Extreme circumstances often inspire innovation. One current example is the pivot by distillers from making spirits to making hand sanitizer.

The transition was not without government hurdles, but in this instance government cooperated with common sense. First, the Alcohol and Tobacco Tax and Trade Bureau waived requirements to obtain permits in order to legally manufacture hand sanitizer and agreed to waive the federal excise tax for alcohol-based hand sanitizer products. In addition, the Food and Drug Administration issued temporary guidance saying, “the agency does not intend to take action against manufacturing firms that prepare alcohol-based hand sanitizers for consumer use and for use as health care personnel hand rubs during this ongoing public health emergency.”

Prior to these actions, distillers were forced to use creative workarounds:

Distillers had been finding ways to work around restrictions, including donating rather than selling sanitizer, or calling it something other than hand sanitizer. For instance, Los Angeles spirits maker Amass was selling “alcohol-based hand wash” on its website… The company will now call the product hand sanitizer.

Before the new guidance distillers were also scrambling to find distribution channels that would not run afoul of FDA or TTB regulations, frequently donating products to local healthcare organizations or providing small quantities to customers as free gifts with purchases.

Even with the relaxed regulations, distillers could still face challenges. In the shift from spirits to hand sanitizer, distilleries are taking on substantial financial burdens. Though some have plans to eventually sell the hand sanitizer in order to defray costs of production and lost spirits revenue, determining a legal way to do so is challenging. Fears of running afoul of the FDA, or price gouging regulations, have slowed the transition.

Although the FDA and TTB have, correctly, relaxed the rules surrounding the production and distribution of hand sanitizer, private businesses should not have faced regulations discouraging them from increasing the supply of a vital public health resource. Private altruism should not be discouraged by government regulations.

COVID-19 is pushing the U.S. economy into recession as businesses cut back and close down. Congress is set to pass a huge stimulus and business support package that will cost taxpayers $1 trillion or more.

I fear much of the spending will be misdirected, at least that portion aiming to boost demand rather than sustain safe supply. Policymakers should focus on widespread virus testing and distributing safety equipment to help get businesses back in safe operation as soon as possible.

Economists Paul Romer and Alan Garber discuss that strategy in the New York Times. They argue, “To protect our way of life, we need to shift within a couple of months to a targeted approach that limits the spread of the virus but still lets most people go back to work and resume their daily activities.”

The authors propose two strategies: “The first relies on tests to target social distancing more precisely. The second relies on protective equipment that prevents the transmission of the virus.”

Much of the spending in the proposed stimulus bill is a Band-Aid. As Romer and Garber said, “Loan guarantees and direct cash transfers will stave off bankruptcy and default on debt, but these measures cannot restore the output that is lost when social distancing keeps people from producing goods and services.”

The authors argue that “Investment in protective equipment and tests would be a far less expensive, better way to stimulate the economy than giveaways and transfers.” It would also keep the government in its proper sphere of public health rather than trying to keep the economy afloat with borrowed money.

Maryland Gov. Larry Hogan has followed other governors in ordering all “nonessential” businesses to close workplace sites within his state. But is it so easy for policymakers to judge what is “essential” and “nonessential” business activity?

Take supermarkets. They are essential as the main food source for people self-isolating or working from home. But if supermarkets and their supplies are essential, so are their goods’ manufacturers, the producers of plastic and cardboard carrying the goods, the company’s accountants and financial advisers, cleaning companies that serve the stores, cleaning products used by said companies, the truckers who ferry the goods, gas stations, rest stops, farms, farm equipment manufacturers, mechanical service stations for trucks and farm equipment, and more.

As you can see when you review the family tree of any consumer-facing industry, the market economy is a vast network of interconnections, both vertically and horizontally. One of the reasons why even a partial shutdown can be so catastrophic is because of knock-on effects through supply-chains or indirect losses of income affecting families, as coming unemployment figures and GDP numbers will surely show.

