Category: Current Affairs

Failure to Prepare is Endemic

LA Times: They were ready to roll whenever disaster struck California: three 200-bed mobile hospitals that could be deployed to the scene of a crisis on flatbed trucks and provide advanced medical care to the injured and sick within 72 hours.

Each hospital would be the size of a football field, with a surgery ward, intensive care unit and X-ray equipment. Medical response teams would also have access to a massive stockpile of emergency supplies: 50 million N95 respirators, 2,400 portable ventilators and kits to set up 21,000 additional patient beds wherever they were needed.

In 2006, citing the threat of avian flu, then-Gov. Arnold Schwarzenegger announced the state would invest hundreds of millions of dollars in a powerful set of medical weapons to deploy in the case of large-scale emergencies and natural disasters such as earthquakes, fires and pandemics.

…But the ambitious effort, which would have been vital as the state confronts the new coronavirus today, hit a wall: a brutal recession, a free fall in state revenues — and in 2011, the administration of a fiscally minded Democratic governor, Jerry Brown, who came into office facing a $26-billion deficit.

And so, that year, the state cut off the money to store and maintain the stockpile of supplies and the mobile hospitals. The hospitals were defunded before they’d ever been used.

…Together, these two programs would have positioned California to more rapidly respond as its COVID-19 cases exploded. The annual savings for eliminating both programs? No more than $5.8 million per year, according to state budget records, a tiny fraction of the 2011 budget, which totaled $129 billion.

…Now, many California hospitals are being forced to ration their inadequate supply of N95 masks, and hospitals are rushing to rent ventilators in anticipation of a severe shortage as COVID-19 caseloads grow.

A useful reminder that failure to prepare for low probability but high cost events spans the political spectrum.

What will post-pandemic New York City look like?

That is the topic of my latest Bloomberg column, here is one excerpt:

Most of all, there will be an exodus of elderly residents. New York City will become even more the province of young people, assuming the role that Berlin has long played in Germany. That will be good for the city’s long-run vitality. [TC: No, I am not saying this is a good thing overall.]

Rents and land prices are likely to fall. This is not necessarily because of a high number of deaths, a ghoulish and difficult detail to predict. Nonetheless many businesses will think twice about locating their headquarters in New York City, if only because senior managers tend to be relatively old. The net effect will be to make the city less attractive for businesses but more affordable for residents, most of all young people. It will be more like the New York of the 1970s and 1980s, with fear of infection replacing the fear of crime.

And:

If Covid-19 survivors have immunity, as is the case with many viruses, the city’s social life may become very segregated. Survivors will have time-stamped immunity certificates and lead relatively active social lives. Those who have not had the virus will be far more Puritan — spending more time online, refusing to shake hands, biking rather than taking the subway. Different bars and even different parts of town will have reputations as better for one group or the other.

This kind of segregation is not an especially appealing prospect. Yet New York City, with its incredible choice and diversity, will be better suited to deal with it than will rural or suburban America. Of course if you haven’t been infected yet, and cannot prove immunity and get into the safe clubs and bars, you will be all the more scared to visit the riskier outlets available to you.

In fact many people, especially the young, may actually expose themselves to the virus deliberately, to join what is ostensibly the more fun-seeking crowd. Maybe there will be bars and parties for people in the “actively infected” phase.

I hope to return to the broader topic of our future in subsequent posts.  And here is a new NBER piece that the coronavirus curve already is flattening in NYC.

The biggest supply chain risk right now?

Trump administration officials are asking India to lift restrictions to give the U.S. access to pharmaceutical ingredients needed to produce a range of drugs, amid fears of a potential U.S. drug supply shortage prompted by the coronavirus outbreak, three sources familiar with the matter told NBC News.

The two governments are holding discussions aimed at easing newly imposed restrictions on pharmaceutical exports from India, which Delhi introduced to ensure the country would have medicine needed to handle the pandemic inside of its borders, the sources said.

With coronavirus potentially disrupting the global supply chain for medicine, India earlier this month restricted the export of 26 pharmaceutical ingredients and the medicines made from them, including acetaminophen — a common pain reliever. India is the world’s leading supplier of generic drugs and is a key source for active pharmaceutical ingredients, or APIs, used to produce a range of medicines.

We need to get on this one right away, I have heard similar worries from very reliable sources.  Here is one article.

