Counterintuitively, these shutdowns also help the economy. A fascinating new study, from researchers at the Fed and M.I.T., has analyzed the social-distancing policies that various American cities enacted during the 1918 flu pandemic. Some cities, like Los Angeles, Seattle, Minneapolis and Cleveland, closed schools and banned public gatherings earlier and for longer periods. Others, like San Francisco, Philadelphia and St. Paul, Minn., were less aggressive.
The first group of cities suffered fewer deaths — and also enjoyed higher average employment and manufacturing output, as well as stronger bank balance sheets, in the following year. The title of the paper — by Sergio Correia, Stephan Luck and Emil Verner — says it all: “Pandemics Depress the Economy, Public Health Interventions Do Not.”
The economic costs are still severe. Today, the most effective response would probably be a two-month national shutdown, accompanied by a modestly larger stimulus bill than Congress just passed, both to pay many Americans’ salaries and to bolster the health care system. When the two months were over, healthy people could go back to work, and any new cases could be quickly isolated. That second phase would be similar to the strategy in Singapore and Taiwan.
Had Trump taken this approach in late February, a full month after the first American fell ill, he could have vastly reduced the human and economic toll. Even if he took it now, he could probably get the country functioning close to normally by early summer. Instead, he is talking about normalcy by April — and making it likely that things will still be abnormal in July.
What explains his response? Trump lives in the moment. He is impetuous. He is like a day trader, not a long-term investor. A shutdown sounds miserable to him. He doesn’t have much respect for scientists and their data, but he does pay close attention to his poll numbers. And they’re rising (along with, it’s worth noting, the approval rating of other world leaders). Trump’s approach seems to be working, for now.
I can’t tell you exactly what the future will bring, especially during a crisis unlike any the world has confronted in a century. It’s possible that Trump could somehow luck out and the virus will end up being less gruesome for all of us. But that’s not the likely outcome. And nobody should forget that he is choosing a path that endangers lives and jobs mostly because it feels better to him in the moment.