 The U.S. government's response to the coronavirus has been nothing less than catastrophic, including weak, delayed, and incompetent actions by its two main public health agencies, the Centers for Disease Control and Prevention, and the Food and Drug Administration. Alex Tabarak, a professor of economics at George Mason University, and one of the co-founders of the popular blog and online university, Marginal Revolution, is an outspoken critic of the government's actions, including the FDA's refusal to allow for home testing of the coronavirus. Reason spoke with him about official responses to past pandemics, what countries are doing things right, and how the government can get a better handle on stopping the spread of coronavirus. Yeah, I would say that the response of both the CDC and the Food and Drug Administration has been a failure of historic proportions. I've always been skeptical of the FDA, but this failure is so extreme that it's really remarkable. I mean, even I'm surprised that it's been so bad. Here's the basic issue. Look, China gave us a window of opportunity by locking down Wuhan, by having immense controls, by shutting down their economy. They took these tremendous actions, weeks and weeks, months before we did, and that should have sent up a signal flare to everybody in the world, take this seriously. I mean, I as an economist, not an epidemiologist, not a microbiologist, I looked at what China was doing to their economy, and I knew this has got to be taken seriously because the Chinese aren't stupid. They're not going to be throwing away trillions of dollars and entirely locking down their economy for something which is, quote, you know, like the flu. I mean, this is a very serious issue. And the whole job of the CDC, the whole reason we have the CDC, is precisely to prepare for pandemics like this. And the CDC utterly failed. They first tried to create their own tests instead of adopting the already working WHO test, that delayed testing. Then the FDA compounded that error of the CDC by not allowing private labs and by not allowing state labs to do their own testing. So this was an absolute disaster which combined with everything else the government wasn't doing, has really delayed our response tremendously. What is the role of testing in kind of combating and containing the coronavirus? Well, look, this virus is extremely infectious. That is each person if in the ordinary business of life will typically transmit it to three or four other people. And so you have a cumulative process like that, right? That within a couple of days, it goes from one person to three people. And then from those three people, each one of them will generate it to three other people. So you got nine and so forth and so forth. So these exponential processes grow tremendously quickly. And that's why what looks like nothing today, you know, suddenly is a huge issue and is overwhelming hospitals. Now, the other way of putting that is that if you can test and trace, you test that first person, you trace them to the three people whom he transmitted the virus to, okay, then you can stop it maybe if you test quickly and you contact trace, then you can stop it in its tracks. But if you don't do that, then very, very quickly, it is completely out of control and is everywhere in the United States. Why did the FDA and I guess also the CDC, why did they, you know, not wave once, you know, once the coronavirus showed up here, why didn't they wave their standard operating procedure and say, okay, we need to get more tests in place or we need to open up the process to include more people? Yeah. I mean, this is just typical FDA procedure and like any bureaucracy, they're slow to act. I do think they should have, of course, acted much, much sooner, but the FDA was doing what they always do. They were following the rules and the regulations which have accumulated over many, many years, okay, and those regulations are just they're slow, they're cumbersome, they're bureaucratic. This is normal standard operating procedure. Now, Trump, of course, is pretty awful. I think Trump's handling of the crisis has been terrible, but in no way can this all be blamed upon Trump. A lot of this was baked into the completely legal, completely normal procedures of the FDA. The FDA has, at least as of today, and we're talking on Tuesday, the 24th, they banned or they put a stop to at-home testing for coronavirus. Why is that problematic? Yeah, it's ridiculous because the FDA has been forced, first they were forced to allow the private labs tests, which finally they did, and that has increased the number of tests, then they allowed the states to do their tests and so that has increased, but yet still their attitude is to clamp down. So a number of companies a month ago started to produce and in just the last week started to sell at-home test kits. Now, these at-home test kits, you're only collecting the sample at home, swab up your nose, right? And then it's sent off to a registered and certified lab. So all of the science is done in a certified lab. And the FDA said today or yesterday that we're not going to allow these at-home tests. And I think that's problematic for several reasons. Now, it may very well be true, we don't know, but it may very well be true that an at-home test is less accurate than when a nurse does the test. You have to stick to swab pretty far up your nose is what I've been told. Now, there's a couple of things. One, some of that can be caught at the lab. So then you can do a test the second time. Second, do we really want nurses doing all of these tests at this point in time where nurses are in short supply? I think it's actually a good thing that some people are doing the tests at home. Second, yes, it is true that you might get a false negative, which means that you think you