Hogan’s list of all he deems “essential” shows this clearly. The sheer number of industries thought required for society to function shows that a market economy is a vast tapestry of non-coercive, interlinked cooperation, far from the picture of dog-eat-dog competition painted by its critics.

Firms “excluded” from shutting down include: the chemicals sector, a raft of commercial facilities (including dry cleaning), communications firms (internet, telecoms, cable, broadcasters), a whole of “critical manufacturing” companies, the “defense industrial base,” the energy sector, other utilities such as water, a range of financial services firms, the food and food processing supply chain, pet stores and vets, healthcare and related services, funeral homes, large parts of the transportation sector, sectors in IT, government facilities industries, and staffing and payroll service firms.

A sector here, a sector there, and pretty soon you’re talking about pretty large parts of the economy. Hogan was at pains to point out that this list was “non-exhaustive” too, with companies encouraged to review additional guidance to check if they were unsure.

My concern is that orders such as Hogan’s are sowing confusion rather than giving businesses clarity. There are good public health reasons why you might think mandated closures for mass entertainment activities– sports events, restaurants, bars, nightclubs, cinemas – are a good idea. There might also be a reason to impose temporary, emergency limits on numbers of people in social gatherings or stores. Both principles have in fact determined many private companies’ responses to this crisis, even prior to government action. A government message encouraging people to work from home may be reasonable guidance too.

But grand declarations that all “non-essential businesses” should close risks inadvertently shutting down activities that policymakers hadn’t considered “essential” but whose absence will cause real harm to the public health effort or other essential sectors. One person’s non-essential business might be another business owner’s key supplier. It would surely be far better to avoid the mistakes of bureaucratic hubris and just outline directly which businesses and sectors should cease operations, with the list continually under review when clear problems arise.

Many countries have enacted travel restrictions in response to the spread of COVID-19 that originated in China. For instance, President Trump announced a partial travel ban on China in late January that went into effect on February 2, 2020. Trump’s partial travel ban exempted American citizens, lawful permanent residents, and many others. Those who returned were supposed to be medically screened and quarantined if they showed symptoms. Those quarantines and medical screening were likely inadequate as we saw after the government imposed travel restrictions on Europe and returning Americans overwhelmed the airports. At least 36 other countries also imposed travel restrictions on people coming from China at about the same time.

The goal of the travel restrictions was to slow the spread of COVID-19. Clearly, COVID-19 is just about everywhere, but the important question is whether the travel bans slowed the spread enough to either ­somewhat flatten the curve or shift the curve to the right to give enough time for health care providers, civil society, and governments to prepare. It makes intuitive sense that travel bans could have slowed the spread of COVID-19 because it originated in one part of China and spread predictably via airline routes. A recent Rasmussen poll shows that the travel bans on China and Europe are popular if they limit the spread of COVID-19.

The government has the power to limit the spread of diseases through travel restrictions. The appropriateness of a travel restriction depends upon how effective it is at reducing the spread of disease and reducing its associated costs in health, lives, and to the economy relative to the costs incurred by such a restriction. There is a growing body of academic research on travel restrictions imposed by governments in response to the COVID-19 pandemic. Although it is early and there are problems with the COVID-19 data available, travel restrictions likely delay the spread of COVID-19 in modeled simulations by up to a few weeks.

Academic Research – Epidemiological Models

Epidemiological research on how travel restrictions impede the spread of COVID-19 is almost entirely theoretical and model-based. These papers usually begin by building or adapting a model of COVID-19 transmission via transportation routes. Travel restrictions reduce or remove nodes from transportation networks, limiting the spread of the virus in destination countries where those restricted-travel nodes reside. However, these travel restrictions don’t reduce travel with all other nodes in the international transportation network. Thus, if COVID-19 is traveling between other nodes in other non-restricted countries, travel restrictions on highly-infected countries like China merely delay the spread. In other words, travel restrictions aren’t as ineffective as closing the barn door after the horse escapes, but they aren’t that much better.

