Every morning I take about a 3 mile walk around the neighborhood with our seven year old female Samoyed, Kara. Over the last week or so we have seen both the auto and foot traffic dwindle. This morning, for example, I only saw three cars and no joggers on our walk. There were very few pedestrians walking, just a few people walking their dogs.

The one thing I did see was a city work crew doing non-emergency work on some of the trees in the neighborhood. They were not observing “social distancing” and, indeed, blocked both the street and the sidewalk so we needed to walk across nearby lawns to maintain the appropriate distance ourselves.

As you can see Gov. Pritkzer continues to give daily press conferences, not not observing “social distancing”. Note, too, that the sign language interpreter repeatedly touched his face. Can he stop short of touching his face without changing the meaning? I don’t know. My point here is not a “gotcha” or claiming hypocrisy but more to point out that what is being advised is difficult.

If city and state employees including the governor himself won’t take the directives the governor has issued seriously, why should Illinoisans more generally?

I agree with Allison Schrager’s assessment from her op-ed in the Wall Street Journal:

Almost everything about the novel coronavirus is uncertain. It was unexpected, though perhaps more of a surprise than it should have been. Public-health experts have been warning for years that a pandemic could happen. But every few years come warnings of potential catastrophes that never seem to materialize.

Among the unknowns about the virus: the true hospitalization and death rates; how infectious it is; how many asymptomatic patients are walking around; how it affects young people; how risk factors vary among different countries with different populations, pollution levels and urban densities. It seems certain the virus will overwhelm hospitals in some places, as it has in China and Italy. We also don’t know how long these extreme economic and social disruptions will last. Without reliable information, predictions are based on incomplete data and heroic assumptions.

This uncertainty makes it much harder to manage the virus, or to strike a balance between public health and the economy. What happened in 1918 or 1957 isn’t particularly instructive. The virus is different. The world is different. So is our health-care system.

The goal should be to move from uncertainty to risk, which will take time and data. The way forward is testing as many people as possible—not only people with symptoms. Some carriers are asymptomatic. California is starting to test asymptomatic young people to learn more about transmission and infection rates. Testing everyone may not be feasible, but regularly testing a random sample of the population would be informative.

This helped in South Korea, which tested thousands of people a day. South Korea has managed to slow the rate of new cases and gather data about how the disease has spread, its effects on different populations, and the mortality rate in that country. More testing would also help spare the world from future shutdowns if the virus reappears before there is a safe, effective vaccine.

Every medical test has some rate of false positives and negatives. The error rate for Covid-19 tests may be especially high. Scientists are still learning about how long the virus lives in the body. Administering tests takes skill and is prone to human error. We don’t know how reliable tests were in China; studies suggest the false-negative rate there is between 3% and 50%—an enormous range. If tests aren’t reliable, the supposed source of certainty can create even more uncertainty. The Food and Drug Administration must balance the urgency for more testing with caution to ensure new tests meet its standards for accuracy.

Policy makers should throw as much energy as possible into getting accurate data. That would allow the world to assess the real risk of the coronavirus. This may lead us to continue to take drastic action to limit its spread, or it may allow us to temper our response, managing the risk at a much lower cost to both society and the economy. Whatever the response, it will be appropriate, based on an assessment of risk—not uncertainty and fear.

What is needed is not just diagnostic testing but epidemiological testing. Right now I believe that most elected officials are acting from political calculus or just plain panic rather than responding to COVID-19. I’m not sure how else you can explain that Illinois is “locked down” (population 12 million/1,200 COVID-19 cases) while Washington State (population 7 million/2,200 COVID-19 cases) is not.

The editors of the Wall Street Journal are not happy about the stimulus package presently stalled in the Senate:

Majority Leader Mitch McConnell last week asked his GOP committee chairs to work with their Democratic counterparts on planks of the complicated legislation. Republicans sought about $850 billion in liquidity for businesses to prevent credit defaults and mass layoffs, and roughly the same amount on Democratic priorities—including enhanced unemployment benefits, direct payments to households, and a surge in medical spending. By Saturday night, Mr. Schumer was expressing “delight and surprise” at the “bipartisan cooperation.”

