Covid-19 crisis is for real

Few words are more overused in our debates than “crisis”. We have many — the education crisis, the inequality crisis and the environmental crisis, to name just a few. The word suggests an impending calamity unless we take instant action. The reality is that most crises are not calamities. They’re stubborn problems that, for one reason or another, defy a sweeping solution. Life goes on. The “crisis” label is mostly a public-relations device designed to attract attention.
Then there is the occasional exception — a crisis that is really a crisis, meaning that if we don’t react with the right responses, we will suffer irreparable harms. This is the case with the coronavirus. We need to understand why. There are at least four intertwined crises, involving healthcare, economics, politics and democracy.
Let’s start with healthcare. By this, I mean our capacity, or lack thereof, to stop the transmission of the coronavirus disease before it reaches horrifying levels of illness and death.
A computerised simulation done by researchers at London’s Imperial College has estimated that, if tough remedies against the virus aren’t adopted, the death toll could hit 2.2 million in the United States. With more stringent policies — mainly mandatory quarantines — US deaths could drop by half to 1.1 million, the study asserts.
The report stunned some experts as too pessimistic. Whatever the case, there is little dispute that unless we control the virus, we will suffer many unnecessary deaths. Voluntary quarantines are the proposed solution — stay home (“shelter in place”). If people don’t come in contact with each other, they can’t pass the disease along. Grocery stores, gas stations and other essential outlets would be exempted.
This will also protect hospitals from being overwhelmed by a floodtide of patients. In public health lingo, the curve of new cases will “flatten”. Doctors and nurses can concentrate on the sickest patients.
With testing becoming more common, we can also get a better idea of the virus’s spread. Without testing, many cases went unreported. As of March 20, the number of US cases is 15,219 with 201 deaths, up from virtually none at the beginning of February.
The second crisis is economic. As the virus spread, many customers stopped eating in restaurants, attending sports events, going to movies or travelling from home. With customers fleeing, companies laid off workers or closed. Treasury Secretary Steven Mnuchin suggested that the unemployment rate, 3.5% in February, could hit 20%.
Though this seems exaggerated, the jobless numbers will almost certainly rise sharply.
Economist Joel Prakken of IHS Markit forecasts unemployment to be approaching 9% by December.
Compounding the pressure on employment, stocks crashed. From the market peak in mid-February, global stock markets dropped about a third, erasing $20 trillion in paper wealth, according to Howard Silverblatt, an analyst and S&P Dow Jones Indices.
The losses will dampen retail spending through what economists call “the wealth effect”. If people feel poorer, they spend less.
What looms, if these adverse forces aren’t disarmed, is a recession that may equal or exceed the Great Recession of 2007-2009 in its ferocity. This brings us to the third crisis: the political crisis.
Republicans and Democrats have repeatedly shown themselves unwilling or incapable of reaching compromises on basic issues of national importance. Can the parties do better now?
In isolation, any of these crises would be difficult to resolve separately. As CNBC’s Steve Liesman has pointed out, there’s an inherent contradiction — or tension, if you will — between what we want from economic policy (stronger economic growth to avert another depression) and what we want from health policy (slower economic growth, or no growth at all, to reflect a population “sheltering in place”).
It may be that the contradiction is less stark than I’ve indicated. “It’s a false choice,” says David Wilcox, a former Federal Reserve economist now at the Peterson Institute for International Economics. His point: The economy can’t be strong unless it is purged of the toxic coronavirus. Good health policy and good economic policy are identical. Still, the twin goals tug, at least temporarily, in opposite directions.
What results — it’s been building for years — is a crisis of democracy or, more precisely, a crisis of the liberal democratic states established since World War II.
This democratic crisis subsumes all the crises I’ve mentioned above — healthcare, economics and politics — and raises the profound question of whether we can govern in the common interest. Or are we condemned to a system that defines the common interest as the collective desires of many different subgroups, with each subgroup pursuing its own interest and no one group looking out for the larger common good.
That is a scary assessment, but it fits the facts and suggests that we are stumbling into an unhappy future.

—The Washington Post

Robert J Samuelson is a journalist for The Washington Post, where he has written about business and
economic issues since 1977. He was a columnist for Newsweek magazine from 1984 to 2011