Epidemics

Just Send the Checks

|The Volokh Conspiracy |

I am a libertarian. I'm generally supportive of a very limited government that performs a few necessary functions. Redistributing wealth and bailing out folks from their own misadventures are not among those necessary functions of a limited government. If the government is going to provide a social safety net, it should try to design it so that it does not incentivize unproductive behavior and does not waste public resources.

Those considerations do not apply to the current debate over federal appropriations to respond to the COVID-19 pandemic. The government should just send the checks. Quickly and with minimal red tape. Means testing and complex fade outs are not what is useful in the moment. The immediate crisis calls for relief, plain and simple.

It is certainly the case that some on the left want to use the present moment to launch expansive new social programs. Those debates can wait until another day, and politicians on the left are doing no one any favors by trying to exploit the crisis by tying aid to a host of onerous restrictions or attempting to erect new permanent programs. Crises are often exploited to expand the state, and we should be vigilant in resisting such efforts.

Likewise, there are those on the right who have fallen into familiar routines of resisting any government assistance as a hand-out, packaging government assistance as a tax cut, or tying government assistance to their own favored set of conditions and exceptions. If we were discussing a new permanent social program, then such design details would matter a great deal and should be central to the debate, but we are not.

In the present moment, the government itself has ordered businesses to stop operating. The global pandemic has brought economic activity to a standstill in ways that could not have been anticipated or adequately planned for by responsible private actors. With good reason, the government has disrupted people's livelihoods and restricted individual activity for the sake of the common good. Even if we were to think the government has been misguided in some of the steps it has taken, the fact remains that the government has taken steps that have unavoidably done substantial economic damage.

In such circumstances, the government should compensate individuals for the damage it has wrought and relieve individuals from the unforeseen burdens that they have been asked to assume. What individuals earned last year has no bearing on what their current needs are given the government-ordered lockdown. The more complex and burdensome the government makes any financial assistance that it offers, the less effective it will be in mitigating the economic costs of the pandemic and relieving people of their current suffering from the effort to contain the pandemic. The more complex the policy the government attempts to design, the longer it will take to reach agreement on what to do, the more difficult and time-consuming the implementation will be, and the greater the uncertainty and economic disruption that the government will be creating. The more complex and nuanced the policy the government attempts to design, the more room there will be special-interest favoritism and rent-seeking cronyism.

The government's current efforts to lockdown social and economic activity in order to stem the spread of the disease will necessarily rely heavily on voluntary compliance. The state might be able to effectively quarantine some individuals or isolated areas, but it cannot for any extended period of time shut down the country. People will voluntarily assume some individual burdens for the collective good if the necessity of doing so is clearly explained and those burdens are not too onerous. The government cannot expect people to assume those burdens forever and cannot expect them to take truly heroic actions. The government needs an exit strategy from the current policy of containment, and that will eventually require extensive testing, tracking and individual quarantine. In the meantime, the government needs to minimize the damage and maximize the efficacy of the current containment strategy, and that requires relieving individuals from immediate financial uncertainty.

The government has instantly thrown millions of people out of work in what was previously a full-employment economy. There will be unavoidable economic consequences to that, and the government can only take steps to mitigate those consequences. It should, however, act as quickly to provide financial support for those adversely affected by the societal lockdown as it has to impose that lockdown. If the government had been more fiscally responsible in the past, we would be in a better position to take the necessary steps now. But we cannot fix past mistakes by closing our eyes to current needs.

Even a libertarian should support a simple, temporary program of massive relief to be immediately phased out as soon as the crisis has passed so as to collectivize the hardship of fighting this common foe and insure as smooth a transition as possible to the post-epidemic situation.

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  1. If I get a check, it’s going straight to a local food bank, homeless shelter, etc., following the ones already sent.

    1. I apparently will receive no check, but your comment has inclined me to follow your lead nonetheless. Thank you.

  2. Here’s an idea.

    Absent a vaccine, the government could pay healthy individuals to get infected in a controlled setting. “Corona colonies” could be set up in school gymnasiums, where infection and recovery can take place.

    One way or another, there will be an inevitable wave of infections over the population, and this may be the best way to spare the elderly and impaired from that impact.

