Social Distancing

Research lead by Neil Ferguson and his colleagues at Imperial College London suggests that a staggering 2.2 million would die in the United States and 510,000 in Britain if nothing is done by governments and individuals to stop the pandemic (no social distancing or hand washing, etc.).  Imperial College London study  The U.S. was late and bumbling in addressing the Novel Coronavirus coming from China in December. The Food and Drug Administration (FDA) refused to authorize the use of tests approved by the EU and the test developed by Centers for Disease Control and Prevention (CDC) was flawed and had to be withdrawn. The United States remains embarrassing and dangerously behind other countries in testing and other preparations for dealing with the disease.  “Coronavirus-testing-delays-caused-red-tape-bureaucracy-scorn-private-companies”

Unable now to contain the virus in a targeted way, the U.S. has largely shut down its schools, theaters, restaurants and other places of public gatherings as well as flights from abroad. The Ferguson “report concludes that the British government might be able to keep the number of dead below 20,000 by enforcing social distancing for the entire population, isolating all cases, demanding quarantines of entire households where anyone is sick and closing all schools and universities — for 12 to 18 months, until a vaccine is available”. A comparable figure for the U.S. implies a reduction in the death rate to 86,000.

For perspective, traffic accidents in the U.S. in 2017 killed 40,100.  More than forty-seven thousand committed suicide that year and 55,672 died from influenza and pneumonia. When compared with ordinary flu, covid-19 spreads more rapidly and is ten times as deadly, but we still do not know very much else about its properties.  But, we can expect a relatively large number of deaths from this new virus no matter what we do.  But doing nothing will increase deaths considerably.

What steps should the U.S. take?  We don’t ban cars because people die in them. We choose to take calculated risks if they are not “excessive”.  https://wcoats.blog/2016/12/27/our-risks-from-terrorists/

The extreme measures being taken in the U.S. proceeded without serious estimates of the economic costs to the economy and the spill over health risks of children kept home with vulnerable grandparents, etc.  “The CDC guidelines advised that short- and medium-term school closures do not affect the spread of the virus and that evidence from other countries shows places that closed schools, such as Hong Kong, ‘have not had more success in reducing spread than those that did not,’ such as Singapore.  But this guidance was not released until Friday [March 13], after the cascade of school closings had begun.”  “States-are-rushing-to-close-schools-but-what-does-the-science-on-closures-say”

Our extreme reaction will generate huge costs that cannot be fully known reverberating for years to come. We can be pretty certain that there will be unintended, undesirable consequences quite beyond the disruption of our pleasurable, cultural activities (bankruptcies of otherwise viable firms and the resulting loss of jobs, etc.). The government (congress and the administration working together for a change) is attempting to anticipate and ameliorate as many of those consequences as possible. One example of the search for cost effective balance of cost and mitigation involves the stopping of flights from Europe.  The cost of monitoring arriving airline passengers before boarding abroad is very likely cheaper than the economic disruption and damage of forbidding foreign visitors at all.  Following Trump’s announcement of the travel ban (once his team sorted out and clarified what he was actually imposing) the American Civil Liberties Union announced, “These measures are extraordinary incursions on liberty and fly in the face of considerable evidence that travel bans and quarantines can do more harm than good.”

Unlike the U.S., Britain has not closed its schools and restaurants. But as I am writing this, the UK just announced that its schools will close Friday March 20.  The Patriot Act passed quickly after the 9/11 terrorist attacks in the U.S. on September 11, 2001 (for those of you too young to remember) reminds us how quickly and easily we surrender our revered liberties when we are scared.  Almost 19 years after 9/11 we still have the dangerously intrusive provisions of the Patriot Act.  Once freedoms are surrendered and the government steps in it seems to be hard to regain them.  The extreme measures being taken in the U.S. and elsewhere to slow the spread of covid-19 provide us with the latest example.

On March 16, Deborah Birx, White House coronavirus response coordinator, reported that models based on data available so far indicated that the biggest reduction in deaths came from “social distancing, small groups, not going in public in large groups. But the most important thing was if one person in the household became infected, the whole household self-quarantined for 14 days. Because that stops 100 percent of the transmission outside of the household,”

The biggest bang for the buck comes from individuals protecting themselves by social distancing, hand washing, and normal (and perhaps enhanced) care to avoid the sick and avoid exposing others when we are sick as we generally do now. Clear public health guidance from the government could go (would have gone) a long way to encourage the enhancement of such diligence.  The Kennedy Center for the Performing Arts never closed down during the flu season.

Covid-19 calls for vigorous government action, even now when it is too late to stop it any time soon. We will need extra hospital beds, medicine, respirators, protective gear, replacements for infected health workers, vaccine research, development, manufacture and administration and more.  Soon we will require replacements for the many brave health care workers such as nurses and doctors as they also become infected with the virus. But as with all decisions, private and public, a careful assessment of costs and benefits of different courses of action will produce the best result.  Knowledgeable public information to guide the natural protective self-interests of each of us and our usual concern and respect for the well-being of our families, friends and neighbors can carry us a long way toward minimizing the further spread of this disease at minimal cost to lives and property.

