Georgia Is Right To Reopen, but Will That Actually Restart Its Economy?

The kill switch to the economy was easy to find. The "on" button may be impossible to locate.


The societal lockdown due to the novel coronavirus has shown that the U.S. economy definitely has a kill switch. As Georgia begins to lift its restrictions on "non-essential" businesses tomorrow, we're going to find out whether the economy has anything resembling an on switch.

Over the past five weeks, 26.5 million Americans have filed for unemployment, suggesting a real unemployment rate of nearly 21 percent, the highest since 1934. By the first week of April, according to Moody's Analytics, "U.S. daily output has fallen roughly 29 percent, compared with the first week of March, just before the spate of closures" caused by shelter-in-place orders affecting "8 in 10 U.S. counties."

If the kill switch was easy to find, it's going to be tough as hell to restart the economy or even keep it staggering along at its current anemic pace. A new study from economists Jonathan Dingel and Brent Neiman at the University of Chicago finds that only about "37 percent of U.S. jobs can plausibly be performed at home," helping to explain the economic wreckage caused by nearly universal lockdowns. Nearly two-thirds of workers are already out of luck, and that's before slack demand starts to threaten the bottom lines of companies employing those lucky few who can work from home.

Which brings us to the controversial decision of Georgia Gov. Brian Kemp (R) to reopen parts of his state's economy. His decision has been criticized by both medical experts and President Donald Trump, but effective tomorrow,

Employees at "gyms, fitness centers, bowling alleys, body art studios," as well as "barbers, cosmetologists, hair designers, nail care artists, estheticians, their respective schools & massage therapists," will be allowed to return to work…but will have to operate under restrictions.

And come Monday, "sit-down restaurants, theaters, and private social clubs will be allowed to reopen," also subject to social-distancing and other restrictions.

This is, I think, not simply an eminently defensible decision from a libertarian position, but a good one. Without forcing anyone to do anything they don't want to, it transfers power to individual businesses, workers, and residents and gives them more choices to make their own decisions. Some businesses in Georgia will reopen and others won't. Hospitals and other treatment centers have had time and experience to prepare for crushes that have mostly failed to come to pass, in no small part due to lockdown orders. In late March, for instance, Gov. Andrew Cuomo said that his state of New York, the epicenter of the pandemic in the United States, would need as many as 40,000 ventilators while having only 12,000 on hand. By April 17, reports National Review's Kyle Smith, Cuomo said he "has so many ventilators he is giving them away: On April 15, he said he was sending 100 of them to Michigan and 50 to Maryland. On April 16, he announced he was sending 100 to New Jersey."

The rush to mandatory lockdowns—as opposed to calls for voluntary forms of social distancing and other measures to reduce the rate and spread of infection—that took place a little more than a month ago obscured serious discussions about their efficacy. "Our historical experience with mandatory quarantines and mass quarantines and cordons is just not good, it's not effective," a senior scholar at Johns Hopkins University told STAT just before San Francisco announced its early shelter-in-place order in mid-March. If and when Georgia, which has a relatively low death rate of 8 per 100,000 residents, or other states that start to reopen their economies are hit by waves of new infections that require hospitalization, they will be in a position to respond.

But even as Georgia moves to lift restrictions on "non-essential" businesses tomorrow, it's unclear how employers, employees, and customers are likely to act. The example of movie theaters illustrates the difficult road ahead. Variety reports that "exhibition insiders stress that it would be nearly impossible for most major chains to start business back up by next week." That's because they have been shuttered for more than a month, necessitating cleaning, prep, and retraining of workers. Venues will have to abide by rules limiting gathering to 10 or fewer people while observing social-distancing rules that will limit the ability of theaters to earn back basic operating expenses. And there's also a question of what movies will be shown, since most studios have themselves shut down or gone to a skeleton crew.

Hollywood studios aren't releasing new movies for at least a month, when Universal's comedy The King of Staten Island opens on June 19 and Warner Bros.' sci-fi thriller Tenet debuts on July 17. Almost all other films scheduled to release this summer have been shelved or postponed, except for Disney's live-action Mulan on July 24 and Warner Bros.' comic book adventure Wonder Woman 1984 on Aug. 14. That means even if exhibitors are able to turn the lights back on in some venues, there's not a lot of compelling product to offer. They would likely be forced to screen library titles and a few lower-budget indies.

Even more daunting is the unsettled issue of legal liability. It's unclear whether theaters (and other businesses) will be held responsible for illnesses claimed by either customers or employees.

Majorities of Americans say they will not feel comfortable eating out, going to malls, museums, concerts, and even church services for at least three months. Those attitudes are likely to change dramatically if and when deaths abate or surge, or when a vaccine is announced. But in the near term, they suggest that even when a state or city lifts its bans, the economy may well stay dormant for a long time to come. Although the public health dimension of the coronavirus pandemic has dominated the discussion so far, as time goes on, what analysts at The Foundation for Research on Equal Opportunity call "the severe human cost of a prolonged economic shutdown" will come to occupy more and more of our attention.