It’s been six months and a handful of days since the day the NBA cut its season short and the COVID-19 pandemic, shutdowns and the new normal became a reality. People, businesses and politicians are antsy to see an end to the economic pain, the social distancing and the uncertainty.
We’ve seen protests, defiance and public tantrums as the most vocal have yelled and demanded things reopen and get back to normal as fast as possible—an opinion that has its foothold among some elected officials—based on the faulty assumption that all this hurt is driven solely by government intervention (which, if we’re being honest, has been largely toothless).
But a developing understanding of people’s behaviors during the pandemic—reduced foot traffic, continuing jobless claims and continued precarious position for Alaska’s businesses–is that the larger driver of the continued pain is the general public’s lack of certainty and confidence about the virus.
The reopen now crowd’s insistence that the virus is not that big of a deal—that if we just rework the numbers, it turns out that not that many people have died after all!—doesn’t magically make the virus—its lethality or long-lasting health consequences—any less real and it certainly doesn’t help the rest of us feel any more confident in returning to “normal.” If anything, their blithe attitudes erode public confidence and prolong the economic pain.
Instead, if you’re willing to listen there’s been a persistent feeling that we’re just around the corner from another shutdown. Might as browse the shelves while we can—before the folks mentioned above sends case rates spiking back into unmanageable levels. Better start saving in case things get far worse.
Economists speaking to the Legislature last week laid out this problem in clear detail, with the core argument that there doesn’t need to be a tradeoff between “health and wealth.” That providing for individuals’ health helps rebuild their confidence to go out and work or spend and that helps with economic recovery.
“What’s going on is some portion of the negative shock is due to what economists term avoidance behavior. Basically, people don’t want to get sick,” ISER economist Kevin Berry told House legislators at a hearing last Wednesday, “particularly with diseases like COVID-19 which have unknown long-run health impacts and are very deadly for portions of the population—elderly relatives, at-risk relatives and themselves.”
He said the emerging understanding of the virus is that jobless claims are driven not just by government intervention but consumers voluntarily staying home to limit their risk of contracting the virus. In Alaska, the arrival of COVID-19 coincided closely with shutdown orders so it’s difficult to tease out the impacts of each factor, he said, but the overall takeaway is consumer confidence with the virus and economic health are linked.
“It’s not clear that there is a tradeoff by health and wealth. By fighting the virus, we avoid this avoidance behavior response and make it more likely that people are willing to return to work and return to spending,” he said.
The haphazard rush we’ve seen to reopen to boost the economy runs the risk of giving the virus another chance to boom, and Berry described it as a short-term “sugar rush” with long-term risks of higher infection rates.
As for government intervention, he said the blunt approach of lockdowns contributed to as much as about 60% of the job losses or as little as 12% depending on the estimates but said more targeted measures in light of the growing understanding of the virus—such as mask mandates and capacity limits—will not just limit the impact but may even be boons, inviting more people to return to work and return to spending.
“The benefits in lives saved and making consumers feel safe can easily outweigh the costs,” he said. “The benefits in lives saved outweigh the costs even when we’re using inefficient and blunt instruments. More targeted policies that focus on making people feel safer where they work and where they consume can have double dividends in both reducing the burden of the needs and reducing the economic cost.”
Asked about the economic impact of a statewide mask mandate, he said, “If anything, masks would have a positive impact because it’d make people feel safer returning to the economy.”
He said, though, that more targeted measures that seek to improve consumer confidence aren’t a replacement for direct aid to affected businesses and individuals, such as programs like the state’s CARES Program that provides cash grants to small businesses. No amount of consumer confidence among Alaskans will bring back the economic engine that is tourism, after all.
Why it matters
The early days of the pandemic were marked with uncertainty and unrealistic expectations as leaders from President Donald Trump—who’s been revealed to have knowingly downplayed the virus—to Gov. Mike Dunleavy—who called it a “momentary glitch”—sought to reassure the public. While Trump was intentional in his lying, the fact is that many people really didn’t know what this unprecedented event would look like and the result is that realistic expectations were never set.
The requirement for us to change our behavior to stave off the virus has gone from a month to a few months to maybe the summer to who knows when. It will take patience for us to make it through it and it’s unfortunate that some Alaskans—who’ve likely had their attitudes about the virus shaped by Trump and his enablers—have shown little capacity for patience.
The fact of the matter is that none of us like social distancing, none of us like wearing masks, none of us like seeing businesses close their doors and thousands of people go without work (the latter two are why continued government aid are so critical). But at the same time, no one wants to get sick or see their loved ones get sick.
There are plenty who doubt the seriousness of the disease, but their bluster does nothing to reduce the risk of the virus or make anyone else feel particularly confident about the road ahead. Yes, the government intervention has done its damage but their casual attitudes about the virus are delaying the recovery.
There’s no fast answer to COVID-19. Natural herd immunity is unrealistic, a vaccine is a long ways a way from being widely available and fast, reliable testing is still a luxury.
Until then, a measure of patience to put up with the inconvenience is the only course to get things back to some kind of reasonable normal or, as a sign outside a pizzeria says:
“Your mask help us stay open!”