The best economic advice I’ve heard during the coronavirus threat is that offered by Austan Goolsbee, former Council of Economic Advisers Chair under President Obama. In a recent NPR Planet Money podcast Medicine for the Economy, which is compulsory listening, Goolsbee said:
…the best thing you can do for the economy has nothing to do with the economy…
…we have to get on top of this as a public health matter, I think, before you can effectively deal with this as an economic matter.*
This is very true. The biggest threat to the economy is the virus getting out of control and shutting down activity for months. As emphasised in the Planet Money episode, coronavirus is a supply-side shock as much as a demand-side shock. The government’s stimulus is aimed at stimulating demand, but we may end up in a situation where people can’t go to work, won’t go out to spend, and many shops and venues won’t be open. The stimulus won’t be much help in that case.
The best thing we can do now for the economy—and more importantly for public health—is to rapidly contain the virus. It’s becoming clear we should consider even more drastic short-term measures than the Prime Minister has recently announced. Yes, such measures would come at a substantial cost, but they could help us avoid even higher costs later on, if large parts of the economy shut down for months, and tourism-dependent regions such as the Gold Coast and Cairns experience mini-depressions. More drastic measures in the short-term may also help us avoid the horrifying possibility of hospitals being unable to cope with massive demands for treatment.
The best public health advice I’ve heard regarding how Australia should deal with coronavirus has come from the ABC’s Dr Norman Swan:
The blurb accompanying the clip on YouTube summarises his advice:
The ABC’s Dr Norman Swan says a ‘severe shutdown’ is required to combat coronavirus…
…a proactive quarantine, including closing schools, while case numbers are low to curb the spread of the virus.
I agree with Dr Swan. We need to contain this virus quickly to save lives and to avoid even greater economic disruption in the future.
*A transcript of Goolsbee’s remarks is available.