Serving the High Plains
Serving the High Plains
In theory, there is a point where the economic impact of shutting down for the coronavirus is greater than the impact of the virus in terms of lives lost and reduction in quality of life.
Where that point is continues to be debated by economists and, as we have seen, policy makers.
The policy makers, however, are often guided by party affiliation and politics instead of the realities of the pandemic and economics.
Economists, who are often guided by equations that provide numerical support for theories, find themselves in the same quandary as physicians and epidemiologists: Too little is known about how COVID-19, a brand new disease, spreads under different circumstances.
Without significant proven knowledge about the mechanics of COVID-19 spread, it is hard for both epidemiologists and economists to take the measurements they require to develop real answers.
Economists are divided on what they think will happen under different circumstances.
Some support continuing strict lockdowns when COVID-19's contagion gets out of hand.
One is Andrew Atkeson, an economist at the University of California, who observed in a “Science” magazine article, “Either you shut off the economy now and have people staying at home, or you let this thing rip and you have people staying at home scared,” he says.
Economist Sergio Rebelo of Northwestern University, told “Science” that even a year-long lockdown could bring more economic benefit than cost. Such a shutdown, Rebelo said, would shrink the economy by 22%, costing $4.2 trillion. With no containment measures, however, he said, the economic impact of 500,000 additional deaths would be a loss of $6.1 trillion.
Sean Snaith, one of Florida's best-known economists, however, told the Sarasota (Fla.) Magazine that “self-inflicted” damage to the economy is more devastating than the virus itself.
“We've bulldozed the economy,” Snaith said. “This is devastation.”
James Stock, a Harvard economist, sees adverse effects coming from either too much or too little in shutdowns.
“If you keep the shutdown going for two months more than we need to, that's just an unbelievably costly mistake,” he said. If we lift the shutdown two months too soon, that would be an unbelievably costly mistake.”
How much is too much or too little? Stock's research resulted in a shrug.
“Policy outcomes hinge critically on a key unknown parameter,” he concluded in a research paper, “the fraction of infected who are asymptomatic, and on the current rates of infected and recovered in the population.”
Economists cited in a June 6 New York Times article on alternative ways to enact shutdowns, seemed to agree that shutdowns should be targeted to high-contagion areas, but eased in areas doing better.
The article noted that after city-wide shutdowns in New York, a study found that economic cost could have been reduced by a third or more by closing down individual neighborhoods to balance the risk of infection with impact on local jobs.
My conclusion is that economists are doing no better on the shutdown question than medical science. COVID-19 is still too new to yield the answers we need.
Steve Hansen writes for Clovis Media Inc. Contact him at: