I have a number of reservations about Brian Wesbury’s post at RealClearPolitics about the havoc that the measures adopted in reaction to SARS-CoV-2 is wreaking on the U. S. economy including his analogy of “mark to market” during the late financial crisis with the reliance on models of likely mortality due to COVID-19 and that the financial crisis reenforced the notion of “government as savior” but I think this is a good, succint description of the likely aftermath of the lockdowns:

Millions of small businesses will never reopen. Hospitals, universities, and state and local governments are all facing damage that will take years to overcome. Our children missed graduations, proms, sporting events, and more. The mental damage could last them a lifetime. And when their parents lose their jobs and must go on the government payroll, it will cause even more pain. What is more “essential” than taking care of your children? But, that doesn’t matter because the government has decided what is essential and non-essential. And this has all been caused by models that most experts now agree were wrong.

I don’t think, however, that he has come to terms with the implications of a fiat currency:

There is not enough money in the Treasury to fix all this. Every dime the government spends ultimately comes from the private sector. If we shut the private sector down for just a couple of weeks, let alone months, the cost will take generations to repay.

The Treasury is in no danger of running out of money. It can merely extend credit to itself (or, more precisely, the Federal Reserve can issue the credit and buy up the Treasury’s bonds). And repay? It will never be repaid. We haven’t repaid the money that was borrowed to finance the War of 1812.

However, there is a risk. If the money is used to spur consumption rather than to increase production and we simultaneously try to reduce our reliance on overseas supply chains, there is an increased risk of hyperinflation. For the time being we’ll be so worried about deflation that the idea of hyperinflation won’t even occur to most.

There’s one thing that should never be forgotten. COVID-19 isn’t wrecking the economy. The government response to COVID-19 is wrecking the economy. That’s at all levels.

Whether you support President Trump, oppose him, or neither, I think you owe it to yourself to read Joseph Nye’s piece at Project Syndicate. Here’s its opening:

CAMBRIDGE – Leadership – the ability to help people frame and achieve their goals – is absolutely crucial during a crisis. British Prime Minister Winston Churchill demonstrated this in 1940, as did Nelson Mandela during South Africa’s transition from apartheid.

By these historical standards, the leaders of the world’s two largest economies have failed abysmally. US President Donald Trump and his Chinese counterpart, Xi Jinping, both initially reacted to the coronavirus outbreak not by informing and educating their publics, but by denying the problem, thereby costing lives. They then both redirected their energies toward assigning blame rather than finding solutions. Owing to their failures, the world may have missed the window for responding to the crisis with a “Sputnik moment” or a “COVID Marshall Plan.”

Leadership theorists make a distinction between “transformational” and “transactional” leaders. The latter try to steer through situations with business as usual, whereas the former try to reshape the situations in which they find themselves.

Of course, transformational leaders do not always succeed. Former US President George W. Bush tried to remake the Middle East by invading Iraq, with disastrous consequences. By contrast, his father, former President George H.W. Bush, had a more transactional style; but he also had the skills to manage the fluid situation that the world found itself in after the collapse of communism in Europe. The Cold War ended, Germany was reunited and anchored firmly to the West, and not a shot was fired.

I don’t think that there’s any question but that Xi Jinping has been a disastrous leader for the entire world but, importantly, for China. The future, of course, has not been written yet but I suspect he has ended the project that his predecessors began 40 years ago and ended it in failure.

I and practically anyone else who’s even marginally informed can tell you what President Xi should have done differently. What should President Trump have done differently? Be specific. I wish he had begun using the Defense Production Act earlier and were wielding it more now and I wish that he had organized a national program of epidemiological testing so we had some notion of the scope and reach of the disease but I suspect that Dr. Nye’s objection to Trump is less what he has done than who he is. Trump is not a Roosevelt or a Churchill. He cannot rally the people of the United States behind him and encourage them. That just isn’t who he is. Regardless of what he has said or may think he does not have the authority to issue orders to the governors of states or local leaders without declaring martial law which I don’t believe anybody wants. And absent a time machine bringing the supply chains of protective gear and pharmaceuticals within the United States is going to take time. It should be done but it won’t happen instantaneously or painlessly.

I would date the failure of leadership in the U. S. much, much earlier to the Joint Communiqué on the Establishment of Diplomatic Relations between the U. S. and China. Offering China anything of value without requiring liberalization or, indeed, much of anything was an error. That error was aggravated by granting China MFN status and its admission to the World Trade Organization.

