Apparently the response from the right to my point that Trump's colossal failure will gratuitously inflict not only enormous suffering and death, but also a much deeper and longer economic contraction, is this: BUT THE PROTESTERS!!! Whatever the impact of the protests (and I assume there will be one), it's abundantly clear that our federal government is massively failing us.
British economist Simon Wren Lewis is writing about Boris Johnson's abject failure, but
he might as well be writing about Trump's:
Just a short post to advertise my Guardian
article ‘Fear of coronavirus, not lockdown, is the biggest threat to the UK's economy’. The key point I make is that the economy would suffer badly even if there was no lockdown. People, once they realised the extent of the threat, would stay at home. The three reasons I give for imposing a lockdown are classic reasons in economics for state intervention.
- The state has an information advantage
The government, because it talks directly to top scientists, can see the pandemic coming a lot faster than the majority of people. That didn’t work out too well in the UK, where people were leading the government, but if the state functioned well this would be true.
- The state deals with externalities
While the majority of people would stay at home in a pandemic, many others might take risks. Whether the state should allow individuals that freedom is an interesting question, but that is not the point here. Because risky individuals can interact with others who are rightly being cautious, they create an externality which a lockdown avoids.
- The state supports individuals in a recession
There is a classic Keynesian role here. In this case it goes further, because it allows people to stay at home who might otherwise feel compelled to work and endanger themselves and others.
A benign government would lockdown quickly and hard, and get new infections down to a sufficiently low level such that the vast majority of people feel comfortable resuming their social consumption. It would have a local and well trained track, trace and isolate regime (TTI) in place to deal with any new flare-ups once lockdown was lifted. That would enable lockdown to be lifted once daily new infections were low.
That optimal strategy leads to a short sharp economic downturn, but an equally swift recovery that should be V shaped. The UK has departed from this optimal strategy in almost every respect. It delayed the lockdown, which automatically means that the lockdown is going to have to last longer. It failed to deal with externalities by not properly protecting health and care workers. It
farmed TTI out to an inexperienced private contractor, so the TTI infrastructure will not be fully operational until September/October! It is chipping away at the lockdown before new infections are low enough, which raises R and prolongs the lockdown. The result is more deaths, but also a bigger and more prolonged recession, and a slower recovery.
The Trump administration has done exactly nothing on any of these fronts and has instead left it to the states to fend for themselves. This is also terrible from a macroeconomic perspective. States simply will not have the resources to do what needs to be done. As incomes fall and sales decline, so will state income and sales tax revenue. Unlike the federal government, which can fund deficits by borrowing at negative real interest rates, states must slash spending on everything to keep their budgets balanced.
Meanwhile, despite multiple studies concluding that widespread mask usage could stop the virus in its tracks, Trump's administration does nothing to ensure that everyone has masks. Worse, Trump himself mocks the idea, and since the Trumpbots must ape whatever President Dunning-Kruger does, mask-wearing has itself become politicized.
And now Trump plans to pack capacity crowds into closed arenas in states like Oklahoma and Arizona where new cases are on the rise. To feed his vanity.
On the other hand, THE PROTESTERS!!!
Good grief.