don't have it and you actually do have it. Now, clearly, that's not good. But it does mean that as your symptoms get worse, well, then you can go to medical care. Again, it's not perfect. You may take some actions which you otherwise wouldn't. But at this point in time, we really need many more tests and we need to draw on the American ingenuity and free enterprise to really address this in a decentralized fashion, as fast and as quick as possible. Are there any countries that so far, I mean, you mentioned China. China is an authoritarian regime. I mean, I've seen videos of people being nailed into their apartments after testing positive for crown and things like that. Is that the model that we should be following or are there other countries that have contained the virus in a way that is more kind of comports more accords more with a kind of liberal democracy? Right. Yeah. China took very strong actions. I don't necessarily think those are the actions we should have taken, you know, three weeks ago, we may now be forced to do what China did. We may not have much of a choice. But some of the other things which have been done, South Korea has been very, very good at testing and tracing. And so what you want to do there is you want to test, as soon as you find a positive test, you find out everyone that person has met with or been with in the last two weeks, and you go and you test them. Okay. And in this way, you kind of clamp down. And they have, despite having a very fast increase in the number of cases, they've bent the curve. In other countries, we still don't know what exactly is going on everywhere, but Japan is an interesting case. Japan wearing masks is quite common. People, even in normal times, will walk around on the subway with a mask. And that appears to have allowed Japan, at least so far, we don't know, but it appears to have allowed Japan to do very well in this crisis. And here we got, I think, again, bad information. At the beginning, people were told, oh, the masks don't do any good, right? Just reserve them for, you know, the hospital workers. And of course, the people in the hospitals, they do need masks and they are first priority. But it does appear the masks work. Right. And that's because the mode of infection seems to be when you vaporize, when you cough, you sneeze, whatever. If you're infected, that goes out and it comes in contact with other people. So you're keeping it in yourself and other people are not getting it. It works both ways. Yes, you are keeping it in. And also, you're not breathing in directly if someone sneezes or something like that. And it just prevents you from touching your mouth and nose. Right. Because a lot of it is picked up on hard surfaces. Yeah, it's a very mechanical kind of prevention technique. You know, one of the other things that you have, you've criticized at Marginal Revolution, excuse me, is the Defense Productions Act. This has gotten, you know, this is one of those laws that's been on the books for a long time, but never really gets invoked. Can you describe what it is and why you think it's a kind of false savior in this situation? Yeah. So the Defense Production Act is sort of what you see in the movies, right, is the trucks are all leaving, they're all running away from the front. And the Army comes in and says, we're going to requisition these vehicles to get our troops where they're needed. And in that kind of sense, I think it's fine. And if we needed to build tanks, you know, and, you know, it was, you know, literally people were invading and I think it would be fine. But the main issues that we're dealing with right now are ones where the consumers want masks. The consumers want hand sanitizers. Consumers and the medical professionals, they want ventilators. So all of the market signals are all working in the direction that we want them to work. And for this idea that the government can simply come in and go to a factory and say, you know, you're making cars, but now we want you to make ventilators. It just doesn't make a lot of sense for two reasons. One, the government doesn't necessarily know what actually are the best substitutes in terms of production for the ventilator. What are the real machines that you need to make ventilators? The government doesn't also know the secondary consequences. That is, if you take some factory and you turn it from producing, you know, cars or trucks or something, and now it's producing ventilators. Well, maybe you needed those trucks for ambulances. I don't know. But the government doesn't know those secondary consequences. All of that is much better handled by the price system. We let the prices rise. We let entrepreneurs figure out, hey, maybe there's a better way of producing these things. Maybe we can produce them. Maybe there's, you know, animal models which can be used. You know, maybe it's not like the truck manufacturers which have the actual technology to produce ventilators, but it's accordion makers. Maybe the accordion makers really have the right technology. Do you worry like in the early days of, you know, when the coronavirus really hit? And I guess, you know, I'm thinking late February and whatnot, there were runs on things like toilet paper. Obviously, hand sanitizer is in short supply. Do you feel like the productive capacity of the United States is up to kind of providing what we need or do we need, you know, are we going to have persistent shortages? No, no, no. The productive capacity is there, no question. So already the shelves in most places are either filled or refilling. We're not going to have toilet paper. Okay. Don't worry about that. Don't worry about toilet paper. We're not even going to run the hand sanitizer that's being taken care of. That'll be filling the shelves again quite quickly. We can do all of that stuff really