The former U.S. Treasury Secretary, Lawrence H. Summers, told us about his views on the reopening of the economy:
This week with some economy starting to open up, we had Georgia start to open up first. We also have Sweden then never really closed very much what are we learning from that is it does it do the consumers come bouncing right back.
I think we’re learning something that was quite surprising. The lockdown is actually less the issue than people’s fear. If you look at what’s happened to consumer spending, it’s come back some in Georgia, but it’s also come back in New York and to just about exactly the same extent.
If you look at Sweden, which never closed down and Denmark, which closed down pretty rigorously, there hasn’t been much difference in what’s happened to consumer spending or the economy.
The Swedish economies dipped 80%t as much as the Danish economy has. The reality is that this is more about is not the lockdown but the virus and people’s degree of confidence. If you think about it, that makes sense. If they opened up all the restaurants to sit in one, I wouldn’t go sit in a restaurant now even though I like restaurants.
I think most of us are more constrained by our desire to be prudent about our health and the health of people we might pass a virus on to. That underscores what I’ve been saying for some weeks that ultimately the most important economic policies are the health policies, whether it’s testing or therapy or vaccinations or contact tracing that could put this problem in the rearview mirror.
Until we do that, I don’t think we’re really going to fix the fundamental economic concern, and when we do that, we’ve got a prospect of a reasonably rapid recovery.
This great debate about lockdowns is actually less of a debate than we have all thought about it as being because people who don’t believe in the lockdown in the United States, don’t respect and honor it and people who are scared don’t go out even if the lockdown is removed.
I saw that one of the prominent Washington think tanks has announced that it’s not going to have any visitors until the end of the year. It’s not going to have anybody back in their offices until September at the earliest. They’re not waiting to see what gets decreed by the President or by the mayor of Washington DC.
You see a lot of that kind of thing. This is going to be based more on decentralized decision-making of people who assess risks to themselves is I think what we’ve learned here.
I don’t think this situation is going to be behind us till we have a vaccine or a convincing and highly credible kind of therapy. I do think that if we did the right things with testing, such as testing employees before they come back and retesting them on a periodic basis, or universities opening based on the fact that they are going to test each student with some periodicity.
I think these kinds of things will start to happen if we have tests, and there’ll be a further multiplier from testing if we can do it more pervasively. So I do think that ramping up testing should be a very great priority.
I suspect the utility of testing will come in a more decentralized way then I probably would have imagined a few weeks ago.
It’ll be employers, it’ll be airlines not wanting to have anybody with the virus on their planes, it’ll be similar things for entering into various kinds of activities, etc.