In many places in the U.S., it's neither safe nor legal to conduct business right now due to the threat posed by the coronavirus pandemic (for more on this, see Editor in Chief Katherine Mangu-Ward's "The Seen and the Unseen of COVID-19"). But the damage done by the virus has been made worse by an incompetent government response, impositions on people's civil liberties, and an ongoing trade war with China. What follows is Reason's explanation of what went wrong and which rules, regulations, and parts of life people are getting the opportunity to rethink.
Red Tape Stymied Testing and Made the Coronavirus Pandemic Worse
The United States is home to the most innovative biotech companies and university research laboratories in the world. That should have provided us with a huge advantage with respect to detecting and monitoring emerging cases of COVID-19 caused by the coronavirus pandemic. Public health officials had the opportunity to slow, if not contain, the outbreak: By tracing the contacts of diagnosed people and quarantining those who in turn tested positive, they could have severed the person-to-person chains of disease transmission.
South Korea demonstrates that such a campaign can work. While both countries detected their first cases of COVID-19 on January 20, the trajectories in the U.S. and South Korea have since sharply diverged. By the beginning of March, South Korea had "flattened the curve"—that is, substantially reduced the number of people being diagnosed each day with coronavirus infections—whereas the United States was still struggling to do so when this article went to press six weeks later.
South Korean health officials met on January 27 with private biomedical companies, urging them to develop coronavirus diagnostic tests and assuring them of speedy regulatory approval. The first commercial test was approved in that country a week later. South Korea's now-famous drive-through testing sites were soon testing tens of thousands for the virus. By the first week in March, the country had tested more than 150,000 people, compared to just 2,150 in the United States. Testing and contact tracing helped daily diagnosed cases in South Korea peak at 909 on February 29.
In stark contrast, officials at the U.S. Food and Drug Administration (FDA) and the Centers for Disease Control and Prevention (CDC) stymied private and academic development of diagnostic tests. Much to the contrary, the CDC required that public health officials use only a diagnostic test designed by the agency. That test—released on February 5—turned out to be contaminated by a reagent that made it impossible for outside labs to tell if the virus was present in a sample or not. The CDC's insistence on top-down centralized testing meant there were no available alternatives, which greatly slowed down disease detection just as the infection rate was accelerating.
This massive bureaucratic failure is a big part of why a larger proportion of Americans than of South Koreans will suffer and die from the viral illness.
On February 29, the FDA finally moved to allow academic labs and private companies to develop and deploy their own diagnostic tests. But in the meantime, the Trump administration had begun lying about the availability of tests. On March 2, FDA Commissioner Stephen Hahn declared that "by the end of this week, close to 1 million tests will be able to be performed." During a tour of CDC headquarters on March 6, President Donald Trump asserted that "anyone who wants a test can get a test." In fact, it took until the end of March for 1 million tests to be administered in the United States.
Once the FDA got out of the way, diagnostics companies LabCorp and Quest rolled out tests almost immediately. Many academic labs followed suit. Unfortunately, pent-up demand led to significant delays in reporting results.
By the end of March, companies such as Abbott Laboratories had introduced tests that report results in less than 15 minutes. But after four startups began offering at-home testing, promising to further improve access, an obstinate FDA shut them down.
The FDA has finally managed to smooth the way for private companies to begin introducing blood tests for antibodies to the virus produced by people's immune systems. General population screening using these tests will reveal undetected cases, providing a better idea of the actual extent of the pandemic. The tests will also identify people who have recovered and probably can go safely back to their lives beyond quarantine.
In the absence of effective treatments for COVID-19, testing and contact tracing on a massive scale will be vital to restoring economic activity—assuming the epidemic is beaten back, in the meantime, by social distancing. But due to red tape, the coronavirus outbreak in the U.S. has turned out to be far more deadly than it could, and should, have been.
Beware 'Temporary' Emergency Restrictions on Liberty
State and local officials have taken sweeping emergency actions to combat the spread of COVID-19, including shelter-in-place orders, bans on large gatherings, and widespread business closures. Such measures may well fall under the traditional police powers of the states to regulate actions on behalf of public health, safety, and welfare. But even the most necessary of emergency actions may still pose a significant risk to liberty.
The U.S. experience during World War I offers a cautionary tale about how government restrictions passed in the heat of a national emergency can linger for years afterward—a lesson that must be quickly learned if we are to avoid repeating some grave mistakes in 2020.
When President Woodrow Wilson took the nation to war against Germany in 1917, he did so in the name of making the world safe for democracy. But the president also targeted certain enemies much closer to home. "There are citizens of the United States, I blush to admit," Wilson said at the time, "who have poured the poison of disloyalty into the very arteries of our national life….The hand of our power should close over them at once."
