(Bloomberg Opinion) — In combating Covid-19, the U.S. stumbled into a “natural experiment” whose national negative outcomes have outweighed the positive ones, including greater loss of life and more cases of debilitating illness, not to mention a setback to economic recovery. Now it faces a second natural experiment whose outcome is also likely to be disappointing unless we are willing to learn more from the first one.
By largely ceding decision-making to the states, the U.S. ended up with a much different approach than the vast majority of other countries in emerging from the severe economic coronavirus lockdowns. While individual results vary, there is now overwhelming evidence that the majority of states that reopened early are now saddled with both health and economic crises with no quick way to resolve both at the same time.
States such as Florida and Texas are reporting record infections and hospitalizations. Deaths have climbed. And an inadequate supply of tests and lag time in producing results are undermining the authorities’ ability to avoid worsening public health conditions, even in states that have grasped the gravity of the situation. The consequence is that the economic recovery will inevitably slow, not only because of the rollback of reopenings but also because of a likely loss of confidence among households and businesses, which will most likely taper their enthusiasm to re-engage once states reopen again.
At the other end of the spectrum, the states that have reopened much more slowly, including those in the Northeast, are doing a lot better health-wise. That is due in part to a government response that was influenced heavily by the tragic severity of the initial Covid hit. More important, their progress has not been undermined by people deviating widely from state and local government directives, such as wearing masks and maintaining social distancing. As such, the process of “healthy reopening” is taking place in a much more orderly and consistent manner so far.
The outcomes in the middle set of states appear mixed, largely because of the inappropriate behaviors of individuals rather than the decisions of state and local governments. I see this every day in Southern California. A marked resurgence in Covid cases led the authorities to roll back some of the reopenings and require masks in public. But people have been slow to respond, seemingly learning little from the earlier experience of New York in particular.
In our area, the vast majority of people in public are not wearing masks or adhering to social-distancing rules. This is due in large part to a combination of misinformation and inconsistent messaging that has led individuals, particularly young people, to not fully realize how their behavior poses a risk to society at large. The rising supply of tests has not kept up with surging demand for them, frustrating access, slowing turnarounds and handicapping tracking and contact tracing.
The results of this first natural experiment add up to a disappointing picture at the national level. It includes record levels of daily infections (nearing 80,000), enormous pressures on hospital capacity and a rising death toll. In turn, these outcomes threaten the results of the second inadvertent experiment that has begun: Running a multispeed country in which the healthy reopeners are hoping to avoid contamination from the rest.
To this end, several of these states have already moved to a “sand-in-the-wheels” approach on interstate mobility as they navigate this tricky phase of living with Covid — one that will be with us until there is some mix of natural and vaccine-induced community immunity. This includes the announcement by New York and neighboring states that they are requiring 14-day self-quarantining by people coming from the most affected states. They moved last week to strengthen enforcement and expand the number of states covered by the rule.
Yet the ability to sustain these reopenings is not just up to them. With constitutional and other considerations limiting what the healthy reopeners can do to protect themselves from contagion, much will depend on how quickly the other states, including the people living there, learn the lessons from the first natural experiment. This is also true for the federal government.
What is most needed now is a set of scientifically driven actions and strong messaging that influence and, in some cases, seek to impose healthier behavior before the situation deteriorates so much that weeks of broad-based lockdowns could become inevitable. Such lockdowns, if they were to occur, would have severe negative economic and social implications, including by pushing the country back into recession and risking renewed financial volatility.
In navigating a second natural experiment, the U.S. would be well served by quickly incorporating the lessons of the first experiment in the areas of policy relief measures, social distancing, face coverings, testing and contact tracing. The incentives to do so are compelling.
Despite the encouraging progress on both therapeutics and vaccines, it is for now the only feasible way to avoid:
Widespread bankruptcies and a second wave of joblessness when the government and the Federal Reserve have already deployed significant resources for relief. A further hit to trust in the effectiveness of institutions and policy responses. A worsening of the inequality trifecta of income, health and opportunity. Restricting children’s access to healthy in-person education and raising the frightening specter of a “lost generation” whose standard of living ends up being significantly worse than that of their parents. Fueling social unrest at a time of much greater awareness of longstanding injustices that continue to erode the social cohesion needed to ensure the collective responsibility for overcoming Covid’s generational challenge.
The whole point of natural experiments is to derive findings, be open to their implications and modify policies and behaviors accordingly. Unless we collectively get better at this, and quickly, the two experiments will be treated by historians as an example of giant collective failures whose consequences could be borne by multiple generations.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Mohamed A. El-Erian is a Bloomberg Opinion columnist. He is the chief economic adviser at Allianz SE, the parent company of Pimco, where he served as CEO and co-CIO. He is president-elect of Queens’ College, Cambridge, senior adviser at Gramercy and professor of practice at Wharton. His books include “The Only Game in Town” and “When Markets Collide.”
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