A recent article in the journal Science models how China travel restrictions affected the global spread of COVID-19. They use an “individual-based, stochastic, and spatial epidemic model” called Global Epidemic and Mobility Model (GLEAM) that integrates real-world data on travel between travel nodes (cities and population centers) and the transmissibility of COVID-19.

Individuals inside of GLEAM go through several different phases with respect to COVID-19: They can be susceptible to the disease, have latent or inactive infections, be currently infectious, or are removed due to recovery or death. Those who are susceptible can acquire COVID-19 through contact with infectious individuals. Those susceptible individuals who become infected will go through a latent period and proceed to become themselves infectious. Those people who are infectious will then move toward the removed stage where they are no longer able to infect others because they were isolated, hospitalized, died, or fully recovered and acquired immunological memory. Importantly, the authors also consider how changes in the transmissibility of COVID-19 affect the spread of the disease relative to and in conjunction with travel restrictions. The authors of the paper estimated the time that an individual spends in each phase based on COVID-19 data available before the paper was published on March 6, 2020.

Next, the authors run the GLEAM model with different reductions in international travel. It’s difficult to disentangle the effect of travel restrictions imposed by different countries because of many imposed bans on travel from China at different times. Furthermore, China imposed internal travel restrictions in response to COVID-19. Thus, the authors simplify their model by considering the effects of a 40 percent and 90 percent reduction in travel to and from mainland China, both beginning on February 1, 2020. Separately, they also model how a travel ban on the city of Wuhan, which began on January 23, specifically affected the spread of the disease in the rest of Mainland China and internationally.

The Wuhan-only travel restriction reduced the international transmission of COVID-19 cases outside of Mainland China by 77 percent by early February. However, the numbers quickly rebounded. Within 2–3 weeks of the Wuhan travel restriction, the number of international cases of COVID-19 that spread to countries via airline transportation resumed its pre-Wuhan-restrictions numbers after 2–3 weeks. In other words, the Wuhan travel restriction likely reduced the spread of COVID-19 in other countries by a few weeks.

As for a February 1, 2020 travel restriction on the rest of Mainland China, the authors estimate that a 90 percent reduction in international travel would only modestly affect the pandemic’s international trajectory such that the number of cases crossing borders per day will return to the pre-Mainland China travel ban level by February 16^th. A 40 percent reduction in international travel from Mainland China beginning on February 1, 2020 would have an even smaller effect. In that scenario, the number of cases crossing borders per day returns to the pre-travel ban level on February 3, 2020.

The most important finding of the Science article is that reducing transmissibility does more to slow the spread of COVID-19 than travel restrictions. A 90 percent reduction in travel merely reduces one node in a travel network whereby COVID-19 spread. By lowering transmissibility across the world, even if only by 25 percent, the spread of COVID-19 through every node in that network is reduced greatly.

I contacted some of the authors of the Science article to ask for their code so I could replicate their model with different travel restriction scenarios, holding transmissibility constant. Additionally, I asked them to rerun their model under different assumptions and by looking specifically at the spread of COVID-19 inside of the United States. Unsurprisingly, they are extremely busy and haven’t responded yet. The biggest issue with this paper is that it’s just a model, a very useful one that increases our understanding of how COVID-19 spread, but it has not been empirically tested.

Another paper published in the Proceedings of the National Academy of Sciences looks at how Chinese-government imposed travel restrictions impeded the exportation of COVID-19 cases abroad. It found that by January 12, 2020, the daily risk of exporting a single case of COVID-19 to another country exceeded 95 percent and the likely first export occurred in December 2019. The Chinese government didn’t impose travel restrictions out of Wuhan until January 23, 2020. The authors estimate that the Chinese travel lockdown reduced the number of COVID-19 importations in other countries by about 80 percent by mid-February. They wrote:

travel restrictions cannot be expected to fully arrest the global expansion of COVID-19, but may decrease the rate of case exportations if enacted during the early stages of the epidemic … At this early stage of the COVID-19 epidemic, this decrease in exportation rates from mainland China could delay the onset of outbreaks in cities yet to be affected. This obstruction of importation events will be critical to preparing an effective public health response for when a local COVID-19 outbreak arises.

