Are the unvaccinated responsible for the slowing economy? Not really
The Atlanta Fed’s GDPNow tracker downgraded its forecast for Q3 GDP growth again: it has now dropped from 6 percent at the end of July to 1.3 percent now. Then came the…
Ten months ago, when governors across the United States began shutting down their economies to fight Covid-19, there were those – myself included – who urged policymakers to take all relevant factors into account when making these decisions. As I wrote last April:
Of course, the economy cannot be the only consideration in deciding how to deal with the Coronavirus. And there are economic costs to not acting, to letting a new, contagious, and serious virus have its way with the population unimpeded. But we should take all factors into account. There is no greater issue currently facing our state, or our country.
This was not a popular view at the time. It was argued by many that there was no trade off between preserving your economy and ‘defeating’ Covid-19: that the latter was a necessary precondition for the former.
Over the course of the pandemic we have learned much more about Covid-19. We learned that the virus was not equally dangerous to all: that, by contrast, it was like a laser guided missile designed to impact the elderly with comorbidities. We learned that Minnesota’s Covid-19 crisis was primarily a crisis in its care homes. This new knowledge offered an opportunity: we could target our protections at the most vulnerable and allow the rest of the state to return to something approaching normal, minimizing the economic damage.
This was not done. Instead, Gov. Walz’ five point plan for combating Covid-19 in care homes had little obvious effect. The ICU capacity which the shutdown had initially been intended to build came, and then went again. And what it meant to ‘defeat’ Covid-19 seemed to change, from ‘Two weeks to flatten the curve’ to ‘Indefinitely to eliminate the virus completely’.
Belatedly, some of the more enthusiastic ‘lockdowners’ are beginning to see the trade offs that have been there all along. Yesterday, New York Governor Andrew Cuomo tweeted:
We simply cannot stay closed until the vaccine hits critical mass. The cost is too high. We will have nothing left to open. We must reopen the economy, but we must do it smartly and safely.#SOTS2021
— Andrew Cuomo (@NYGovCuomo) January 11, 2021
I am loathed to hold Governor Cuomo up as an authority on how to deal with Covid-19. Despite the deal to write a book on his Covid-19 response, despite winning an Emmy Award for his Covid-19 briefings, despite Dr. Fauci holding up New York as model for fighting Covid-19, and despite being hailed as “America’s Governor“, his state still ranks second for per capita deaths from the virus – 204 per 100,000 people. As the economist John Maynard Keynes once wrote: “Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.” The relative reputations of Gov. Cuomo and Florida’s Ron DeSantis (107 deaths per 100,000) show the truth of that.
But he is right to recognize these trade offs now, however late in the day. How much economic damage could have been avoided if policymakers had seen them sooner?
John Phelan is an economist at the Center of the American Experiment.