That failure wasn’t the failure of a single president. It was bipartisan. It was the failure of an entire class. Trump was elected in large part as a reaction to that failure. If you want less Trump, make fewer persistent errors of that scope, mitigate the risks, and reverse the harm that has already been done.

The editors of the Wall Street Journal weigh in on the “Wuhan Lab theory”, the notion that the virus spread from a biosafety lab in Wuhan, China outside the lab to Wuhan and from there to the entire world:

The evidence is clear that the Chinese Communist Party covered up for weeks the extent of the coronavirus outbreak in Wuhan, but what we don’t know is why. One emerging theory is that the virus originated in a Wuhan lab. Beijing denies it, but the world deserves a full accounting of what China knew and when.

President Trump and Secretary of State Mike Pompeo have both said in recent days that they’ve seen evidence the coronavirus did come from a Wuhan lab. Mr. Trump said it appears to be an accidental release. If they don’t want the issue to be dismissed as an anti-China campaign ploy, they should make the evidence public.

Scientists think the virus was carried naturally in horseshoe bats and jumped to humans for the first time in Wuhan late last year. The question is: Under what circumstances did that happen? It could have happened at the city’s wet market, though that theory is complicated by a changing timeline and the fact that the bats don’t appear to have been sold there.

It could also have jumped from bats to another animal like a pangolin before infecting a person, or patient zero could have encountered a bat in the wild. The “lab theory” isn’t that it was a bioweapon gone wrong. It’s that a lab worker was inadvertently infected at the Wuhan Institute of Virology (WIV) or Centers for Disease Prevention and Control, both of which are located near the first reported cases.

I have no idea whether COVID-19’s Patient Zero was a lab worker in Wuhan or not and, honestly, I don’t really care. I don’t believe that SARS-CoV-2 is an escaped bioweapon. It has practically no characteristic of a good bioweapon. If it’s a bioweapon it’s the world’s worst. It makes a darned good terror weapon, however, as we have learned.

Every shred of evidence we have right now suggests that the virus did originate in China has practically every pandemic of the last four centuries has. And that the Chinese authorities lied about it and covered up which can be as well explained by hypersensitivity as by malice. That China presents a repeated risk of contagion and its leaders will lie about the risks, at least as long as the Chinese Communist Party as in charge, are more than enough reason to adopt strenuous measures to mitigate the risks that presents.

The financial risk is in the trillions of dollars, more than any conceivable benefit of trade with China, and in the millions of lives which is enough to point to the sort of mitigation that is needed.

I ran across two stories which provide additional information on the “stay at home” directives and business lockdowns that have reduced economic activity all over the world. The first story is from Reuters and comes from France:

PARIS (Reuters) – A French hospital which has retested old samples from pneumonia patients discovered that it treated a man who had COVID-19 as early as Dec. 27, nearly a month before the French government confirmed its first cases.

Yves Cohen, head of resuscitation at the Avicenne and Jean Verdier hospitals in the northern suburbs of Paris, told BFM TV that scientists had retested samples from 24 patients treated in December and January who tested negative for the flu.

“Of the 24, we had one who was positive for COVID-19 on Dec. 27,” he told the news channel on Sunday.

The samples had all initially been collected to detect flu using PCR tests, the same genetic screening process that can also be used to detect the presence of the novel coronavirus in patients infected at the time the sample is collected.

Each sample was retested several times to ensure there were no errors, he added.

while the other story was mentioned here in comments yesterday. From CNBC:

Most new Covid-19 hospitalizations in New York state are from people who were staying home and not venturing much outside, a “shocking” finding, Gov. Andrew Cuomo said Wednesday.

The preliminary data was from 100 New York hospitals involving about 1,000 patients, Cuomo said at his daily briefing.

It shows that 66% of new admissions were from people who had largely been sheltering at home. The next highest source of admissions was from nursing homes, 18%.

The second story suggests that the “stay at home” directives and lockdowns have not been effective while the first story suggests a mechanism. If SARS-CoV-2 was being contracted via community spread in France in late December and, presumably, in China earlier than that, doesn’t it suggest that it has been contracted via community spread in the U. S. earlier than had been recognized as well? Contracting the disease from those who are asymptomatic and the large number of “essential” workers explains just about everything else.

In other words you don’t need to assume non-compliance to explain the findings.