P.S.  In my previous blog of March 15 (Covid-19, why aren’t we prepared) I reported Beth Cameron’s claim that the National Security Council Directorate for Global Health Security and Biodefense was disbanded in May 2018.  Ms. Cameron was its director at the time.  Yesterday Tim Morrison, director of the successor unit for a year in 2018-19, “No-white-house-didn’t-dissolve-its-pandemic-response-office”, explained that its staff and function were merged with two other units performing overlapping functions in order to improve efficiency without a loss of its capacity “to do everything possible within the vast powers and resources of the U.S. government to prepare for the next disease outbreak and prevent it from becoming an epidemic or pandemic.”  I apologize for misrepresenting what happened and expect Mr. Morrison to apologize for the disastrous failure of his unit to fulfill its mandate.

Brexit

The reality of Brexit unleashes a flood of questions, most of which cannot be answer for quite a while. The near term consequences of the UK’s exit from the European Union will depend on the details of the divorce, which will take several years to unfold. Divorces can take place smoothly and amicably or not. The result—the new reality—can be seen as fair (but invariably diminished on both sides, at least economically) or not.

My concern in this note is whether the underlying public sentiments that pushed Brexit over the finish line—the fear of job losses and cultural dilution as a result of excessive immigration—herald a retreat from the globalization that has dramatically raised standards of living and reduced poverty around the world in the last several decades.

As we know from Adam Smith, our ability to increase our output and thus income rests heavily on the productivity gains made possible by specialization. But we can only specialize in our work and output if we are able to trade what we produce for the other things we need and want to consume. The freer and more extensively we can trade, the more we can specialize and prosper. As I never tire of pointing out, the boundaries of trading within the family, the village, the province and the country and beyond are largely arbitrary. However, trade requires shared rules and standards. Within the family these can be more informally developed and understood. Even within villages customary understandings of weights and measures and value may suffice among people who know each other. But as the domain of trade expands and buyers and sellers no longer know each other, such standards and rules need to be formalized into laws and their enforcement supported by courts and impartial judges. Parties to agreements need to be confident that their contract will be enforced as agreed.

The U.S. Constitution gives our federal government the power and responsibility to establish standards of weights and measures and the monetary unit without which trade within the United States would be greatly encumbered. Agreeing on the voltage standard for electrical devises is one of thousands of examples. Businesses themselves recognize the benefits to themselves and their customers of harmonizing many elements of the products they produce and trade. Thus bottom up negotiations over many years have produced the Uniform Commercial Code, which removes many unnecessary costs of trading across different legal jurisdictions through standardization.

Trade across national borders could not exist without international laws and understandings about the nature of contracts and their enforcement, the description and measure of content and statements of value (unit of account), etc. Leaving the EU does not free the UK from the need to conform to such standards if they wish to continue trading with the rest of the world.

In their efforts to facilitate free trade within Europe by harmonizing product standards, the European Commission bureaucrats in Brussels got off to a bad start by failing to distinguish between those standards that facilitated trade from those that unnecessarily limited product diversity and competition. Their definition of the acceptable features of bananas has become the poster child of their misguided and laughable efforts. This does not mean, however, that the facilitation of international (or intra EU) trade does not need harmonized standards (weights and measures of food content, length, volume, etc.) in order to remove unproductive and unnecessary costs of trade.

The huge benefits of trade—global trade—also require that each of us can produce (work at) whatever we do best. The fullest measure of such freedom—free labor mobility—would require the free movement of labor to the best jobs they can find and this is what the EU required of its members within Europe. It is also what has raised fears and reactions within the UK of having, for example, too many Polish plumbers. As the vote for Brexit dramatically demonstrates, we dare not ignore these fears and they are not easily dealt with. See my earlier discussion of this challenge: https://wcoats.wordpress.com/2016/06/11/the-challenges-of-change-globalization-immigration-and-technology/

The growing anti-immigrant sentiments in continental Europe have little to do with free labor mobility within the EU and are more directed to the refugee problem created by the wars in the Middle East. The British vote to leave the EU seems to reflect some mix of a reaction to ill informed harmonization measures taken by the EU (largely some time ago) and a lack of appreciation of the benefits of properly directed harmonization of codes and standards as well as of fears of losing jobs to immigrants (and on the part of some, a natural fear of strangers). The key question for the future of free trade and globalization and the enormous benefits they bring is whether Brexit is the beginning of a closing of that door. We need to make every effort to address and mitigate these fears so that that does not happen.

The establishment of an efficient international trading order (the international establishment of rules and laws and their enforcement) can come about in a variety of ways. The international agreements and organizations established after World War II to perform this role (e.g., UN, WTO, IMF, World Bank) have generally served this international order well though they are not perfect. The statement by Boris Johnson, former mayor of London and possible successor to British Prime Minister David Cameron, that: “I believe we now have a glorious opportunity: We can pass our laws and set our taxes entirely according to the needs of the U.K. economy,” either reflects stunning ignorance of the role of international law in underpinning globalization or blatant dishonesty. The international institutions that oversee our liberal international order need to be preserved and where appropriate strengthened, not destroyed.

The European Union itself was always much more than an economic (free trade) project. Following WWII after centuries of devastating wars, the European project was always more about establishing the mechanisms of political cooperation that would avoid another European war. It has been stunningly successful in this endeavor, but still struggles to find the right balance in the devolution of authority and the best formulation of European wide governments for preserving peace and promoting economic well-being. An excellent discussion of these issues can be found in Dalibor Rohac’s Toward an Imperfect Union: A Conservatives Case for the EU.

The consequences of Brexit for Britain (what ever might be left of it) and for the EU (what ever might be left of it) will not be known for many years. But the risks of an inward looking nationalism and a retreat from a liberal international order that it seems to reflect should be taken seriously and resisted vigorously.