Enter the Democratic left, which trashed the bill as a handout to the wealthy. “Mitch McConnell & the GOP are pushing a crony capitalist slush fund for friends and donors,” tweeted Alexandria Ocasio-Cortez, who everyone thinks will challenge Mr. Schumer in a 2022 primary. Mrs. Pelosi returned from recess to say the House will write its own bill, and Mr. Schumer then blocked the Senate from even debating the bill that his fellow Democrats co-wrote. Stand up guy, that Chuck.

The “crony capitalist slush fund” line is false and dangerous. Government created this financial panic. Government told Americans to stay home and essentially ordered U.S. commerce to stop. Without revenue, companies can’t pay the bills. Without access to government loans, companies of every size will be forced to lay off employees by the millions.

Who do progressives think that hurts? The “working families” Democrats claim to care about will get the pink slips. Let’s see how inequality spikes if a prolonged recession cuts national output by 10% or more this quarter, or worse if this continues for a few more weeks.

I am unprepared to take sides on the merits of the Senate bill. With the extreme partisan quality of today’s politics this food fight in the Senate was to be expected.

I think that Sec. Mnuchin’s proposal for a payroll tax is a good one. It should be extended to both the employee and employer sides (if you’re not aware of it both employers and workers pay about 7% payroll taxes). There is no faster way to get money into the hands of both companies and workers.

That won’t do anything to help those who are unemployed, however, and there are millions more of them than there were a couple of weeks ago. Fast action is needed and I don’t much care which political party is at fault for the delay.

Recovering from this crisis will take years, maybe decades, and it will require dedicated attention from lawmakers for a long, long time. There is no master stroke. If they don’t want to focus, they should get out of politics.

China isn’t the only one that will be facing court cases. So will governors as Lindsay Wiley explains in an op-ed at the Washington Post:

If individuals or businesses affected by long-term interventions to combat the pandemic choose to sue, the courts would not be limited to an all-or-nothing approach. Judicial orders could require authorities to demonstrate that they are implementing public health surveillance measures to determine which areas are affected by significant community transmission and will, in due course, implement widespread testing and surveillance to tailor the timing, geographic scope and severity of public health restrictions so as to maximize benefits while minimizing harms.

It will be a full employment program for plaintiff’s attorneys. Even in an emergency elected and appointed officials are constrained by law and takings are takings.

I didn’t want to let too much time go by without remarking on Tom Friedman’s New York Times column in which he outlines a plan for restarting the U. S. economy after the COVID-19 hiatus:

One of the best ideas I have come across was offered by Dr. David L. Katz, the founding director of Yale University’s C.D.C.-funded Yale-Griffin Prevention Research Center and an expert in public health and preventive medicine.

Katz wrote an Op-Ed in The Times on Friday that caught my eye. He argued that we have three goals right now: saving as many lives as we can, making sure that our medical system does not get overwhelmed — but also making sure that in the process of achieving the first two goals we don’t destroy our economy, and as a result of that, even more lives.

For all these reasons, he argued, we need to pivot from the “horizontal interdiction” strategy we’re now deploying — restricting the movement and commerce of the entire population, without consideration of varying risks for severe infection — to a more “surgical’’ or “vertical interdiction’’ strategy.

A surgical-vertical approach would focus on protecting and sequestering those among us most likely to be killed or suffer long-term damage by exposure to coronavirus infection — that is, the elderly, people with chronic diseases and the immunologically compromised — while basically treating the rest of society the way we have always dealt with familiar threats like the flu. That means we would tell them to be respectful of others when coughing or sneezing, wash their hands regularly and if they feel sick to stay home and get over it — or to seek medical attention if they are not recuperating as expected.

Because, as with the flu, the vast majority will get over it in days, a small number will require hospitalization and a very small percentage of the most vulnerable will, tragically, die. (That said, coronavirus is more dangerous than the typical flu we are familiar with.) As Katz argued, governors and mayors, by choosing the horizontal approach of basically sending everyone home for an unspecified period, might have actually increased the dangers of infection for those most vulnerable.

“As we lay off workers, and colleges close their dorms and send all their students home,’’ Katz noted, “young people of indeterminate infectious status are being sent home to huddle with their families nationwide. And because we lack widespread testing, they may be carrying the virus and transmitting it to their 50-something parents, and 70- or 80-something grandparents.’’

