The economic damage from COVID-19 business shutdowns could be massive. We’re starting to see the effects with initial unemployment claims spiking to a record 3.3 million last week.

In an effort to keep businesses in one piece, the $2.2 trillion federal relief package provides loans to large businesses, and essentially provides grants to small businesses that retain employees. We will nonetheless see many bankruptcies in coming months.

Another part of the downturn will be less visible—the tens of thousands of businesses that won’t be started in coming months. In a normal year, about eight percent of the nation’s businesses disappear along with the jobs and incomes they support. Fortunately, entrepreneurs replenish the economy with the creation of more than 400,000 new businesses employing about 2.5 million workers in a typical year.

Due to the crisis, many entrepreneurs are likely shelving their startup plans and many new jobs will not be created. The Wall Street Journal profiled an innovative startup that the crisis has sadly pushed into bankruptcy:

Satellite venture OneWeb Global Ltd. has filed for bankruptcy after raising more than $3.4 billion from SoftBank Group Corp., Airbus SE and other investors to build a satellite network that would beam cheap internet connectivity from space.

… The company pioneered low-cost, automated production of such satellites, fueled by funding from Japan’s SoftBank and other investors, including aerospace giant Airbus, Qualcomm Technologies Inc. and the government of Rwanda.

The bankruptcy filing raises new questions about the financial viability of such broadband-via-satellite projects largely targeting developing regions. Entrepreneur Elon Musk and Jeff Bezos, founder of Ama​zon​.com Inc. are among those pursuing the same markets.

OneWeb said it had exhausted its financing to build out an orbiting constellation of roughly 70 spacecraft and was seeking more capital just as the coronavirus pandemic roiled financial markets and shut swaths of the global economy. SoftBank is OneWeb’s largest creditor, owed $903 million, and shareholder, according to court papers.

OneWeb set up a manufacturing site near Florida’s iconic Kennedy Space Center able to turn out satellites for roughly $1 million apiece while initiating work on ground stations and inexpensive antennas designed for developing countries. Airbus executives praised the production initiatives as major advances reducing the time and expense of satellite manufacturing.

When we are over the worst of the health crisis, attention will turn to rebooting the economy. We will need an army of startups to help create that V‑shaped growth trajectory that unemployed workers will desperately need.

To spur high-tech startups such as Oneweb, policymakers should cut the capital gains tax rate, which would increase incentives for entrepreneurship and stimulate the flow of risk capital. Tax reforms would also lend support to industries gaining new attention during the crisis, such as biotech, telemedicine, and other health-tech activities.

To spur lower-tech startups such as restaurants, policymakers should repeal minimum wage laws, particularly state laws that set wages above the federal level. Millions of people will need work, but many startups and struggling small businesses will not be able to afford the high wage rates imposed in states such as California, New York, and Washington.

To spur self-employed startups, policymakers should start repealing occupational licensing rules, which are state restrictions on the entry into hundreds of occupations. Climbing out of the recession, many people will be looking for new types of work after prior jobs have disappeared. Licensing rules can impose expensive and time-consuming requirements that unemployed people will not be able to afford in a struggling economy.

States impose licensing rules not just for doctors, but for interior designers, travel agents, bartenders, makeup artists, animal trainers, and massage therapists. Licensing rules “often bear little relationship to public health or safety,” with more training typically needed for a cosmetologist than an emergency medical technician. The share of U.S. jobs requiring an occupational license increased from 5 percent in the 1950s to about 29 percent today.

While federal and state policymakers are holed up in their homes in coming weeks, they should be thinking about tax and regulatory reforms to spur short-term recovery and long-term growth.

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More on minimum wages here and here, and more on occupational licensing here and here.

When thinking through the wisdom of COVID-19 lockdowns and orders, commentators often compare the value of lives saved against some loss of economic output (GDP) to determine whether the measure was cost-effective. But this is an apples vs. oranges comparison.

The value of a statistical life is some calculation of what the average U.S. citizen is willing to pay for a reduction in their probability of dying. Suppose I’m willing to pay $20,000 to avoid a 0.2 percent chance of death. The value of a statistical life for me is thus $20,000/0.2 percent = $10 million per statistical life saved. If this number were applied across the population, then a measure that prevented 500,000 deaths would create $5 trillion in value.

