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We Need to Be Realistic, Not Optimistic, Not in Denial, Not Pessimistic, Just Realistic

By April 8, 2020Commentary

Readers know that I am not a fan of the general business shutdown that exists in most states and that has caused extensive job loss.  I thought that was a bad approach for a variety of reasons, with the primary one being that the harm being done to low and middle-income people did not seem to be being considered; because it was pretty obvious that these mitigation efforts, however extreme, were only delaying the spread of infections; and because there were obvious lesser, more targeted mitigation efforts that would avoid most of the economic damage.  I am just as concerned that there is currently a lot of undue denial of reality in regard to what happens if the shutdown orders are removed or made less extreme.  Those concerns relate both to the spread of the disease and to the economy.  There is a lot of happy talk right now that we are past the worst of it, the infamous curve has started to flatten and maybe trend down and that the economy will snap back very quickly to near where it was before.  I don’t think any of that is realistic.

Trying to gather relevant facts in the face of a fast-moving situation like this epidemic is difficult.  Scientific research comes out everyday, but results need to be replicated and validated before action is taken based on those results.  There is just a lot of very critical information that we don’t know on the disease side of the equation.  On the other hand, we know fairly precisely what the economic damage from lockdown orders is.  So we have to do the best we can in balancing the likely effects, as we currently understand them, of the epidemic against the pretty certain effects of business shutdowns.

Here are issues in regard to which I think there is some unrealistic thinking.  The first is that if the curve of infections and deaths does trend flat or down, we are heading toward the end of the epidemic and will soon be in the clear.  This perception is partly due to wishful thinking, which is a common human trait, and partly due to politicians and even experts not being clear in what we should expect.  One exception to some extent is Dr. Fauci.  This misunderstanding is based on a belief that we are eradicating the virus.  We are not.  We are limiting opportunities for transmission.   We could maintain the shutdowns indefinitely to continue to limit the spread, but I don’t believe anyone thinks that is possible from an economic perspective.  So the most realistic assumption is that if we lifted the extreme mitigation measures there will be an increase in infections and all the events that flow from infections, including some level of serious illness and deaths.

What could affect that level of infections?  There is some evidence that suggests that many people, even when exposed to the virus, don’t get infected.  Is this due to pre-existing antibodies?  To a generally strong immune system and good health?  To genetic variations in the ACE receptors that the virus uses to enter cells?  Some recent research has even suggested that people who have had tuberculosis vaccinations are more resistant to infection.  Whatever the reason, it would be good news if it is true that a large proportion of the population isn’t even likely to get infected upon exposure.  And if that is true, it makes it more likely that the virus has already infected a good chunk of the people who could get infected.

What would affect the rates of serious illness and death among the infected?  Probably for some of the same reasons listed in the prior paragraph, only certain sub-populations seem to develop severe coronavirus disease.  This is particularly true for those persons over age 70 with pre-existing illnesses or general frailty, and for younger age cohorts with certain health conditions, like respiratory disease, immune system diseases, and certain chronic illnesses.  Younger, healthy people have almost no risk of serious illness or death.  This also means that any resurgence of the virus if a shutdown is lifted or lessened would likely find fewer targets, as the first wave afflicted a larger proportion of those who might have gotten severely ill.

But I believe we should be prepared for a resurgence of infections and severe illness if the shutdowns are modified or ended and we should make a decision now on how we are going to handle that.  One thing that is clear is that any change in the shutdowns should be accompanied by measures that continue to exist to protect those vulnerable populations.  Nobody seems to want to acknowledge the likelihood of resurgence, must less make decisions about how it might be handled.  In my judgment, we must lift the general business shutdown, keep in place the more targeted and less severe spread mitigation measures and be honest in acknowledging that there will be infections and deaths.  Part of being a leader instead of a politician is accepting that there are hard choices with hard consequences regardless of the decision.

The second issue with unrealistic thinking is in regard to economic recovery.  The damage we have done to demand, output and jobs is so sudden and so severe that we simply don’t have any precedent to use for guidance.  We are running up public debt at an astounding rate and burning through private cash reserves quickly.  The public psyche has been shocked, and many people will be fearful of returning to their normal routines and/or less likely to return to prior spending and consumption behavior.  To imagine that if all the lockdowns were lifted tomorrow, the economy will snap back in a few months is a fantasy.  We have done immense damage, and because of the lemming-like behavior of most countries, this is a global depression in a very interconnected economy.  So people should anticipate that it will be a long, slow slog back.

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