At Wilson's urging, Congress passed the Espionage Act of 1917, a notorious law that effectively criminalized most forms of anti-war speech. Among those snared in its net was the left-wing leader Eugene Debs, who was arrested in 1918 and sentenced to 10 years in federal prison. His crime had been to exercise his First Amendment rights by giving a mildly anti-war speech at an afternoon picnic. In 1919, the same year that the U.S. government signed the peace treaty that formally ended World War I, the U.S. Supreme Court upheld Debs' conviction for speaking out against the war. Debs would rot in federal prison until he was pardoned by President Warren G. Harding in 1921. As for the Espionage Act, while it has been amended several times over the years, it remains on the books.
State governments imposed various restrictions of their own. Nebraska's legislature responded to America's entry into the Great War by cracking down on the civil liberties of its German immigrant communities. Most notably, the state banned both public and private school teachers from instructing children in a foreign language. That law was aimed directly at the state's extensive system of Lutheran parochial schools, where teachers and students commonly spoke German.
Robert Meyer, who taught the Bible in German at the Zion Evangelical Lutheran Parochial School, sued the state for violating his constitutional rights. But the Nebraska Supreme Court waved his objections away. "The salutary purpose of the statute is clear," that court said. "The legislature had seen the baleful effects of permitting foreigners, who had taken residence in this country, to rear and educate their children in the language of their native land."
The U.S. Supreme Court reversed that ruling in 1923. Thankfully, the rights of Meyer and others were ultimately restored. But the offending restriction was not eliminated until well after the war was over.
We should all be on guard to make sure that temporary COVID-19 restrictions—as necessary as they may be—remain temporary.
The Trade War Made Us Less Prepared To Handle This Crisis
President Donald Trump's trade war with China has been costly for Americans—and the COVID-19 outbreak reveals that we might be paying with more than just our money.
What's worse, the White House knew the risk it was running. "These products are essential to protecting health care providers and their patients every single day," Matt Rowan, president of the Health Industry Distributors Association, told the Office of the U.S. Trade Representative in August 2018. At the time, the office was considering a wide-ranging set of new tariffs targeting hundreds of billions of dollars' worth of annual imports from China. Among the products that would be hit with those higher duties were thermometers, breathing masks, hand sanitizer, patient monitors, and medical-grade personal protective equipment, including masks and sterile gloves. Those products "are a critical component of our nation's response to public health emergencies," Rowan warned.
Other medical professionals at the hearing similarly pleaded for the Trump administration to drop the proposed tariffs. Alternative suppliers could not be found quickly, they said, in no small part because Food and Drug Administration (FDA) approval was required before other sources could be used. The likely result of Trump's proposed tariffs would be higher prices for medical gear and decreased availability of critical supplies.
The warnings went unheeded. The tariffs did what tariffs do.
In 2017, the last full year before Trump's tariffs were imposed, more than a quarter of all medical equipment imported to the U.S. came from China. By 2019, imports of Chinese-made medical products had fallen by 16 percent, according to an analysis from the Peterson Institute for International Economics (PIIE), a trade-focused think tank. While U.S. imports from the rest of the world increased during the same period, according to PIIE, the increase was not sufficient to offset the tariff-induced decline in imports from China. It's likely that hospitals drew down on existing inventories, hoping that the trade war would end before they had to restock.
"In many instances, Americans had no choice but to continue to buy from China, which meant paying an additional cost due to the tariff," says Chad Bown, a senior fellow at the think tank. "Medical equipment cannot instantaneously sprout up at another plant in some other country."
Trump's so-called "phase one" trade deal with China, signed in December, did not lift tariffs on medical gear. But when the coronavirus outbreak reached America, the White House finally took action. On March 10, the administration quietly dropped its tariffs on Chinese-made medical equipment in a too-little, too-late effort to allow American hospitals to stock up as the coronavirus pandemic took hold. Later in the month, the White House announced it would postpone all other tariff payments for at least three months as a form of economic stimulus.
Together, those two actions are an admission of guilt. They demonstrate that the administration is well aware that tariffs are paid by Americans—and that they harmed America's preparation for a pandemic. Trump's reversals, says Bown, serve as "an implicit indictment of his administration's own policy."
Recall that officials were warned about exactly this possibility. Their hubris and economic illiteracy may well have led to the deaths of innocent Americans.
"It reveals the foolishness of the administration's shoot-first-and-ask-questions-later approach" to the trade war, says Scott Lincicome, a trade lawyer and scholar with the Cato Institute. "There was clearly no thought given to how this would actually work in practice, and now you're seeing the consequences."
COVID-19 Makes the Case for Deregulation Everywhere You Look
It didn't take long after the coronavirus crisis began for the smart set to write off small-government types in articles with such snarky headlines as "There Are No Libertarians in a Pandemic." By now, it seems more correct to believe there are only libertarians in a pandemic, including many public officials, who suddenly find themselves willing and able to waive all sorts of ostensibly important rules and procedures in the name of helping people out.
