Written by John Furlan
Recovering the Economy
Economic Impact of COVID-19 Policy Responses Largely Being Ignored
The issue isn’t how to somehow try to eradicate COVID-19, that opportunity passed long ago, if it ever realistically existed. It has been on how to “flatten the curve,” so that healthcare systems are not overwhelmed.
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According to The Hill, Fauci on Sunday said of COVID-19, my bold emphases added:
“Unless we get this globally under control, there is a very good chance that it’ll assume a seasonal nature. … We need to be prepared that since it will be unlikely to be completely eradicated from the planet that as we get into next season we may see the beginning of a resurgence.”
So the challenge addressed has been on how to “flatten the curve,” so that healthcare systems are not overwhelmed.
What are the economic/social costs of doing so, and when might the curve be flat enough so that those policies can start to be lifted, at least selectively, by geography and demography, without risking overwhelming the U.S. healthcare systems and personnel, their main justification? These issues are perhaps even less well-reported than the Covid-19 model data issues.
What’s been missing in the COVID-19 national debate so far is a viable, credible economic voice on what the pandemic and especially the policy response to it is doing to the U.S. and global economy. Someone like Fauci, Gates, Ezekiel, Lipsitch and others.
To address these economic issues, since an update to my March 25 article, and explicitly in my March 29 and April 1 articles, I have been calling for Sanders to create an Economic Jobs Council to address the issue of the rapid destruction of American jobs, before the 6.6 million jobless claims report on April 2 seemed to validate the need for one.
“What’s been missing in the COVID-19 national debate so far is a viable, credible economic voice”
I did so, despite the obvious fact that Sanders wasn’t going to get the nomination. Some may understandably question my appealing to Sanders to tackle the unemployment issue. I have done so in the very slim hope that he might run with it, since he is so concerned about the plight of American workers.
At this point I don’t care who runs with the idea, even Trump, because it’s badly needed. In addition to the economists I mentioned in those articles, who have not responded positively, I would suggest that “big names” like Furman, Krugman, Stiglitz, Summers, Mankiw, etc. consider doing so ASAP.
The natural human economic response to COVID-19 is “you can’t put a value on a human life,” a “single death is one too many,” etc. But that is not necessarily the best policy response, based on the best data available. I’m not trying to be cold-hearted by saying so, just realistic.
Trump has expressed the “cure may be worse than the disease” view several times, but of course he has often destroyed his own credibility, especially to the liberal media. So Trump needs an economic Dr. Fauci if he wants to have any chance of getting the public to agree with his viewpoint. And that is obviously not going to be Jared Kushner or Peter Navarro.
Trump overcame his reservations about a national lockdown not because of data, models and Fauci, but rather because of his emotional reaction to the horrendous COVID-19 situation in Queens, NYC, his boyhood home, and the death from COVID-19 of a close realtor friend of his. I’d hate to see what might happen if a member of his family ever got it.
That is how the human mind evolved to work, it has emotional responses to situations that touch it most closely and extrapolate stories from them, often in fearful ways, because of anxiety over the unknown, which may have been evolution’s way of propagating our species, when that unknown could be a lion behind the bush.
But in the 21st century it doesn’t have to be that way, does it? Isn’t this supposed to be the era of big data and artificial intelligence? But you need viable data for any of that to work.
There are a few “free market” ideologues who dislike “big government,” except when it suits them, banks, military, etc., with a similar view as Trump’s about opening up the economy sooner rather than later.
But they lack credibility, they were often the same types who didn’t see the 2007 – 09 Great Financial Crisis (GFC) coming, and then greatly over-played the impact of rising deficits, calling for austerity which greatly prolonged the economic damage and caused huge human misery.
Flattening the Curve Was Necessary Because of Decades of Prior Poor Healthcare Policy
A crucial COVID-19 issue, which is often overlooked in the media, is that the public healthcare systems in the most vulnerable high-density cities like NYC were at very real risk of being overwhelmed, even with social distancing, which no responsible politician like Cuomo could conceivably not try to do everything possible to avoid.
