Friday News Roundup — March 20, 2020
Pandemic Ripple Effects; Crisis Deregulation; Plus News You May Have Missed
Good Friday afternoon dear readers, we at CSPC hope that you all are weathering the COVID-19 quarantine as well as possible. Here at the Center, we have shifted to telework and continue to rework our biannual Fellows Conference as an all-virtual experience. We continue to meet with our partners in political reform, space policy, and global technological competition using video conferencing and phone calls. While we endeavor to continue our work with as little interruption as possible, we value the health and safety of our colleagues and partners above all else. We hope that as many people as possible will follow CDC guidelines to minimize the impact of this crisis on our society.
It is also worth mentioning that President Trump has invoked the Defense Production Act, originally used to ramp up war production at the start of the Korean conflict, to produce elevated numbers of masks and other disease prevention supplies. This move comes after urging from Congressional leaders such as Senator Chuck Schumer. The CDC and State Department have issued a Global Level 4 Health Advisory, urging all Americans not to travel abroad and to return home as soon as possible if already abroad.
In the face of the quarantine, one of the aspects of our work that can largely continue as normal is the Weekly News Roundup. Our apologies for the delay this Friday as we’ve parsed the latest details to the broad COVID-19 response — and adapt to working from home. In this week’s edition, Dan looks at the response to the combined crisis in both public health and the broader economy. Chris covers the rampant deregulation of certain sectors for the duration of the crisis, and whether such deregulation needs to be temporary. As always, we wrap up with news you may have missed, with Wyatt taking the lead.
And Now, the Response
Dan Mahaffee
The COVID-19 outbreak has become a global health, economic, and political crisis. The health crisis is clear. Look at any of the stories from hospitals in China, Italy, or Spain, and you see what toll the virus can take. China was able to stop Covid-19 through harsh and brutal clampdown quarantine measures that few western democracies could imitate, but now find themselves creeping toward.
As we address the impact of the disease and seek to slow its spread, the result is a dual demand and supply shock that has brought the international economy to a halt — roiling markets as investors move out of almost all types of assets seeking the “safety of cash.” A double-blow to the economy also comes from the oil price war between Saudi Arabia and Russia, which places the strategically and economically important U.S. energy sector in the crossfire.
In the coming weeks, as more tests are administered and the disease spreads — though hopefully at a slower rate due to social distancing measures — we will see both the epidemiological and economic impact in higher case numbers, tragic death, and then the job losses and bankruptcies.
It may seem heartless to combine the impact of the virus with the economic impact, but they are one in the same. The logistics networks and technology that underpin our consumer-driven economy will be redeployed and adapted to resource the health care response. At the same time, to slow the spread of the virus, broad swaths of the consumer service sector have ground to a halt. Entire industries — from massive airlines to mom-and-pop restaurants — and the people they employ face an uncertain future.
This brings about the need for political action. By contemporary standards, Congress is moving at lightning speed while the Trump Administration — never bound by conservative fiscal orthodoxy — is willing to do whatever it takes for the economy. If one were to say that the president’s desire to be re-elected led to a bungled initial response, then that same desire may be just what the nation needs to bring about bold stimulus.
It will also require reconsideration of future direct payments, tax cuts, loan guarantees, and other measures that will be on par, if not bigger, than the government intervention following the financial crisis. Treasury and the Fed will need well-resourced tools that can be applied to the economic situation as it evolves alongside the response to the virus. It may require government backstops and loan guarantees — or even direct, low-interest, lending from government to companies and individuals — all measures that were previously unimaginable.
That this massive expansion of government to address this economic crisis will be overseen by a president that harnessed a movement built on opposition to the past massive expansion of government to address the last economic crisis is not lost on us. There are also historical lessons to consider from that response.
The nature of the response can be informed from some of these historical lessons. Given that this will fall on millions of American workers first, the need for direct support to workers — rather than the perception, fair or unfair, of just “bailouts” for industries — is key to legitimizing the response. While means testing may seem a fairer way to distribute such payments, it will likely slow the response due to income verification. Better to have a sense that all Americans are helped by any direct aid so that it is not a political shibboleth down the road. At the same time, there will be bounds on how companies can use their government assistance, as the memories of executive bonuses and share buybacks still drive public anger. If anyone appears to be enriching themselves from this process, there will be public wrath, as some U.S. Senators are already aware.
