In a lengthy article in today’s Wall Street Journal titled “New Thinking on Covid Lockdowns: They’re Overly Blunt and Costly,” Wall Street Journal reporter Greg Ip does a good job of backing up the title of his article. He shows that the title is justified.
Well, almost justified. The thinking isn’t exactly new. It’s been around for a few months, which makes it old in Covid-19 time.
In “The Data Are In: It’s Time for Major Reopening,” co-author Jonathan Lipow and I covered much of the reasoning that justifies the idea that lockdowns are overly blunt and costly in an op/ed. Where was the op/ed published? In the Wall Street Journal, the publication that Greg Ip writes for. When? On June 16 (print) and June 15 (on-line.) The article is gated but you can read the whole thing here. That was 10 weeks ago.
READER COMMENTS
Nick R
Aug 26 2020 at 1:38pm
You’re so right. It’s sad, but I read the editorial pages of the WSJ less for its opinions but because I’ll get news there not covered in its news pages. I suspect I’m not alone.
Chris C
Aug 27 2020 at 11:30am
You are right, but I still give Ip and the WSJ credit for publishing this (front page, no less) since no other main stream media outlet has dared to publish anything similar.
David Henderson
Aug 27 2020 at 1:00pm
Good point. The word “new,” though, is inappropriate.
Michael Pettengill
Aug 26 2020 at 4:53pm
The contraction and resulting lost jobs etc are not from government action, but from the higher income and wealthy consumers shifting and cutting their consumer spending.
Due to fear.
As well as some high income, wealthy workers refusing to work, eg, sports stars.
Due to fear.
The Capitalisn’t podcast on March 10, plus another with Russ Roberts on March 27, and then on April 10, are better discussion of the situation and tradeoffs when much less was understood. Unfortunately, half a year later, the situation in the US is not much improved.
Fear is the obstacle. In the US, government action has not done much to reduce the fear.
The wealthy and high income are increasing costs to reduce the risk factors that cause them to fear, eg, the bubbles and constant testing for playing sports in empty stadiums for broadcast.
The initial response by Trump is still the response of many governments with disease spread somewhat controlled: travel restrictions. No travel to nursing homes, no travel to NYC without quarantine, no travel to school without testing and then staying in a bubble.
How can fear be reduced? Testing and isolation/quarantine.
Rapid inexpensive testing will not be profitable, but will require paying all the costs to workers, with workers engaged in high volume processing to bring costs down to perhaps $25 a week per person, each person collecting spit several times a week. But only a few institutions are focused on the innovation in order to operate, not to profit from testing.
Government could contract for doing mass testing constantly to fund building up new businesses by ensuring payments to pay for capital and workers for limited time, say two years, with profits coming from innovation. Multiple rounds of competitive contract awards would spur innovation. The contracts would require all IP to be free of patent monopoly, if not require publishing of “trade secrets”.
The above would allow behavior restriction be done quasi privately at labor costs and no profit/rents.
Controlling disease spread will reduce fear and promote more discretionary consumer spending.
As Promarket.org reports in https://promarket.org/2020/08/25/social-distancing-laws-cause-only-small-losses-of-economic-activity-scandinavian-countries-as-a-case-study/ no restrictions on behavior to not increase economic activity.
Demark with government mandates to reduce infection spread has the same economic activity as Sweden without the death tolls, but again both saw sharp contractions due to fear. But Denmark seeks to be rebounding faster as experience reduces fear, while offering a sense of control.
The biggest risk is locking in consumer spending choices for the high income consumers. Those without discretionary spending capacity will suffer income losses further constraining consumer spending, and together the economy will be dragged down
Jack Tatom
Aug 26 2020 at 5:42pm
How do you account for the boom in the economy since April? Retail sale have returned to the February level, employment rose 9 million in the first three months since April. The July surge in CV cases did not stop or reverse rising output, employment and income. The return to work is no surprise given that states began to loosen restrictions in May. Similarly the return to work accelerated as the end of the Federal subsidy to unemployment compensation approached on July 31.
Winslow Kelpfroth
Aug 27 2020 at 3:36pm
As I observed early on, there are no non-essential workers, at least in the non-governmental side, as redundant hires tend to be moved to where they are productive or let go to find something else productive.
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