– March 23, 2020
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When will the lockdowns and business restrictions end? This is an extremely important question, the importance of which doesn’t seem to be widely appreciated or even acknowledged. A few others, notably The Wall Street Journal and John Cochrane, are making similar arguments.

All the most recent developments concerning the coronavirus are additional, severe restrictions of economic activity in large parts of the country. The governors of California, Illinois and New York issued decrees on March 20 similar to those in place in Italy and Spain and earlier in China. People are supposed to stay in their homes and not go out other than for specific reasons. On the same day, Pennsylvania ordered all “non-life-sustaining” businesses to close and Florida ordered all restaurants closed for on-premises dining. This occurred after social distancing including widespread closures of businesses had been ongoing for more than a week.

When asked about whether life might be close to normal by Easter, April 12, Dr. Fauci, head of the National Institute of Allergies and Infectious Diseases, responded, “I can’t predict what the situation would be. I think we need to be prepared to modify behavior, even when it involves things that are very close to our hearts.” 

I do not want to over-interpret Dr. Fauci’s reply in an interview, but he certainly did not indicate that the end of these increasing restrictions is in sight. This is a profoundly disturbing state of affairs.

If the large-scale shuttering of businesses goes on for more than another week or so, many people’s lives will be ruined. While it is not entirely clear how many people in the United States live paycheck to paycheck, the number is far from zero. 

One estimate is that half of all people making less than $50,000 a year have no savings to pay the bills. Most people working in retail establishments and restaurants make less than $50,000 a year. Many of these people have no way to buy food after not being paid for a short period. Some have credit cards. Some don’t. Some have relatives who can help. Some don’t.

There is no evidence that these grave consequences are being considered in a serious way. Instead, presentations tend to focus on technical issues and avoid the widespread suffering that soon will overwhelm many in the United States.

Discussions of the coronavirus need to change now and start focusing on when life can start to gradually return to normal.

The gradual lifting of these restrictions should be outlined soon. The lifting of restrictions should include measures taken by businesses and the government to limit exposure. The lifting also should take account of the costs of these restrictions on people. 

Some of the gradual return of activity will occur naturally, no matter what. There is no evidence that people are ready to rush out to stores and restaurants right after restrictions are lifted. On the contrary, many restaurants decided to close on-premises dining because few people were willing to venture out given concerns about the coronavirus.

In the meantime, the main preparation that will let people return to something like normal economic activity is testing. Testing anyone who thinks they might have coronavirus is the surest way to reduce infections and let people return to work with some confidence in their own health and the health of others.

Gerald P. Dwyer

Dwyer

Gerald P. Dwyer is a Professor and BB&T Scholar at Clemson University. From 1997 to 2012, he served as Director of the Center for Financial Innovation and Stability and Vice President at the Federal Reserve Bank of Atlanta. Dwyer’s research has appeared in leading economics and finance journals, as well as publications by the Federal Reserve Banks of Atlanta and St. Louis. He serves on the editorial boards of the Journal of Financial Stability, Economic Inquiry, and Finance Research Letters. He is a past President and member of the Executive Committee of the Association of Private Enterprise Education. He is also a founding member of the Society for Nonlinear Dynamics and Econometrics, an organization for which he served as President and Treasurer. Dwyer earned his Ph.D. in Economics at the University of Chicago, his M.A. in Economics at the University of Tennessee, and his B.B.A. in Business, Government, and Society at the University of Washington.

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