The Road to Economic Recovery And The Disciples of Chaos
Every construction project requires a solid foundation and formulating a plan for restoring the nation’s economy is no different. It must be constructed logically and rooted in reality. While we still don’t fully understand all that we need to know about COVID-19, enough has become known to enable us to start formulating a path for rebuilding the nation’s economy.
What We Know
Let’s start with what we know. First, we are dealing with a virus that has the ability to spread very rapidly and is projected to exact a death toll greater than any war this country has fought since World War II. Second, we currently have no medical weapons to combat or prevent this disease from imposing its will; and we are not likely to have any for the foreseeable future. For now, our defense has to consist of avoiding the enemy and relying on our own individual immune systems, a defense which remains untested against this enemy. Third, we don’t have the option of sacrificing thousands of lives to protect our country and its institutions as we did in World War II because this enemy grows stronger, not weaker, with each life it infects. In fact, for every person infected by COVID-19, three more are likely to be placed in jeopardy.
We also know that even if we are successful in creating a medical defense against it, other similar viruses will likely present themselves in the not too distant future. This means that many of the steps we take now as temporary measures will become permanent parts of our lives just as the security measures adopted in response to the 9/11 attack are still with us today even though Al Qaeda has largely disappeared, Osama bin Laden has been dead for almost a decade and ISIS has been destroyed as a nation. Thus, we won’t be able to go back to how things were before COVID-19; and we will have to resist the Sirens that promise a return to that life. Many jobs and businesses will disappear and new industries will fill the void left in their wake. Similarly, many of the jobs and industries that do survive will be transformed so as to make them more resistant to the viruses that lie in our future, changes which may well impede their efficiency. This will be the new reality.
Confronting Reality
Unfortunately, while we are trying to elude the virus we will not be producing the things necessary to sustain our lives. This is a problem we face both as individuals and as a nation. For those of us who have retired to a comfortable existence, this problem is not particularly vexing; however, for approximately 95% of Americans who need to work to support their families and cannot do that from the comfort of their homes, this poses a serious dilemma. Moreover, the further you go down the income scale, the more acute the problem. Approximately 40% of Americans have no savings and live from paycheck to paycheck. They can’t even afford to go a single week without income to pay their rent and feed their families. It is for this reason that Congress has rushed to enact programs to get monies to these individuals and their families while the nation goes into hiding from the virus. The roughly $2.7 trillion that the Congress has already appropriated is only designed to provide for those in need through the end of May, and the way we are now proceeding, that will not be enough. Even so, there will be many to whom the currently appropriated funds will not flow, and they will have no choice except to risk their lives to the virus while pursuing a livelihood.
To be very blunt, our Congress has chosen to increase the nation’s debt in order to buy time in which to adopt and implement a more sustainable strategy for coping with the virus. This was a choice forced on the Congress by the administration’s failure to act before the virus had become a formidable threat. Had the administration acted promptly in January (as a few countries did), these extraordinary expenditures might not have been necessary; and if the administration does not act decisively now those expenditures will have been wasted. It is during this respite that the nation must move quickly to transition from a strategy of social distancing to a strategy of containment and recovery.
All of the medical experts say that this transition must be based on testing to determine who has or has had the virus, who is immune to the virus and under what conditions can productive activities be safely undertaken. No one really knows how much testing this will require. It appears to be a function of the number of persons who have been infected by the virus, but that is something we won’t even know until we have tested a large percentage of our population. Moreover, a test for the presence of the virus (or even to see if the virus has infected an individual) is largely like a snapshot in that it only provides information as to what existed at a moment in time. Thus, a person not infected one day may become infected the next; and a person who has been shown to have been infected has no assurance that he or she may not be capable of transmitting the virus to another or even become infected again. This means that testing for the virus (at least for the present) must be an on-going process requiring a few hundred million tests.