But note carefully what this represents: it’s not about output or spending. The value we place on our lives through our choices represents our expectation of the pleasure we’d get from a full spectrum of things we’d miss if we died. Not just the consumption we’d forgo, in other words, but the value we place on time with friends and family, travel experiences, enjoying all the new non-market leisure activities we can engage in, and more. The value of a statistical life used to calculate a dollar measure of the value of lives saved in a lockdown is therefore an economic welfare measure, not a GDP measure.

So the correct comparison when weighing up the wisdom of a lockdown is not “GDP lost” but “economic welfare lost.” That means we must account for the value of our lost liberties from shutdowns, stay-at-home orders, and closure of non-essential businesses. As British economist Andrew Lilico has said, that includes “the cost of lost enjoyment, lost advance in our skills, lost spiritual development, lost self-expression, delayed marriages, missing of windows of opportunity to ever have a baby, missing the chance to sit at the bedside of a loved one dying of cancer,” and much more besides. These non-market losses mean the loss of economic welfare from lockdowns is much greater than observed losses to GDP.

One of my friends has had to cancel his bachelor party as a result of the lockdowns; another probably won’t now have her ill Dad around to give her away at her wedding; some students are missing out on lessons that might permanently impair their understanding for life. It should be obvious these losses are greater than any hit to consumption or earning potential. My guess is that many of you at home feel like your evening time is worth less without the option of doing something different. You valued that option even if you wouldn’t act on it. In economic terms, Casey Mulligan writes about all this as a loss in the productivity of leisure time.

Now, accounting for this lost value accurately is difficult. Especially because, even if governments lifted lockdowns, many of us would likely continue to curb our own non-market activities to avoid the risk of infection or spreading the virus to loved ones. The problem is in large part the virus, not just the policy response. In normal times too, libertarians would balk at the idea you could “aggregate” in some way these very personal valuations of liberties. And, just so my views are not misrepresented, I am not saying that trying to account for them necessarily changes the calculus to what is optimal policy either way.

When thinking through how much pain we are willing to incur to save lives though, it’s essential that we do not place an implicit value of zero on our personal, non-market freedoms. The value of lives saved accounts for our ability to live those lives. Cost estimates of lockdowns should account for the value of our restricted liberties too.

Tucked deep within the nearly 900 pages of H.R. 748 – the Coronavirus Aid, Relief, and Economic Security Act – is a provision designed to strengthen unions in industries that accept bailout loans. Bloomberg reports:

“Companies with between 500 and 10,000 employees applying for a direct loan from the Treasury Department would be required to “make a good-faith certification that the recipient will remain neutral in any union organizing effort for the term of the loan.” New loans for businesses affected by the pandemic are available for up to five years under the bill.”

Who gets to define neutrality, I wonder?

As the “vast majority of states have closed public schools in an effort to slow the spread of the coronavirus,” reports NPR, “many districts are now faced with a dilemma: how to provide remote learning to students without running afoul of civil rights and disability laws.” Whether due to lack of accessibility in online lessons themselves or lack of personal attendants to see to their needs during lessons, many special ed students “may not be able to adapt or follow along.” That’s a potential legal problem because the Individuals with Disabilities Education Act (IDEA) requires that schools offer special ed students, who make up 14 percent of American students, an appropriate equivalent public education. (Two other disabled-rights laws, Section 504 of the Rehabilitation Act (Section 504), and Title II of the Americans with Disabilities Act, also regulate school services.)

“These concerns have prompted many districts, like Chicago Public Schools, to only provide ‘enrichment’ while schools are closed, with no ‘new learning,’ and no grading or tracking of attendance.” And some disability advocates stoutly defend this stance: until schools can build accessibility, extra help, and needed personal attendant services into each and every online lesson, in their view, IDEA and the other laws should forbid schools from giving the majority of kids a reasonable hope to advance by completing the year’s scheduled curriculum.

This is destructive zealotry. Fortunately, in the view of the U.S. Department of Education and Education Secretary Betsy DeVos, it is not a result compelled by federal law. On March 21 the Department put out guidance advising public school systems that it would recognize and recommend a maximum of flexibility during this new and unprecedented emergency and that it was legitimate for schools to adopt a variety of different strategies to meet disabled kids’ needs, ranging from instruction delivered through alternative means and media to compensatory instruction after schools are able to resume normal operation.

