All our choices are bad, but some are even worse

We’ve been here before. Unemployment is high and rising. Americans fear for the future. Politicians of both parties are unsure about what to do, though they’re quick to criticise the other party’s suggestions. Regardless of which way they turn, the choices seem dismal. Sound familiar? It’s not 2019 or 2020, and the subject is not the coronavirus. It’s late 1970s and early 1980s, and the source of so much angst is double-digit inflation.
There is a dilemma at the core of modern democracies. Political leaders believe that to fulfill their democratic responsibilities, they must reflect the “people’s” wants and needs. But often, what the people want is not what the society needs. Politicians and voters crave immediate gratification, when patience and self-restraint may deliver more long-term benefits.
That’s true now, just as it was in the late 1970s and early 1980s. Reviewing what happened then provides perspective, even as it illuminates the difficulty of our present choices. Still, the choices cannot be avoided, as the experience 40 years ago reminds us.
For several decades, political leaders had tried
unsuccessfully to tame inflation, which had slowly increased from about 1% in 1960 to 6% in 1969 and
as high as 14% in 1980. All manner of policies had failed presidents Johnson, Nixon, Ford and Carter: bouts of tight money; a wage-price freeze; various forms of “voluntary” or mandatory controls; attempts to reduce persistent budget deficits.
Nothing worked. The main reason was simple: Both political parties were unwilling to maintain harsh economic policies — meaning high unemployment and interest rates — long enough to squeeze inflationary expectations.
Until, that is, Paul Volcker and Ronald Reagan took charge. Appointed as chairman of the Federal Reserve Board in 1979, Volcker raised short-term interest rates to 20%. Reagan, elected president in 1980, supported him. Monthly unemployment peaked at 10.8% in 1982. By 1983, inflation as measured by the Consumer Price Index dropped to 4%.
The social cost of purging inflation was enormous and highly unpopular. Congress was outraged. Volcker and Reagan were vilified. But perpetual stagflation — a permanent mix of high inflation and joblessness — would have been worse.
That is where we find ourselves today. All our choices are bad. The lockdowns in many states are harsh and personally unpleasant. There is no guarantee that they will ultimately succeed in exterminating the coronavirus. President Trump is leading the alternative policy of relaxing the lockdowns.
“Our country wasn’t built to be shut down,” he said recently. “America will, again, and soon, be open for business. Very soon. A lot sooner than the three to four months” that some have suggested.
Doubtlessly, most Americans share the president’s impatience and would be thrilled if new policies revived the economy and repressed the virus. But if this could be done easily, it would already have been done. The outcome could be the worst of both worlds: the economy doesn’t flourish; and the virus does.
It’s true that, in the long run, there is no conflict
between suppressing the virus and mending the economy. The economy can’t be healthy if many millions struggle with the disease and others worry that they, their families and friends may soon become afflicted.
But in the short run, reviving the economy is at odds with suppressing
the virus. The standard treatment is isolation, either as “social distancing” or quarantining.
“As soon as we relax ‘social distancing,’ we know the virus will spread more rapidly,” says Ashish Jha of the Harvard School of Public Health. Ideally, increased testing would enable medical teams to identify and isolate all cases, but this prospect depends on having enough health care
personnel, supplies and tests — propositions that are in doubt.
(Interestingly, there were comparable pressures in the 1980s from car dealers, home builders and the
unemployed to relax tight-money policies before inflation had subsided. Volcker and Reagan succeeded because they persevered in the face of criticism.)
Whatever happens, the future looks tortuous. Jha thinks that we may be grappling with the coronavirus for the next year or 18 months — that is, until a vaccine is deployed or until so many people have contracted the disease that
society has effectively developed mass immunity. Typically, survivors generate antibodies against the disease.
The danger of prematurely relaxing the lockdowns and quarantines is that the virus soars. Little will have been gained. Success requires public understandings of the difficult choices that are involved. Trump should serve as the Explainer in Chief.
But preoccupied by his own political future, he is hardly a model of courageous clarity.
The larger issue is that politics in democracies are inevitably skewed toward short-term outcomes, not long-term gains. This is a condition that, regardless of how the coronavirus drama turns out, should engage us all.

—The Washington Post

Robert J. Samuelson writes a twice-weekly economics column. Both appear online, and one usually runs in The Washington Post in print on Mondays. He was a columnist
for Newsweek magazine from 1984 to 2011