Shutdowns and double dips

I want to run something by you I haven’t thought through 100%. It’s on the coronavirus where I am by no means an expert. But it’s troubling me and putting virtual pen to virtual paper will help me tease out some of the variables. I’ll try to stay away from the science where I have no edge and focus on the logic behind public policy.

The Economy and Public Health

Here’s the problem.

Coronavirus cases are spiking in Europe so much now that governments are considering various forms of shutdown. And that has people thinking about a double dip recession in Europe. And given how cases are spiking in the US, people are now wondering if the same kind of  shutdowns could happen in the US too.

This could be a terrible public health outcome, but also terrible for the economy, jobs, household income and markets.

But why can’t governments just avoid shutdowns altogether and keep things chugging along? Isn’t that US President’s Trump idea? And if a government does do this, wouldn’t that mean no double dip? These are the questions I am running through in my mind when I think about the connection between public health policy responses and the economy.

And I have some preliminary thoughts on what forces lockdown policy responses based upon something I was reading in Belgian daily ‘De Tijd’ this morning.

The Belgian Example vs the Danish one

The coronavirus caseload in Belgium is really spiking right now. And the government is thinking about a lockdown as a result. Here’s how ‘De Tijd’ talks to the issue (translation from Dutch mine, original link here):

The continuing influx of coronavirus patients into hospitals is increasing the pressure on the government to implement a complete lockdown. Far-reaching measures, the most striking of which are the prohibition of non-essential movements, are on the table this afternoon during a meeting of the top federal and regional ministers meeting in the Consultation Committee.

OK. So that wasn’t just me. It was Google Translate-assisted. But, the message in that article is clear. It’s the health care system overload that precipitates late lockdowns. I think this is significant in thinking about potential outcomes.

You have countries like Denmark, for example, where they are now implementing a mask mandate. Those that don’t wear one in public risk a heavy fine (article in Danish here). This is much like mandates we saw in the Influenza epidemic of 1918 of 1919,. But the Danes are taking this measure well before caseloads overwhelm their healthcare system.

Case counts have risen dramatically, which is why they are stepping up measures.

Danish ccase counts

But, for various reasons like increased and early testing and better therapeutics, this rise is not accompanied by epidemic levels of hospitalization. This is true everywhere, as the New York Times points out. In all of Denmark, a country of 5 million, there are only 144 people in hospital because of coronavirus versus 535 at the peak in the Spring.  And the German daily ‘Frankfurter Allgemeine Zeitung’ mentioned today that the Danes are closing the border more aggressively to Germany now too.

I think the Danes may be able to get through the great European second wave in relatively good shape. And that will be good both for public health and the economy. They will have done so because they acted early and decisively and because they have relatively good public health protocols in place to deal with Covid-19.

Belgium is potentially being forced into a lockdown by circumstance. They waited too long and now their healthcare system is at the breaking point. They have to lockdown or face an even more horrific scenario.

Flattening The Curve

The Belgian example opens up another line of thinking for me here too. If a healthcare system becomes overloaded, aren’t doctors and nurses less able to give individualized attention to patients? And if patients get less individualized attention, won’t that mean that the coronavirus hits many people harder, more of whom as a percentage of patients would then die? And to the degree medical supplies like ventilators are limited in those circumstances, doesn’t that also mean that doctors and nurses have to choose who gets one and who doesn’t, also increasing worst case healthcare outcomes?

This is exactly why you want to flatten the curve. I think flattening the curve allows the healthcare system to work well. And when the system works, fewer people die.

So, I am thinking about the Dakotas in that context because I have seen infection rates, coronavirus hospitalizations and virus-related deaths skyrocket there.

Upper Midwest coronavirus 2020-10-30

Source: Washington Post

And the states not only remain open for business, there are no statewide mask mandates.

Here’s an article from yesterday from a major South Dakota-based newspaper. “South Dakota leads nation in cases, hospitalizations and positive tests per 100,000 people,” they state.

The New York Times COVID-19 tracker says the state is reporting an average of 112 cases per 100,000 people the past seven days as of Wednesday. North Dakota, which has been No. 1 for weeks, is at 107.6. South Dakota reported a new high for active cases (12,462), current hospitalizations (413) and daily deaths (19) on Thursday. Based on a population of 884,659, one in 71 people in the state are actively infected with COVID-19.

North Dakota still leads the nation in deaths. The state is reporting 1.2 deaths per 100,000 people the past seven days, while South Dakota reported 0.8 deaths per 100,000.

South Dakota has three counties in the top 10 of rates per 100,000 across the country.

A Minnesota newspaper headlines the situation in neighboring North Dakota this way: “If North Dakota was a country, it would have the world’s worst confirmed COVID-19 outbreak, one analysis shows“.

When do these states lock down? Hospitals in the upper Midwest of the US are struggling to serve all of the patients coming in.

My Take

To me, this looks like Belgium, but worse. And I think a shutdown is inevitable. But when it comes, the public health outcomes will be significantly worse. And so the shutdown will have to be more severe. And so, the economic consequences too will be more severe.

I saw yesterday that El Paso was forced into a two-week shutdown due to a surge in coronavirus cases. This is going to happen everywhere across Europe and the US.

Mohamed El-Erian’s piece in Bloomberg bears reading.

El-Erian on Covid-19

I am firmly in the camp that says those that take ‘socially-acceptable’ measures early do best. They get buy-in from the electorate. And they avoid a shut down altogether. That’s good for the economy.

Those that don’t take those measures and are forced to shut down but do so early like Germany, do worse. But they can get back on their feet quicker because they intervened quickly.

Those that wait are forced into action by healthcare system overload. And then the economic outcome is worse. The US is going to be in that camp. I don’t foresee national level mandates. And so, state and local mandates and shutdowns will take over. And they will do so often after a significant and deadly delay. We should be prepared for this outcome.

As usual, if this comes true, it’s not because I am some prescient genius. I know nothing about epidemiology. If I’m saying it and it winds up happening, it’s because it’s clear and obvious. Let’s hope I’m wrong.

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