On theoretical grounds, an authoritarian government might either under-react or overreact to an epidemic. In practice, I suspect that overreaction is the bigger threat.
I would not have held this view before my visit to China last year. Traveling around that huge country I experienced almost mind-bogglingly excessive levels of security. Americans are used to security checks before getting on airplanes, but in China you have such checks even before boarding a subway train. We even had to go through security to board a minibus in a remote area with about a dozen other tourists. Why?
Now it appears that the same overreaction is occurring with the Covid-19 pandemic. The press has missed this issue, focusing instead on the fact that China has had great success in reducing the severity of the epidemic. Even those who question the data for earlier in the year admit that new cases have now fallen to a very low level. But the same success is apparent throughout the rest of East Asia, at a far lower cost in terms of inconvenience.
Recently, China put all of Dongbei (Manchuria) into a tight lockdown, after the appearance of just a few cases related to people returning from Russia. That region currently has only 25 active cases, 22 in Jilin:
Some 108 million people in China’s northeast region are being plunged back under lockdown conditions as a new and growing cluster of infections causes a backslide in the nation’s return to normal.
In an abrupt reversal of the re-opening taking place across the nation, cities in Jilin province have cut off trains and buses, shut schools and quarantined tens of thousands of people. The strict measures have dismayed many residents who had thought the worst of the nation’s epidemic was over.
This is how governments react when they don’t have to face voters. The Chinese Communist Party is about to have an important meeting in Beijing, and they worry about being confronted with a major Covid-19 outbreak. Their wish to avoid embarrassment counts for much more than the convenience of a 100 million Chinese citizens.
One might argue that American presidents sometimes put their interests ahead of the public. That’s true, but we have many more checks and balances. Governors also have a big say, and competition between the states has at least some force in “keeping them honest”. No state government wants see a much more severe outbreak than other states. But it’s also true that no state government wants a severe lockdown if nearby states are doing fine without one.
PS. In a sliver of good news, Chinese oil demand has returned almost to normal. Recall that it was the Chinese economic recovery in early 2009 that first sparked the global recovery from the Great Recession. The recent Chinese recovery is a huge boon to US frackers.
READER COMMENTS
P Burgos
May 18 2020 at 11:11pm
Prof. Sumner’s opinion appears to rest on the belief that Jilin only has 25 cases (or around thereabouts) and that the rest of the country also has very few cases. Yet there are regular press reports that there are an unidentified number of “asymptomatic” cases, that is, folks who have tested positive for the virus, but don’t have symptoms. China does not include those cases in the official numbers it reports to the rest of the world. And there are credible reports that China has a database showing 600k+ confirmed cases of the virus in the country, as opposed to the 80k+ reported to the rest of the world.
That in itself is not enough to prove that the CCP is currently dramatically under reporting their number of active, confirmed cases. It should make one very uncertain that they know what is going on with the virus in China. It could be that there already is a large outbreak in the Northeast. It could be that officials have enough data to know that there is still quite a bit of community transmission in many places in the country, but that officials don’t have the data to know where the new cases are coming from, and hence don’t have a good handle on its prevalence or its whereabouts. There are lots of possibilities, and not really good enough evidence to be all that confident in any one scenario.
Scott Sumner
May 19 2020 at 1:27am
Burgos, It’s possible that China has 600,000 cases, not the 83,000 officially reported, just as the US probably has 10 million cases, not the 1.5 million officially reported.
None of that has any bearing on this post.
P Burgos
May 19 2020 at 7:03am
Surely the number of cases, or an inability to detect cases, in an area is relevant to judging whether the official response is appropriate and proportionate to the risk of a severe outbreak.
MikeDC
May 19 2020 at 12:35pm
The number of cases seemed to have bearing on your post when (in the post) you called the Chinese government’s response an overreaction because they have only 25 cases in the region in question.
How does one interpret a new piece of information? “China imposes a strict lockdown on a region with almost no reported new cases”.
Explain the incentives here. Let’s break it down to the fundamental economics. People respond to incentives.
Your explanation is that the lockdown is being put in place at the whim and convenience of the Chinese Communist Party.
Could be, but even though the CCP doesn’t face voters, they still have strong incentives to avoid economic damage, an unhappy populace, and loss of face that goes along with having to go back into their “lockdown mode” even partially.
That is, they have strong incentives against lockdown. And the fact that they are doing something they have strong incentives not to do implies they have a strong (but unseen by us) incentive to do so.