    1. Completely agree and have for a while now. Young, healthy people who are willing should get infected as soon as possible. We currently have the capacity to treat the few of them who will get sick and need medical care. Otherwise, it will go a long way towards developing herd immunity.

      1. First, some will almost surely die. That’s a sacrifice I don’t think we have the stomach to ask for.

        Second, there are lots of young people, I’m not sure even their lower rate of serious infection within the larger absolute number would be within the capacity for us to deal with.

        1. Not only do we have the stomach for it, we have done exactly this for years.

          Some still die every year from measles and other “childhood” diseases. Yet, until this panic, responsible parents regularly held “measles parties” so their kids could catch the disease and get over it while they are young.

          And given the disease patterns so far, the rate of infections needing hospitalization among the young is approximately zero (ignoring those who have pre-existing conditions which would cause them to self-select out of the program in the first place).

          1. Ah yes – the “conservative” answer to every problem. Send young people to die.

            I can’t find one word you’ve said that is remotely true. And the sad part is idiots like you are in charge of the executive branch.

            1. Well, that’s one way to look at it. The sane way to look at it, though, is to recognize that risk is unavoidable and that therefore risks should be taken when the consequences are as controllable as possible.

              Much like this latest virus, measles when you are young is a relatively minor disease with a very small (though non-zero) risk of death but a very, very serious disease if you catch it when you are older. Yes, when my son caught measles I deliberately put him in proximity with his little brother. And, yes, we invited the neighbor kids over, too. (With full disclosure and voluntary participation by their parents.) It was and remains the responsible thing to do.

              1. “It was and remains the responsible thing to do.”

                I agree with that – if there wasn’t a vaccine. But I’m curious why you would have kids contract the actual disease when a vaccine is available?

            2. Have any better ideas? We need herd immunity, period. We can get it by people randomly getting it and causing massive economic harm, or we can give it to people who are willing to take the risk and have the best chance of surviving.

              I’m among the young people who would volunteer. I’m an under-40 year old woman who runs half marathons for fun. I’ll take my chances so that I can have immunity and not later, inadvertently transmit the virus to people who are twice my age and have a fraction of my lung capacity.

              1. The thing you’re missing is, that you’re solving the trolley problem in a way that the bulk of this country won’t. Perhaps the utilitarian outcome is going to be substantially worse, but for better or woese, that’s not the field we’re playing on.

                1. OK, but pointing out optimal strategies is still a good thing to do.

                  If I was a 30 year old nurse, doctor, cop, fireman, … I think I’d assume:

                  1)the nature of my job means I am very likely to get it eventually and…
                  2)therefore I’d rather get it now in sort-of-controlled conditions instead of later, when the outcome would not only be worse for me but worse for the flood of people who need me well and working then.

                  Also, your response seems to read like you missed the “people who are willing” part of Theo’s comment.

              2. theobromophile, there is a problem. Herd immunity, to be worth much, requires a substantial fraction of the population to become immune. Thus, your suggestion would—at a time when hospital capacity to take care of more-at-risk patients is essentially tapped out—add an additional flood of hospitalized young people to the mix.

                As care-giving capacity went critical—even assuming the younger hospitalized would rarely die—triage would set in, and to make room for the flood of younger patients, designate many older patients who could have been saved instead to be sidelined and die.

                Perhaps you were unaware that we are talking about a disease which is sometimes mild, but also, not infrequently, requires hospitalization of even younger patients. The current stats I am seeing on ages of hospitalized patients put younger patients in the range of 40% of the mix. That seems far too high to make your scheme practical in the context of an already-maxed-out healthcare system.

  3. “TEMPORARY program of massive relief to be immediately phased out … [emphasis added]”

    Yeah, right.

  4. I agree, send the checks. Furthermore, let’s err on the side of sending more to individuals and less to corporations.

    Former American Airlines CEO said Wednesday, “we can’t let all the major airlines go bankrupt.” Oh, no? But can we let any of them go bankrupt? How is it that after 10 years of bull market AAL has no capital or structure in place to survive for 2 or 3 months? It’s because they blew it all on buybacks and bonuses. If as an individual you failed to set aside an emergency fund when it would have been easy for you to do so, that would be rightly seen as poor planning with your finances.

