The coronavirus outbreak is serious, and it deserves a serious response. If you’re healthy, help people out. If you have elderly relatives or neighbors, reach out and see if they need anything. If you need help yourself, don’t be embarrassed to ask for it. If you need to cancel travel, work from home, or even self-quarantine, do so. It might be unpleasant, but it’s likely better than the alternative. And, of course, be diligent about washing your hands. But what about public policy? The real meat of Washington’s coronavirus response should focus on the long term, not the short term. Congress should refrain from passing what my colleague Wayne Crews calls “flash policy,” such as a crisis-inspired stimulus package, or bailouts, or rash monetary fixes.
There are a few immediate actions the federal government should take. My colleague Iain Murray suggests reducing tariffs, especially on medical supplies, faster approval for vaccines, and a few other things. Several of our other colleagues have additional ideas. But honestly, the list is short. The federal government is just not well-suited for fast, flexible crisis response. Most of the government-appropriate responses are at the state and local level, not the federal level.
Short-term flash policy is at best unnecessary. More likely, it is actively harmful. To show why, here is a graph of U.S. real GDP, 1929-present. The gray bars indicate where recessions are. If they weren’t there, they would be hard to see. The coronavirus may well give us another gray bar. Whatever Washington does now will have little to do with whether or not one appears, or how severe it will be, or how long it will last.
The graph’s 90-year span includes the Great Depression, World War II, oil price shocks, stagflation, and the 2008 financial crisis. Long term, the economy will be fine, even if the coronavirus has an impact on par with those events. We should be concerned not with a gray bar, but with helping the sick and containing the infection’s spread.
While there just isn’t much Washington can do in the short run, there are long-run policies Congress should enact. Easing regulatory burdens will enable faster, more flexible responses to future outbreaks—even in areas that might not seem to be outbreak-related. For example, my colleague Marc Scribner points out that drones and autonomous vehicles can help to prevent infections from spreading in the first place, and can make quarantines easier on the people who have to endure them. Lifting regulatory barriers against them won’t help with the coronavirus pandemic right now. But if there is another outbreak in five or ten years, it could help people then.
The point is that limiting damage from disease requires flexibility and adaptability. Intentionally or not, many regulations freeze things in place. They make adapting and improving more difficult. Easing those burdens will not calm the stock market today. Nor will it help anyone with coronavirus right now get better any faster. But less restrictive, more flexible regulatory institutions can improve everyone’s chances the next time an outbreak happens. And eventually, one will.
I don’t expect Congress or President Trump to take the long view right now. It’s an election year. Long-term regulatory reform would do little to calm volatile markets. People are scared right now, and not always thinking rationally. This is reflected in jittery markets, which are comprised of scared, sometimes irrational human beings. People won’t likely even listen to long-term policy proposals until the short term settles down a bit.
And that’s ok. Let’s take care of each other first. Let’s enact what policies are suited to the problem, such as reducing medical supply tariffs and expediting vaccine approval. Let’s avoid flash policies like stimulus or bailouts. Washington is inherently helpless against the coronavirus. Considering the harm that flash policies can cause, the coronavirus response is a time for limited government, not a new case for the opposite. Then we can talk about long-term institutional improvements such as regulatory flexibility and institutional safeguards against flash policies. Ultimately, sound institutions are what will allow for faster, more flexible responses to epidemics, and keep people safe.
Inertia Wins! 