How else to explain the decision by the much-loathed and irrelevant-to-safety Transportation Security Administration (TSA) to allow family-sized jugs of hand sanitizer onto planes? The TSA isn't going full Milton Friedman—it's reminding visitors to its website "that all other liquids, gels and aerosols brought to a checkpoint continue to be allowed at the limit of 3.4 ounces or 100 milliliters carried in a one quart-size bag." But it's a start.
Something similar is going on in Massachusetts, a state well-known for high levels of regulation, including in the medical sector. Expecting a crush in health care needs due the coronavirus, Republican Gov. Charlie Baker has seen the light and agreed to streamline the Bay State's recognition of "nurses and other medical professionals" who are registered in other parts of the United States, something that 34 states do on a regular basis.
As Walter Olson of the Cato Institute observes, that move "should help get medical professionals to where they are most needed, and it is one of many good ideas that should be kept on as policy after the pandemic emergency passes. After Superstorm Sandy in 2012, by contrast, when storm-ravaged ocean-side homeowners badly needed skilled labor to restore their premises to usable condition, local laws in places like Long Island forbade them to bring in skilled electricians even from other counties of New York, let alone other states."
The group Americans for Tax Reform has published a list of more than 170 regulations that have been suspended in response to the current crisis: Secretary of Health and Human Services Alex Azar has waived certain laws in order to facilitate "telehealth," or the use of videoconferencing and other technologies to allow doctors to see patients remotely; the Department of Education is making it easier for colleges and universities to move their classes online; cities are doing away with open-container restrictions and allowing home delivery of beer, wine, and spirits in places where it was previously prohibited; the Federal Emergency Management Agency belatedly permitted Puerto Rico and other U.S. territories to acquire personal protective equipment from sources outside the country; and on and on.
You can probably see where this is headed: If the policies above are worth tossing out in an emergency, maybe they ought to be sidelined during normal times too.
Situations like the 9/11 terrorist attacks and the coronavirus outbreak often open the door to naked power grabs whose terrible consequences stick around long after the events that inspired them. Governments rarely return power once they've amassed it. But if you listen carefully, you can hear them telling us which restrictions they realize can be safely tossed.
When the infection rates come down and life begins to get back to normal, it may be tempting just to go back to the way we were. Resist the temptation: Many of the rules we put up with every day are worth re-evaluating. And not only during an emergency.
The Coronavirus Stimulus Is a Crony Capitalist Dream
Elizabeth Nolan Brown
Crony capitalism triumphed as members of Congress voted in March on a massive COVID-19 response bill. The $2.3 trillion package was unanimously approved in the Senate before clearing the U.S. House of Representatives 419 to 6.
Getting the most attention in the new Coronavirus Aid, Relief, and Economic Security (CARES) Act is a stipulation that many Americans will be getting $1,200 apiece from Uncle Sam. People making less than $75,000 individually or $150,000 as a couple will receive the full amount, with prorated amounts available to single earners making up to $99,0000 and couples up to $198,000. Families with kids will get an additional $500 for every child 16 and under.
But the 880-page bill is also brimming with handouts for government-favored industries.
For airlines, the CARES Act includes a $25 billion grant plus $29 billion in loans and loan guarantees. Grant money is also available for agricultural companies, to the tune of $33.5 billion.
Government institutions—including some far removed from direct COVID-19 relief efforts—will also be getting cash infusions. For instance, the legislation includes $150 million for the National Endowment for the Arts and the National Endowment for the Humanities. The CARES Act also inexplicably provides $10.5 billion for the Department of Defense, though only $1.5 billion of that is directed at coronavirus-related National Guard deployment, and just $415 million is for vaccine and antiviral medicine research and development by the agency.
Rep. Justin Amash (I–Mich.), one of the few in Congress to vote against the CARES Act, rightly called it "corporate welfare" that "reflects government conceit. Only consumers, not politicians, can appropriately determine which companies deserve to succeed."
Amash supports payments to individual Americans in this time of crisis but opposes the carve-outs for favored industries. If the federal government is going to spend $2 trillion, "then the best way to do it, by far, is a direct cash transfer that otherwise keeps government out of the way," Amash tweeted.
The bill has been celebrated by many Democrats and Republicans as a measure to help working Americans and ordinary people in the face of the new coronavirus. But the corporatist bent means that ordinary people will be paying more in the long run for this "help."
The total cost of the measure leaves every American "on the hook for over $6,000 in debt for these 'investments,'" commented Libertarian Party Chairman Nicholas Sarwark on Twitter, "but it's the businesses that will receive the rewards." He called the measure a "socialist" bailout for "corporate cronies."