A third paper published in the Journal of Clinical Medicine ran a model about how the reduction in travel with China affected the number of COVID-19 cases in Japan, whether it delayed a “major epidemic” there, and how long the epidemic was delayed. It found that those restrictions reduced the probability of a major epidemic in Japan from 7 percent to 20 percent, which resulted in a median time delay of a major epidemic of two days. That effect was produced by reducing the number of COVID-19 cases arriving in Japan by 70.4 percent from January 28-February 7, 2020.

A fourth non-peer reviewed paper modeled the effect of Australia’s restriction on Chinese travel that was imposed on February 1, 2020. This paper is the first to look at importation bans specifically rather than reductions in overall travel. The authors found that Australia’s travel ban reduced the number of cases and deaths from COVID-19 by about 87 percent over a 400-day time period projected into the future. That is a huge effect in the model, but the paper does not consider the spread of COVID-19 to Australia from countries other than China. Including the spread of COVID-19 to Australia from other countries would certainly reduce the effectiveness of the Australian ban.

The existing literature finds that travel restrictions likely delayed the spread of COVID-19 internationally by a short period of time, from a few days to several weeks. The next question is whether these short delays made a difference.

Did the Delaying the Spread of COVID-19 Matter?

Many of the papers above model how travel restrictions delayed the spread of COVID-19, often by a short period of time. There are many reasons why travel restrictions didn’t do more to reduce the spread of COVID-19 in these models. First, many of the travel restrictions on China excluded many people. Viruses don’t discriminate by nationality, so American citizens could have brought the virus back to the United States or other countries after the travel ban. Second, the travel restriction was imposed too late. The virus had escaped China already and it was being transmitted to healthy people around the world. The travel restrictions also didn’t block travelers from other countries.

Third, the travel ban created a false sense of security that delayed other more effective methods of containing COVID-19, such as instituting social distancing sooner. In other words, the travel ban was always an ineffective policy that substituted for more effective ones like those adopted in Singapore. Other methods of reducing COVID-19 transmission are effective. To the extent that travel restrictions substituted for those policies, as they likely did in the United States, it likely undid any benefits by delaying other actions.

A delay in the spread of COVID-19 could purchase precious time to flatten the curve so that seriously ill patients won’t overwhelm hospitals, intensive care units, and die in larger numbers as a result. But that only works if the government, civil society, and business use the extra time to prepare for the coming pandemic. Like every other disaster, few were going to act until it reached certain crisis proportions. There was evidence that COVID-19 was building as a looming threat for months – in mid-February, I stocked up on emergency supplies, extra cleaning supplies, hygienic equipment, and ammunition because I was worried about COVID-19. I wasn’t the only one nor was I particularly prescient.

Conclusion

Travel restrictions, including limits on emigration and immigration, delayed the spread of COVID-19 by a few days to a few weeks. The above research papers are limited as they just model and project COVID-19 cases rather than empirically test how restrictions affected the actual spread of the disease, but they are valuable starting points in evaluating this crucial policy tool. Travel restrictions could have delayed the onset of a crisis mentality by a few weeks and shifted the curve to the right rather than flattening it. Shifting the curve to the right, in addition to preparing for a pandemic by adopting other policies to reduce transmission, could have been an effective strategy. But by themselves, travel restrictions do little but delay the onset of a crisis mentality and shift the curve to the right rather than flattening it.

At a Coronavirus Task Force briefing last week, President Trump incorrectly told the press that the antimalarial drug chloroquine had already gone through the Food and Drug Administration’s approval process for the treatment of COVID-19 infection: “They’ve gone through the approval process, it’s been approved and they did it, they took it down from many, many months to immediate.” He was later corrected by the FDA Commissioner, who said the approval process had not and will not be completed until controlled clinical trials have convinced the agency.

