'The Fear, the Panic, Is a Bigger Problem Than the Virus,' Says New York's Governor

The "panic" Andrew Cuomo has in mind is a rational response to the threat of an economically ruinous government overreaction.

"The fear, the panic, is a bigger problem than the virus," says New York Gov. Andrew Cuomo, who is resisting calls for "shelter in place" orders as a way of curtailing the COVID-19 epidemic. Telling New Yorkers they must not leave their homes "scares people," he told The New York Times yesterday, and he will not approve such edicts in New York City or elsewhere. "That is not going to happen," he promised, contradicting warnings to that effect from New York City Mayor Bill de Blasio.

The "panic" Cuomo has in mind is actually a rational response to the threat of a disproportionate, economically ruinous government reaction to COVID-19. "Why the fear, why the panic?" he said. "Because you watch things like that all day….Somebody says something, and then it's on the screen right away. 'Oh my God, I'm going to be locked in my home. I better go to the store and buy stuff.'"

That reaction is not only understandable but perfectly reasonable when state and local governments across the country are ordering businesses to close and telling millions of people they must stay at home except for "essential" purposes, when the mayor of New York City is threatening a similar lockdown, when prominent legal scholars are urging a nationwide lockdown and a suspension of habeas corpus rights, and when doomsayers are suggesting that such measures need to be maintained for a year or more. Is it possible that the politicians are the ones who are panicking, while the people subject to their whims are simply trying to deal with the fallout as best they can?

As NYU law professor Richard Epstein points out in his recent interview with Nick Gillespie, these extreme measures are motivated by worst-case scenarios that do not take into account adaptive behavior or the natural attenuation of viral epidemics. John Ioannidis, an epidemiologist and biostatistician at Stanford University, notes that governments are imposing "draconian countermeasures" based on data that are "utterly unreliable." Estimates of COVID-19's case fatality rate (CFR), ranging from 1 percent to more than 3 percent, are "meaningless," he says, because they are systematically biased by unrepresentative samples that include only people with symptoms severe enough to seek testing or medical attention.

Based on data from the Diamond Princess cruise ship—"the one situation where an entire, closed population was tested"—Ioannidis argues that "reasonable estimates for the case fatality ratio in the general U.S. population vary from 0.05% to 1%." He notes that "a population-wide case fatality rate of 0.05% is lower than [the CFR for] seasonal influenza." He warns that "if that is the true rate, locking down the world with potentially tremendous social and financial consequences may be totally irrational."

In the face of all that uncertainty, public officials may imagine they are erring on the side of caution. But that is true only if you ignore the negative impact of aggressive interventions. Some economists say those restrictions could lead to a downturn as bad as or worse than the Great Recession of 2008–09, which cost the United States an estimated $22 trillion—and that is without assuming even more extreme measures such as a national "shelter in place" order. It is hard to see how a loss of that magnitude can be rationally justified, even if you accept the worst-case scenario sketched by the U.S. Centers for Disease Control and Prevention.

COVID-19 itself may have serious economic consequences. But the virus is not shutting down workplaces, disrupting supply lines, driving people out of business, depriving people of the jobs they need to get by, and confining them to their homes. The government is doing that.

Today China, where the epidemic emerged three months ago, for the first time reported no new local infections. Does that development mean that the severe economic price China paid for its sweeping restrictions on movement was worth it, and that other countries should follow its example? Or does it mean that the epidemic can be expected to peter out in the United States after a few months, regardless of whether the government locks down the country?

While governments in South Korea, Singapore, Taiwan, and Hong Kong have not imposed restrictions as onerous as China's, they nevertheless seem to have been successful at curtailing infections. In South Korea, which has a robust testing program strikingly different from the government-engineered fiasco in the United States, the number of new cases has been declining since early March.

While the benefits of aggressive COVID-19 control measures are speculative, the costs are certain. Americans are suffering right now, and will continue to suffer, because of the way politicians have decided to respond. It may be impossible for everyone to be "made whole," as Bernie Sanders promised during this week's Democratic presidential debate. But the government has a duty to try, since it is inflicting this pain in the name of protecting the general public. Whatever relief measures Congress approves should focus on compensating people for the damage caused by these policies.