A common opinion piece you’ll see today is an analysis of aspects of the Coronavirus crisis-- whether those be the rise of remote work, the speed at which we got a vaccine, or the “collapse” of global capitalism-- in terms of their implications towards the future of policy and economy. I think too many of those pieces focus too much on cultural intersections. It is more useful, in my view, to study the practical policy effects of the pandemic. I believe that controlling social trends is far harder than managing political ones and more good can be done to look at the policy that can be implemented rather than nigh-abstract cultural phenomena.
My feeling about the policy response for the crisis is that technocrats, when left to do their jobs, have effectively responded. It is when they face political pressure or arbitrary restrictions that we run into problems. Consider how the Federal government potentially bungled PPE production during the beginning of the pandemic. However, when we allow our nonpartisan institutions to flourish, we get good results.
The Macroeconomic Angle
The Necessity of Fiscal Relief
It has become obvious that the fiscal relief of the CARES Act was a success. The programs were effective at relieving poverty for many Americans. Poverty rates remained stable despite the massive shock to the economy. Many even saw their incomes rise because of programs like the $600 a week UI. Americans were able to restock on their savings that had been drained ever since the Global Financial Crisis, as they had increased liquidity and decreased consumption.
However, these benefits have expired, and the need for more relief has become more prescient than ever. The November jobs report was, to put it mildly, disappointing, and breadlines (a sight that should never be seen in this country) are forming outside food banks in Texas. Food insecurity is skyrocketing and the child hunger rate has risen to more than twice pre-pandemic levels. Congress must pass additional relief to ensure families can make it to the vaccine financially intact.
The Efficacy of Monetary Stimulus
The Federal Reserve’s actions during this crisis, whilst not perfect, have been admirable. They did much to prevent a recession and kept markets from collapsing. They haven’t shown signs yet of pulling back, especially as the US Treasury seems to be abandoning any sort of support for the American people. The new policy of keeping the pedal to the metal and locking down interest rates was what the economy was missing for the past decade.
Still, there’s more that the Fed can do. NGDP is still behind its potential, and the economy isn’t set up for full employment. I acknowledge that it’s a meme, but let the money printers go brrrrrrr more! The workers of the United States will be thankful.
Debt is (Relatively) Unimportant
The pandemic has shown that the national debt is almost a meaningless figure when talking about relief policies. No, this isn’t some Austrian kvetching, but a serious insight into how we must think of government spending. Truth is, government spending now will prevent greater damage later. As John Maynard Keynes said: “In the long run, we are all dead”.
As interest rates have lowered, debt has become vastly more manageable. It is important that we see pushback on fiscal conservatives as we look towards recovery policies and policies that would rectify structural issues that have amplified during the pandemic. Will the debt come eventually? Yes. But not before a lack of action does vastly more harm.
The Public Health Angle
Public Health Signalling Is An Unfortunate Trend
Lockdowns have obviously been implemented to help counter the COVID-19 pandemic’s spread. Issue is, many of them are poorly designed, specifically because of public pressure for action that looks good. Governor Newsom of California has recently introduced a series of restrictions that make no sense. Public health officials in New York City shuttered schools despite little evidence that schools were major sources of community spread.
I believe these actions were in part due to a need for governments to reassure their worried constituents and pretend like they are in control. It is, and while I loathe the term, it is accurate here, a form of virtue signalling-- meaningless and potentially ultimately detrimental actions meant to flash meaning towards the concerned.
FDA Approval Must Move Faster
While the vaccine has been effectively made since February, the vaccine trials and approvals process has taken much time. Many called for an opening of human trial testing early on in the vaccine timeline, and from our enlightened position now, that should have happened. Even right now, the FDA is moving too slowly with the vaccine approval. This could be costing many American lives; COVID-19 is the single leading cause of death in this nation at the moment.
Tyler Cowen has suggested that the FDA is “optimized” to move slowly. In my opinion, this is a seriously structural flaw in our public health bureaucracy. We should re-examine our bureaucratic standards and re-align them for a fast-paced, high-impact world. This pandemic showed the US’ weakness compared to other countries in managing pandemics. It shouldn't have to be that way.