We are currently performing roughly 500,000 tests per day and I have seen estimates that we need to be performing between 1.5 to 5 million tests per day. The fact that we have now performed far more tests than any other nation is a particularly useless fact which the President likes to repeat. It is not how many tests we have performed or even how many tests we have performed on a per capita basis. What is important is how many tests we have performed in relationship to the number of infected persons at the time the tests are being performed. Had we started testing at a time when the number of infected persons was only a few dozen, as little as a thousand tests might have been adequate. However, since we delayed pursuing testing for over two months, the number of infected persons was able to grow into the thousands, making it extremely difficult to locate and isolate the vast majority of those who had been infected. It is for that reason that we left ourselves no choice except to try to starve the virus by denying it access to new prey.
Compounding the problem of having delayed the start of our testing activity is the manner in which the testing process has been conducted. Although the President’s Coronavirus Taskforce began its work with a great fanfare, announcing companies that it had enlisted to produce testing kits and a website to direct individuals to testing stations, little has been produced by those efforts which were largely exaggerated. What resulted was that the states were left on their own to secure their own testing products and supplies. Not only was most of the world’s supply of testing materials already spoken for by the time this task was dumped into their laps, but the states were placed in the terrible position of competing against each other for the purchase of these items. To make the problem even worse, many purveyors of testing materials, trying to take advantage of this situation, were selling defective testing supplies with the result that we don’t even know how much we can safely rely on the tests that have already been performed.
Thus, in many respects, we are now having to start the entire process all over again. After literally a month of contending that it was the state’s responsibility to arrange for their own testing supplies, the Trump Administration has at last agreed to assume that responsibility, leaving only to the states the job of organizing and administering the tests within their borders. This means the federal government will now have to decide what tests are to be employed and who will be producing them and to get those materials to the states in a timely fashion. Unfortunately, this could take another 30 days with the result that most states will continue to be playing catch-up against a rapidly expanding virus.
The problem is not simply limited to acquiring and distributing the necessary test supplies, but also includes arranging for the tests samples to be processed. Right now, the nation’s capacity to analyze the necessary number of test samples is also woefully inadequate, and ramping up this capability will require setting aside other forms of tests being performed by commercial testing laboratories and commandeering the laboratories of universities and research organizations for this purpose. This will be a logistics project of monumental proportions, best organized by the military.
In addition to augmenting the nation’s testing capabilities, there is also a consensus that no efforts should be made to restart the economy until social distancing practices have been successful in reducing the daily number of new cases to the point that future victims can quickly be identified and the persons whom they may have infected can be traced, tested and isolated. This is also not without problems as no state currently has the number of public health employees needed to carry out the tracing function or the facilities for isolating potential new virus victims. These employees need to be recruited and trained, another task that should have been commenced weeks ago. Some countries (such as Israel) have tried simplify the tracing process by employing electronic devices to ascertain a virus victim’s past travels and contacts. Unfortunately, such an undertaking in this country is months, if not years, from becoming a reality. The only piece of good news is that it should not be particularly difficulty to be able to isolate new virus victims as the nation is now blessed(?) with an abundance of empty hotels that could fill this need.
Restarting the Economy
The foregoing measure are simply the prerequisites for commencing the process of reopening the economy. How you reopen the economy is just as important and problematic as when you reopen the economy. A few European countries have already begun this process. Their methodology is to do it in stages, separated by 14-day intervals so that there will be adequate time to ascertain whether they have acted too quickly before moving on to the next stage. Should that be the case and the number of new infections begins to multiply, the process of stifling its growth to a containable size will have to be reinstituted, causing an additional delay in restarting economic growth.
The first stage of the re-opening process in Europe is reported to involve small retail establishments, with successive stages involving larger businesses. In this way, the Europeans hope to minimize the risk of restarting the spread of the virus on a scale that might be too large to control. This seems perfectly logical. The problem is that this plan contemplates a very gradual reopening process that could take a few months even in Europe where the number of infected persons is considerably smaller than in the U.S. In our country implementing this process could take much longer; and the longer the process is drawn out, the more people that will remain in a non-productive status who will have to be supported by the government, perhaps requiring a few more $1 trillion appropriations before the process is completed.
