The tentative optimism in parts of Europe and the U.S. about a turning point in the rate of coronavirus infection is encouraging more people to start thinking about how and when to restart economies. It is a crucial and complex issue involving an unusual range of risks, uncertainties, difficult judgments and trade-offs.
I certainly don’t have an easy answer, and neither do people I talk to whom I respect greatly. With a view to generating ideas, how about collectively engaging in the following thought exercise?
Imagine you, as the leader of a liberal democracy, have to make the decision based on the following conversation among three sets of experts — which, for simplicity, we will aggregate into a single expert each on health, the economy and social behavior.
Health Expert: I have good news. Because of our social-distancing policies, we are seeing a turn in the rate of infection of citizens.
Social Behavior Expert: That’s great news, especially as I hear that more people are starting to wonder whether the huge disruptions to virtually every aspect of their daily lives were worth it. Adjustment fatigue is really setting in.
Economic Expert: It’s great news indeed. We need to urgently lift the sudden stop to economic activity. Unemployment is soaring. Even otherwise-viable businesses are facing bankruptcies. And our relief efforts are not just costing a lot, but they are less effective than we had hoped for because of the need for better delivery pipes. Can we start normalizing economic activity as soon as possible?
Health Expert: Not so fast! Yes, we are doing better, but we are nowhere near out of the woods. Immunity is at least a year away, if not longer, be it through a vaccine or herd immunity. Our ability to treat the ill is still limited essentially to just keeping them alive and comfortable as they fight this dangerous virus. We don’t have proper drug treatments yet. And let’s not forget the difficulty we have in identifying the asymptomatic carriers of the virus. Without that, we can’t even think of effective tracking and tracing. If we lift social distancing now, we risk a dangerous relapse that will overwhelm our health system.
Social Expert: Wow, that’s well said. We would also risk a general loss of trust in medical advice. The government would lose credibility. And the risk of social unrest would increase.
Economic Expert: Yes, but if we continue with the sudden stop, we invite multiplying short- and longer-term problems. Our economy, indeed our society, is not wired for social distancing. We are inflicting real damage that risks undermining not just this generation but future ones. The longer we maintain this economic standstill, the more we risk turning an already unavoidable deep and sudden recession into a financial crisis and, with that combination, a multiyear depression.
Social Expert: You have a point there. We are worried already about the risk of domestic violence and a deeper opioid crisis.