“O.K.,’’ I said, calling Katz by phone at his home in Connecticut after reading his article, “but we are where we are now. Most states and cities have basically committed to some period of horizontal social distancing and sheltering in place. So, can we make lemonade out of this lemon — and not destroy our economy?’’

I don’t see why not, he answered. “Now that we have shut down almost everything, we still have the option of pivoting to a more targeted approach. We may even be able to leverage the current effort at horizontal, population-wide, interdiction to our advantage as we pivot to vertical, risk-based, interdiction.’’

How? “Use a two-week isolation strategy,’’ Katz answered. Tell everyone to basically stay home for two weeks, rather than indefinitely. (This includes all the reckless college students packing the beaches of Florida.) If you are infected with the coronavirus it will usually present within a two-week incubation period.

“Those who have symptomatic infection should then self-isolate — with or without testing, which is exactly what we do with the flu,’’ Katz said. “Those who don’t, if in the low-risk population, should be allowed to return to work or school, after the two weeks end.”

Effectively, we’d ‘reboot’ our society in two or perhaps more weeks from now. “The rejuvenating effect on spirits, and the economy, of knowing where there’s light at the end of this tunnel would be hard to overstate. Risk will not be zero, but the risk of some bad outcome for any of us on any given day is never zero.’’

There are several issues with this, the most serious being that I don’t believe the virus works that way. My understanding is that the best intelligence we have is something like 68% of those infected show symptoms within a week, 95% within two weeks, 99% within three, etc. Said another way his plan is unlikely to have the desired effects.

I do agree that a “one size fits all” approach will probably maximize the economic harm without accomplishing the presumed objective. Here in Illinois the governor has shut down the entire state (population: 12.74 million) for 1,200 active cases (12 deaths). One of the casualties of this experience is likely to be the end of the notion of a risk-free life. Nowadays things that my grandparents took for granted are practically unheard of. “Ordinary childhood diseases” used to kill thousands every year.

I’ve been thinking about this for some time but James Kraska has put it into words at War on the Rocks. The hugest liability suit (or group of suits) in the history of the world is now inevitable and China will be the defendant. After explaining the nature of the deliberate misconduct he goes on to explain the liability:

While China’s intentional conduct is wrongful, is it unlawful? If so, do other states have a legal remedy? Under Article 1 of the International Law Commission’s 2001 Responsibility of States for Internationally Wrongful Acts, states are responsible for their internationally wrongful acts. This commission’s restatement of the law of state responsibility was developed with the input of states to reflect a fundamental principle of international customary law, which binds all nations. “Wrongful acts” are those that are “attributable to the state” and that “constitute a breach of an international obligation” (Article 2). Conduct is attributable to the state when it is an act of state through the executive, legislative, or judicial functions of the central government (Article 4). While China’s failures began at the local level, they quickly spread throughout China’s government, all the way up to Xi Jinping, the general secretary of the Chinese Communist Party. He is now being pilloried by Chinese netizens for his failures of action and inaction. The most prominent critic, Chinese tycoon Ren Zhiqiang, lambasted Xi for his mishandling of the coronavirus, calling him a “power hungry clown.” Ren soon disappeared.

Responsibility flows from local Wuhan authorities to Xi himself, which are all organs of the state of China, and whose conduct is therefore attributable to China. An “organ of the state” includes any person or entities that are acting in accordance with national law. Even if China were to disavow conduct by local authorities or state media as not necessarily directly attributable to the national government, such actions nevertheless are accorded that status if and to the extent the state acknowledged and adopted the conduct as its own, as was done by the officials in Beijing (Article 11).

Wrongful acts are those that constitute a breach of an international obligation (Article 11). A breach is an act that is “not in conformity with what is required of it by that obligation … .” China’s failure to expeditiously and transparently share information with WHO in accordance with the International Health Regulations constitutes an early and subsequently extended breach of its legal obligations (Article 14). Consequently, China bears legal responsibility for its internationally wrongful acts (Article 28). The consequences include full reparations for the injury caused by the wrongful acts. China did not intentionally create a global pandemic, but its malfeasance is certainly the cause of it. An epidemiological model at the University of Southampton found that had China acted responsibly just one, two, or three weeks more quickly, the number affected by the virus would have been cut by 66 percent, 86 percent, and 95 percent, respectively. By its failure to adhere to its legal commitments to the International Health Regulations, the Chinese Communist Party has let loose a global contagion, with mounting material consequences.

