pop. = 10.5M) will suffer more than twice as many Covid-19 deaths, 9,600 (5,600 + 4,000), during this first wave of the pandemic (March-May):
https://covid19.healthdata.org/united-states-of-america/massachusetts
https://covid19.healthdata.org/united-states-of-america/connecticut
But there are also examples of Statist nations that have much lower general fatality rates from Covid-19 in this period.
I hasten to add that we will need also two more kinds of data from the Swedish approach:
1) Does the Swedish approach enable quicker progress towards herd immunity (whilst not becoming a bad outlier in fatality rate)? Here we need evidence about prevalence of the coronavirus in the Swedish populace, especially random testing of healthy, working-age people. Or, instead, does the Swedish approach (transparency, private prudence, facilitation of voluntary isolation of vulnerable demographics) willy nilly delay progress towards herd immunity, more or less like Statist approaches?
2) Does the Swedish approach substantially reduce economic disruption, compared to Statist approaches?
Or maybe wide differences among national cultures are more consequential than Statism per se?
Today (April 10), IHME revised — tripled! — its projection for cumulative Covid-19 deaths in Sweden, March through May, to 13,000!
https://covid19.healthdata.org/sweden
Thus the IHME’s current projections for Sweden and for MA + CT are now similar.
(The drastic revision of the projection for Sweden reminds me to heed Arnold Kling’s words of caution about elaborate models.)
Thanks Arnold for a superb posting. You are a beacon of good sense plus you write very well.
In a normal year, about 2.5 million persons die of all causes in the USA.
If the virus unchecked would cause an extra 2.5 million deaths, then I would endorse lockdowns.
But if the extra deaths are only going to be about 100,000, I really have to question extreme measures. Our media stresses the deaths, and it is natural for that to concern us.
It is impossible for any politician to talk in these terms without being branded a monster, but at least we can talk about this in our blogs.
And how does that differ from what we have now? Don’t firms expect protection from competition and innovation already? And government already directs a lot of funding. I’d like to see a marginal argument here.
Also, if you give individuals taxpayer-backed credit lines (what happens when a person using such a credit line goes bankrupt btw?) isn’t that state-socialism?
That’s rather too strong for me. I’d say that the last few weeks might (might!) have served to dispel the lingering illusions of some individuals that America is still a land of unfettered capitalism and individual rights rather than a modern ultra-bureaucratic state not terribly dissimilar from the Chinese model. Which it arguably is.
Things like this will help dispel lingering illusions:
https://www.wsj.com/articles/fed-announces-new-facilities-to-support-2-3-trillion-in-lending-11586435450
There’s a word in aviation for the phenomenon we’re expecting: “Pilot Induced Oscillation”. It’s an ill-tuned feedback loop (typically underdamped) where the time lag of the response isn’t taken into account.
Some transit and power data in support of Arnold’s position that individual actions are more meaningful than government action.
https://mobile.twitter.com/jonkay/status/1248226753165889536
Arnold, as someone on the verge of 45 years-old, I would never “OK, Boomer” you.
You’ve earned it.
We’re talking about video games, right?
“The rights of the state now take precedence over the rights of individuals.” Eventually someone with deep pockets is going to challenge the first-amendment right of freedom of assembly. The Supreme Court will eventually rule on this. I have seen no speculation as to how the court might rule.
“When someone like me objects to all of this, I am afraid that the response from people under age 45 will be, ‘OK, Boomer!’”
For the record, you were called out as being an out of touch boomer after calling the suffering of millions as out of work Americans as a “short term liquidity” issue. That struck me as callous and unsympathetic.
Btw – excellent post.
Even before this crisis, there was little appreciation among well-educated young people for the liberal institutions of free markets, equality under the law, and civil liberties.
I really wish libertarians would focus attention why young people feel left behind instead complaining their education. The best get people to support free markets is make them feel they benefiting from free markets.
The 30% work from home leisure class can’t seem to understand the plight of the 70% out of work class. Libertarians seem to be particularly tone deaf to this…and ASK’s posts are but a reflection of this.
I am tired of this canard. I support aiding people who were hurt by this crisis. The CARES act does less to help people who need it than I would if it were up to me. If you insist that the only way anyone can show sympathy for other people is to support the CARES act, then just put it that way, and stop insulting me personally.
“I support aiding people who were hurt by this crisis. The CARES act does less to help people who need it than I would if it were up to me.“
That’s all you needed to say, thank you. Why was that so difficult?
N=1, so you can dismiss it if you’d like, but up to this point, you have come across as callous and unsympathetic.
Tyler Cowen has gone off the deep end during this crisis with his negativity. I’m very surprised, but I also know he says he reads twitter and blogs pretty much all day at home which could be an explanation.
I sometimes wonder, if it was 2007 (pre-iPhone) vs. 2020, would we have reacted the same way? Would it have been worse and for whom?
2020 seems to be predicated on two guiding principles:
1) the enduring belief in models to guide public policy regardless of their underlying ability to accurately predict actual outcomes to within any degree of accuracy
2) the always connected smartphone with never ending updates.
Good questions. I will get back to them.
You are getting a little more specific about your inflation virus fears now that you say there may be price controls on necessities.
Here are my naive uninformed guesses that I use to justify why I disagree.
The quantity of M2 or base money or whatever measure does not drive inflation. People need to have a reason to transact where the terms are that more money is to be exchanged for less value. It is transactions that drive inflation. Increasing wealth inequality suggests the money holder has little to worry about when transacting. The wealthy person’s stock of money or the wealthy company’s stock of money is not relevant. Reluctance to compare offers drives inflation but I don’t see reluctance changing.
Bond market prices say that inflation will be low.
Inflation begets inflation but what will get the ball rolling? We don’t have rapid labor force growth. We don’t have growth in organized labor. We have GDP that is increasingly services and more disconnected from commodity prices. Less trade might boost prices a little but that inflation can be mitigated in a variety of ways. There will be more automation and getting inputs from multiple suppliers.
Lack of investment boosts inflation. The marginal source of capital is the middle income developing countries. They like western country bonds and when possible they like to list their equity on U.S. stock exchanges and Hong Kong as an alternative. People seem to like negative real rates of return. There’s a savings glut so I think there will be adequate investment in producers of staples. We will not need price controls on toilet paper and milk.