Like, maybe they’re systematically lying about the size of the outbreak. Instead of 25, there’s 25,000 or more. Maybe they’re still “overreacting”, but it at least acknowledges the economic reality that even in China, 100M people is a lot, and the CCP has plenty of skin in the game.
Scott Sumner
May 19 2020 at 1:18pm
So is your claim that Uyghur terrorists are massacring lots of Chinese people, and the CCP is covering it up? Does that explain their absurd overreaction in domestic security? I’m being sarcastic, but we don’t need any conspiracy theories to explain what’s going on there with Covid-19, it perfectly fits the model. The CCP overreacts to threats.
The underreporting of caseloads that I referred to is not a conspiracy, it is due to the fact that most people with Covid-19 (almost anywhere in the world) don’t get tested. The few exceptions (such as Iceland and Singapore) have very low mortality rates.
Independent experts believe the Chinese figures showing little community transmission are roughly correct, although they surely miss a few cases. It’s also consistent with HK, Taiwan and other places with effective containment policies.
MikeDC
May 19 2020 at 10:51pm
My claim is that even the CCP responds to incentives. Their oppression of the Uyghurs is consistent with that. With the police state and propaganda machine they’ve built, and the rest of the world’s willingness to look the other way, treating that group terribly doesn’t seem to impose any costs upon the CCP.
Thus, the benefits don’t even have to be that high for oppression to be worthwhile. And, as reprehensible as it is, doing so seems to have benefits for the CCP. Obvious ones, because allowing consistent dissent seems to be the death knell of most police states. It’s an evil policy, but probably rational.
In contrast, locking down 100m people over a 25 case outbreak of COVID seems to have much higher costs (again, for the CCP) and much less obvious benefits. That’s not rational.
And, generally speaking, the conspiracy theory is wrong because it posits some kind of obviously irrational behavior.
Scott Sumner
May 20 2020 at 1:24pm
Mike, I think you misunderstood. The CCP has a completely irrational policy of security controls all over China. The threat is tiny relative to the scale of the controls. I was not talking about repression in Xinjiang.
Michael H Cardwell
May 20 2020 at 4:32pm
Again, I’d say the CCP’s general security controls are quite rational, even though they’re evil. Even the stuff that seems ridiculous, like your minibus example, serves a deterrent purpose by making the security apparatus appear omnipresent, gain the support of the security apparatus whose livelihood depends on carrying out these policies, and gives that bureaucracy some numbers to justify itself (along the lines of what Michel is saying below); “I have 8 minders out riding trains today monitoring people”; “I conducted my quota of security searches” etc.
This is a basic application of The Logic of Collective Action. It’s rational for the CCP to do these things because they reap the benefits and the costs are imposed on others.
It’s true that the lockdown imposes a lot of costs on others, but it also imposes enormous costs on CCP members, and if the infection levels are in the ballpark of the numbers you publish, the benefits of this policy seem quite low.
Mark
May 18 2020 at 11:48pm
I agree that China is overreacting, but a lot of that is probably due to international pressure. There has been tons of blame placed on China on the theory that China should have locked down Wuhan earlier or tighter (even though China’s lock-down of Wuhan was already the most draconian anywhere in the world), or that China should have locked down even non-Wuhan parts of the country even when those areas had few to no cases. And this blame is not just about hurting feelings, but is being used to materially punish China through trade sanctions, travel restrictions, and even threatened seizure of Chinese assets. Any confirmed cases of a virus coming from someone who had been in China is used to punish China in a way that cases of a virus coming from someone who had been in some other country is not, and this causes China to lock down extra-hard. If it wasn’t for this really unprecedented level of international pressure, China probably would not be quite so authoritarian, as the Chinese government stakes much of its legitimacy on economic growth too. This whole situation is another example of how Chinese people are doubly oppressed by both their own government which is authoritarian by nature and foreign governments which view Chinese people as aliens not deserving of the rights their own citizens have.
zeke5123
May 19 2020 at 8:36am
Or China is being blamed because (I) it appears to have intentionally misled the world about the virus so that China could buy the necessary supplies more easily and (II) everyone has talked for a long time re the possibility of the wet markets / transmission of a COVID-19 like virus yet CCP did nothing. The idea that China is being uniquely punished / unfairly judge doesn’t seem plausible to me.
Jon Murphy
May 19 2020 at 8:57am
I gotta agree with Zeke here. Much of what I’ve read has the blame on China because of their obfuscation and the wet markets more so than not locking down hard enough (such criticism wouldn’t make sense given other countries like Korea, Taiwan, Sweden, and Japan never went full lockdown).