The guidance should be applauded. It’s a legitimate focus of policy to invest in research and resources so that during and after this unplanned emergency kids with special needs can advance too, and in more than just an “enrichment” way. But in the meantime, the advancement of the student body as a whole should not be held hostage to anti-discrimination principles applied in a spirit of ideological fanaticism.

Federal and state regulations are being waived or relaxed so that patients can receive medical care and continue their medications while social distancing or quarantining during the COVID-19 pandemic.

For example, states are relaxing licensing requirements and scope of practice laws in order to allow more health care providers to serve people in need. The Centers for Medicare and Medicaid Services has taken steps to promote the practice of medicine, including telemedicine across state lines. The Drug Enforcement Administration and the Substance Abuse and Mental Health Services Administration have made it easier for people receiving Medication Assisted Treatment for drug addiction to continue on methadone or buprenorphine while practicing social distancing.

Sadly, both acute and chronic pain patients on opioid therapy still must contend with onerous requirements, such as limits on the number of pills per prescription and the requirement to be seen by the prescriber in order to obtain a refill. Some of these requirements are state-based. Some are federally imposed, including last year’s rule from the Centers for Medicare and Medicaid Services that Medicare Part D beneficiaries with acute pain be given no more than a 7‑day supply of prescription opioids as initial treatment for their pain. With patients confined to their homes—many already relatively immobilized by their pain—these regulations become an even greater burden.

Health Canada, the regulatory agency that oversees Canada’s health care system, recognizes this and has urged its provinces to:

• permit pharmacists to extend prescriptions;
• permit pharmacists to transfer prescriptions to other pharmacists;
• permit prescribers to issue verbal orders (i.e., over the phone) to extend or refill a prescription; and
• permit pharmacy employees to deliver prescriptions of controlled substances to patient’s homes or other locations where they may be (i.e self isolating).

In response to the current public health emergency, the DEA, SAMHSA, and CMS should follow the example of Health Canada and waive prescription limitations, as well as requirements for in-person evaluation for refills, and encourage states to do the same. Governors should then issue executive orders waiving state-based restrictions. As regulations are relaxed or waived to address the needs of patients while we are all being asked to engage in social distancing and self-quarantine, pain relief must not be given short shrift.

Economic nationalism was on the rise before the spread of COVID-19, and worryingly, it may be picking up even more as a result.

Countries around the world are experiencing the biggest public health crisis in recent memory, and there are concerns about having the necessary supplies to deal with it. It is understandable that governments are afraid that they will be short of the medical care products they need.

The proper response, however, is not an “every country for itself” hoarding of these products. Instead, all countries should play a constructive role in addressing the problem, taking into account their current public health situation. As our colleague Scott Lincicome put it last week, the proper response by government here should be:

conducting international diplomacy and multilateral coordination of public health and economic issues in order to share best practices, ensure global medical collaboration on potential cures, and prevent counterproductive, “beggar-thy-neighbor” policies such as hoarding or export restrictions;

Unfortunately, there are signs that some governments are headed in the wrong direction. So far, 54 countries have implemented some form of export restriction on medical supplies.

There have even been actions to restrict food exports. To date, the United States has not joined in this approach, but a member of U.S. Congress recently proposed a full ban on certain critical medical supplies. With the number of cases surging quickly in the United States, proposals such as this one could gain support.

As Lincicome suggests, what countries should be doing instead is coordinating with each other, which will help them figure out who needs what products at a given moment. Each country is at a different stage of the COVID-19 crisis. Those who are in the midst of the crisis should be reaching out to tell the rest of the world what they need. And those who are in recovery or have not been hit too hard, such as China and Japan, should be helping those who need it.

There was speculation that China, a major producer of medical supplies, was restricting exports, but the evidence so far suggests that has not happened. After dealing with its internal crisis, China is now trying to export again: It approved the export of 5 million masks to South Korea; and a Chinese company recently signed a contract with the Italian government to provide 8 million masks. And as Reuters reported on Sunday:

A planeload of desperately needed medical supplies arrived in New York from China on Sunday, the first in a series of flights over the next 30 days organized by the White House to help fight the coronavirus, a White House official said.

