Economist Herb Stein was famous for a great many things, but most prominent among them was “Stein’s Law.” It is elegant in its simplicity: “If something cannot go on forever, it will stop.”
Stein’s Law is particularly appropriate these days as we discuss plans for reopening the economy. There is a small but growing portion of mostly Republican governors who seem intent on opening up sooner rather than later. There’s also a group that insists on opening up slowly, with Ezekiel Emanuel suggesting “conferences, concerts, sporting events, religious services, dinner in a restaurant, none of that will resume until we find a vaccine, a treatment, or a cure” while concluding that “[w]e need to prepare ourselves for this to last 18 months or so and for the toll that it will take.”
Somewhere in the middle are a slew of plans from think tanks outlining a variety of suggestions to open up gradually over the course of the next few months. Most of these plans are pegged to a variety of metrics based off of declining caseloads, or a set period of time. The Center for American Progress suggests 45 days, while Harvard suggests three months.
These are interesting debates, but they don’t frame the question properly. The question isn’t what timeline we should allow for things to start to reopen. That assumes a degree of control over events that we probably lack. Instead, the timeline will probably be dictated for us, which demands a slightly different policy discussion. There are a couple of reasons for this:
First is public opinion. Support for stay-at-home orders remains robust nationally in polling, but there is at least anecdotal evidence that patience with such orders is starting to wane. I’ve noticed an increase in traffic when I go to the bank, and longer lines when I get takeout. We’ve seen protests, although they are sporadic at best. And, again anecdotally, people’s nerves seem to be fraying.
How long the public will support these measures is anyone’s guess, but I doubt the public’s patience is infinite. This debate will heat up as our economy sorts into three tiers: knowledge economy workers unaffected by the collapse who demand continued distancing; essential workers who have to work (often in jobs where it is impossible to distance); and a growing segment of unemployed. Simmering in the background is the issue of churches; secular observers often have a hard time appreciating the mindset of religious believers, but I’m confident that while the devout are willing to take a few weeks off of services, they won’t wait several months to resume them.
Second, for plans that are based on the development of a vaccine or a national test-and-trace system, it isn’t assured that we will ever have either. In fact, we’ve never developed a vaccine for a coronavirus, and there are challenges involved in doing so. Attempts to develop an effective vaccine for SARS ran into financial challenges as the virus disappeared, but those vaccine trials also were showing secondary effects. This doesn’t mean it is impossible – many trials are well under way for this pathogen, and the reward for developing this vaccine will be much greater than developing one for, say, the coronavirus strains of the common cold. But we shouldn’t act as though success is assured, either. Hope is important, but it is not a plan.
As for test-and-trace, this would require immense intrusions on personal liberty to carry out, which the public and courts may or may not tolerate. I also think people underestimate the massive logistical challenges involved in implementing such a policy in a country that is roughly the same size as all of Europe, including the Russian portion, only less densely populated overall. I’m not a public health expert, but implementing this in Manhattan seems to be a fundamentally different challenge than doing so in, say, Montana.
But these are secondary, and to some degree speculative, concerns. The biggest problem is that, sooner or later, something will collapse that we can’t bail out or regulate our way around. The most obvious prospect is another collapse of the financial system, though we successfully bailed out and regulated our way around such an event only 12 years ago.
A crisis in higher education is another possibility. If students decide to opt for gap years before college or to take another year off before going to graduate or professional school as campuses close, school income would be hit. More important for some larger schools would be the cancellation of sports. The Ohio State University, for example, makes some $75 million in profit off of sports, and it isn’t the nation’s biggest sports school. Those are big gaps to fill, especially when states will be facing contracting budgets as well.
Larger concerns would be a collapse of the health care system or food distribution networks. We’ve seen increasing stories of hospitals conducting layoffs – counterintuitively, one might think, amid a pandemic – because of the cancellation of non-emergency surgeries, which supply a huge amount of their operating budget. To put this in perspective, Ohio hospitals are projected to lose $1.2 billion a month in revenue. That’s unsustainable for the summer, much less 18 months. Farmers are beginning to destroy their crops as the collapse of the dining industry removes a major source of demand.
You should think of this probabilistically. We’ve thrown a live grenade into a very delicate social and economic web. Regardless of whether or not you support the measures we’ve adopted so far, the longer they go on, the higher the probability of the grenade detonating as we hit a “tail risk” phenomenon. Sooner or later some second- or third-order effect is going to pop up that no one anticipated, and that threatens to overwhelm us. If you need further convincing, follow oil prices. Negative prices are not normal.
Mind you, the first school closures barely occurred a month ago (speaking of which, if secondary schools are closed next year, those parents still working are going to have to figure out how to make it work). We haven’t been at this very long and we’re already seeing serious threats looming. I can only imagine what other threats will emerge after another month or two of this.
Finally, we shouldn’t let these trees obscure a wider forest. These different scenarios work with each other: As second- and third-order effects begin to present, Americans’ tolerance for restrictions will increasingly wear thin. This will be especially true if, as some suspect, the virus retreats in the summer (before reappearing in the fall).
Two concluding thoughts: First, this is descriptive, not prescriptive; the analysis does not vary whether one opposes or supports the current measures. Second, none of this means that we should do nothing. It means that time is of the essence. We don’t have unlimited runway to get things up and running before our hand is forced. We might have the 45 days envisioned by the Center for American Progress, but I’m extremely skeptical that we have the three months envisioned by Harvard.