Rep. Thomas Massie (R–Ky.) strikes a similar theme. "When we were attacked at Pearl Harbor, did we come up with a $2 trillion stimulus package, or did we declare a war on our enemies?" he asked. "We declared war on our enemies. Why have we not declared war on this virus? Why is our first instinct to make sure that the rich people get to keep all their riches?"
While Government Dithered, Private Companies and Philanthropists Swung Into Action
Microsoft founder and philanthropist Bill Gates saw the pandemic coming. In a February 28 New England Journal of Medicine article, he warned that "COVID-19 has started behaving a lot like the once-in-a-century pathogen we've been worried about." He called for public health agencies across the board to take steps to slow the virus's spread. He argued for the importance of accelerating work on treatments and vaccines.
At the same time, the U.S. Food and Drug Administration (FDA) was slowly—so very slowly—swinging into action. On February 4, the agency formally acknowledged the public emergency and agreed that the situation called for a quicker-than-usual response to entities seeking emergency approval for new COVID-19 diagnostic tests. Nevertheless, it took the FDA almost a whole month to provide guidance on exactly how laboratories and commercial companies could accelerate that process.
By then, private-sector leaders were already putting plans in motion. The first confirmed case of COVID-19 in the United States was in January in Washington state, where Gates' philanthropic organization, the Bill and Melinda Gates Foundation, is based. On March 10, the Gates Foundation announced a partnership with MasterCard and Wellcome, a U.K.-based research charity, to commit $125 million to a "COVID-19 Therapeutics Accelerator" that hoped to speed up the response by "identifying, assessing, developing, and scaling-up treatments." The private response would turn out to be critical. A group of Seattle doctors had already had to defy the U.S. Centers for Disease Control and Prevention in order to implement the tests that caught the virus's arrival in America.
On the same day of the Gates Foundation announcement, the Kaiser Family Foundation, a nonprofit health policy think tank, put together a tracker showing how much private philanthropy was going into the worldwide response. The group calculated that at least $725 million had then been committed by private nonprofits, businesses, and foundations to aid in international relief efforts. Candid, a foundation that helps nonprofits and foundations connect to donors, calculated that $4.3 billion in grants had been funded by early April for coronavirus responses around the world.
Early on, much of the assistance was directed toward China. But as COVID-19 spread everywhere, so did private philanthropy and innovation. As hospitals and health providers ran out of face masks (thanks in part, again, to FDA regulations that made it hard to ramp up production in response to demand), businesses donated their unused stockpiles. Soon, the private sector was iterating novel solutions as well. Across the world, companies and crafters with access to 3D printers and sewing machines began designing and producing masks of their own.
The number of breathing devices at hospitals became one of the more dangerous chokepoints in the COVID-19 response, leading to rationing and difficult medical choices in areas with high concentrations of infections. Again, innovators went to work. In Italy, for example, volunteers reverse-engineered a respirator valve that was in short supply, began manufacturing it with a 3D printer, and donated a stock to local hospitals.
As the spread of COVID-19 shut down auto manufacturing in the United States, companies such as GM and Tesla stepped up to suggest repurposing some unused spaces in their plants to help produce more ventilators. While President Donald Trump was a big fan of this response, both logistical and bureaucratic barriers got in the way. Yet again, the FDA's slow response was a problem. It wasn't until March 23, when the FDA announced it was relaxing some guidelines that strictly regulated where, how, and with what materials ventilators could be manufactured, that this problem could even begin to be solved.
Meanwhile, the worldwide collapse of tourism due to the spread of COVID-19 left hotels and short-term rental services such as Airbnb bereft of customers. Some hotels near medical centers were converted into clinics. Others, like the Four Seasons Hotel in New York City, announced plans to let medical personnel responding to the pandemic stay there free of charge. Airbnb offered to waive its fees if its hosts would likewise volunteer to house medical personnel and aid workers responding to the crisis. The company claims to have gotten 20,000 such offers by the end of March.
Beyond the philanthropic response, the ability of citizens to abide by shelter-in-place or stay-at-home recommendations and continue to thrive is entirely due to private-sector responses. While some small restaurants have had to shut their doors, many others are surviving thanks to delivery services such as Grubhub, DoorDash, and Postmates. Mass runs on grocery stores cleared shelves of staples, but within a week America's truck drivers and warehouse workers had gone into overdrive to get things back to a certain level of normalcy. There continued to be shortages of some goods, but even amid a deadly pandemic, almost no one had to worry about starving. For those stuck without companionship, Pornhub even offered one-month premium subscriptions for free.
The colossal response from the private sector most certainly helped make it possible for greater numbers of people to work from home, spend less time interacting with others, and "flatten the curve" to reduce the spread of COVID-19. While the government was still trying to figure out its messaging and untangle its bureaucracy, countless individuals, businesses, and community groups were quickly adapting to solve problems on the ground.
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