AEI paper on virus containment policy

Written by Scott Gottlieb and others. They call it a road map to reopening, and it includes various benchmarks and milestones that might be used in deciding when to lighten up on the shut-downs. Pointer from Yuval Levin.

My main quibble with it is that I think that we should at least try a “masks and scarves” strategy in one city and compare it with the “shut down the economy” strategy in a comparable city. Although the report recommends using masks or face-covering fabric, it does not consider that this might substitute for strangling local economies.

[UPDATE: You want to object, “We can’t experiment with people’s lives in a crisis!” My response is that we are doing exactly that. We are experimenting with various lockdown policies, but not in a way that allows us to learn from the results. ]

For the future, the report recommends,

The COVID-19 pandemic has exposed serious gaps in our nation’s pandemic preparedness. COVID-19 will not be the last public-health emergency to threaten American society. We must invest in the scientific, public-health, and medical infrastructure needed to prevent, detect, and respond to the next infectious disease threat.

. . .We need to move away from a decentralized system that promotes unequal implementation of preparedness measures across the nation and toward more coordinated execution of response. . .Preparedness for public-health emergencies should be elevated as a function in the White House, with a coordinating function analogous to the director of national intelligence.

I fear that this is exactly what will happen. But it embodies a form of the Nirvana Fallacy, in which a big spending spree and consolidating power in a central agency are presumed to work. Some points to consider:

1. We already have a CDC, and it failed at its One Job. It may have done more harm than good, by trying to monopolize testing and by recommending against people wearing masks.

2. After 9/11, we created the TSA. Do we think that was cost effective? Remember to include the lost time for passengers. Plus the inconvenience and the effort it takes to implement workarounds for the restrictions on liquids.

We are in a Robert Higgs Crisis and Leviathan moment. Government officials always say in a crisis “We need more power.” They never relinquish it. Look at where the Fed’s balance sheet stood ten years after the “emergency” of 2008. It had not even come close to shrinking back toward its pre-crisis level. And now, of course, it will grow by another order of magnitude.

We have increased government spending by roughly 50 percent over last year. What do we expect to happen in 2021?

a) We go back to the old baseline level of spending.

b) We cut spending below the old baseline, as part of the process of restoring fiscal health.

c) We continued to spend about 50 percent more than the old baseline.

You and I both know that the answer is (c). Keynesians will be warning us that any “cuts” in spending will cause a recession. And politicians, having increased their ability to conspicuously bestow funds on various constituents, will not relinquish their enhanced control over resources.

6 thoughts on “AEI paper on virus containment policy

  1. It takes more than masks and scarves (with masks being very hard to come by for the general public) for get things back open. It also takes cleaners, hand sanitizer, gloves, paper towls, etc are have become almost unavailable (go to any store today and try to purchase lysol wipes).

    Until the logistics gets much better, the thought of easing up and seeing how many people die is insane. When the results of an experiment could be the collapse of the local healthcare facilities, one should think long and hard about easing up.

    The problem with the U.S. is that we are very bad at doing what it takes to get past this pandemic (witness all of the people is large groups in NYC). The results will be that the U.S. is probably going to be the last to emerge from the pandemic while those countries that can get their act togeter will have their economies up and running.

  2. We already have test data on isolation vs openness vs testing if u look outside US (gasp!). Taiwan S Korea Iceland Singapore Japan Sweden all remained open with and without aggressive testing. UK and US shelter in place (in heated dry infectious homes) and test less wind up topping the death charts on this one.

  3. You left out the option which is most likely: d) the spending decreases to slightly higher than the original baseline, much less than 50% higher.

    • Budget Deficit % GDP

      2009: 9.8%
      2014: 2.7%

      It’s almost like recession deficits and emergency spending don’t remain in perpetuity.

      I do understand Arnold’s concern that deficits can ratchet up in a crisis and remain elevated, but the hyperbole that the state of affairs in the crisis will extend exactly as is into perpetuity is unhinged.

Comments are closed.