"Here are three scenarios with regard to reopening economies."
"Here are three scenarios with regard to reopening economies."
There is increasingly fierce debate in the coronavirus pandemic’s biggest victims—the US and the other leading Western countries—as to the wisdom of reopening those countries’ economies. In the US, the debate involves the federal government, over which Donald Trump presides, and some states of the Union. The debate has pitted the economists and the health scientists against the White House and the pro-reopening local politicians.
The battle lines have been clearly drawn. President Trump and a growing number of state governors are arguing that sufficient progress has been made in terms of curve-flattening and death reduction to justify a graduated, guidelines-observing reopening of the state economies. The economists and the health scientists are counter-arguing that the infection and death rates have not gone down sufficiently, that not nearly enough nationwide testing has been done and that premature reopening will very likely lead to a return of the pandemic—a second wave of infections—sooner or later, possibly as soon as the end of 2020.
In Western Europe an increasing number of countries, led by hard-hot Spain and Italy, have taken steps in the direction of lockdown-easing. Selected industries and occupations have been granted permission to resume their activities. In these countries the arguments—and the warnings—are the same as in the US.
It looks like there is no stopping the movement toward this. With only six months left to the general election in the world’s largest economy, US politicians are under increasingly strong pressure to go for economic reopening. Under the circumstances, all that economists can do is review the whole situation and try to determine the outcome of what they and their health-science colleagues regard as premature economic reopening.
The reopening of an economy at this stage of the pandemic will end up in one of the following ways.
First, it can be a more or less total with all or most of the reopened national or state economy restored to near-normalcy without the return of COVID-19. This outcome will depend on the degree of favorability of the nation’s or state’s economic conditions, the quality of the preparations that were made and the degree of public compliance with the anti-COVID-19 guidelines, especially social distancing. This outcome is much to be hoped for, given the pain and dislocation that the lockdowns have caused.
The second possible outcome would be a partial success for the reopening. The selected industries and establishments have remained in business and there has been no second wave, but there has been no return to the pre-lockdown operating sales and revenues. This outcome will have been attributable to the lingering fear of COVID-19 and uncertainty about future economic conditions. This has been the experience of most economy-reopening US states thus far.
The third outcome is the one that everyone prays will not come to pass. Here the warnings of the “Don’t do it just yet” health scientists and the economists come to reality and, after a few weeks and months, the coronavirus comes roaring back. No decent anti-early-reopening person wants to be able to crow that he or she was proven right. A second wave of COVID-19 infections anywhere is the last thing in the world that a right-thinking person wants.
Outcome No. 1 and Outcome No. 2 are within the realm of possibility, with the latter more probable, given the absence of an anti-coronavirus vaccine. But the health scientists know far more about viruses than economists, politicians and businessmen, insist that a second wave of COVID-19 is very likely in the near future in the absence of widespread testing.
Though one prays that a second wave will not come to pass, the authoritativeness of the health scientists makes Outcome No. 3 the more likely outcome of the early economic reopening.