A Solution if We Act

Many simulations have been run in recent weeks using standard epidemiological models and the emerging consensus, as I read it, is that test, trace and isolate can be very effective. Paul Romer’s simulations are here and he notes that a COVID-19 test does not have to be especially accurate for the test, trace and isolate strategy to work. Indeed, you don’t even need to trace, if you test enough people. Linnarsson and Taipale agree writing:

We propose an additional intervention that would contribute to the control of the COVID-19 pandemic and facilitate reopening of society, based on: (1) testing every individual (2) repeatedly, and (3) self-quarantine of infected individuals. By identification and isolation of the majority of infectious individuals, including the estimated 86% who are asymptomatic or undocumented, the reproduction number R0 of SARS-CoV-2 would be reduced well below 1.0, and the epidemic would collapse….Unlike sampling-based tests, population-scale testing does not need to be very accurate: false negative rates up to 15% could be tolerated if 80% comply with testing, and false positives can be almost arbitrarily high when a high fraction of the population is already effectively quarantined.

Similarly, Berger, Herkenhoff and Mongey conclude:

Testing at a higher rate in conjunction with targeted quarantine policies can (i) dampen the economic impact of the coronavirus and (ii) reduce peak symptomatic infections—relevant for hospital capacity constraints.

This is exactly the strategy I discussed in, Mass Testing to Fix the Labor Market, where I wrote “Testing, isolating and tracing will [get the economy back on track] much faster and cheaper than dealing with a prolonged recession.”

I want to expand on the costs because it’s clear that a mass testing regime will require millions of tests. Is that cost-effective? Yes. The two types of tests we have are a RT-PCR test for COVID-19 (there are several versions) which costs something like $100 but could probably be much less as we ramp up. (We can cut costs and greatly increase throughput, for example, by pooled testing.) The second test, a blood test for antibodies, is, as best as I can tell, in the realm of $10. Both types are useful. I am going to be very conservative and say that we use a combination of tests at $75 per test. To test the entire US population, therefore, it would cost on the order of $25 billion dollars. Coincidentally, $25 billion is about what we spent on the Manhattan Project in current dollars. Thus, I am proposing a Manhattan Project for testing.

Twenty five billion dollars to test the entire US population. Now suppose the pandemic knocks 5% off US GDP over the next year or two, that’s roughly a trillion dollars lost. Or to put it differently, $3 billion a day. Thus, if mass testing reduces the number of days we are away from work by 9, it pays for itself. Let’s again be conservative and say that testing will also require a $25 billion fixed cost to build the enzyme factories and so forth, for a total cost of $50 billion. 18 days and it’s worth it.

We would also save medical costs by suppressing the virus. (The focus on ventilators has perhaps been overdone given that ventilators in no way guarantee survival–better to stop people needing ventilators.) We would also save lives. Thus, a program of mass testing seems like a no-brainer. Yet, there is no direct funding for anything like this in the $2.2 trillion CARES bill which is stunning. Here’s Austan Goolsbee:

We literally put in a tax break for retailers and restaurants to expand their capacity but not money for production of more COVID tests.

Here’s Paul Romer:

We have an economic crisis because it is not safe for people to work or consume. Our Congress just passed a bill that will spend $2.2 trillion to deal with the crisis. Can anyone identify any spending in this bill devoted to making it safe for people to work and consume?

As I wrote:

We need to attack the virus with test, isolate, and trace. More money for counter-attack!

Objections will no doubt be raised. Isn’t there a shortage of reagents? Do we have the personnel to test everyone? To which I answer, $50 billion solves a lot of problems. We won’t know how many till we try. We don’t need all of final testing capacity at once and even poor tests like simple temperature checks will help but we need to move rapidly in the right direction. The main constraint is time. Social distancing and lock downs are starting to have an effect. I expect the emergency will peak in mid-April and then things will slowly start to get improve. Even when the worst of the emergency passes, however, we will still need lots of testing. This virus will be with us and the world for some time. Let’s get on it.

Oregon Closes Online Schools!!!

Well this has got to be the dumbest thing I have read all week:

WW: The Oregon Department of Education has closed the state’s online charter schools under Gov. Kate Brown’s order to close public schools to halt the spread of COVID-19, according to a document obtained by WW.

…Marc Siegel, a spokesman for the Oregon Department of Education, confirms that although Brown’s order did not explicitly call for the closure of online charters, state education officials believe that is the intent of the governor’s order.

