That is, do the stringent public health rules imposed in 42 states—mandatory closing of non-essential businesses, stay-at-home orders—do so much economic damage that they are worse than the pandemic?
About 156 million Americans were working before coronavirus.
16.8 million have filed for unemployment in the last 3 weeks — 11% of the working force. And those are just the people who could get through to file.
Millions more don't quality to file.
Are we killing (or at least put in a coma) the US economy to save some lives?
Is the 'cure' worse than the 'disease' — as Donald Trump was warning three weeks ago?
First, the question presumes that there is an alternate world, a path-not-taken, in which we go about our lives normally, but 2 million Americans (more or less), die from covid-19.
That world could not exist.
Offices & companies would have closed—for lack of staffing, because key people died, because as word got out how prevalent covid-19 was, customers stayed away.
How do you run a college if 25% or 30% of the students get sick? Who takes care of those people?
Who goes to a restaurant if that restaurant sparks a neighborhood outbreak that kills a dozen & sickens hundreds?
As bad as the shutdown of the US economy has been, imagine a more chaotic version in which businesses & schools, governments & sports leagues close helter-skelter amid fear & uncertainty.
Imagine that chaos multiplied times 10 in New York — and also in every city in America.
Chaos in Miami, Atlanta, Charlotte, Boston, Detroit, Chicago, Memphis, Houston, Phoenix…
In the last few weeks, 3 economists have raced to study what happens when a pandemic comes & you either put stringent public-health rules in place, or you try to go about business-as-usual.
'Pandemics Depress the Economy, Public Health Interventions Do Not: Evidence from the 1918 Flu'
It's from MIT economist Emil Verner and two federal reserve economists, Sergio Correia & Stephan Luck.
@EmilVerner
@Ogoun
@StephanLuck
papers.ssrn.com/sol3/papers.cf…
Minneapolis v. St. Paul
Los Angeles v. San Francisco
Cleveland v. Pittsburgh
What they found was very clear.
Those cities also suffered most not just from deaths caused by the flu, but from economic damage from those deaths & from the illness itself.
The cities that did less to protect their citizens suffered most — from the disease, and from economic damage.
This study shows that, the more you do, the more determined and patient you are, the better for people & the economy.
papers.ssrn.com/sol3/papers.cf…
nytimes.com/interactive/20…
Deaths are not just events of personal sadness and grief.
They have a huge economic impact — on the families involved, of course, but on companies and communities as well.
The economy is the people in it.
It turns out, we save the economy by saving the people.
That's what the study by Correia, Luck & Verner appears to show.
How do we reopen the economy, how do we get back to work & school, to movies & football games & praying together?
One thing is certain:
Turning the economy back on will be much harder, much more complicated, much more delicate than turning it off was.
• Close non-essential businesses
• Close schools
• Order everyone to stay at home
With what rules?
At what pace?
With what testing?
How do you know when a city is really safe & ready?
We need thought and detailed plans for that. So far, I haven't seen much thinking or conversation around it.
Testing is the path back. Testing is how you know who has been sick & is now immune. Testing is how you know who is sick & needs to stay home.
Testing is the path to safety & confidence in that safety, to work, study & play without fear. #