The unnecessary fight over Covid-19

We American’s expect to be able to make our own choices about what risks we are willing to take. The limits on our behavior generally concern when it threatens to harm others. When state after state issued stay at home orders and mandated the closing of many businesses (restaurants and theaters, etc.) a year ago they violated this principle. Many people rebelled at this intrusion into their prerogatives, but sadly by often making foolish decisions of their own. Of course, those who contract a contagious disease, such as Covid-19, should be legally quarantined.  Otherwise, businesses and individuals should make their own decisions about how to respond to this pandemic on the basis of the best possible information about its risks and how to mitigate them. A role in which the government failed miserably.

As with economic decisions more generally, countries that give maximum scope to individuals about what to produce and/or buy have been far more prosperous than those in which more decisions are made centrally and imposed from the top (socialism). Among other things the CARES Act suspended debt payments (and associated defaults, bankruptcies, and evictions) for understandable reasons https://wcoats.blog/2020/04/11/econ-202-cares-act-who-pays-for-it/. However, it was part and parcel of centralized mandatory decision making and inferior to individual case by case decisions by lenders and borrowers (debt restructuring) and landlords and tenants (rent forgiveness or holiday or eviction). In normal times when a debtor is unable to service its debt, for purely profit maximizing reasons lenders evaluated case by case whether to allow temporary arrears (debt restructuring) or to invoke the default provisions of the loan (bankruptcy).

Restaurants that felt they could safely open with social distancing and other safety measures that would convince their customers to return should be allowed to do so. They should be free to decide whether requiring face masks when entering and walking about the restaurant would attract more customers than not doing so. Customers who were not comfortable in a restaurant that did not take these safety measure would not patronize them. The relevant government should decide whether to require them on public transportation, etc.  If you come to my house, be sure that you are wearing one.

The culture war we now witness over face masks and other aspects of appropriate public behavior with regard to Covid-19 was so unnecessary. The American government behaved like a parent dealing with children and many Americans responded by behaving like children. They didn’t choose not to wear face masks because they were convinced by medical data that they are not effective (most data shows that they are very effective). Rather they chose not to wear them because the government told them they must. Childish indeed. Almost a year ago I wrote that the government’s most effective role was to provide the best information available (and more was coming available every week) about the nature and risks of Covid-19 and how best to avoid or mitigate those risks. If restaurants felt that they could safely remain open, they would need to convince potential customers that they had taken measures to protect them from exposure to the virus. This was not the approach taken by the government and public trust in the statements of the government in recent years has been, to say the least, low.

I expressed these views almost exactly a year ago (March 31, 2020). I repeat that blog here:

https://wcoats.blog/2020/03/31/beating-covid-19-compulsion-or-persuasion-and-guidance/

About wcoats

I specialize in advising central banks on monetary policy and the development of the capacity to formulate and implement monetary policy.  I joined the International Monetary Fund in 1975 from which I retired in 2003 as Assistant Director of the Monetary and Financial Systems Department. While at the IMF I led or participated in missions to the central banks of over twenty countries (including Afghanistan, Bosnia, Croatia, Egypt, Iraq, Israel, Kazakhstan, Kenya, Kosovo, Kyrgystan, Moldova, Serbia, Turkey, West Bank and Gaza Strip, and Zimbabwe) and was seconded as a visiting economist to the Board of Governors of the Federal Reserve System (1979-80), and to the World Bank's World Development Report team in 1989.  After retirement from the IMF I was a member of the Board of the Cayman Islands Monetary Authority from 2003-10 and of the editorial board of the Cayman Financial Review from 2010-2017.  Prior to joining the IMF I was Assistant Prof of Economics at UVa from 1970-75.  I am currently a fellow of Johns Hopkins Krieger School of Arts and Sciences, Institute for Applied Economics, Global Health, and the Study of Business Enterprise.  In March 2019 Central Banking Journal awarded me for my “Outstanding Contribution for Capacity Building.”  My most recent book is One Currency for Bosnia: Creating the Central Bank of Bosnia and Herzegovina. I have a BA in Economics from the UC Berkeley and a PhD in Economics from the University of Chicago. My dissertation committee was chaired by Milton Friedman and included Robert J. Gordon.
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1 Response to The unnecessary fight over Covid-19

  1. 27rpringlegmailcom says:

    Warren Good post, thank you Here is UK support for your view – but Jon Sumption cuts a lone figure here. Would be interested to know if you agree with him.

    https://unherd.com/2021/03/lord-sumption-civil-disobedience-has-begun/

    Robert

    >

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