A commercial carrier landed at John F. Kennedy airport carrying gloves, gowns and masks for distribution in New York, New Jersey and Connecticut, three hard-hit states battling to care for a crush of coronavirus patients.

…

The first plane, funded by the Federal Emergency Management Agency, carried 130,000 N‑95 masks; nearly 1.8 million surgical masks and gowns, more than 10.3 million gloves; and more than 70,000 thermometers.

(Of course, there have also been restrictions on the import side, but those can easily be removed by the countries imposing them. Hoarding goods for your own citizens to use is at least understandable. Restricting your own ability to buy foreign products, through tariffs or Buy American provisions, makes no sense.)

Beyond products, people with expertise are crucial as well. The Economist recently noted the following:

veterans from the earliest battles of the pandemic are taking their knowledge to others. On March 12th eight Chinese doctors, led by Liang Zongang, a professor of cardiopulmonary reanimation, arrived in Italy on a charter flight that brought medical equipment supplied by the Chinese Red Cross. They were followed on March 18th by around 300 Chinese intensive-care doctors.

There has been a lot of blame thrown around relating to the origins of the coronavirus and the actions taken in the early months. All of that can be sorted out later in the interest of preventing this from happening again. Public health experts need to have access to the full details in relation to both the origins and actions of each government in response.

For now, though, we need to focus on getting through the current public health crisis. The best approach is for nations to coordinate the relief effort. (Our colleague Inu Manak wrote last week about how the WTO could play a role here.) China’s contributions have been very helpful, and the U.S. State Department recently announced its own efforts.

There will be opportunities for other countries to help as well. There could be a second wave of the virus in China, and there will almost certainly be a dangerous spread through the developing world. Any country with the resources to help should plan to do so.

In the meantime, export restrictions should only be used if absolutely necessary—if a country is in the worst stages of the crisis and cannot spare any supplies. Otherwise, we should let the need for these supplies dictate where they are sold.

California Governor Gavin Newsom ordered all “nonessential businesses” in the state to close in response to COVID-19. The order closes all businesses except for those deemed to be part of America’s critical infrastructure. While it’s not possible to determine exactly which businesses will have to close—the order’s implementation is still being worked out—it is clear that immigrants are disproportionately likely to still be on the job this week, putting their health at risk to keep the state afloat.

The order’s language lacks the specificity to identify each particular case, but this post reviews data from the Census Bureau’s American Community Survey from 2018 (the most recent year available) to identify likely essential industries that will remain open. Overall, about 4.6 million immigrants will likely be deemed essential in California—33 percent of all the state’s essential workers. They are producing food and equipment, maintaining operations at hospitals and research facilities, and distributing supplies across the state.

Figure 1 shows the percentage of foreign-born workers in each major industry classification, including only those subindustries deemed or likely to be deemed essential. It is important to note that immigrants may play a variety of specific job duties within these industries. The share of foreign physicians in the medical industry, for example, is much higher than the share of foreign workers overall.

In 2018, California’s immigrants constituted 63 percent of the workers in essential agricultural industries, 45 percent of essential manufacturing, 40 percent of essential service sector workers, 39 percent of essential wholesale workers, 38 percent of construction, 36 percent of transportation, 33 percent of social and child agencies, 32 percent of medical facility staff, 30 percent of essential professional services, 28 percent of essential retail, and 26 percent of essential finance. Only the extraction industry and the three governmental industries—utilities, public administration, and the military—had immigrant shares below 20 percent. Overall, 27 percent of Californians were immigrants in 2018. Nationally, the share is less than 14 percent.

Table 1 provides the full list of industries that I estimated are or are likely to be deemed essential based on the governor’s order. One noteworthy essential subindustry is manufacturing of pharmaceuticals and medicines where 42 percent of its labor force in California were immigrants. Immigrants were the same share of the workforce for manufacturers of medical supplies. Another noteworthy example is grocery wholesalers—nearly half (48 percent) of its workers are immigrants in California. Similarly, 46 percent of the workers at California’s nursing care facilities—which are on the frontlines of protecting the elderly from COVID-19—are immigrants.

Immigrants are helping California survive this unprecedented challenge. They are making and distributing food, producing pharmaceuticals, and caring for the sick.