Many people might therefore conclude that doctors are not legally permitted to prescribe chloroquine, or its analog hydroxychloroquine, to treat COVID-19 infections. In fact, doctors around the globe, including the U.S., are using these and other drugs to treat their patients, and reporting on their findings in the peer-reviewed medical literature.


French medical researchers reported on the chloroquine’s potential based upon their experience with a small group of patients in the March issue of the International Journal of Antimicrobial Agents. Chinese medical researchers reported similar encouraging results in early February. Researchers at the University of Washington in Seattle are using chloroquine to treat their COVID-19 patients, with one of its research associates calling the results thus far “very promising.” And a report in today’s Wall Street Journal by a practicing physician and the director of the Division of Infectious Disease at the University of Kansas Medical Center also touts the drug’s potential.

The use of chloroquine, hydroxychloroquine, and other drugs (such as azithromycin and antiviral drugs used to treat HIV) to treat COVID-19 are examples of “off-label” drug prescribing.

Prior to 1962, drug makers were required to convince the FDA their product was safe to consume and met the FDA’s criteria for providing product information, use, and dosage on their labels. But the 1962 Kefauver-Harris Amendments to the Food Drug and Cosmetic Act of 1938 added the additional burden of proving the drug’s efficacy in treating the condition for which it was developed.


Efficacy requirements add years to the approval process. Ironically, once a drug is thus approved for the treatment of the condition for which it was initially intended, the FDA has no restrictions on using the drug in any other setting. Using it to treat a condition for which it was not initially approved is called “off-label,” because the label is only allowed to state the condition for which its use was FDA-approved.

It is reasonable to wonder why, after doctors wait several years to get permission from the FDA to treat their patients with a drug for condition “A,” the FDA in principle trusts doctors to use their clinical judgment, based on their knowledge and experience, to treat conditions “B thru Z.” Why not skip the efficacy component of the approval process and speed things up? Alas, a great many patients suffer or even die waiting for the chance to see if a drug that may be helping patients in other countries can be used by them—a problem called “drug lag.”

Clinicians use drugs “off label” very frequently. In fact, according to the Agency for Healthcare Research and Quality, “one in five prescriptions written today are for off-label use.” An example of off-label use in my specialty of general surgery that immediately comes to mind is the antibiotic erythromycin to treat paralyzed intrinsic muscles of the stomach, a condition called gastric atony.

Many years often pass before clinical trials convince the FDA to update its approved use of a drug to include what had been an off-label use. Aspirin had been used off-label to prevent recurrent stroke or heart attack for many years before the FDA approved it for that use.

Most of what clinicians read in medical journals or observe at scientific conferences deal with the efficacy and comparative effectiveness of various medications or procedures in the treatment of health conditions.

It may indeed turn out that the FDA eventually approves chloroquine, hydroxychloroquine, and other drugs currently used off-label for the treatment of coronavirus and other viral infections. That could still be quite a while off. In the meantime, it is important for people to know that clinicians are not prohibited from using these drugs now. If a life-threatening situation develops, they can discuss using one or more of them with their health care provider.

1. Why are we so concerned about this virus, which so far (as of mid-March) has killed many fewer people than an ordinary flu?

The key to the answer lies in the words “so far.” The virus seems to spread at a phenomenal rate, with cases doubling more than once a week. If the number of deaths were to double once a week, then starting from about 200 deaths on March 15, by the end of May the total would be 200,000 deaths, which is about ten times the number that we get from ordinary flu.

The Imperial College paper made an extrapolation that warned of the possibility hundreds of thousands of deaths if social distancing were not encouraged.

2. How do differences in testing frequency and reporting practices affect reported spread rates and death rates?

The reported spread rate depends on the actual spread rate and the trend in testing frequency. For example, in the United States, testing ramped up the week of March 16, and the reported spread rate rose above 50 percent per day on some days, but that is probably well above the actual spread rate. It is very difficult to estimate the actual spread rate as long as testing protocols are changing.

Death rates are also very unreliable. Some people have died of the disease without being tested for it, so that they do not count in the virus death statistics.