There is also a certain lack of reality to this plan. The mere fact that restrictions on a given class of enterprise are removed does not assure that the enterprise will actually be able to operate successfully, much less at a scale commensurate with its operations before social distancing orders were put into effect. That’s because of three factors: (1) the company’s employees may be reticent to return to work fearing that they will be exposing themselves anew to the virus; (2) the company’s customers may similarly be reluctant to visit the company premises for the same reason; and (3) the company’s business may be dependent on the smooth operation of its previous supply-chain which may have been interrupted by the virus in another community or country. In short, just as the economy as a whole cannot be restarted over-night, each individual business will also have to restart gradually, placing an additional financial burden on the business and its employees which, in the absence of further governmental assistance, could jeopardize its continued existence.
Since protecting the well-being of the business’ employees and customers will be critical to a successful reopening, most businesses will need to change their methods of operations so as to minimize the risk of re-igniting the spread of the virus. They will also be required to furnish its employees (and possibly its customers—think of Las Vegas’ casinos) with gloves, masks and other protective equipment so they can perform their assigned functions without endangering themselves. Such matters will have to be contemplated in advance of the re-opening and any necessary supplies will have to have been ordered and on hand as work is resumed. In short, restarting a complex business will not be anything like simply turning the lights back on. It will take thorough planning and scheduling and possibly weeks, if not months, to accomplish.
Perhaps a better way to proceed is not to prioritize reopening of non-essential businesses on the basis of their size or class, but rather on the basis of which businesses have adequately prepared themselves to reopen. Thus, those businesses which have adopted safety protocols, have trained their employees in the application of those protocols and are in a position to provide their employees with protective equipment would be allowed to open. This would provide an incentive for each business to place itself in that position as quickly as possible. It also raises an important question: who is to decide whether a business meets those criteria as such decisions should not be left to business owners as their decisions will undoubtedly have an impact on the entire communities in which they operate. To facilitate this process, however, the local or state government should publish recommended measures so each business owner will know what criteria will be used in determining whether his/her business is well-situated to be reopened.
As noted above, the nation must vastly increase its ability to test for the virus. This is not only to determine whether the spread of the virus has been reduced to the point that healthcare facilities will be able to accommodate infected persons and potential new victims can be identified, traced and isolated, but also to enable operating businesses to determine that their employees remain healthy and do not pose a threat to their fellow workers. Having testing capabilities to facilitate ongoing activities could require many times the number of tests necessary to contain the spread of the virus.
The New Normal
The foregoing assumes that all businesses will remain economically viable in a post COVID-19 economy. Maintaining a guard against the virus’s resurgence will impose additional costs which many businesses will not be able to pass on to their customers. We have already had a preview of this phenomenon with the collapse of the oil market. The slow-down in the world’s economy brought about by the virus has resulted in a glut of crude oil, which in turn has driven down the price of oil to the point that it is currently not economical to extract it from the ground using hydraulic fracking methodology. Whether this segment of the fossil fuel industry will ever be able to recover remains to be seen. Similarly, social separation requirements are becoming a death-knell to traditional department stores. There is also a question whether small restaurants and coffee shops will be able to operate profitably if social distancing considerations require them to reduce the number of customers they can accommodate in their facilities. Almost every business that serves the public will have to consider these issues and many will come to the reluctant conclusion that their business model will not work in an environment dictated by social separation requirements.
In the past five weeks over 26 million workers have applied for unemployment benefits and this number will almost inevitably increase over the next few weeks as more business owners find themselves with inadequate resources to carry on their businesses. It has been predicted that unemployment in this country will reach levels not seen since the Great Depression and may even exceed them. President Franklin Roosevelt dealt with the issue of unemployment by creating the much-maligned WPA which put unemployed individuals to work doing tasks that would have future benefit for the nation. Today, we have no shortage of such projects because we have neglected rebuilding the nation’s infrastructure for the past 40 years since the sainted (at least by Republicans) Ronald Reagan declared that “Government is not the solution to our problems, government is the problem.” It simply makes no sense to continue the stop-gap measure of paying people to stay away from their jobs. If our economy is to survive, we need to get a return on the monies we are now investing to keep our economy alive; and construction projects which can be performed while observing social distancing protocols seem like an obvious solution.
In addition, college graduates in the class of 2020 who can’t get a job, and those students waiting to get into medical schools and other out-of-work high skilled individuals should be recruited to serve as public health workers tracing individuals who have been exposed to COVID-19. This work is critical to the nation’s revival and requires a level of education not possessed by the average unskilled worker. In short, rather than have furloughed workers remain in their homes while awaiting for their employers to restart their businesses, these individuals should be put to work either performing other tasks that pose little danger of spreading the virus or by using their time in their homes to upgrade their skills or to master the protocols they will need to follow when they return to work in their former positions.
