The debate over reopening the economy has heated up. Good. We need to reopen soon.
The shutdown was the right thing to do. Morally, society should provide a preferential option for the most vulnerable. In this case, the most vulnerable are those at greatest risk from the virus. The shutdown made special provision for them. And shutting down was the right economics as well. So far, shutting down has surely preserved more of the nation’s productive capacity than has been lost in income by workers and businesses.
But a shutdown this severe must be short. In my latest Bloomberg column, I offer six additional principles to guide the debate as the U.S. finds its way to a concrete plan for reopening.
(1) We need to decide our goals. Should the objective be to stamp out the virus? That new cases be steady or declining? To have as much economic activity as possible, provided that hospitals are able to handle the number of sick patients? To have as much normalcy in daily life as possible, provided the share of vacant ICU beds is above some threshold? By those latter metrics, we could be at least partially reopening some major cities soon.
(2) Policymakers need to be comfortable discussing the trade-off between lives and economic outcomes. Different goals and metrics have different implications for this trade-off, and the decision to reopen faster would likely result in more coronavirus cases.
(3) We will need to act without having all the necessary information. In particular, an adequate testing regime may not be up and running. Of course, Congress should do whatever it can to get testing on track. But its absence can’t block the economy from restarting — public sentiment may not be that patient. That’s why we need other metrics.
(4) A regional opening strategy can depend on governors, despite the president’s protestations.
(5) Accept the ebbs and flows of progress. Progress will likely not be linear. Say our metric is hospital capacity. If hospital beds start filling up at a rapid rate in a particular region of the country, say, during the fall, then public-health measures should ramp up social distancing in that region on the least critical parts of economic and social life first.
(6) Congress should be prepared to continue its attempts to rescue the economy over the longer term. We could have elevated unemployment for a while, even if we see the unemployment rate falling rapidly.
Check out my column for my full argument. I conclude the column:
Other countries are reopening in a gradual way that could build confidence. In Austria, small shops will resume normal activity on this week, larger stores on May 1, restaurants, hotels and schools in the middle of next month, and public events can resume in July. In Denmark, nursery and primary schools might open this week. Professional baseball teams in South Korea are playing intra-squad games with an eye toward starting the official season in early May. Some shops in the Czech Republic have already been allowed to reopen. Kindergartens in Norway will be back next week.
The U.S. should be getting back on track, too — and soon.
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