Phil H
May 19 2020 at 10:25am
It’s almost always wrong to assume that China is acting in response to international pressure. Like the US, internal politics is much, much, much more important.
To the extent that China is being “blamed” (and while I know there’s talk, has any action against China actually been taken?), I think it is being unfairly blamed. Disease will emerge. Blaming the country they appear in doesn’t solve that problem. I think of mad cow, ebola, even AIDS… all of them recent, all of them traceable to a specific region or country. But I don’t think the countries involved were or should have been blamed.
Michel
May 19 2020 at 8:04am
I experienced the COVID-19 lockdowns both in China (Late Jan-Mid Feb) and in the Netherlands (Mid March-Now). It is unlikely that other countries can copy the experience from China, even if in countries with a strong government (e.g. Singapore). It’s a sociocultural difference where collectivism and social conformity are rooted and also a government difference where the authoritarian government plays more like parents in a big family. But the old-styled promotion system within the authoritarian government can be something that causing problems. I would expect the competition between provinces can be much more stronger than that between US states. It may exist even at the municipality-, county- or township- levels, as local authorities rely on their performance for promotion after the pandemic. At the beginning of outbreak, incentives can be higher for local authorities to cover up the cases when other regions did not show any so that the higher-level governments won’t detect, and that is why the local government in Wuhan has been criticized and get punished very soon after the outbreak gets detected by the provincial and central government. But when the cases keep showing up in many regions across the country and when controlling the spread is something becoming a consensus, the incentive for local authorities shifts from covering up the outbreak to tightening up mobilizations, and performers who can lock down most efficiently and effectively may be more likely to get promoted. I agree with the author that overreaction is a bigger problem during that lock down period, instead of underreaction. In the Netherlands, I think number of cases or death tolls are less linked to the the political career of local authorities, and if the first outbreak were discovered in the Netherlands, local authorities may do better at the beginning, but I doubt they can do better in later on containing the spread. The same situation may happen in the US as well. The statistical numbers may have reflected this.
Scott Sumner
May 19 2020 at 1:23pm
Good points.
Alan Goldhammer
May 19 2020 at 9:11am
“Recall that it was the Chinese economic recovery in early 2009 that first sparked the global recovery from the Great Recession. The recent Chinese recovery is a huge boon to US frackers.”
Seriously? The fracking companies are so severely leveraged and have really never been profitable. Bethany McLean has written about this and all one needs to do is look at the debt levels these companies are carrying. Take a look at their balance sheets!!! In order for them to get out from under the debt load, oil will have to go up to $100/barrel and that’s not going to happen.
Scott Sumner
May 19 2020 at 1:21pm
That may be so, but $30 oil is still better than $20 oil. If only in minimizing losses.
(I don’t agree with your $100 figure, BTW.)
Alan Goldhammer
May 19 2020 at 1:46pm
For the consumer $20/barrel for oil is better than a higher price. I wonder how many airlines will be locking in fuel at ridiculously low prices. Southwest did this some years ago, purchasing in advance about two years worth of jet fuel which led to huge profits for them in terms of cost savings. the problem is the airlines squandered all their earnings on stock buybacks and were left will precious little capital to take advantage of this.
I wish I could share your optimism about the fracking industry. Continental Resources might make it through OK, but my bet is on Chevron and Exxon who have downstream processing that will keep them afloat. They may end up being buyers of distressed properties in the oil patch.
Scott Sumner
May 20 2020 at 1:26pm
You said:
“I wish I could share your optimism about the fracking industry.”
I never expressed optimism about that industry, and indeed don’t have optimism. I said much higher prices are a big boon to the industry, as they obviously are.
Thomas Hutcheson
May 19 2020 at 12:47pm
Scott,
Sorry to cross post, but I think I’m still getting blocked by your spam filter over at “The Money Illusion”
Comment on “Not Your Grandfather’s Recession”
Agreed. I had never believed that a significant demand shock was possible. Therefore I was skeptical about the benefits of NGDPL targeting vs plain old fashioned PL targeting plus employment maximization.
What is not unique is the is the Fed’s disastrously inadequate response. Can there be ANY justification for the Fed, whether in 2008-2019 or in 2020, to allow the TIPS inflation expectations to fall and remain below the equivalent of 2% PCE? Why doesn’t some enterprising journalist, social psychologist, or anthropologist investigate this mystery?
Scott Sumner
May 19 2020 at 1:23pm
Thomas, I agree. Sorry about the span situation, I don’t know what happened. Could you try a different email account?
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