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If the government wants to save lives and resume the economy, the way is to increase coronavirus testing and the production of protective equipment, so that people can go back to work even if the virus is circulating.
That is the recommendation of the economist Paul Romer, Nobel Prize for Economics in 2018.
In an interview with BBC Brazil, Romer, a professor at New York University, said that conventional economic responses to combat a recession they won’t work until people can safely return to work.
“Is a waste of resources trying to get people back to work if they haven’t found a way to make it safe to go back to work, “says Romer.
He adds that the crisis caused by the pandemic may be worse than the Great Depression “if governments don’t act quickly to make sure people get back to work safely.”
The American economist criticizes the possibility of creating “immunity passports”, an option that has been considered in countries such as Brazil and the United Kingdom, to allow the circulation of people who have recovered from covid-19.
This measure would lead, according to him, to many infections and deaths.
“This policy makes no sense, unless you want the majority of the people in your economy to catch it, you understand that some of them they will die, and then after that, he will let the recovering people go back to work. “
Romer insists on the need for massive coronavirus testing.
Romer, who was chief economist at the World Bank, says it’s our “moral obligation” protect essential workers who are exposing themselves by working as nurses, doctors, police and drivers.
“We must stop all other productive activities and dedicate all our resources to the production of protective equipment that these workers need to be safe when they interact with the public. We are not fighting the enough to produce the equipment they need, “he says.
Here are the main parts of the interview.
You say epidemiologists should focus on your area and point out the amount of testing necessary to return to normal. What do you think they are doing wrong and in what scenario do you think it is possible to return to activities?
If we can test more people that will save lives and help us get our economy back. Some public officials responsible for health and some epidemiologists say that it is not feasible to diagnose more people, that we would never be able to do that.
They want to recommend other policies to contain the pandemic, and that is fine. But they don’t have the knowledge to rule out evidence-based policy arguing that “it doesn’t matter if that’s going to contain the pandemic, since we will never adopt it, so why think about it.”
For Romer, it is a priority to increase efforts in the production of personal protective equipment.
Do you think that soon there will be capacity to do many tests? Is it feasible?
If we diagnose people and isolate those infected, we can, at the same time, contain the pandemic and protect workers who are already working (in essential activities), in addition to learning how we can get more people back to work.
And who can determine how much evidence is needed and say if it is feasible?
It’s a very simple calculation: A good rate to work for right now is the ability to diagnose the entire economy every two weeks. To get the number of tests needed per day in this scenario, divide the population by 14.
Romer says protecting essential workers, such as those who work in hospitals, is essential.
Countries such as the United Kingdom and Brazil have raised the possibility to create “immunity passports”. Do you agree?
This policy makes no sense, unless you want most of the people in your economy to catch it, understand that some of them will die, and then after that, you will let the recovering people go back to work. That policy will lead to many infections and many deaths..
My proposal is not to do tests to see who recovered from the disease. I mean is to do tests to see who is infected. If you are infected, you must be isolated. That is the difference between the antibody test, which can tell if the person has recovered; and the virus test, which checks if someone is sick or infected.
Can the solution to this crisis be in “printing money”, as some economists have suggested?
Conventional economic responses to a recession will not work until people can safely return to work.
It is a waste of resources trying to get people back to work if no way has been found to make it safe for them to return to work.
Romer argues that proposals like “immunity passports” are meaningless.
In the production of personal protective equipment, is it the role of the government to give some kind of stimulus?
It is very important that the government make personal protective equipment available as widely as possible and at low cost.
This is the reason: there are people who are already going to work – nurses, doctors, police, ambulance drivers – and are exposed to the risk of infection and death.
If we ask them to do these jobs for us, it is our responsibility and moral obligation to protect them in the best possible way.
For this, we must stop all other productive activities and dedicate all our resources to the production of protective equipment that these workers need to be safe when they interact with the public.
We are not trying hard enough to produce the equipment they need.
Another thing that we are not doing is examining these workers so that if a police officer is infected but without symptoms we can make sure that they do not go to work and infect many other officers.
We need to provide equipment for the protection of essential workers and test them frequently, perhaps every day, to ensure that they are not passed on to their colleagues.
Many people must continue working despite restrictions.
And how could the government stimulate this production, which you say must be large and cheap?
If the government allocated the money to the production of protective equipment, if the government dedicated the money to expanding our testing capacity, we would have more protective equipment and we would have more tests.
It is the supply curve: the more you are willing to pay, the more you will receive. If we do not pay more, we will not receive more, and this means that we will not be able to protect our essential workers.
People are charged a lot to save in difficult times. But we see many large companies that, with two months of crisis, turn to the government. Should those companies receive state aid? And the big companies that recently adopted robust share buyback programs, should taxpayers save them too?
The first step is: if a company needs more resources to survive, it must sell more shares. The way a company gets more funds is by selling shares. Instead of buying back shares, which is a way to get rid of money, the company needs to sell shares.
So the first thing the government should say is: companies that were disposing of all their money are not loaned until they do otherwise and start selling more shares to get more money.
Is there a parallel between this crisis and the Great Depression?
I think it may be as bad as the Great Depression. If governments do not act quickly to ensure that people can return to work safely, we could have an economic crisis worse than the Great Depression.
Romer cautions that the coronavirus crisis could be as severe as the Great Depression of 1930.
Can this crisis change inequality between countries and within countries?
All of these questions are important, but they are not as urgent as the doubts we face about how to save lives, especially the lives of essential workers, who die even as we apply our policy of quarantine and social isolation.
Is a possible change in the level of international trade after the pandemic also a secondary question?
I insist that we simply cannot focus on any other issues until we focus on this issue of spending money on life-saving things: protective gear and testing.
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