I am getting a little ornery with all of the people citing Covid externalities, and then not going a step deeper. To be clear, I agree we should subsidize preventive measures (most of all vaccines and testing, but more too), and close down high-risk indoor gatherings in many locales. No more Democratic Party fundraisers in New York State, not indoors at least.
What is being neglected is that many of the American people are voting with their feet when it comes to externalities, and we may not always like the answers we are seeing. Take all of the pending Thanksgiving travel — the biggest risk is to parents and grandparents, but mostly they are receiving their children voluntarily. Now I get that there is a higher-order risk to friends of the parents and grandparents, and that externality is not internalized, but still…much of the externality is in fact internalized.
I haven’t seen many (any?) jurisdictions in this country where the median voter wants to shut down Thanksgiving travel. Do please note it is in fact my personal preference that no one travel for Thanksgiving, but I’m not going to confuse that preference with the Coasean outcome or for that matter the democratic outcome. It might be the Coasean outcome in northern Jutland, it does not seem to be here.
Or consider mobility. The people of means I know have been moving to Austin and Miami, two locales that are both quite open in the sense of having relatively few Covid-related restrictions on commerce. These individuals do not have to work as a cashier in the Safeway, and so they can enjoy the openness while avoiding most of the corresponding risk. They can work at home and socialize outside. Maybe the weather, the time zone, the “coolness” of the locale, and other factors are more important than the stores being open. Still, the “loose” Covid policies have not scared them away.
One might expect that front-line workers would be less keen to move to Austin and Miami, but I have not seen data to that effect and I am not convinced that is true on net. I genuinely would like to know, and in the meantime am agnostic on the question.
I don’t see many people moving into Vermont or San Francisco, two locales that have done a good job minimizing Covid risk.
Analytically, you might put it this way. There always have been positive externalities from human contact through commerce, and at the margin, even with Covid risk, for many people those externalities still are positive. Thus if you limit or tax those interactions, the policies will be unpopular.
I genuinely do think many of our failings are those of prudence rather than externalities. That is one reason why I am reluctant to recommend large-scale coercive lockdowns, while still regarding the positive fight against Covid with extreme urgency. Two of our prudence failings are the following:
1. We are not good at intertemporal substitution in this context, and
2. The risks of Covid are sufficiently stressful that many people instead prefer to self-deceive and minimize the risks, rather than deal with the stress (NB: this is one instance where higher stakes and decisive choice lead to a worse rather than a better outcome, contra Caplan).
3. Many individuals are bad at grasping the multi-week reporting lags and also the “Blitzkrieg” nature of the struggle.
I am reluctant to smush together the externalities argument and the paternalism argument for policy activism, and instead prefer to unpack the two, even though that weakens the case for major restrictions. It disturbs me that few public health commentators or for that matter commenting economists are willing to consider even this simple analytic division. Talking about all the deaths does not in fact settle the matter, as it remains necessary to ask what Americans really want, and how much we ought to be willing to respect those preferences.