President Xi will probably also be named personally and I would be greatly surprised if cases haven’t already been filed in U. S. courts. The U. S. federal government could shield China from such litigation but it’s hard for me to see why. As the article suggests the value of these litigations will likely be in the trillions.

The very least that should happen is that China should be expelled from the World Trade Organization.

I am increasingly convinced that South Korea is successfully “bending the curve” on COVID-19, i.e. constraining the number of active cases to a fairly manageable level. Let’s do a little analysis, shall we? You can follow along at Worldometer.info if you care to.

On March 11, nearly two weeks ago, SK’s active cases peaked at 7,362. As of yesterday the number had declined to 5,884 (a difference of 1,478) through a combination of deaths (44) and recoveries (1,434). The number of deaths per day has not declined since about March 2. That has proceeded with an average of five per day since then.

At that pace it will take SK about 44 days before the number of active cases has dropped to zero. 220 more people will have died. That will be May 6.

Here in the United States we do not appear to be particularly close to being where SK is now or realistically even where SK was on March 2. Said another way unless something changes markedly it will be June before the COVID-19 outbreak here can be truly said to be under control. I don’t think the lockdowns, “shelter in place” directives, or other draconian measures that have been taken will hold until then.

In his regular Wall Street Journal column Andy Kessler advises against a stimulus package with “a price in every box”:

Politicians need to do something, right? Yes, but it should be short-term and temporary. President Trump has a “big bold plan.” White House adviser Peter Navarro wants an $800 billion payroll-tax cut. Senate Republicans want to send $1,200 checks to a huge share of Americans. Treasury Secretary Steven Mnuchin is negotiating with congressional leaders a bailout of as much as $2 trillion. Rep. Ro Khanna, Mr. Sanders’s campaign co-chairman, ups the ante with checks of up to $6,000 for those making less than $65,000. Candy-coated popcorn, peanuts and a prize.

Mr. Mnuchin has smartly authorized the Fed, via Section 13(3) of the Federal Reserve Act, to lend directly to solvent companies, creating a trillion-dollar backstop for the commercial-paper market and money-market funds. A “lender of last resort” is needed. Airlines need capital, so lend to them at a Bagehotian penalty rate, against future ticket sales or even planes as collateral. The penalty rate is to make sure those that don’t need it don’t clog the system. The same program could shore up hotels and other still-solvent large businesses. And with support from the Fed, banks can do the same for small businesses. If the economy has a three-month hole because of quarantines and lockdowns, the Fed can provide a bridge loan across that void.

Those without jobs also need direct assistance, like debit cards for food handed out by local authorities. No one should go hungry as the economy evaporates for 90 days. Food aid could also be provided internationally—maybe using those mothballed cruise ships.

But one big puzzle is deciding the best way to help workers, many of whom are out of jobs, or are running short on tips and trips if they’re waiters or Uber drivers. We have a social safety net, and each state must temporarily but immediately lower bureaucratic barriers to collecting unemployment insurance—which obviously should include waiving the requirement that applicants seek work. Temporary sick leave is critical, as is helping small businesses continue to pay wages.

What I want to comment on is his assertion that”government giveaways as stimulus don’t work”. I agree with him that as presently constructed they don’t work as well as they did 80 years ago. I believe that John Maynard Keynes would say the same thing. When you combine the Ricardo’s theory of comparative advantage, a fiat currency, Keynesian stimulus, and deciding that the United States’s advantage are in providing health care services, finance, and personal consumption expenditures. Under those circumstances the multiplier goes down to zero and you’re merely transferring consumption from the future to the present. That’s fine until it becomes the future but the future is now.

As we are seeing right now in order to make something politically palatable you need to put prizes in a lot of boxes. That’s politics not economics.

I have just noticed that I missed the anniversary of my starting this blog last week. As of March 15 I had been been posting here for 16 years. Time flies.