I have to think this is an oversight soon to be corrected but maybe there is a method behind the madness. Some are worried that students will switch into online charter schools reducing other public school funding:

“Enrollment of new students to virtual public charter schools during the closure would impact school funding for districts across Oregon and therefore may impact the distribution of state school funds and delivery of services as directed under the executive order,” the department said in its guidance to districts.

Unbelievable.

Hat tip: Raghu Parthasarathy.

Who and what will rise and fall in status?

A reader asks:

will we see a post from you with predictions of ‘risers & fallers’ in our new coronowartime world?…What are your predictions for (semi-) permanent changes in status of various insititutions & ideologies in the new times?!

Here goes:

Risers

Health care workers — duh, and much deserved.

The internet and the tech community more broadly — Their institutions have performed the best, and even Anand G. has more or less recanted.

Big business

Singapore, Taiwan, and South Korea

Peter Thiel, who numerous times cautioned us about the fragility of globalization and global supply chains.

State capacity libertarianism

The NBA and Adam Silver — They led the charge to shut things down.

Surveillance — It worked in parts of East Asia, and Europe’s unwillingness to use it will cost many lives.

Telemedicine

Science and scientists

Balaji Srinivasan, who saw it all coming on Twitter.

Individuals who can create structure for themselves — the true winners of lockdown.

The Federal Reserve System and Jay Powell — hail QE Infinity!

Losers

The FDA, CDC, and WHOouch.

Social justice warriors — who cares about your microaggression these days?

Rudy Gobert — will never be in the running for “Defensive Player of the Year” ever again.  That said, his being Covid-positive led to the closing of the NBA and may have benefited America more than any other NBA player “action” has done, ever.  He has since given a good deal of money to charity and ought to go up in status.

Bill de Blasio, mayor of New York.

Bolsonaro, López Obrador, and populism more generally.

Academics in the humanities — have they added much to our understanding of the situation, or to our response?

The media.  No matter what you think they might deserve, they just seem to keep on going down in status.  Bet on the trend!

Mixed

Various “right wing types,” of varying degrees of fringe, were early on this issue.  But I suspect they will rise in status only within their “in groups.”  Same with Matt Stoller.

Triage — we had to do it, and we did it unflinchingly.  But in the “social record,” will this go down as OK, or as horrifying and “we can’t ever let this happen again”?  Or maybe we’ll just forget about it, and pretend those silly philosophers doing trolley problems are wasting our time.

Donald Trump and also China.  I’ll delete any comments that discuss these, because as topics they do not encourage subtlety of response.  No matter what you may think is a just outcome here, in predictive terms the paths of these reputations are still difficult to call.

I thank C. for some assistance with this post.

Price dispersion and pandemics

Price dispersion is an excellent indicator of transactional frictions. It isn’t that absent price dispersion, we can confidently say that frictions are negligible. Frictions can be substantial even when price dispersion is zero. For instance, if the search costs are high enough that it makes it irrational to search, all the sellers will price the good at the buyer’s Willingness To Pay (WTP). Third world tourist markets, which are full of hawkers selling the same thing at the same price, are good examples of that. But when price dispersion exists, we can be reasonably sure that there are frictions in transacting. This is what makes the existence of substantial price dispersion on Amazon compelling.

Amazon makes price discovery easy, controls some aspects of quality by kicking out sellers who don’t adhere to its policies and provides reasonable indicators of quality of service with its user ratings. But still, on nearly all items that I looked at, there was substantial price dispersion. Take, for instance, the market for a bottle of Nature Made B12 vitamins. 

Prices go from $8.40 to nearly $30. It is not immediately clear why sellers selling the product at $30 are in the market. It could be that the expected service quality for the $30 seller is higher except that between the most expensive and the next lowest price seller, the ratings of the next highest seller are lower. And I would imagine that the ratings (and implied quality) of Amazon, which comes in with the lowest price, are the highest.

p.s. Sales of the boxed set of Harry Potter show a similar pattern.

That is all from Gaurav Sood.

Sicken Thy Neighbor Trade Policy

A number of countries have imposed export bans on medical equipment. This is a natural, knee-jerk, reaction but a mistake for two reasons. First, no country in the world produces everything it needs. An export ban imposed by one country benefits that country but when all countries ban exports, it’s likely that no country is better off and all are worse off. A prisoner’s dilemma.