The Disciples of Chaos
Unfortunately, implementing this strategy requires leadership. It requires someone who will tell the American people what problems lie ahead and what they will have to do to overcome them. Moreover, that message must come from someone who has credibility and has earned the the nation’s trust, a role clearly unsuited for a man who has lied incessantly over the past three years and has told the nation that the pandemic is a “hoax” and will vanish in a few days.
In addition, there is no time to waste as every day that is wasted, the cost of recovery goes up exponentially. All we have learned during the past four months is that our President lacks the qualities needed to lead the nation. He not only lacks the intellectual curiosity and attention span to comprehend the issues that confront us, but also the organizational skills necessary to plan the actions that must be taken and the leadership qualities necessary to inspire the nation. In fact, he has spent the last three years sowing divisions among Americans, placing his personal interests above those of the nation and undermining the effectiveness of the federal government by elevating personal loyalty over competence. Jeb Bush spoke the truth during the 2016 election debates when he said that Donald Trump would be the “Chaos President.”
There is little disagreement among those with experience in combatting pandemics that the virus must be contained before the nation’s economy can successfully be restarted. The President has paid lip service to that advice by proclaiming that “saving lives is his highest priority” and putting his name on guidelines reiterating that wisdom. At the same time, however, he has sought to both encourage and coerce the nation’s governors into restarting their states’ economies before it is prudent to do so. In a previous article I observed that the President has reached the crass (and shortsighted) conclusion that it is politically preferable to save the nation’s economy than to save lives. Not only will this please his donor base, but the sheer number of people that will be adversely affected by a weakened economy (roughly 300 million) will dwarf those who will die or will be grieved by the loss of a close friend or family member (roughly 10 million).
With this strategy in mind the President has embarked on a campaign to compel the reopening of the nation’s economy as quickly as possible by (1) using his press conferences to encourage governors to reopen their states’ economies by arbitrary dates; (2) encouraging his wealthy supporters and support groups to foment protests in the capitals of over 30 states; (3) tweeting his encouragement to his followers to LIBERATE their states ; (4) complimenting those participating in these protests; and (5) resisting Democratic efforts to provide additional economic assistance that the states need to continue their efforts to restrain and contain the growth of the pandemic. Thus, even assuming that the administration carries out its reluctant undertaking to organize the production and distribution of testing materials and personal protective equipment for those providing essential services, it is difficult to envision how the initial wave of infections (yes, there will be others) will even be concluded by the beginning of August as predicted by the Institute for Health Management and Evaluation (“IHME) or that the death toll will not greatly exceed the 65,000 Americans currently predicted by the IHME.
The President has not been alone in bringing political pressure on the nation’s governors to deviate from a rational approach to restoring the nation’s economy. He has an administration that has been purged of persons with real expertise in recognizing, preparing for and fighting a pandemic. Those who have escaped being purged have been deterred from speaking publicly. The only exception seems to be Dr. Fauci who has made a Faustian bargain to limit his remarks so he can continue to have access to the President and hopefully dissuade him from pursuing his worst instincts. In their places (to the extent that their positions have even been filled) are a cadre of sycophants who know little of what they are doing, but who can be counted upon to praise the President for his leadership.
Primary among this group of malefactors are numerous Republican governors who are fearful of acting against the wishes of a President who has infected the minds of their constituents. A good example of this group is Governor Kemp of Georgia, Governor Parson of Missouri and Governor DeSantis of Florida who refrained from even adopting social distancing restrictions until the President had signaled he did not oppose them. Many of these governors are now moving forward with plans to reopen their states’ economies even weeks before the IHME has indicated that such action might be safely undertaken.
Then there is Fox News, the official echo chamber of the President, which provides not only constant praise the President’s actions, but provides unwarranted coverage for protest rallies of a few hundred persons, encouraging its viewers to join in those misguided events, including local politicians hungry for TV coverage in a period of forced inactivity. Fox has also been outspoken in its support for an early lifting of social distancing orders.