quite well. Now, we're already also ramping up on masks and things like that. But again, one of the problems with the Trump administration and with the the trade war with China is that China now actually is a very good place for us to go buy masks because they've got to handle on the disease. They produce millions of them every single day. Ventilators as well. They don't need quite as many as they were producing. So actually, the thing to do would be to get on the phone, say, can we get, fill up a plane with these things? And that would help with some of our emergencies. So rather than blame the Chinese, we can talk about that some other time. Let's get that. We'll worry about that when the disaster is over. It's very obvious that this disease attacks all human beings. It does not respect borders. And so we need to work together. And the Chinese, they took the first hit. They now have a lot of productive capacity, which we would like to buy from them. And we should be thinking about doing that. What, you know, one of the other things that you've written about at Marginal Revolution online, people can find it, you know, if they Google it. You've talked about, you know, some people now are saying that we've been too blunt in locking down all people. Basically, I'm talking to you from New York City. You're in the Washington, D.C. area. These are two cities that have had a real, you know, substantial lockdown. Non-essential workers are supposed to stay home and either, you know, just get unemployed or work from home. You are not, some people are starting to say, you know what we need to do? This is a disease that strikes mostly older people with underlying health conditions. We should be quarantining them, but we should be letting younger, healthier people go back to work and kind of restart the economy. What is your critique of that? It's too early to do that. There are two problems with segregating the elderly. The first is that, look, even though the probability of dying is lower if you're young, there's still an awful lot of young people. A lot of people less than 65 years of age, including myself, whose probability is pretty damn high, okay, given the background, given background risk. And there's a lot of them. So it still means potentially hundreds of thousands of excess deaths among young people. Moreover, it's going to be very hard to keep the death rate down if the hospitals become overwhelmed. That is what Italy is facing right now. Even when you can treat people in a normal situation and they might recover, when you have gone, when you lack ventilators, when you lack beds, when you lack physicians, when you lack nurses, you don't have enough of them, okay, then the death rate is going to go way up. So that's the first problem. It would mean a lot of young people dying. The second problem is this idea that we can segregate and isolate the elderly or those most at risk. That makes sense when most people don't have and don't get the virus. But if you're talking about segregating and then letting everybody else go back to work, those other people are going to get the virus. And they're going to give it to their grandparents and they're going to give it to their co-workers and other people in the same apartment building and so forth. So it's actually segregating the elderly. It really only works when not that many people get the disease. So I think the idea is self-contradictory in two ways. One, it will kill too many young people. And two, it actually won't work. Segregating the elderly actually won't work that well. What is your sense from a kind of economic point of view, though? How long can we sustain an economy where people are talking about having a massive shrinkage of the economy over the next couple of months? How long can we go on with a workforce that is essentially idled? Yeah. There's no question that it's going to be a very sharp, very sharp decrease in gross domestic product. And this can be very painful. Unemployment is going to be high. Now, what I do think is that if we can get the number of tests up and we can start testing and tracing, which means that you find somebody who is positive and you trace everyone they've come into contact with and test them, then we can start to do two things. One is people who are negative. We can start allowing more of them to meet with one another. So you put on negative. We may have to have badges. And those people can start to go back to work. Second, there's a second type of test, which is not whether you have the virus, but whether you had the virus. And that test works by looking to see whether you have antibodies, whether you have the immune system has developed some of these antibodies to attack the virus. And if you have the antibodies, that suggests that you have some immunity. So the people who have been infected and you have recovered, they're also going to be great workers because you're not worried about working with them because they have some immunity. So for both of these reasons, testing and identifying, then we can start getting people back to work. But to do that, first we need to flatten the curve, as you said. What do you think, how long will that take under kind of current circumstances or current practices? What are we looking at before we get to a point where we start opening things up again? Yeah. So it really depends upon how quickly we can ramp up the number of tests. A lot of tests are being developed. They do seem to be coming online pretty quickly, but it's still far less than I would like. When we have a lot more tests and when we've got New York and San Francisco and Seattle, when we have those cities under control, then I think we can start to do some of these things, maybe in a few weeks. That's what I would hope. And I think we can do things like the following. We shouldn't