The prisoner’s dilemma is even worse than the basic analysis indicates because supply chains are globalized so it’s not even that one country produces ventilators and another produces masks and they are better off trading. Rather, it’s that both ventilator and mask production rely on inputs from other countries. What this means is that export bans make it more difficult for anyone to produce anything. Reuters gives an example:

Swissinfo has reported that production in Hamilton Medical, a major Swiss manufacturer of hospital ventilators, has slowed because Romania banned exports of a critical input that Hamilton was sourcing. The lesson is that any EU export restriction puts at risk other EU imports also needed to fight COVID-19. If the product definitions covered by the EU policy are so broad that they also restrict exports of parts and components, the EU may end up losing access to other supplies of equipment it seeks to import.

And here is Stefan Dräger, head of German ventilator manufacturer Drägerwerk:

DER SPIEGEL: When will a shortage begin developing for filters, tubes and other components for the ventilators?

Dräger: It already has….The parts come from all over the world, including from Turkey. I very much hope that the supply chains remain intact despite the protectionism. If someone decides to disrupt them, there will no longer be any ventilators, for anyone.

Disrupting sophisticated global supply chains is likely to create dis-coordination.

For want of a nail the shoe was lost;
For want of a shoe the horse was lost;
For want of a horse the battle was lost;
For the failure of battle the kingdom was lost—
All for the want of a horse-shoe nail.

For want of a ventilator part the life was lost.

The second reason why export bans are a mistake is that when there are economies of scale banning exports can decrease local consumption. A company that knows that it cannot export will be less willing to invest in building new plant and infrastructure, for example. We see exactly this phenomena in the brain drain “paradox”. Brain drain proponents argue that developing countries need to ban exports of human capital (i.e. don’t let people leave) to keep skilled workers at home. But in fact places like the Philippines, which export a lot of nurses, also have more domestic nurses. As Clemens and McKenzie write:

Enormous numbers of skilled workers from developing countries have been induced to acquire their skills by the opportunity of high earnings abroad. This is why the Philippines, which sends more nurses abroad than any other developing country, still has more nurses per capita at home than Britain does. Recent research has also shown that a sudden, large increase in skilled emigration from a developing country to a skill-selective destination can cause a corresponding sudden increase in skill acquisition in the source country.

The premise of export bans–in this time of need, we need to keep our resources at home–is natural but the virus is a worldwide challenge that needs a worldwide response. We is everyone in the world. We have a lot to gain by cooperation, especially as some countries are being hit at different points in time. Germany, for example, sold ventilators to China as the crisis hit China and China can (re)sell to Germany as China recovers. Our best strategy is a united front where we learn from other countries and reallocate resources around the world.

Beggar thy neighbor trade policy, such as the infamous Smoot-Hawley tariff, lengthened the Great Depression. We don’t want sicken thy neighbor trade policy to length the great pandemic.

Hat tip: anonymous.

Where does all the heterogeneity come from?

Here is a Christopher Balding tweet storm, excerpt:

Iceland has done almost 14k tests on an island of 360k so more than 3% of the total population…They have more than 800 confirmed cases, 10k people in quarantine, 800 in isolation, 18 hospitalizations, 6 in ICU, and 2 dead…About how many people SHOULD have corona if the spread etc numbers are accurate. As of March 27, Iceland would be expected to have more than 46k people that have corona. Emphasis this is on an island of 360k and 800 confirmed cases.

What is going on in the Icelandic numbers?  What accounts for this apparent heterogeneity?  Dosage?  Is it that Icelandic clustering is mostly in one easy to control central city and the rest already is “socially distanced,” even in the best of times?

I know there are some MR readers in Iceland, and presumably they read the Icelandic press.  Can anyone shed light on why the death rate is not higher in Iceland?  Is it that the death rate is about to burst a week from now?  Alternatively, you might think the Icelanders have kept their hospitals up and running — important for sure — but that doesn’t explain what seems to be a quite low rate of reported cases.  Or is it that Iceland’s second largest city is so tiny — Akureyri at 18,925 inhabitants — that the virus doesn’t have many easy chances to recirculate once cut off for a while?

Similarly, Sweden hasn’t restricted public life very much and they do not seem to be falling apart?

How much better is Staten Island (less dense) doing than Manhattan (more dense)?