Guru Madhavan’s op-ed at the Wall Street Journal is essentially a hymn to engineering:

Much of the conversation will come back to engineering, which historically has advanced public health far more than medical care has. Sanitation, water supply, electrification, refrigeration, highways, transportation safety, body scanning and mass production are a few examples. It’s easy to overlook how these technologies improve health outcomes, so consider one that’s an obvious part of many Americans’ lives today: the bandwidth necessary for telework.

I think he overstates his case somewhat but there’s resonance between his point and one I’ve been trying to make around here.

He mentions Margaret Hutchinson or, in the name by which I know of her, Margaret Hutchinson Rousseau. Alexander Fleming, a physician, discovered penicillin but Ms. Rousseau designed the first commercial penicillin production plant and she was a chemical engineer. We remember Fleming and have largely forgotten Ms. Rousseau and it’s just not because of her gender.

Other fields have figure prominently in the advances in public health as well. Louis Pasteur wasn’t a physician. He was a chemist but his work probably did as much as anyone’s to make the modern world and, especially, modern medicine possible. And he was fought by the medical establishment every step of the way as was his disciple, Joseph Lister, who was a surgeon.

My point here is not to dismiss physicians but to point out that they aren’t the only experts. Engineers, chemists, epidemiologists, statisticians, computer scientists, public policy experts and, yes, even politicians have their own expertise and all will be necessary if we are to deal with the challenges with which SARS-CoV-2 presents us.

He concludes:

Separated, specialized approaches to remake our health, economy and civics will guarantee the next breakdown. Let’s engage engineers and adapt industry practices for federally organized logistics to pave the way out of this pandemic. This is an essential service.

New York Times columnist Thomas Friedman has returned to make specious analogies to China again. This time he want to institute a “more democratic version” of the contract tracing China has done:

In sum, if we are going to save the most lives while getting the most people back to work to prevent an epidemic of unemployment, depression and despair, it is going to require a federally coordinated, democratic version of the China strategy.

Let’s take that at face value. The “China strategy” was to shut down Wuhan’s public transportation, suspend train service to the city, and close the roads going into it. Short of declaring martial law, that is beyond the president’s power and the president can’t order the mayor of New York or the governor of New York State to do it.

But I have a deeper question. How do you go about tracing a person you happened to be sitting in the same car with on the subway? Let alone doing so democratically? I don’t believe there’s any way to do it other than coercively.

However, I’m skeptical about taking anything the Chinese authorities have told us at face value. More to the point what did the South Koreans do? There is a description in this New Yorker article.

Leaving aside that privacy considerations would render the approach the South Koreans took untenable, graph theory would suggest that scale is important. You’d expect the complexity to be on the order of the square of the number of people involved. In other words what is just barely practical in South Korea would be completely unworkable in the United States even if we discarded everything we’ve considered sacred in privacy rights.

I guess my point here is that rather than looking for a Chinese solution or a South Korean solution, the preferred strategy in the U. S. should be one that makes some sense here rather than urging us to remake our society so it’s more Chinese or South Korean.

Illinois Gov. J. B. Pritzker has announced his plan for reopening Illinois, reported at TriState.com. Dividing Illinois into eleven health regions:

The five phases of reopening for each health region are as follows:

Phase 1 – Rapid Spread: The rate of infection among those tested and the number of patients admitted to the hospital is high or rapidly increasing. Strict stay at home and social distancing guidelines are put in place and only essential businesses remain open. Every region has experienced this phase once already and could return to it if mitigation efforts are unsuccessful.

Phase 2 – Flattening: The rate of infection among those tested and the number of patients admitted to the hospital beds and ICU beds increases at an ever slower rate, moving toward a flat and even a downward trajectory. Non-essential retail stores reopen for curb-side pickup and delivery. Illinoisans are directed to wear a face covering when outside the home, and can begin enjoying additional outdoor activities like golf, boating and fishing while practicing social distancing. To varying degrees, every region is experiencing flattening as of early May.

Phase 3 – Recovery: The rate of infection among those tested, the number of patients admitted to the hospital, and the number of patients needing ICU beds is stable or declining. Manufacturing, offices, retail, barbershops and salons can reopen to the public with capacity and other limits and safety precautions. All gatherings limited to 10 or fewer people are allowed. Face coverings and social distancing are the norm.

Phase 4 – Revitalization: The rate of infection among those tested and the number of patients admitted to the hospital continues to decline. All gatherings of up to 50 people are allowed, restaurants and bars reopen, travel resumes, child care and schools reopen under guidance from the IDPH. Face coverings and social distancing are the norm.