really be having, not for very long, just sort of dividing work into essential and non-essential. Instead, what we should be doing is saying things like, you can go back to work if everybody in your work can wear a mask and doesn't interact with the public. So there's lots of firms where they're in a factory or they're building something. You have the workers there. They're not interacting with the public. Every worker on an assembly line can wear a mask. Many of them would be wearing masks anyway. So those workers should be able to go back. That is, instead of just saying essential versus non-essential, we should say, just as we do with food, anybody can open a restaurant so long as they follow the following health conditions. And so anybody should be able to go back to work so long as the workplace can follow the following kind of conditions. You wrote recently about a study of the 1957 Asian flu outbreak in the United States, which killed between 70,000 to 100,000 Americans. What did you find when you looked at this? Because reading your write-up of the work on it, I mean, it's staggering, really, that this happened within relative memory and nobody seems to really think about it at all. That's right. It's very puzzling because we had in 57 and early 58 a pandemic quite similar to what we're having now. It was not quite as infectious and the fatality rate for those who got it was not as high. So it's not as dangerous. It wasn't as dangerous. But as you say... But you're talking like 100,000 people. I mean, that obviously in the late 50s, they wouldn't have known World War II, but that's double what died in the Korean War just a few years before. Absolutely. And there was a big recession also, a very sharp recession. So growth fell by like 10% in that first quarter. Thank you. Notice that it produced right around them was the worst quarter post World War II on record. But then you said that when you looked at people who were talking about that period, none of them even mentioned like economists, analysts don't even mention this. Exactly. So I was a little puzzled at this because from today's perspective, it seems pretty obvious that the flu would have sent a lot of people home from work and was worldwide and this recession was worldwide. But nobody at the time kind of thought that it was causing the recession. So I'm actually not sure. I actually think this is a puzzle for economists to look at. Was the recession caused by the pandemic? Or was it just coincidental? Certainly we did not do all the things we're doing now. Yeah. Is that because I don't want to say life was cheaper then, but it wasn't just, I mean, was it that the concept of medical interventions in a kind of mass way were not as developed or people were willing? Again, it's hard to think about this, but whether it's the 1918 Spanish flu epidemic, the Depression, World War II, etc., there was just seem to be a higher tolerance for adverse effects, events that are just terrible. Yeah. I think that's right. I think you're absolutely right. I mean, this was a generation or generations which had gone through Great Depression, World War II, Korean War, and all that kind of stuff. And I think they were more hardened to it. Plus, of course, they had less choice. You know, thank God for the internet. The internet and the American internet has held up incredibly well. So this is something I think we all ought to be amazingly proud of. The American internet is conveying much, much more traffic and it has done so seamlessly. I mean, look at us. I mean, we are having a conversation across, you're in LA, right? I'm in New York. You're in New York. Okay. So only across 800 miles or something like that. And yet we have full video and it has not failed us yet. So the American internet has been incredible. You know, one of the things that a number of people are observing and you're part of this, you're building out a kind of cloud-based world. Marginal Revolution University has a ton of online courses you teach online, I guess, both through Marginal Revolution and you also, do you do teaching distance learning for George Mason as well? I do. I do. So I have to admit that the crisis has, I'm less affected by many people since I was already teaching online. So my class actually has continued just as if nothing had happened. So I'm a little embarrassed to admit that because it is easier for someone like myself who can work from home to say that we should lock down or keep the lock down for longer. And I'm probably not looking at unemployment. So I understand all of that. But ultimately, the economy is about people, right? And there's no point having high GDP per capita if per capita is really low. That's not the way we want high GDP per capita. Yeah. What do you think is the hardest thing? I mean, and obviously, I mean, academics, I think in many ways, journalists or many journalists, certainly in my own experience, I've been working from home either full-time or part-time for almost 25 years at this point. Like you, there are real costs to it. And this is the slow, squeezed psychologically, I think it's going to become more and more apparent on people. But day to day, it's not that big a lifestyle change for me. What do you think is the hardest thing for regular kind of workers in the meat space economy, you know, where they're face to face every day? What is the hardest thing to kind of get by or to kind of to adjust to in the current moment? Well, I'm not sure about that exact question, but I will say this. I think one of the things which is so difficult about this is we're dealing with exponential processes and it's very, very difficult to understand exponential processes. So I think a lot of people are looking around and saying, well, why are we doing this? And the reason we're doing this is because it doubles