Some reports indicate that in hard-hit Westchester County,. NY, the rate of hospitalization is about one percent (8-10 percent in some other places).  Alternatively, here is serious talk that the death toll in Wuhan is 20x official figures.

How much of the heterogeneity results from the kind of mixing you get?  One account of the low German death rate is the young and the old were never pushed together so much by the policy response.  One account of the high Italian death and hospitalization rate is that the initial quarantine was only regional and thus it spread very dangerous forms of mixing throughout the larger country.

It is possible that Cambodia, Thailand, and Vietnam still will be hit hard, but so far the signs do not indicate as such.  Warm weather may play a positive role, though that remains speculative.  The latest weather paper appears credible and indicates some modestly positive results.  Of course weather won’t explain the relative Icelandic and Swedish success, if indeed those are truly successes.

By the way, on the “everyone already has it” theory, a semi-random sample of 645 from Colorado showed zero positives.

So where is all this heterogeneity coming from?  Is it all just bad data?  That seems hard to believe at this point, and Iceland seems like a plausible source of reasonably good data.

As for concrete conclusions, these heterogeneities should make us more skeptical about any models of the situation.  But it would be wrong to conclude that we should do less, arguably risk-aversion could induce us to wish to do more, including on the lock downs front.

It is also worth pondering which heterogeneities are “baked in,” such as heat and age structure of the population, and which heterogeneities can be altered at the margin, such as forms of social mingling.  It is at least possible that studying these heterogeneities could make policy far more potent.

Overall, I do not see enough people asking these questions.

The Defense Production Act

In my post, Let the Markets Work, I argued that the Defense Production Act was “neither especially useful nor necessary.” The earlier post focused on how markets were working to address the crisis. Today, we can see the flip side, how the government is working to address the crisis.

The NYTimes reported on Thursday that the government was balking on a deal to buy ventilators

The White House had been preparing to reveal on Wednesday a joint venture between General Motors and Ventec Life Systems that would allow for the production of as many as 80,000 desperately needed ventilators to respond to an escalating pandemic when word suddenly came down that the announcement was off.

The decision to cancel the announcement, government officials say, came after the Federal Emergency Management Agency said it needed more time to assess whether the estimated cost was prohibitive. That price tag was more than $1 billion, with several hundred million dollars to be paid upfront to General Motors to retool a car parts plant in Kokomo, Ind., where the ventilators would be made with Ventec’s technology.

At $1.2-$1.5 billion that’s $15,000-$18,750 per ventilator which is well below the standard price of $25,000-$50,000 (maybe these ventilators would be simpler or less fancy.) Seems like a bargain to me but maybe GM wasn’t the best producer. I think we could buy more pretty quickly from China, as Elon Musk did. In anycase, I’ll give the government the benefit of the doubt on the bargaining. Note that even as they were haggling over the price, GM and Ventec were continuing to work towards production. The market for ventilators is growing.

The President, however, then went on Hannity to say that he didn’t think we needed 30-40 thousand ventilators and also insulted GM CEO Mary Barra in a series of tweets. This was clearly some kind of clever bargaining strategy. Surprise! It failed. Yesterday in a pique, the President invoked the DPA.

CNN: President Donald Trump invoked the Defense Production Act on Friday to require General Motors to produce more ventilators to deal with increased hospitalizations due to the spread of the novel coronavirus in the United States.

But it’s unclear what practical, immediate effect the order will have.

…Trump also named Peter Navarro as the national Defense Production Act policy coordinator for the federal government. Trump said Navarro has been doing that job over the past few weeks but announced him as the coordinator for the first time on Friday.

Trump decided to invoke the act because he was irked by news reports that an agreement between GM and the administration had stalled, a person familiar told CNN.

So what have we gained by using the DPA? Will the ventilators be produced any faster? Will the ventilators be any cheaper? Will other companies be so quick to enter into negotiations with the government? Will Peter Navarro direct production more efficiently and fairly than market prices? No.

Are many more people infected than we think?

Here is the Clive Cookson FT piece (with an irresponsible headline).  Here is the Lourenco new Oxford study, only a few pp.  Miles Kimball offers analysis and numerous references.

Here is the Bendavid and Bhattacharya WSJ piece that perhaps has had the biggest popular influence.  They argue that many more people have had Covid-19 than we think, the number of asymptotic cases is very large, and the fatality of the virus is much lower than we think, perhaps not much worse than the flu.  But their required rate of asymptomatic cases is implausibly high.

