Why Have Tighter COVID Restrictions Helped State Economies? – Sun of San Bernardino
In April 2020, as the pandemic was in full swing, economists announced, âHard math: COVID-19 presents a tough choice between life, death and the economy. Americans immediately condemned the recession blockade, in the words of Florida Governor Ron DeSantis. The destruction of millions of lives across the United Statesâ¦ There is no benefit to matching the COVID death rate. âBy the end of the year, some states, especially Texas, had ended COVID restrictions to improve economic activity.
2020 has been lenient in the past, but there is data (from the Bureau of Economic Analysis) to gauge each state’s âmathâ. And looking at this data, the results can be surprising, especially in larger states with more diverse economies. It is difficult to find the real compromise between the COVID blockade and the decline in economic activity.
If anything, we find the opposite.
First, let’s take a step back and take a look at the larger state data. Washington, which has above-average COVID restrictions, ranked first among states that outperform the United States in 2020. Next come three fewer COVID states (Arizona, Colorado, and Georgia) , followed by three more severe states (North Caroline, Maryland and Georgia).
California, one of the toughest states, followed in eighth place. After California, only the other three states have surpassed the country economically. In Texas, Indiana and Florida, it wasn’t all that strict. It is difficult to find compromises among these 11 states. States with high COVID restrictions have performed well economically, and states with low COVID restrictions have also performed.
And if you look at all the states beyond these 11 states, you will find some awesome models. States with more stringent interventions have, on average, produced better and healthier economic outcomes.
Is it just a statistical anomaly? The answer seems to be no. One of the reasons I have confidence in the results is to look at other countries. For example, consider Sweden, which is notorious for having few strict COVID measures. In 2020, Sweden was in poorer health than Scandinavian countries similar to Denmark, Norway and Finland. At the same time, its economic consequences during the pandemic were no better than those of its healthier neighbors.
This discovery goes down in history. An investigation into the 1918 flu epidemic by the Federal Reserve Bank of St. Louis took the flu more seriously, and later St. Louis outperformed the city of Philadelphia economically and healthier. previously published. I discovered that.
Likewise, a 2020 survey of the 1918 pandemic found that cities with stricter interventions had better jobs and better health.
What explains this seemingly strange but lasting result? The power of government signals.
The state sends a message to its citizens when it shows through policies and declarations that the pandemic takes it seriously enough to curb the spread of the disease and impose (sometimes extreme) measures to protect public health. I send. Part of this message is about business. The state says protocols are in place to make open businesses as secure as possible, and if that isn’t possible, the business will be shut down.
But, like Sweden did, it sends a different signal when it says the state should make choices about what to do during a pandemic through politics, and the government does. no choice in their place. âCitizens, choose yourselves wisely,â he said. Therefore, open business will be busier than closed business, but open business may be better in places with tighter restrictions.
Does it show up in the data? Yes, in some ways. Using OpenTable’s pandemic data, California restaurants and bars have seen a more dramatic reduction in diners than Texas. However, when these sole proprietorships were open, employee hours were down 8.9% in Texas, compared to just 1.5% in California. But it’s just a matter of choosing two states. The food drop in Minnesota, Massachusetts and Ohio was close to California due to restrictions in Florida, Georgia and Missouri, and the latter was comparable, although close to the Swedish approach.
Data from the retail sector describes a similar situation. In the same large states mentioned above, there is no significant correlation between changes in retail sales and the severity of COVID interventions. A similar analysis of retail purchases by store type shows no correlation between intervention and volume. And the same result applies to the minimum of 10 states. People have taken to online platforms to buy goods at roughly the same rate, regardless of the severity of the intervention.
The bottom line is that people react to the information they have and the signals they receive from the government. Clearly, business closures will increase unemployment in the affected sectors. However, there is no evidence to suggest that the closures or other public health interventions have resulted in more serious economic consequences. Therefore, such trade-offs must be made between the sectors directly affected by the intervention, and in states and countries where the intervention is less, the overall infection rate is higher, resulting in a voluntary decline in demand and an increase in absenteeism. May be seen.
Even knowing all of this, you can believe that the freedom of choice is well worth the social and health costs of that freedom. But empirically, it’s not a trade-off between health and bottom line. It is a compromise between freedom of choice and public health.
Jerry Nickelsburg is the faculty director of UCLA Anderson Forecast and a former ZÃ³calo public square columnist.
Why Have Tighter COVID Restrictions Helped State Economies? – Sun of San Bernardino Why Have Tighter COVID Restrictions Helped State Economies? – Sun of San Bernardino