every three days, right? And so I think it's very hard to understand or hard to convey to people the counterfactual. What would the world look like if we did not lock down? And I think that's one reason why we were so slow because it's just hard to believe that something can grow that quickly. And unfortunately, we all sort of seem to need examples. And even China was not enough of an example. Italy apparently was not enough. People always say, well, that's different. China is different or Italy is different or whatever. Well, it can't happen here. Yeah. I mean, and it does seem that we may end up somewhere in between the two. I mean, Italy, even for Europe, and I guess Spain is also experiencing something similar. These are, you know, despite being part of Western Europe or, you know, and familiar to people, Italy has always been a poor country. So it may be that whatever is going on there is not going to be the same here. Do you think, when will we know if the current course of actions are effective enough? At what point can we say, okay, we at least know what's working and what isn't? How long will that take? So anything we do today won't show up for another two weeks. So that's why, you know, we've really only been in this, you know, 10 days or so. So I'm expecting, you know, later this week, end of, you know, next week, hopefully we'll bend the curve, you know, and get control of Seattle and San Francisco and New York. New York is now looking like our Lombardy. I hope that's not true. But I think if we can get control in those cities, then we'll know we're doing the right thing. Final question, you know, as a good libertarian, I mean, you've been writing from a broadly libertarian perspective your entire professional life, you know, early on in this, and of course, because people, you know, don't want to deal with actual problems, they immediately go for cheap shots. So there was a flurry of articles about how there are no libertarians in a pandemic, et cetera. You know, does this shake the way that you think about the size and scope of government or the way that it should function? Or do you feel like this is actually validating? I mean, some of the criticisms you were talking about the FDA, you know, where do you come out of this from an ideological perspective? Yeah. So let me start with the FDA, because as you've noticed, I've been long been a critic of the FDA saying that they're too risk averse. And, you know, right now, lots of people are agreeing with me, right? Because lots of people are finding themselves, oh, I'm at risk. But here's the thing. When you had a deadly disease, it was just as big an emergency, you know, a year ago, as everyone is feeling today. So look, put yourself in the other guy's shoes, okay? People ought to be able to do that. So if I had cancer, if I had, you know, pancreatic cancer, if I had, you know, some heart disease, I would like the right to try. I would like to have, you know, medicines come out faster, right? And so I think this does very much support me on the FDA. And we have to think about, you know, everything people are saying now that applied, you know, five years ago, okay, there's nothing new. There's nothing new there. The FDA has always been too risk averse. Now, more generally on sort of libertarianism, generally, I think it's quite clear that the strongest part of our response has come from the private sector. The private sector, you know, whether it be Amazon or Walmart or McDonald's, okay, they are really keeping this country together. And the decentralized approach, letting the states, letting private labs come out with their own tests, that has been very, very much supported. This command and control, I think, has failed, utterly failed. And a lot of people can see that now. Now, sorry. So let me give you one more. And that's a negative one. And that is that, look, you know, I want a small government, okay? I want it much smaller than it is now. But I damn well want to get what I pay for, right? I mean, we are paying a huge chunk of our income to the government. And one of the things which I think, even I as a libertarian think the government should do is, you know, handle pandemics and things of that nature, right? And they're failing. So they're failing to provide the public goods. You know, the whole economic reason for government is to provide public goods. And they're failing on that. So I do think that pure competency, you know, really matters. And here, you know, the Trump administration, I think, is especially incompetent. It's not that, you know, other governments, lots of governments are incompetent. They're, I think, especially incompetent. And I don't want to, you know, totally go have Trump derangement. It's not all Trump's fault. But just pure competency, I think, really matters. And there's something about the U.S., which does seem, you know, when we talked earlier about how difficult it is to build a subway line, you know, how difficult it is to get anything approved. Like we could not build the Hoover Dam today, right? You know, the environmental review alone would take years. So there is something, which we do seem to have become a, you know, a sclerotic society. And I think pure competency and ability to get things done, that also matters. So that's the sense in which, I guess, I'm sort of a little bit less libertarian or something like that. You know, when I want the government to act, I wanted to damn well, act well and competently. And that's something which I'm not seeing. All right, we're going to leave it there. Alex Tabarak of George Mason University and Marginal Revolution. Thanks for talking. Happy to be here. Hope it's Saturday, next time. Yeah, this has been the Reason Interview with Nick Killespie. Thanks for listening. 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