Finally, there must also be a reckoning of how this will be paid for. It is time that the United States began to issue 50, or even 100 year debt. Multi-trillion dollar deficits are necessary for the economic response, but this must also be a reminder that we cannot continue this national profligacy. The debt we create now is a reminder of how we failed to reap years of plenty. Make no mistake, austerity in the face of this crisis will be a terrible economic mistake, and its political consequences will be even greater populism and growth of the fringe right and left — but the debt reckoning will drive much of the debate as this crisis goes on.
The debt will be just one of many reckonings that we will consider after the response. We will need to evaluate our own response to this outbreak. The Chinese Communist Party will need to be held to account for the suffering this outbreak has caused, first for the people of China, and now the world. Our assumptions about society and the economy and the myriad fragilities we tolerate for the sake of either tradition or efficiency are ready for re-evaluation. The global balance of power may be changing before our very eyes because of this crisis.
All are important things to consider, but ultimately moot. All that matters now is moving fast, thinking boldly, and rising to meet this combined challenge to public health and economic prosperity.
No Libertarians in a Pandemic?
Chris Condon
Those in favor of fiscal restraint and social liberalism are often the butt of jokes in the political realm. Yes, I’m talking about libertarians, the people you may have laughed at for voting Gary Johnson in 2016. While this group has mostly flown under the radar since then, Twitter pundits love to take pot shots at those with libertarian sensibilities every once in a while. Most recently, the COVID-19 crisis has elicited such criticism, with the blue check marks modifying the famous phrase “there are no atheists in a foxhole” to the new “there are no libertarians in a pandemic.” With this taunt, conservatives and progressives alike insist that libertarians abandon their principles at the first sign of trouble, namely any crisis that has a chance of affecting them. This notion, like many peddled by the ever-enlightened Twitter punditry, is patently mistaken.
Strawmen abound in the scheme of this particular attack on advocates for less government. Most prominent is the insinuation that libertarians support the abolition of government entirely, supporting total anarchy. Most libertarians fall in the classical liberal philosophical camp, which holds that government exists to protect individual liberty to the greatest extent possible. National defense and public safety (police, fire departments, etc.) fall within this definition. Another insinuation of this argument is that libertarians support far greater government intervention that their philosophy allows in a crisis situation such as that of COVID-19. In fact, the libertarian answer to this crisis is the same as it is in a normal situation: government action often harms more than it helps.
Governments across the country themselves are even beginning to see the validity of this principle, although they would never frame it this way. Across the nation and at all levels of government, officials have taken action to relax regulatory frameworks to allow private actors to address the coronavirus and circumstances created by its spread. One of the most visible consequences of the pandemic to most was the run on supermarkets, with shelves devoid of canned goods and toilet paper as hysteria over the virus began to spread. While many on social media took the opportunity to knock capitalism for this “market failure,” shelves were soon restocked, and leadership of grocery chains assured the public that the supply chain is as strong as ever. Even as the public demands greater and greater quantities of goods, supply is able to keep up. That is what a market system allows.
In Texas, Governor Greg Abbott saw that regulation was only getting in the way of this system. For the duration of the crisis, he lifted a restriction barring alcohol industry trucks from delivering supplies to grocery stores. This move, he argued, would allow supermarkets to more easily keep their shelves stocked and alleviate increased demand during the pandemic. A similar measure instituted in Texas and other areas (even including Washington, DC) is allowing restaurants to deliver alcohol to patrons along with their food orders, allowing establishments largely reliant on revenue from selling alcohol to remain viable for the duration of the virus. Relaxing both of these restrictions allows the market to operate more efficiently and helps businesses deal more effectively with the consumer.