Deaths occur with a lag so that if the number of cases is increasing, the reported death rate will understate the true death rate. To see this, assume that the true death rate is 1 percent, and death occurs 5 days after someone becomes a “case” by testing positively for the disease. Suppose that on day one there are 100 cases and on day five there are 1000 cases. As of day five, there will be one death (out of the original 100 cases), but dividing this by the number of current cases (1000), we would compute a death rate of 0.1 percent, which is far below the true number.

Other factors will cause the reported death rate to be overstated. Most important, many people who have the disease in mild forms will never be tested and thus will not count as cases. So the death rate relative to the number of reported cases will be high relative to the true death rate.

3. What factors affect actual death rates (not the reported death rates)?

An important factor is the quality of care. There was a relatively low death rate on the Diamond Princess cruise ship, and it is likely because the sick passengers and crew were well cared for. In Italy, the death rate from the virus was modest for a while, but it soared once the health care system became overwhelmed. The countries with the highest death rates appear to be those with the weakest health care systems and/​or those whose systems are most overwhelmed by a large caseload. But it is hard to be certain, given the challenges with reporting and calculating death rates accurately.

Age and existing health conditions are other important factors. Death rates for the very young are minimal, and death rates for the very old are high.

Although death rates among otherwise healthy people under age 60 and are low, they are not zero. Deaths of health care workers are particularly worrisome.

We should not treat the death rate as if it is some natural constant. When a large share of the cases is in the elderly population, as in the state of Washington in early March, the death rate will be high. When there are ample human and physical resources to treat patients, the death rate will be lower than otherwise. If new treatment protocols, including pharmaceuticals, prove to be effective, the death rate could plummet.

4. What policies have worked best in reducing the spread rates?

Policies to completely isolate those who have or might have the disease appear to have worked in China and South Korea. This seems to require strict quarantine and extensive surveillance. In South Korea, testing was widespread, as was “tracing and tracking.” When someone is sick, you try to trace back to see who might have made them sick, and you try to track down anyone else who might have come into contact with a sick individual. To do this, the authorities can use data on people’s phones to plot their movements. Presumably, this is not something that Americans are ready to allow.

If only sick people can spread the disease, then isolation of people with obvious symptoms can be effective. But if people who experience no symptoms or mild symptoms can spread the disease, then more general social distancing is required. Apparently, many experts believe that the disease can be spread by people who are not yet severely symptomatic.

5. How is government enforcement of social distancing justified by a difference between private costs and social costs?

The personal cost to me of risking infection is relatively low. Suppose I go to a crowded restaurant. Even if I get infected, I am unlikely to die, particularly if I get good treatment should my case be severe.

But the cumulative social cost of many people deciding to risk infection is high. First, they may infect others who have high risk. Second, as the number of people requiring treatment rises, the capacity of the health care system becomes strained, the quality of treatment falls, and the death rate rises.

Front-line health care workers are particularly inclined to stress the social cost of people risking infection. They see cases of young people requiring ventilators. They see fellow health care workers become sick and even die. They see the limits on supplies of equipment needed to treat patients.

6. How can a short, unpaid vacation for some sectors of the economy have such large ramifications?

Financial obligations don’t sleep. The small business that is temporarily closed and wants to keep its workers still has to make payroll. The individual who is temporarily laid off still has to pay rent and make car payments. The airline whose planes are grounded still has to pay the bank for the loans that it took out to purchase the planes.

Our society is highly levered. Many households have not saved enough to go even a few weeks without a paycheck. Many businesses make heavy use of debt financing and have little cash reserves. Banks deposits are supposed to be riskless and available on demand, even though the assets backing those deposits are risky, long-term loans.

When economic activity is running smoothly, this leverage is efficient. Households can enjoy goods sooner than otherwise by obtaining them on credit. Businesses can expand more by using borrowing than they could if they had to rely on cash flow from profits. Banks and other financial institutions allow households to buy homes, operate small businesses, and start new ventures.