That risk exists because the public systems have been systematically under-funded for decades. The private ones have cut everything to the bone to jack up shareholder value and CEO stock options, and because of the lack of national healthcare insurance, paid sick leave, etc., which discourages the tens of millions of un/undercovered from getting tested and treated early, when the disease COVID-19 is most treatable.
“public [healthcare] systems have been systematically under-funded for decades.”
For the simple, cruel, harsh fact, which Cuomo has stated time and time again, is that by the time a COVID-19 patient, especially the elderly and/or with medical conditions, goes on a ventilator, his/her odds of living are not very good, and they worsen the longer they are on the ventilator.
Given those criminally negligent earlier healthcare policies, including what would seem even the easiest ones of simply providing for enough PCR tests early enough, medical personnel PPE like masks, etc, then perhaps the only viable policy response has been to react by locking everything down.
“private ones [healthcare systems] have cut everything to the bone to jack up shareholder value and CEO stock options”
Policy-makers like Cuomo are well aware of that, even though he has always framed it differently as one death being one too many, which is understandable for a politician, and while he is still trying to trim waste in his state’s Medicaid, whose great expansion in New York under Obamacare has greatly helped in this crisis.
New York Deaths Far Above California, All Other States
The policy response of Fauci and others, most importantly key governors like Cuomo and Newsom, has been to try to “flatten the curve” of COVID-19 cases to reduce the number of deaths by trying to prevent healthcare systems ICUs from being overwhelmed and thus unable to treat the critically sick, either from COVID-19 or other diseases, injuries, etc.
That policy response was understandable and perhaps optimal, given the unknown nature of the novel coronavirus. What these policy-makers most wanted to prevent was another northern Italy or NYC happening, overwhelming their healthcare systems by flattening the curve to below the available healthcare resources.
That curve flattening may have happened in California, see this March 31 Los Angeles times article titled “Social distancing may have helped California slow the virus and avoid New York’s fate,” and this April 3 CNN article titled “What California is doing right in responding to the coronavirus pandemic“.
This is not meant to cast aspersions on New York and Cuomo, or heap praise on California and Newsom, and San Francisco Mayor Breed. The virus doesn’t think in terms of geographic boundaries or political parties and ideologies, and there are profound differences between the two states’ situations.
According to the April 5 update of the IHME model I cited above, California is projected to have peak deaths per day of 70 on April 17 eleven days away compared with a peak in New York state of 878 on April 9, just three days away. California’s population is 39.9 million, New York’s 19.4 million, so on a per capita basis, the latter’s death rate is about 25.8 times greater.
At its peak on April 8, just two days away, New York is projected by IHME to need 6,664 ICU beds, far above 718 available, and 5,641 invasive ventilators, though the latter is I believe a far cry from the much higher numbers that may have been mentioned by Cuomo. In contrast, at its April 14 peak, California, with a population 2.1 times that of New York, was projected to need 798 ICU beds, well below 1,993 available, and 678 invasive ventilators.
“California is projected to have peak deaths per day of 70 on April 17 … compared with a peak in New York state of 878 on April 9”
According to another useful data site, New York has 4,376 ICU beds currently in use, which doesn’t seem to jibe with the 718 available and 6,664 needed at the peak in the IHME model projections.
That is not to say or imply that there might not be acute needs for ICU beds and medical personnel, ventilators, PPE, etc. in key hospitals, like Elmhurst in Queens, NYC, a hospital in AOC’s district which she has mentioned. California currently has 1,040 ICU beds in use, actually above the projected COVID-19 peak need, though I would assume the current use includes non-COVID-19 patients.
The main point being that in both states, New York and California, IHME projects COVID-19 peak hospital resource use is just two and ten days away, respectively. This is not something you often read about in the mainstream media, though those stories are now starting to come out, which was given as the justification for another huge move up in the stock market today.
California issued its “Stay at home” order on March 19, New York three days later on March 22. There may be other key factors at work, e.g. there are important socio-economic-political differences between these two states, which I won’t go into here, other than population density.
For example, according to this web site, NYC has a population density of 11,084 per square kilometer versus 7,461 for San Francisco, which are by far the two highest in the U.S.. San Francisco implemented its “Stay at home” effective March 17. Its Muni and BART transit systems, while crowded at rush hour, are nothing like NYC’s subways, which was probably a major spreader of the virus.