Phase 5 – Illinois Restored: With a vaccine or highly effective treatment widely available or the elimination of any new cases over a sustained period, the economy fully reopens with safety precautions continuing. Conventions, festivals and large events are permitted, and all businesses, schools, and places of recreation can open with new safety guidance and procedures in place reflecting the lessons learned during the COVID-19 pandemic.

The Chicago metropolitan area includes five of those regions.

I suppose that Gov. Pritzker is to be commended for announcing such a plan but I found it disappointing, a plan that could well have been announced on the day that he issued his “stay at home” directive back in March. It is appallingly lacking in target metrics. Fully reopening Illinois in Phase 6 requires “a vaccine or highly effective treatment widely available”, things that may never materialize.

Illinois met the criteria for Phase 3 more than a week ago. We remain in a Phase 1 shutdown.

To my eye the plan appears to be one for not reopening Illinois.

It may come as a surprise to those under the age of 60 but for most of the state’s history Illinoisans lived perfectly ordinary, healthy lives without vaccines or treatments for common illnesses, some of which could, indeed, kill you. Risks were considered a normal part of life.

The way you deal with risks is to identify the highest risks and implement measures for mitigating them, implementing less strenuous measures for lower level risks. Waiting until there are no risks is not a plan.

The editors of the Wall Street Journal rush to the defense of Sweden’s national reaction to COVID-19:

The American left has misunderstood Sweden for years, holding up its significantly liberalized economy as a socialist utopia. Now the misapprehension has moved in the opposite direction, as progressives fret over the country’s supposed economy-over-life approach to Covid-19.

While its neighbors and the rest of Europe imposed strict lockdowns, Stockholm has taken a relatively permissive approach. It has focused on testing and building up health-care capacity while relying on voluntary social distancing, which Swedes have embraced.

The country isn’t a free-for-all. Restaurants and bars remain open, though only for table service. Younger students are still attending school, but universities have moved to remote learning. Gatherings with more than 50 people are banned, along with visits to elderly-care homes. Even with relatively lax rules, travel in the country dropped some 90% over Easter weekend.

Officials say the country’s strategy—which is similar to the United Kingdom’s before it reversed abruptly in March—is to contain the virus enough to not overwhelm its health system. Anders Tegnell, Sweden’s chief epidemiologist, said the country isn’t actively trying to achieve broad immunity. But he predicted late last month that “we could reach herd immunity in Stockholm within a matter of weeks.” Some British public-health officials reportedly leaned toward less restrictive measures before the country’s leaders imposed a harsh lockdown.

I don’t have a dog in this hunt. To be honest to the extent that I’m interested in the strategies being used in other countries at all I’m more interested in Portugal’s than Sweden’s. Portugal, sitting right next door to countries that have mortality rates an order of magnitude higher than theirs, shut down about the same time as we did here in Illinois and they’re beginning to open up again. The largest difference is that the Portuguese paid more attention to nursing homes and hospitals than we have.

I think that longing for a national strategy for the U. S. only makes sense if you’re sitting in New York or Washington, DC. Our circumstances vary too much among different parts of the country. I do wish that the Trump Administration were acting to limit travel on the interstates to trucks hauling freight and that there was a national program of epidemiological testing.

In a report that will be no surprise to anyone familiar with either the organization or the situation, the Economic Policy Institute has published a report that finds that the program is basically a stalking horse for low wages:

H-1B is a temporary nonimmigrant work visa that allows U.S. employers to hire college-educated migrant workers as well as fashion models from abroad; nearly 500,000 migrant workers are employed in the United States in H-1B status.1 The H-1B is an important—but deeply flawed—vehicle for attracting skilled workers to the United States. The H-1B visa is in desperate need of reform for a number of reasons that we have explained in other writings,2 but the fundamental flaw of the H-1B program is that it permits U.S. employers to legally underpay H-1B workers relative to U.S. workers in similar occupations in the same region. This report explains how this occurs by describing the H-1B prevailing wage rule and analyzing the available data on the wage levels that employers promise to pay their H-1B employees.

The key findings of the report are:

• DOL lets H-1B employers undercut local wages.
• A small number of employers dominate the program.
• Outsourcing firms make heavy use of the H-1B program.
• Major U.S. firms use the H-1B program to pay low wages.

This is a serious political issue but not a partisan one. All of those have been true under both Democratic and Republican administrations and is as true of companies run by Republicans as those run by Democrats.