On the federal level, President Donald Trump recently proposed a substantial cut to the federal payroll tax. The president argues that this will quickly and efficiently put money in the hands of the people. Further, such a tax cut would benefit those who work for a paycheck, and would not cut taxes on income such as capital gains, thus applying mostly to lower income individuals. President Trump also recently suspended many testing requirements for new drugs used to treat COVID-19, ensuring that sick individuals would have access to experimental drugs when their need is critical. Trump asserted that the reduction of regulations and bureaucracy in the process of approving the drugs would go a long way in alleviating the crisis and boosting the survivability rate of the virus.
Even local police departments are loosening their grip in response to the pandemic. For instance, the Collin County, Texas sheriff urged police to refrain from arresting petty criminals, instead issuing citations for minor offenses that would normally warrant an arrest. For their part, many local businesses across the nation closed their doors to the public before any government action on the matter. Large gatherings such as concerts were cancelled, and private health organizations recommended that individuals increase the frequency of handwashing and refrain from large gatherings, which many adhered to without a mandate from the authorities.
The alleviation of many regulations in the face of the COVID-19 crisis seems like common sense. Why make it more difficult for individuals to go about their daily lives in the midst of an epidemic that already makes life more challenging? Why raise barriers to business in a climate that is already unfavorable? Most people would agree that doing so would be at best government folly and at worst a gross abuse of power. But this thought experiment begs the question: why do we need these regulations when there is no pandemic? Why shouldn’t restaurants always be allowed to deliver alcoholic drinks? Why should police ever arrest petty criminals that pose no danger to the public? If these things are not harmful during a pandemic, maybe the public will realize that they pose no danger in relatively normal circumstances either.
When the people realize in this crisis that the tendency of government to overextend itself into every aspect of society is restricting their ability to live freely, perhaps they will reevaluate their political priorities. Perhaps in an epidemic, everyone is a libertarian.
News You May Have Missed
Eurovision Cancelled for the First Time In History
Wyatt Newsome
On Wednesday, the European Broadcasting Union announced that the 2020 edition of the Eurovision Song Contest would be cancelled due to the ongoing COVID-19 crisis. Forty-one nations were scheduled to compete this May in Rotterdam, the Netherlands, where the country currently faces over 2,000 cases and has issued closings for schools, restaurants, and certain international flights. The song contest attracts an estimated 200 million viewers worldwide each year, making it the most watched non-sporting event on television. Past winners of the contest include ABBA and Celine Dion. Eurovision first took place as an annual event in 1956 as a way to unite Europe following World War II, and the 2020 contest will be marked as the first cancellation in its sixty-five year history.
Dead Sea Scroll Fragments at Bible Museum Deemed Forgeries
Wyatt Newsome
Researchers recently completed a chemical analysis of sixteen artifacts displayed at the Museum of the Bible in Washington, D.C., concluding that all are fake. The items were presented as fragments of the ancient Dead Sea Scrolls, religious texts that archaeologists date to 400 BCE. While the fragments in Washington, D.C. have been deemed forgeries from the past century, there are authentic portions of the Dead Sea Scrolls first discovered in 1946 which are currently on display in Israel. The Museum of the Bible previously faced some controversy in 2017 when Hobby Lobby settled a $3 million lawsuit after illegally smuggling Iraqi artifacts through Israel and the United Arab Emirates, intending on supplying them to the Museum.
Pentagon Announces Successful Test of Hypersonic Glide Body
Amidst concern that the United States is falling behind Russia and China in the next generation of hypersonic missiles — missiles that travel faster than Mach 5 — the Pentagon announced that a test launch of the Common-Hypersonic Glide Body, or C-HGB, was successfully carried out on Thursday evening at the Pacific Missile Range Facility in Kauai, Hawaii.
Streaming Services to Reduce Video Quality to Help European Networks Cope with Internet Demand
With an increased demand on internet infrastructure in Europe due to COVID-19 lockdowns, Brussels asked internet streaming services to reduce the quality of streaming video. Starting with Netflix, later joined by YouTube and Amazon, streaming providers are limiting shows in Europe to standard definition, to reduce bandwidth use.
The views of authors are their own and not that of CSPC.