Los Angeles is California’s largest city and the nation’s second, with 4.1 million people, NYC is 2.1 times larger with a population density 3.3 times greater. LA is mainly a “car culture” city, it’s hard to get the virus stuck for hours in a car on its endless freeways, which has increasingly become the case also in the S.F. Bay Area, especially on the dreaded Highway 101 in Silicon Valley.
What the U.S. Must Do to Avoid Another COVID-19 Fiasco in the Future
What the U.S. needs in the future to avoid another COVID-19 type crisis is large but targeted healthcare spending, because it already has far too much wasteful healthcare spending, on much smarter policy, first and foremost on a national surveillance system of serology antibody random testing which can catch epidemic diseases just as soon as they get started.
What it also needs is a much better system of coordinating the resources of the currently available healthcare “systems,” within public and private hospital systems and between the two types, Cuomo often talks about this, so that if Elmhurst hospital in AOC’s Queens district is being overwhelmed with COVID-19 patients some can be shifted to other hospitals and facilities.
“a virus moves far faster than Hitler’s blitzkrieg through Poland and France.”
What the U.S. also needs is the capacity to rapidly produce badly needed medical equipment and supplies, if/when that again becomes necessary.
In WW II the U.S. had huge excess “surge capacity” from the Great Depression that it could rapidly reconvert to making the enormous numbers of tanks, ships, planes and other equipment that overwhelmed Nazi Germany and imperial Japan. But that took time, many months, and a virus moves far faster than Hitler’s blitzkrieg through Poland and France.
It should be far easier to make the ventilators and PPE if/when needed, even after the U.S. has disastrously been de-industrialized by four decades of neoliberal financialized globalization. But so far even that hasn’t happened.
The U.S. months ago lost the ability to eliminate COVID-19. Perhaps that was never realistic for an airborne respiratory illness in a globalized world with jumbo jets.
I’ve seen on YouTube another expert in the field say that COVID-19 is like any other respiratory illness like flu that easily spreads through the air, which hence can’t be contained by testing and tracing, the latter being impossible.
So he said the U.S.should have just been allowed to run its course to create “herd immunity,” when 80% of the population has been exposed. And furthermore, that the lessons of China and S. Korea were misunderstood, that they achieved herd immunity before they locked down or tested and traced, since the novel coronavirus was just that, novel.
“The U.S. months ago lost the ability to eliminate COVID-19.”
That view was probably never realistic in the U.S., either politically or in terms of healthcare policy. The U.S. population and politicians felt they needed to do something, especially after Italy and NYC, and that something was to “flatten the curve,” so that healthcare systems were not overrun.
Americans Will Soon Start to Look at Healthcare Benefits of Social Distancing Versus Economic/Social Costs. We should Plan for That Now
Social distancing policies will not eliminate COVID-19, it will prolong it, as its advocates readily acknowledge. Fauci has just said it will likely become seasonal, like the flu. So it hasn’t been eliminated, just contained. Again, from the April 2 Nature article, here’s a chart of what that might look like.
Notice that the “Do nothing” strategy is projected to actually have eliminated COVID, as the expert I just cited claimed, this is not his model, but at a far higher peak of critical-care beds occupied, I would think intolerably high for politicians’ health, plus social and political cost.
As an increasingly fearful, anxious, stressed public would have been constantly inundated with stories of misery and suffering, and tens of millions would intimately know of people going through this nightmare. That just never was likely to happen, even Trump eventually, way too late, caved on social distancing.
“the choice is really between lives and lives.”
So with herd immunity being taken off the table by social distancing, without it we may likely get the second wave, as Facui just said Sunday. If/when Trump sees this type of chart, perhaps on Fox TV, he will very be tempted to say:
“WTF, we’re going to get more of this damn plague after the summer, just before the election, despite my going along with what Fauci said (or whoever else he wants to blame at the moment). So I might as well just goose the economy and stock market as fast and as hard as I can, in that order, with the Fed’s help, because no one is going to re-elect me with a sky-high unemployment rate, at least I know that for sure.”
