Closing down most human activity in response to the coronavirus was disproportionate, but that doesn’t make it unpopular. Even if, when the evidence is in, mothballing the economy is shown to have made little difference to the number of hospitalizations and fatalities, my guess is that people will still believe it was worthwhile.
Lockdown enthusiasts will say, “Ah, but if we hadn’t taken decisive action, things would have been much worse.”
Think of the financial crisis just over a decade ago. It is not unreasonable to suppose that, without the bailouts, bad banks would have collapsed, and their profitable operations would have been bought up by more successful rivals. Bondholders, shareholders, and some depositors would have lost money, but taxpayers would not have contributed a cent. The recovery would have come more quickly, and the level of government debt would have been far lower.
The trouble is, we cannot prove a negative. Any argument about how we might have made better use of the trillions of dollars we blew away can be slapped down with, “Yeah, but if governments hadn’t stepped in, there would have been a complete societal collapse.”
We are all subject to a strain of the sunk-cost fallacy that makes us reluctant to accept that past sacrifices were in vain. It is always hard to argue that “we might have done nothing, and it would have turned out the same.” Yet it is often true.
Consider the way we now remember President Franklin D. Roosevelt’s response to the Great Depression. On any objective reading, the New Deal was a failure. The economy was just starting to recover when FDR began his quixotic interventions, allowing producers to collude and holding salaries far above the going rate. Some of his schemes bordered on demented. For example, he had gotten it into his head that the root cause of the slump was a fall in farmers’ incomes, and so, to push up prices, he ordered the elimination of food surpluses. Yes, you read that correctly. Even as hungry people were lining up at soup kitchens, federal officials were impounding and destroying comestible food.
Knowing what we now know of economics, it is hard to dispute the finding of a UCLA survey in 2004 that demonstrated that the New Deal prolonged the recession by seven years. If you don’t believe me, consider the very different experience of the United Kingdom, which responded to the crash not by spraying money around but by cutting spending sharply. The result? Unemployment fell from over 2.5 million in 1931 to below 1.5 million in 1937, with annual growth averaging 4% between 1934 and 1939. Indeed, the 1930s saw more growth than any other decade in British history, with booms in electric appliances, cars, airplanes, and house-building.
Yet U.S. culture is so globally pervasive and the myth of the New Deal so powerful that, even in Britain, almost everyone views the 1930s as a time of hunger and deprivation, of long lines of unemployed men in cloth caps walking with that jerky step that characterizes black-and-white film reel. We can’t bring ourselves to accept that state intervention deepened the slump in the U.S. while laissez faire brought a speedy recovery in Britain.
It is becoming clear that the severity of a lockdown does not correlate significantly either with the spread of the coronavirus or the rate of deaths. I noted in this column a couple of weeks back that the states that had remained open had, if anything, fared better than the rest. We can now also see that the states that ended the closures early, such as Georgia, Oklahoma, and Tennessee, are not suffering any noticeable new surge. It is a similar picture in Europe, where Spain and Italy, with very harsh quarantines, suffered worse than the Netherlands and Germany, where the restrictions were moderate.
But none of that will alter the verdict. The counterexample of 1930s Britain does not dent the confidence of New Deal enthusiasts. The counterexample of Iceland, which refused to rescue its bankers and bounced back quickly from the financial crisis, does not dent the confidence of bailout enthusiasts. And the counterexample of Sweden, which left shops and businesses open and told people to use their common sense, will not change the minds of lockdown enthusiasts.
Yet there Sweden stands, the control subject in the world’s lockdown experiment, as proof that the bans imposed elsewhere owed as much to a desire to look active as they did to any reasonable interpretation of the evidence. The implication, namely that other governments may have wrecked lives and livelihoods for nothing, is almost too awful to contemplate. So, naturally, most people won’t contemplate it.