But all this leverage increases fragility and interdependence. When households don’t have cash reserves, a short unpaid vacation means that they cannot pay rent. Then the owner of the apartment building cannot make the payment on its loans. Then the bank does not have the money to pay its depositors unless it forecloses on the apartment building and sells it at a loss, etc. 

In a crisis, everyone tries to reduce their leverage. Households cut back on spending. Banks cut back on lending. Economic activity collapses.

7. What are the long-term economic consequences of this crisis?

Behavior will change, and economic activity will alter as a result. People who are considering going on a cruise or flying overseas will be more aware of the risk of contracting an illness, and this will reduce demand. People involved in health care systems will be more aware of the risk of running into a surge in demand, and they will try to expand capacity.

People will become more facile at undertaking work, education, and conferences remotely. Businesses that help foster remote interaction will expand. Businesses that are built around large conferences and meetings will shrink.

As businesses develop supply chains, they may become less concerned with maximizing efficiency and a bit more concerned with ensuring robustness. They may prefer sources with more redundancy rather than sources that minimize cost.

An open question concerns what will happen with leverage. The financial crisis of 2008 caused some de-leveraging in the short term. But households and businesses soon got back to operating with high levels of debt and low margins of safety. Perhaps this time people will be more traumatized than they were in 2008. Perhaps this time government authorities will not be as sanguine about rising dependence on credit in the economy.

8. Why aren’t policymakers taking into account the economic cost of closing restaurants and shutting down other forms of economic activity?

This question implicitly assumes that the alternative of allowing all businesses to operate would be costless. That is, it assumes that we could avoid most of the cost of this crisis if we did not “panic.”

In fact, even if the government does nothing, many individuals and businesses will curtail their activities, based on what they know about the virus. Many private actors were ahead of the government in canceling travel and conferences. The economic costs were already going to be significant, even without government advice or mandates.

More important, an alternative strategy of allowing or encouraging ordinary economic activity could prove even more costly in the long run. One can imagine a scenario in which the health care system gets overwhelmed, causing many people to die who otherwise would not, both from the virus and from other treatable illnesses. There could emerge a social climate in which people fear and suspect strangers. This low-trust social climate would itself hinder ordinary economic transactions.

There is no way to avoid having the economy take a major hit from the crisis. Without a doubt, some of the policy responses will make things worse than would be the case otherwise, and others will make things better. It will be difficult to determine which is which, both in real-time and in hindsight.

9. What about fiscal and monetary stimulus?

I am skeptical about both. Conventional monetary stimulus involves the Fed paying for financial instruments with money that it creates at the stroke of a pen. It’s a subtle way of manipulating rates of return in financial markets. That tool now seems to me beside the point, sort of like the steering mechanism on the Titanic after it already hit the iceberg.

Instead, I think we need a lender of last resort. I have suggested giving households and firms government-backed overdraft protection. Here is further elaboration.

Fiscal stimulus means the government taking money out of someone else’s pocket to give it to you. By someone else I mean a future taxpayer. The future taxpayer may face an explicit tax bill, or that taxpayer may end up paying via the “inflation tax:” giving up some real resource in exchange for government-issued money that is going to shrink in purchasing power.

Fiscal stimulus works because you need to pay your bills today. You don’t care about the future taxpayer. The politicians sure don’t.

As the recipient of the government payment, it looks like you are getting a gift, as opposed to the overdraft privilege or credit line. If you borrow using a credit line, you know you’re supposed to pay it back. But it doesn’t look like you have to pay back your gift. Instead, the person who pays back your gift is the future taxpayer. That future taxpayer could turn out to be you, but you won’t think about it that way.

The political lobbying for these gifts will be intense. I am cynical enough to believe that whatever you and I receive will be but a fig leaf to cover up more extravagant gifts for special-interest constituents. One of the big reasons I prefer the credit-line approach is that interest groups won’t fight as hard for money if they know they will have to pay it back.

