Governors who think they are taking decisive action with orders to quarantine in place by staying home are going to find the economy much easier to shut down than to leap back into production upon order. America has no automatic power to lead the world in income, jobs and wealth. That needs to be earned in the markets.
It was centuries of work and production that made us rich. Once we so brazenly shut that down, don’t be surprised if it doesn’t spring back to life on command.
The Wall Street Journal reported last Friday of second quarter declines of as much as much as 20% at an annualized rate. It said then, “Another month like this week and the layoffs will be measured in millions of people.” Say good bye to Trump’s 3.5% unemployment rate and his blue-collar boom then.
Current stay-at-home policies are creating another Great Depression, when unemployment skyrocketed to 25% for years. Until millions were sent overseas to go win World War II.
There are rays of hope that the clouds may be parting. Spring has sprung, and temperatures are rising. That is already starting to kill the virus, just as it does every spring when flu season passes for the summer.
Modern medicine is already developing therapies to treat those suffering from the coronavirus. Chloroquine and hydroxychloroquine have already proven safe for use by humans over decades to fight malaria. The FDA has already approved them for use by U.S. doctors “off label” to treat coronavirus patients. Remdisivir, produced by Gilead Labs, is another promising treatment. Indeed, computer searches have already uncovered dozens of therapies that can be promising for coronavirus.
Dr. Fauci may sneer at these cures as “anecdotal.” He uses that term rightly as a scientist to refer to anything that has not been proven by a double-blind study as both safe and effective. But I don’t need a double-blind study to point to promising developments as early signs that it is time to end the coronavirus depression.
Indeed, President Trump has already said he would like to see America going back to work by Easter, which is April 12 this year. He and Vice-President Pence, with the support of Dr. Fauci, have already adopted the policy of “15 days to a cure” for their coronavirus task force. Those 15 days are over by March 31.
As the Wall Street Journal has already alertly editorialized “That should be the moment, if not sooner, to offer new guidance on what may be called phase two of the coronavirus pandemic campaign.” That Journal editorial stated last Friday, “No society can safeguard public health for long at the cost of its economic health.”
President Trump is the one that the people have chosen to weigh the economic risks against the health risks and make a final call on the policies. March 31, or by Easter, there will be still more experience with promising drug therapies. Spring temperatures will be higher. It will then be time to allow America to go back to work.
During the Great Depression and World War II, America resorted to massive debt for emergency financing. That would be viable now to keep Americans safe from coronavirus death and depression. That is what markets are telling us with their record low interest rates and continued willingness to buy U.S. bonds reflecting national debt at those rates.
But Democrats had held up passage of legislation to provide any such federal assistance, even with the stock market soaring by an all-time, one day record of over 2,000 points on Tuesday. They complained the legislation was too skewed towards big business. Sheila Bair, President Obama’s chief bank regulator during the 2008 financial crisis, suggested “companies that had management or financial problems should fend for themselves.”
But Bair is conflicted, serving on the Board of Directors of Industrial and Commercial Bank of China, China’s largest commercial bank, which has been trying to get into the American market for planes, rockets, satellites, and jet engines. China would gain by seeing those American aerospace competitors fail in the coronavirus depression.
Americans want to go back to their jobs and businesses now. Democrats had no complaint about Obama’s “stimulus” to recover from the 2008 financial crisis. Indeed, America is ready to see movie theaters, concerts and plays re-open, not to mention spring training and the NBA. Is it too late to try for March Madness?
Peter Ferrara is the Dunn Liberty Fellow in Economics at King’s College in New York. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.