Paul Sancya/AP Photo
The economic toll of the coronavirus crisis on small businesses is seen in a shop window in Grosse Pointe Woods, Michigan, April 2, 2020.
The Dow went up over 5 percent on Monday, virus cases seem to be peaking in some countries, and prognosticators are already saying the worst could be over for the U.S. economy soon.
Dream on. First, on the public-health front, the U.S. has handled this crisis more ineptly and chaotically than any other nation. It will take months, not weeks, before the virus seriously subsides. There could very well be reductions in cases by summer, followed by new upsurges in the fall, as happened with the 1918 flu pandemic.
Epidemiologists use the concept “herd immunity.” That’s the point at which the virus peters out because it has run out of creatures to infect. Herd immunity typically kicks in when about half the population has been infected, and has immunity.
If we had serious leadership, government would plan to order about 100 million test kits, so that a large sample of the population could be tested to determine whether they had acquired antibodies. Those with antibodies could go back to work.
In the meantime, the idea of a quick economic recovery is a fantasy. Financial markets are functioning again only because the Fed has advanced them trillions of dollars of life support.
But the aid for ordinary Americans in the CARES legislation is bottled up. The SBA Paycheck Protection Program is a fiasco.
McConnell and Pelosi are already talking about raising the total amount of small-business aid from $349 billion to maybe twice that. But the real problem is the way the program is run—through reluctant private banks. Government needs to put this money out directly.
Similarly, the unemployment compensation system is not equipped to handle anything like the new volume of applications. I’ve urged that government hire enough new people from the ranks of the newly unemployed to staff up these agencies.
In the meantime, total economic output keeps collapsing as people lose jobs and businesses shut down. Only a few weeks ago, chief economists of the largest banks were projecting a short recession that could be over by summer. These people are paid several times my salary to be idiots.
Recovery will take a long time—and a lot longer if government doesn’t get its act together.