It is inconceivable that any of the protest actions would, or even could, have taken place without the initiation and backing of powerful political families (like the DeVos and Uihlen families) and political action groups (like Freedom Works and Tea Party Patriots). They have made the arrangements for these protests and encouraged and organized the participation of their employees and followers. They also arranged for the local media to cover these events.
I would be remiss if I didn’t also mention Attorney General Barr who called restrictions to mitigate the spread of the virus “draconian” and has threatened to institute legal action against those states that “go too far” in restricting personal liberties. I don’t expect that that his warning will have much influence on how the states deal with the virus. Rather, it seems more intended to reassure the President that Barr is still on his team.
Lastly, no one should overlook the critical role being played by Senate Majority Leader Mitch McConnell. He has fiercely resisted providing additional funding to state and local governments that are under tremendous fiscal pressure to restart economic activity which will help to refill their state’s fiscal coffers which have been depleted by efforts to fight the pandemic. By withholding this funding, he has made it virtually impossible for state governments to continue the fight against the virus for much longer.
The Prognosis
My assessment is that it will not be particularly difficult for the governors to resist the political pressures that are being applied to them. Democratic governors have no reason to be moved by protesters wearing MAGA hats and Trump T-shirts and Republican governors will not be coerced by the small groups of protesters that have shown up on their door steps. Moreover, at present, the President doesn’t seem inclined to be more outspoken in his efforts to pressure them to relax their social distancing orders because he doesn’t want to take responsibility for the results of their actions.
The fiscal pressure on the nation’s governors, however, will not be as easy to resist. The vast majority of state and local governments are required to balance their budgets and their governments are incurring costs of a magnitude which they have never before contemplated. In addition, having placed their economies into a medically induced coma, sales tax and income tax revenues are being decimated and arrearages in real estate tax revenues are rapidly growing. Therefore, within days (not even weeks) most states will be faced with having to furlough school teachers, fire and policemen and sanitation workers. Thus, I have real difficulty seeing how many of them will be able to hold off reopening their economies beyond the middle of May, even though IHME has only projected that 11 states will be in a position to do so by then. It should also be appreciated that the IHME projections are overly optimistic because the number of persons infected by COVID-19 is several times the number of confirmed cases relied upon in those projections and the model utilized by IHME underestimates the back side of the infection curve. As one commentator put it, “The ride down from the peak appears to take much longer than the ride up.”
While moving to reopen their economies a day or two too soon may not have dire consequences, doing so a week or two too soon could be disastrous. This is because the virus has the ability to spread very fast and does so with great stealth, with the result that by the time it becomes obvious that a state has acted prematurely, the impact of that action will take weeks, if not months, to reverse. Thus, premature efforts to reopen the nation’s economy could cost trillions of dollars more just to sustain the nation during its renewed efforts to contain the virus.
While I am of the view that the forces of Chaos will succeed in delaying the nation’s effort to contain the virus, there are a couple of hopeful developments. (Remember, Winston Churchill optimistically observed: “You can always count on the Americans to do the right thing . . . after they have tried everything else.”) First, the President’s Coronavirus Taskforce, at long last, seems to have begun in earnest to bring about the production of personal protective equipment, virus testing kits and reagents for analyzing the test. This is a major step in the right direction. Second, Brian Kemp, the Governor of Georgia, has unwittingly agreed to have his state act as “the canary in the coal mine” by relaxing the social separation orders that he put in place a month ago. Georgia is a relatively populated state which has already experienced over 22,000 confirmed cases of the virus and 900 deaths, both of which figures are probably understated. According to the IHME projections, Georgia will not be in a safe position to reopen its economy for at least another six weeks. Thus, there is a very high probability that Georgia will experience a strong resurgence of COVID-19 cases and deaths on top of the 2,000 to 3,000 additional deaths that are already baked into its future. This will become apparent toward the end of the first week in May, possibly earlier if the state ramps up its testing activities which currently have only extended to a little over 1% of its population. Thus, the problems associated with premature resumption of economic activity may well become readily apparent before a significant number of other states start down that path. This might be just enough to make the President and his followers rethink the ill-advised course they are pursuing.