[Question] How can we protect economies during massive public health crises?

Without the eco­nomic knock-on effects, tel­ling peo­ple to all close up shop and stay home dur­ing a mas­sive health crisis would be a no-brainer. Un­for­tu­nately, the risk of a nasty eco­nomic shock seems to be weigh­ing heav­ily in the de­ci­sions of our lead­er­ship here in the USA at ev­ery level of gov­ern­ment.

We already have cer­tain eco­nomic safeties in­stalled from pre­vi­ous shocks, like the safe­guards that stop trade in the stock mar­ket un­der cer­tain con­di­tions so we don’t eas­ily get a re­peat of the crash of 1929. Or the foun­da­tions and laws that are de­signed to swoop into ac­tion af­ter a hur­ri­cane. Seems like the COVID-19 crisis is pro­vid­ing us with in­for­ma­tion that could help us build new safeties.

Health crises are differ­ent from (other) nat­u­ral dis­asters be­cause in­fras­truc­ture is gen­er­ally not af­fected. The two are similar be­cause each can cause peo­ple be­come un­able or less able to par­ti­ci­pate in driv­ing the econ­omy. In both, econ­omy can re­sume once the crisis is over, but a nat­u­ral dis­aster tends to have a much smaller foot­print and longer eco­nomic re­boot time than a health crisis might.

The U.S. fed­eral gov­ern­ment is too slow (by de­sign) and ap­par­ently quite un­pre­pared to re­act effec­tively to a dis­aster on the scale of COVID-19. Even if they were faster, hand­ing over con­trol of large por­tions of the econ­omy to the fed­eral gov­ern­ment always leaves a bad taste and could eas­ily have con­se­quences just as dire as do­ing noth­ing.

I tend to think of the econ­omy as an in­for­ma­tion en­tity driven by the move­ment of value among var­i­ous ac­tors like in­di­vi­d­u­als, com­pa­nies and cor­po­ra­tions, states and so on up to world-scale or­ga­ni­za­tions. Since ac­tors on all lev­els are af­fected in a health crisis, it makes sense for ac­tors on all lev­els to have ac­cess to safety mechanisms that pro­tect var­i­ous in­ter­ests.

What kinds of sys­tems could we put in place on each of these lev­els to al­low the rele­vant slices of econ­omy to go on hold for at least a few weeks as needed? To put it an­other way: What would we need to do to in­stall eco­nomic pause but­tons at var­i­ous scales, and to min­i­mize the effects of any given en­tity ac­tu­ally us­ing those but­tons?

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