– June 7, 2020

AIER’s home state revealed its intrepid “plan to safely reopen the Massachusetts economy, get people back to work, and ease social restrictions while minimizing the health impacts of COVID-19” in late May. The color coded tables and charts envisioning four phases of gauntlet-running for businesses statewide suggested a commitment by the state to a phased, gradual, and highly managed reopening, though until early June the already-underway plan lacked specifics.

The first phase, labeled “start,” came and went rather uneventfully. I got a longoverdue haircut

The expected announcement of an official move to Phase 2 came from Governor Charlie Baker and staff this weekend, and now it’s time for Massachusetts to kick things up a notch. Going into stores rather than waiting in Gordian knots of traffic to be served “curbside?” You betcha. Window washers? Bring ‘em on. Tattoo parlors? Well, not right at the beginning of Phase 2, but also not all the way until Phase 3. You wouldn’t want people admiring your new ink through dirty windows. That’s just common sense.

Massachusetts is far from alone among states in offering an arbitrary, phased approach to reopening the businesses it demanded close a few months ago. Simply put, there are better ways to accomplish even gradual reopenings that could lead to better economic outcomes, more goodwill, and likely no heightened risk of COVID-19 infections.

Going Through an Awkward Phase

A few days before the Governor’s confirmation of Phase 2 came the awaited specifics, mostly as answers to the question “When Can My Business Reopen?” The answer looks like this:

The four phases of the plan (Phase 2 began officially on Monday, June 8) occur at the Governor’s discretion, though each at least three weeks apart. Unwilling to have their creativity constrained by a mere four phases, Governor Baker and his team introduced some additional staggering in the plan’s first half.

Expecting a laissez-faire response from Massachusetts in 2020 is not realistic. But in addition to all the micromanaging, two of the plan’s broad features simply defy common sense.

First, the plan offers no way to respond to different local conditions within the state. This problem includes but goes well beyond potentially differing COVID-19 infection rates and deaths. There’s a reason local economies are often referred to as “ecosystems.” The various businesses often depend upon each other in ways impossible to tease out looking from the top down. 

Profitable reopening for most of the business types on the list depends on the traffic other nearby businesses are getting, supply chains still often based on local relationships, and whether the area’s residents are themselves going to work and getting paid. Other hoops through which businesses have had to jump, including the Phase 1 allowance for retailers operating “curbside,” appear to be particularly cruel impositions at a statewide level. The difference between a profitable reopening and catastrophic short-term losses is likely tied up in local demand conditions and even traffic patterns. But the plan contains no scope for action from local authorities or the businesses themselves.

Local businesses operate in the opposite of a vacuum. With some but not all participants in a commercial ecosystem that has evolved by being profitable back in operation, the plan likely spells a few particularly treacherous months for already-teetering firms rather than any “relief” to speak of.

The commitment by the Governor to the plan unfolding over at least a few months is the second terribly misguided and unnecessary feature of the plan. Baker and team miss the point when they call Phase 4 “new normal.” Businesses that used to be profitable when all the lights were on now have months more of conditions that for some will spell losses. 

Removing the last mandated restrictions will be the moment when the process of finding a new normal begins, not ends. Entrepreneurs can then stop waiting and begin feeling their way to either profitability or exit in something resembling a normal economy. We hear a great deal in the plan about the Governor’s discretion to delay future phases or turn the clock back, but not about ending the phases early. Hopefully this will be a promise the Governor does not keep.

Regulating Ourselves

There are no easy or perfect answers and the risk of heightened transmission of COVID-19 during this still-uncertain time is something no state can ignore. Backers of the Massachusetts reopening plan would likely argue that this additional pain is necessary to get businesses open and people moving about gradually while monitoring pandemic conditions.

They’re wrong, and the argument doesn’t hinge on anyone’s epidemiological model of choice. Consider if Phase 2 of the Massachusetts plan were instead the following:

Governor Baker and the state of Massachusetts urge residents to limit trips outside their homes in length and frequency to approximately 50 percent of normal conditions. Businesses may reopen with precautionary measures in place at a time of their choosing. We will issue further guidance, hopefully on increasing trips outside the home, in the coming weeks.

Those three sentences, and no more, would do away with the worst shortcomings of the current plan. Along with information resources and recommendations to individuals, families, and vulnerable populations, people could respond to local conditions and their own knowledge and weigh these concerns against their economic needs.

Individuals could decide whether it was more important to go to the library or gym, restaurant or movie, and with a little time signal to businesses when and how to reopen. The most important and robust economic activity, locally speaking, would likely end up opening first and with the greatest chance to survive the process.

How can we trust individuals to not free ride and galavant around town, visiting the career coach and massage therapist while the rest of us cower in our homes avoiding this disease vector? We can’t, fully. Nor can we trust them to follow every rule currently in place, or more importantly for the current rules to be the right ones.

Individual discretion has been the true regulating force throughout the pandemic, whether due to governmental enlightenment or the simple math of enforcement costs. Horror stories aside, we’ve largely been left to determine what is and isn’t essential. AIER Sound Money Project Director Will Luther shows in a recent paper that lockdowns were never as simple as a switch flipped by authorities. 

Stating guidance like “approximately 50 percent” would never get you right there, but it would impact peoples’ decisions and result in the gradual increase in traffic and openings that many think prudence demands. It would also allow businesses drastically more freedom regarding when and how to open, with experimentation along the way, that would allow the process to affirmatively move toward whatever the new normal is.

Admittedly, such an approach would confound many peoples’ expectations of what a well-informed, technocratic regulatory approach in a crisis should look like. If the worst happened, and infections spiked, Governor Baker would be easy prey in the next election, whereas should the worst happen now, he will at least have graphics and phases and categories and subcategories to say “we did our best.”

They have not done their best. In responding to these incentives, Massachusetts’ leaders are harming state businesses without compelling evidence of positive steps toward safety. Governor Baker’s plan is understandable politics but unforgivable policy.

Max Gulker

Max Gulker

Max Gulker is an economist and writer who joined AIER in 2015. His research focuses on two main areas: policy and technology. On the policy side, Gulker looks at how issues like poverty and access to education can be addressed with voluntary, decentralized approaches that don’t interfere with free markets. On technology, Gulker is interested in emerging fields like blockchain and cryptocurrencies, competitive issues raised by tech giants such as Facebook and Google, and the sharing economy. Gulker frequently appears at conferences, on podcasts, and on television. Gulker holds a PhD in economics from Stanford University and a BA in economics from the University of Michigan. Prior to AIER, Max spent time in the private sector, consulting with large technology and financial firms on antitrust and other litigation. Follow @maxgAIER.

Get notified of new articles from Max Gulker and AIER.