Again, that would be a huge mistake, but it’s probably highly likely in the next month or two. Americans like their wars short and won, they don’t want to be dragged into yet another quagmire, like Afghanistan or Vietnam.
So if Trump perceives his choice to be between what appears to be cutting his losses, or fighting what seems to be a losing battle of social distancing anyway as it has a second surge, Trump will cut his losses and run, especially if the hardest hit areas, like NYC, are in blue states he has no chance of winning.
Just as with the issue of containment in foreign policy, what will be the ever-rising costs of opting for containing COVID-19, which creates that seasonal pattern, so as to not overwhelm the healthcare systems, instead of the “Do Nothing” policy, which may have largely eliminated the disease in the U.S.?
At some point in the next month or so, as serology/antibody tests become available and the data get much better, which will probably significantly lower COVID-19’s estimated fatality rate, and as the economic and social costs of tens of millions of unemployed become increasingly unbearable, that issue will have to be addressed, which is a, perhaps the, key point of this article.
It’s probably better to do so sooner than later, before tens of millions of lives and dreams are upturned by forced unemployment and millions of small businesses go under, despite the provisions in the $2.2 trillion CARES Act to address those issues, which cannot be adequate, given the scale that unemployment will likely, already near 10% in just two weeks.
The Choice Before Us Is Not Either/Or, Healthcare and Lives vs Economy and Jobs, It’s How To Do Both Best
As the WSJ article co-author and doctor I cited above said in his YouTube video, the choice is really between lives and lives.
So the choice comes down to both staying the course a while longer with social distancing, until the all clear signal can be safely given that stressed healthcare systems will not be overrun with critically ill Covid-19 patients, and all but the most vulnerable might selectively start to come out into the world again.
AND to accept the reality that the downtrends in the modelers projection of when that might occur, combined with the huge increase in unemployment already occurring the past two weeks, means that it’s probably not too early to start to discuss when to start to phase out social distancing, at least on a selective basis in selective areas.
I know that runs the risk of making many already complacent free-spirited, red-blooded Americans, especially young ones who may or may not have missed spring break, even more complacent.
But at some point U.S. leaders, either Trump or more likely someone else, are going to have inform the American people as realistically as possible as to what the choices are, and trust that the majority will accept and go along with it. Otherwise, what’s the point of being a democracy?
“it’s probably not too early to start to discuss when to start to phase out social distancing”
In addition, and immediately, as I called for in my April 1 article, Pelosi must get to work on a Phase 4 bill which batches the holes in the CARES Act, e.g. for aid to state and local governments which are fast running out of money, and expanding the provisions in that act for unemployment insurance and SBA loans to small businesses.
Even more immediately, Congress must insist that those provisions be implemented as fast as humanly possible, and I realize that government workers are trying their very best to do so, and to do whatever is necessary to overcome obstacles, such as outdated state unemployment computer systems and SBA loan bureaucratic red tape.
For those might want more ideas on follow-on policies to the CARES Act, please see Derek Thompson’s article in the Atlantic on April 2 titled , “The Four Rules of Pandemic Economics A playbook that should govern America’s short-term reaction to the health crisis.” Thompson actually posted two articles on COVID-19 economic issues that same day, I hope other serious journalists and commentators emulate his sense of urgency on these economic issues.
Also see this April 6 Washington Post article titled, “Trump, congressional leaders converge on need for new coronavirus economic package, concerned recent $2 trillion law wasn’t enough Political leaders believe more aid is needed to confront mounting economic problems.“
“Data, model and policy transparency is the sunlight of democracies”
Transparency of COVID-19 data and models, and the cost/benefits of social distancing policies. It’s the one thing that can counteract the fear, uncertainty and doubt, FUD, that is rapidly building in the American population.
As the saying appropriate to the COVID-19 crisis goes, “sunlight is the best disinfectant.” Data, model and policy transparency is the sunlight of democracies, it’s one of the main things that is supposed to separate the U.S. economic-political-social model from more authoritarian.
Make America and World Awesome, MAWA.
Part 1 and Part 2 of this three-part series.
Photo credit: Vox.com
Adapted from an article on Medium 06 April 2020.
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