[Cross-posted from Arnold​Kling​.com]

As the COVID-19 spreads through the United States, the government has closed its borders to foreigners. Yet millions of immigrants already here are working every day to defeat the contagion or mitigate its economic effects. From cleaning away germs to developing cures for them to delivering needed supplies, immigrants are disproportionately engaged in the effort to defeat COVID-19. Indeed, immigrants are overrepresented in nearly every job that is critical during this pandemic.

Health Care and Diagnosis

On the front lines of this battle are the nearly 1.7 million foreign-born medical and health care workers who are caring for COVID-19 patients, according to the Census Bureau’s American Community Survey (ACS). Figure 1 shows that while immigrants composed only 13.7 percent of the U.S. population in 2018, they were 35.2 percent of the home health care aides in America (224,325), 28.5 percent of physicians (281,127), 20.9 percent of nursing assistants (365,466), 18.9 percent of health care diagnosing or treating practitioners (2,840), 18.5 percent of clinical lab technicians (73,314), 15.2 percent of medical assistants (98,383), 15 percent of registered nurses (569,534), and 14.9 percent of health technicians (24,530).

Researching Cures and Treatments

Researching cures and treatments for this virus will likely be the primary long-term solution to the crisis, and immigrants are heavily involved in the relevant fields. The United States had more than 155,000 foreign-born biomedical or chemical engineers, biological or chemical technicians, chemists, and medical or life scientists in 2018, according to the ACS. Specifically, they were nearly 40 percent of medical and life scientists (67,646) and nearly 30 percent of chemists and material scientists (32,226).

The U.S. Department of Labor has approved more than 11,000 hires of foreign workers specifically at the eight major U.S. companies researching coronavirus cures and treatments. Figure 3 below shows that—as I have detailed before—over the last decade, those eight companies have received approvals for 3,310 biochemists, biophysicists, chemists, and other scientists under the H‑1B program. They have received approvals for 2,801 statisticians to analyze the data the scientists are producing as well as 2,133 computer, database, and software support staff.

Cleaning and Disinfecting

It has never been more important to have clean work places, homes, and public spaces. A National Institute of Health study has found that COVID-19 can live on surfaces for up to 3 days, and the Centers for Disease Control (CDC) recommends cleaning and disinfecting as a “best practice measure for prevention of COVID-19.” As Figure 4 shows, immigrants specialize in cleaning occupations that prevent the spread of the disease. They are nearly half of America’s maids, a quarter of its janitors, and 22 percent of its vehicle cleaners and its supervisors of janitors.

Distribution and Delivery of Food and Supplies

The CDC recommends that Americans limit exposure to public spaces as much as possible, so households are stocking up on food and other supplies like never before to avoid trips out. The country is depending on supply chains to allow them to stay inside, and immigrants are disproportionately involved in those chains from start to finish.

Nearly 1.5 million immigrants work in delivery, shipping, and trucking, bringing products to households who need them across America. As Figure 5 shows, immigrants were 18.4 percent of industrial truck and tractor operators (139,172), 17 percent of shipping and receiving clerks (126,406), 17 percent of truck and delivery drivers (760,462), 14 percent of freight and stock workers (450,719) in 2018.

Food Production

Americans still need food to wait out this crisis, and immigrants cultivate and process a significant portion of America’s food and meat production. Figure 6 shows the foreign-born share in various agricultural and related occupations. In 2018, there were more than 700,000 immigrants in the agricultural and food or meat processing jobs. This doesn’t include the more than 200,000 foreign workers admitted to farms as H‑2A guest workers.

Other Production of Supplies

Beyond food, immigrants are also heavily involved in production of other supplies. More than 1 million immigrants worked in the production jobs listed in Figure 7. In particular, one in five paper goods machine operators were immigrants in 2018. These jobs include toilet paper, which has faced unprecedented demand in recent weeks.

Obviously, native-born Americans are still the majority of most occupations in the United States, but immigrants play an important and disproportionate role in many of the occupations that the country is relying upon to get through this tough period. Given the important roles that immigrants are playing, the country should recognize the value of immigration more today than perhaps at any other time in its history.