The best evidence (FT) for asymptomatic cases ranges from 8 to 59 percent, and that is based on a number of samples from China and Italy, albeit imperfect ones.  Icelandic data — they are trying to sample a significant percentage of their population — suggest an asymptomatic rate of about 50 percent.  To be clear, none of those results are conclusive and they all might be wrong.  (And we should work much harder on producing better data.)  But so far there is no particular reason to think those estimates are wrong, other than general uncertainty.  You would have to argue that the asymptomatic cases usually test as negative, and while that is possible again there is no particular reason to expect that.  It should not be your default view.

Marc Lipitsch put it bluntly:

The idea that covid is less severe than seasonal flu is inconsistent with data and with the fact that an epidemic just gathering steam can overwhelm ICU capacity in a rich country like Italy or China.

Furthermore, the “optimistic” view implies a much faster spread for Covid-19 than would fit our data from previous viral episodes, which tend to come in waves and do not usually infect so many people so quickly.

So I give this scenario of a very low fatality rate some chance of being true, but again you ought not to believe it.  The positive evidence for it isn’t that strong, and you have to believe a very specific and indeed unverified claim about the asymptomatic cases testing negative, and also about current spread being unprecedentedly rapid.

Here is Tim Harford’s take (FT) on all this, he and I more or less agree.

By the way, Neil Ferguson didn’t walk back his predictions.  That was fake news.

So we still need to be acting with the presumption that the relatively pessimistic account of the risks is indeed true.  Subject to revision, as always.

The coronavirus situation in Japan is probably much worse than you think

I have been corresponding with a working group regarding the covid-19 situation in Japan.  They shared a draft of their white paper with me while attempting to circulate their revisionist conclusions in policy circles.

The speed premium is indeed increasing quickly.  The white paper has not materially changed since when I first saw it. Since then, the Olympics were postponed and experts in Japan have described the outbreak as “rampant.”  The working group feels that society needs to prepare, and that this outweighs the desire to wait for additional official confirmation.

The authors are an international team based in Tokyo. They cannot attach their identities to the white paper at present.  They are not medical researchers. They have reviewed their conclusions with a medical researcher and others.  You can weigh the evidence of their claims.

Here is the document (no, it is not malware), and here is the opening bit:

The governmental and media consensus is that Japan is weathering covid-19 well. This consensus is wrong. Japan’s true count of covid-19 cases is understated. It may be understated by a factor of 5X or more. Japan is likely seeing transmission rates similar to that experienced in peer nations, not the rates implied by the published infection counts. The cluster containment strategy has already failed. Japan is not presently materially intervening at a social level. Accordingly, Japan will face a national-scale public health crisis within a month, absent immediate and aggressive policy interventions.

There is a great deal of further detail, including the numbers, at the link.  Sobering.

Safety Protocols and Zones of Quarantine

Carl Danner writes me:

“Essential activities” has no objective definition.  It implies some blanket degree of risk acceptance that can’t be accurate by any underlying calculus, i.e. as if someone has specifically weighed whether we can tolerate these particular activities because they provide enough value to offset the incremental risk of conducting them.  But the reality is more likely that those conducting most activities (including “essential” ones) are now undertaking risk mitigation measures intended to reduce the chance of virus transmission to very low or nonexistent levels.

What we need instead — and the logical place for governments to go in unwinding these blanket restrictions — is a recognition that any beneficial economic activity should be allowed if undertaken using a protection protocol appropriate to its particulars and sufficient to prevent virus transmission.  This would get government out of the business of choosing which businesses or occupations are essential, vital, important or whatever — including all the problems attendant to making such discretionary determinations across the entire economy for a sustained period.  Without that revised approach, we could start to develop occupational licensing/certificate of need type problems as a general feature of the economy.

In other words, this part of the virus response should transition to a health and safety regulatory concern that is important, but handled like most of the others.  For example, poor food hygiene can also kill you, but governments generally don’t respond by deciding which cuisines are essential and which are not.  Rather, anyone willing to follow the safety rules can put up any menu they want.  So it should be for economic activities of all kinds.

