We need to fight the virus before we open the economy, according to Larry Summers.
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Summers is a professor at Harvard’s Kennedy School of Government. He is a former president of Harvard, and was Secretary of the Treasury under the Clinton administration. He is also an economic advisor to the Biden campaign. He spoke via a webinar to Harvard Business School alumni on April 20.
The pandemic was not a great surprise, he said. He believes that this will be the century of global health, like the previous century was one of advancements in physics. He was asked if our response to the virus is running the risk of creating unnecessary economic hardship. But, he said, those who frame the question that way miss two fundamental issues. It is not our policy that ruins our economy; it is the disease itself. “When we are hiring trucks to move bodies to the morgue,” he said, “not many people are going to go outside.”
We can’t blame the economic contraction on the policies, according to Summers.
Second, he said, we can create a near-term bit of growth by relaxing our protocols. But if that unleashes a second wave of cases, we will lose in the long term. There will come a point when it is right to open the economy, he said, but no reasonable person thinks it is this week or next week.
If we were better at lockdown, we would be able to move out of it faster. But, many in the country are fighting for liquor stores and nail salons to be classified as essential businesses, undermining that goal.
If we had a more competent federal government, Summers said, we would rely on it more, especially on issues like sourcing ventilators and masks. But the more there are regional differences, the more it makes sense to have localized policies. However, federal oversight would be more effective.
Summers doesn’t think we will exit lockdown safely. It won’t be a steady march from “darkness into light,” he said. There will be a series of movements and missteps. If there are no protests, it will mean we probably aren’t moving fast enough.
“It will be a quite a while before we see a large number of people in a small place,” he said. “That won’t happen in 2020.”
Read the full article here by Robert Huebscher, Advisor Perspectives
