Why Strict Quarantine Measures Can Be Better for the Economy
Believe it or not, a lockdown that forces business closures might be the lesser of two evils.
In recent weeks, protesters from across the country have sported signs reading, “The cure should not be worse than the virus.” Understandably so, many Americans fear that the economic impact of lockdown orders will incur far greater damage than the virus would in unmitigated circumstances, and similar sentiments held by many Republican governors have solidified the widespread push for reopening the economy. The move to save livelihoods seems to be spearheaded by Georgia Governor Brian Kemp, and states like Tennessee have now followed suit despite seeing record jumps in case numbers.
But while Republican governors remain adamant about prioritizing financial health over public safety, many economic experts have refrained from endorsing the decision. In a poll conducted by the UChicago IGM forum, economists from around the United States almost unanimously agreed that premature easing of quarantine restrictions will spell greater economic detriment in the long run.
Source: University of Chicago
Why might this be?
It’s important to not conflate saving public health and rescuing the economy as two mutually exclusive scenarios. Economic strength and public health are inextricably linked, and as Representative Liz Cheney of Wyoming wrote, “There will be no normally functioning economy if our hospitals are overwhelmed and thousands of Americans of all ages, including our doctors and nurses, lay dying.”
That’s because prematurely easing social distancing restrictions will almost inevitably lead to uncontrollable flare ups of infection and resuscitate the need to reimpose stay-at-home orders, further prolonging the timeline before Americans can gradually return to normal life. To spiral into a roller coaster of turning the economy on and off between viral outbreaks will weaken its infrastructure with a dangerous sense of volatility that will not only stump investors, but could potentially lead to even higher rates of unemployment in the long run.
According to many economists, the ideal scenario to curb the spread of the virus and simultaneously salvage economic health includes restrictive quarantine measures that buy time for public health agencies, hospitals, and medical manufacturers to better prepare for future outbreaks. Armed with better preparedness, public servants would be able to slowly ease quarantine measures and allow a semi-normal return to life until the arrival of a viable vaccine. But to teeter back and forth would subjugate the economy to far more disastrous swings in consumer behavior that could generate even longer lasting impacts.
That may come as little consolation to the unemployed parents struggling to feed their children, and it’s understandably difficult for an American family to contextualize their short term plight in the bigger picture of macroeconomic trends. But as New York Governor Andrew Cuomo said, “I say the cost of a human life, a human life is priceless.” These quarantine measures, as financially frustrating and stressful as they may be, undeniably save American lives, and may also save the American economy from further collapse.
Governor Cuomo’s political opponents point to estimates of one percent mortality rates as a justification for sending Americans back to work, an argument Cuomo responded to by saying “we’re not going to put a dollar figure on human life.” But mortality rates of the virus seem to differ everyday as information continues to accumulate regarding a disease that consistently surprises doctors with new complications. What we do know, however, is that the virus is particularly cruel to those with underlying conditions, rendering vast portions of the American public susceptible to severe illness, and subsequently, putting the economy at risk if they were to lose their lives. Over thirty million Americans suffer from diabetes, seventy million experience hypertension, twenty-five million are diagnosed with asthma, and millions more experience combinations of multiple underlying illnesses. For those who are comfortable with putting a price on human lives, it may be helpful to understand that a virus which freely transmits in American society could cost millions of lives, and in layman’s terms, that’s pretty bad for the economy.
Given the rapid development and unpredictability of the situation, few studies have been able to offer reliably concrete models that would allow economists and public health officials to quantitatively weigh their options between the two scenarios. For now, public servants and health officials alike have to rely on the judgement that further distress to our nation’s public health will inflict unnecessary damage to the economy in the long run.
Policy makers and politicians must also consider that opening up prematurely doesn’t necessarily guarantee short term economic returns. Until a viable vaccine is developed and disseminated, consumer behavior will only be a shell of its former self. In the city of Wuhan, the pandemic’s original epicenter, small business owners overwhelmingly reported that lifting lockdown restrictions has done little to spur consumer confidence, citing widespread fear that returning to life as normal will fulfill ominous predictions of future outbreaks. While American society differs in its cultural practices and tendencies, it’s safe to say that flipping the switch on quarantine measures will not coincide with a flipped switch in consumer behavior.
Those planned trips to Vegas: likely cancelled regardless. Weddings set for June: probably postponed. Typical Thursday night bar crawls: likely to be replaced with at-home gatherings.
There’s an understandable difference in consumer reaction to a reversal of stay-at-home orders once public health officials deem it safe versus lifting quarantine measures for the sole purpose of salvaging the economy. For a lawmaker to veer towards the latter scenario is an explicit confession that lives will be lost as a result of going back to work, and regardless of how deadly the virus is, the prospect of death will drastically alter consumer behavior for the worst.
Americans are faced with a choice. You can suppress the virus now and spend the next six months remedying the economic impact, or you can relax quarantine measures to save a month’s worth of economic activity (which is not guaranteed) only to generate a more extreme health crisis that will force extended lockdown measures. As Jason Furman of Harvard’s Kennedy School of Government puts it, “I think the right model right now isn’t that you’re trading lives off against better economic performance. It’s that if you don’t save those lives, you might have even worse economic performance.”
Basic economics teaches us that strong economies grow in stable societies, which is why investors rather spend their money in France than Venezuela, because Nicolas Maduro cannot guarantee societal stability the same way Emanuel Macron can. But health crises like pandemics inherently generate volatility, the Achilles Heel of any economic system. These two conflicting forces of stability and volatility make it abundantly clear that to repair our economic predicament, it is imperative to first resolve our health crisis, no matter how financially costly it may initially be.
Even in chaotic times that cause humans to debate the price of human lives, we seem to learn that every life is invaluable.
Written By Andreas Papoutsis, Undergraduate Economics Student