We should not lift restrictions until the number of new cases is declining and low and we have enough testing capacity to squash new outbreaks. But we should start to think about what safety protocols may be reasonable in the future. For example, I think we could allow any firm to reopen that does not deal with the public and where all the employees wear masks. Any workplace that disinfects twice a day and checks worker temperatures might be another appropriate allowance. Another possibility is quarantining at work. I don’t see the latter as useful for most workplaces but for say a nuclear energy plant or air traffic controllers it might be appropriate to bring in mobile homes, as they do for fracking workers in North Dakota. Going somewhat farther afield we might use cellphone data to decide on zones of quarantine, e.g. home or work or driving in between. Obviously such systems can be spoofed but the point would be to offer this as a temporary and voluntary system to move towards normalcy.

Hat tip: Michael Higgins.

But *when* will you favor a shift in coronavirus strategy? (no Straussians in a pandemic)

I agree with the numerous sentiments, for instance as expressed here by Ezra Klein, that we are not facing a dollars vs. lives trade-off, rather the better solutions will improve both variables.  Also read this Tom Inglesby thread.  Furthermore there is a concrete path forward toward general improvement, for instance read Zeke Emanuel (NYT, I don’t agree with every detail but the overall direction yes).  And don’t forget these costs cited by Noah.

But we are economists, not mood affiliators, and so we must address the classic question of “at what margin?”  At what margin would you favor an actual shift in strategy because the virus already had reached so many people?  And yes, such a margin does exist.  At that margin we would continue some of our defensive responses, but the overall approach would have to change away from the above links.

Let’s say everyone had been exposed to the coronavirus except yours truly.  Should we shut all (non-take out) restaurants just to limit my personal risk?  Clearly not.  And likely I would end up getting exposed sooner or later in any case.  Then you should “let it rip,” and let Tyler decide when he wishes to go outside or not (but of course offer him health care).

So what is the margin of bad outcomes where, after that point, a major change in strategy should set in?  Has to set in?  That is the question we all need to answer.  And what should that strategy change be exactly?

We like to say “speed is of the essence,” but a less frequent spoken corollary of that is “at some point it is too late to stage the defense we had been hoping for.”

What if we made no further progress against Covid-19 after two more weeks?  Three more weeks?  How about a bit of progress on testing across the next month and a modest increase in mask capacity?  How much longer is the cut-off?  Given how rapidly the virus spreads, it can’t be that long from now.  It cannot honestly be “four months from now.”

(For the record, I am still optimistic, but not at p = 0.8, so this eventuality is by no means purely hypothetical.  And it is perfectly correct to note that Trump’s own incompetence is to some extent making the whole dilemma come true, and that itself is deeply unsettling.  Agree!  We should have “gone Singapore” months ago.  But the dilemma is now here nonetheless, noting that we are hardly the only country in this bucket.  You can’t just condemn Trump and stop thinking about it.)

Or what if New York and seven other regions are hopeless but the rest of the country is not?

I am fine if you agree with me, Ezra, Tom Inglesby, Zeke Emanuel, and many others, including most of the Democratic Party public health establishment.  We all favor “speed is of the essence.”

But the next part of the message never quite gets delivered.  And no one wants to talk about what the next strategic stage — if we fail — should look like.

It is imperative that you consider where your line lies — if only mentally — when you would jump ship and indeed…confess a significant degree of defeat and then formulate and push for a new strategy.

Addendum: Straussian Tyler is not entirely comfortable with this post, as he, like his brother Tyrone, prefers to tell the Noble Lie and maintain the illusion that the preexisting struggle must continue across all margins and at all times.  But perhaps, these days, there are no Straussians in foxholes.  So pick your “no return” point, write it down, and then get back to me.  The honesty of our policy response requires this, yes?  I’m not even making you say it out loud.

And don’t you find it strange that no one has been willing to raise this point before?  Could it be that we are not being told the entire truth?  Or are people not telling the entire truth to themselves?  Isn’t that the same mistake we’ve been making all along?

German Federalism

NPR: “We have a culture here in Germany that is actually not supporting a centralized diagnostic system,” said Drosten, “so Germany does not have a public health laboratory that would restrict other labs from doing the tests. So we had an open market from the beginning.”

In other words, Germany’s equivalent to the U.S. Centers for Disease Control and Prevention — the Robert Koch Institute — makes recommendations but does not call the shots on testing for the entire country. Germany’s 16 federal states make their own decisions on coronavirus testing because each of them is responsible for their own health care systems.

If only America had a federal system we might have had earlier and faster testing.