    1. For once, we agree.

      Besides, the bankruptcy of an airline doesn’t make the airplanes disappear. The pilots, attendants, mechanics, etc. don’t drop dead. Ownership changes. It’s a hassle for a while, but it gets straightened out.

      1. Thumbs up. Probably, Bezos/Amazon would buy the assets and hire the employees and start an airline.

    2. And it’s not just money the airlines have been profligate with. They also recklessly squandered the supply of inches between seats.

  5. I completely agree.

    Complexity adds cost (time and money). Whatever money we may save by not sending a thousand bucks to a multi-millionaire will be more than offset by the additional costs of calculating the appropriate amount to send to three hundred million people, and then the cost of providing an appeals process for the same. The timing issue isn’t a small one: there are economic costs to people not being able to pay their bills or keep a roof over their heads.

    Someone more knowledgeable than I can comment, but it is my understanding that if you are setting up a means-tested entitlement, you generally are required to have an appeals process for those who are denied the entitlement. Fastest way around that is to just give everyone the same amount of money.

    If you truly feel like you don’t want another handout, allow states to count the payout against unemployment claims, with a dollar-for-dollar reduction (but not to go negative). Again, the same amount of money per person makes the calculation easy on the states.

    1. Me too.

      I do think it would be nice to set up a voluntary method for those who don’t need the money to put it back in the pool for redistribution to those who do.

  6. I heard an interesting approach yesterday — most businesses are required to have “continuity of business” insurance which (for some reason) is not being honored here.

    Well, instead of litigating this, let’s have the government offer a deal where it partially indemnifies the insurance companies and they pay part (but not all) of each claim. That deals with the coming April 1st deadline — otherwise, the whole house of cards is going to collapse.

    1. 1. Businesses are not required to have ‘business interruption’ insurance.
      2. Of those businesses that choose to buy business interruption insurance, the amounts of coverage those business buy varies widely.
      3. Businesses also get to choose what risks they want to insure. In almost all cases, businesses choose contracts which exclude force majeure risks (acts of God). Those are considered so random as to be uninsurable. The premium the company’d have to charge would be so high that no one would pay it.
      4. Whether or not an epidemic counts as a force majeure depends on the precise wording of your contract.
      5. All insurance is governed by that contract. If the contents of that contract are a surprise, you have no one to blame but yourself.

  7. “Those considerations do not apply to the current debate over federal appropriations to respond to the COVID-19 pandemic. The government should just send the checks.”

    “In the present moment, the government itself has ordered businesses to stop operating.”

    My understanding is that it is mostly state governments that have “ordered businesses to stop operating.” If that’s the case, and under the author’s logic, shouldn’t it be state governments that “just send the checks”?

    1. They can’t borrow/print money the way the feds can. They could never spend enough in the short term.

  8. What I like about this is that it’s less stimulative and more palliative – what government should to in times like this.

  9. re: “Those considerations do not apply to the current debate…”

    Why the hell not? If government gets a free pass any time it chooses to declare an emergency, then our protections are meaningless. If anything, government during an emergency is more likely to do something stupid and self-destructive. It is a time for more scrutiny, not less. Panic is a crappy reason to do anything. And there is no reason those checks have to be sent out so urgently that we can’t debate whether they are a good idea or, if they are, to do it in a way that minimizes the potential for abuse.

    1. The “Why the hell not?” is that there is no moral hazard here. No one is creating a pandemic to get a UBI, unlike banks which absolutely will take stupid risks if you bail them out when the stupid risks turn out badly

    2. Yeah. Rand Paul feebly suggested that assistance to individuals should be through the unemployment system – why send thousands of dollars to people who dont even need it and are still working full time? He’s absolutely right, as always. But the need to win politics and to prop up the baby boomers outweighs all of that. One day there will be a reckoning.

  10. Send the checks, but make sure ppl know this isn’t some wealth redistribution nonsense. Consider it a return of taxes and lower the rates. Get our money out of govt and scale back the size and scope of govt.

    1. Man, it is hard to be a libertarian these days.

      Good luck with that branding idea.

    2. Increase the debt by trillions and lower the rates? Sure, that will work out

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