Thread by @cfishman

When it comes to the coronavirus pandemic, is the cure worse than the disease?

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?

2/ This is a big question.

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.

3/ That's a lot of pain to stop a disease.

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?

4/ The answer is no, for several clear & understandable reasons.

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.

5/ If the coronavirus had been allowed to take its course, with all of us trying to go to work & school, college & church & NCAA March Madness games, while taking some basic protective measures — the whole economy would have crumpled anyway.

6/ The illness would have swept through office buildings, apartment buildings, college campuses, church congregations.

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.

7/ How do you run a factory if 20% of the staff is out?

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?

8/ There is no 'benign' version of covid-19 sweeping through a city or a community.

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.

9/ Just one small example: New York City is so overwhelmed — despite a shutdown that began March 22 — that they are using refrigerated trucks for the dead bodies, a Navy hospital ship is parked alongside Manhattan, and the governor does a covid-19 briefing every day.

10/ That's what has happened in one city that clamped down, but clamped down just a little too late.

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…

11/ That's the alternate universe. In that universe, you have hugely magnified damage from the disease itself, which is way out of control (as opposed to what we have no, just a little out of control) — plus economic chaos.

12/ But that's all a thought experiment. A sobering one, but still a thought experiment.

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.

13/ The study:

'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…

14/ The economists looked at what happened in the US during the 1918 flu pandemic — in terms of the 1918 version of social distancing & economic impact.

15/ Specifically, they looked at pairs of cities of similar geography and economy that took different paths in confronting the pandemic.

Minneapolis v. St. Paul
Los Angeles v. San Francisco
Cleveland v. Pittsburgh

What they found was very clear.

16/ In the 1918 pandemic, the cities that took the strongest public-health measures & kept them in place longest — those cities rebounded economically most quickly & most strongly from the pandemic.

17/ Cities that resisted closing schools, churches, saloons, workplaces, restaurants — those cities struggled when the epidemic passed.

Those cities also suffered most not just from deaths caused by the flu, but from economic damage from those deaths & from the illness itself.

18/ In 1918, the cities that did the most suffered least — from the disease, and from the economic damage.

The cities that did less to protect their citizens suffered most — from the disease, and from economic damage.

19/ It's not just that there is no tension between protecting people from coronavirus and protecting the economy — they are the same thing.

This study shows that, the more you do, the more determined and patient you are, the better for people & the economy.

20/ This is one study, of course. You can click through here and read it for yourself. It's understandable. (You have to do a lot of clicking — finally on a button that says, 'download without creating an account.)

papers.ssrn.com/sol3/papers.cf…

21/ Here is an excellent, thoughtful NYTimes story on the study, with excellent NYT graphics based on data in the study, and also links to additional papers about the economic impact of pandemics.

nytimes.com/interactive/20…

22/ But this study aligns with our thought experiment, and with common sense.

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.

23/ The economy isn't separate from the people in the economy—an excellent insight from @ezraklein in a recent podcast on this topic.

The economy is the people in it.

24/ We don't balance saving the people against saving the economy.

It turns out, we save the economy by saving the people.

That's what the study by Correia, Luck & Verner appears to show.

25/ How do we come back?

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.

26/ Turning the economy off required foresight, a calm sense of what was coming and how to stop it. But then it was a blunt instrument:

• Close non-essential businesses
• Close schools
• Order everyone to stay at home

27/ When you start again, who opens first?

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.

28/ The most important thing: Testing.

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. #

Here you go @joelrhoades39