Commerce, Economy / Finance, Health, Neo-liberalism

We Are Ignoring One Obvious Way to Fight the Coronavirus

Mar 5 2020

By The Editorial Board* – The New York Times

Paid sick leave could slow the spread of the disease and its impact on the economy

The Federal Reserve did what it could Tuesday to offset the growing economic impact of the coronavirus by announcing a supersize reduction in its benchmark interest rate — the first time the Fed has acted between its regularly scheduled meetings since the financial crisis in 2008.

But the Fed is ill equipped to limit the effect of a global pandemic alone. Lower interest rates may eventually soothe financial markets and help to hold down borrowing costs, but the Fed can’t speed the reopening of Chinese factories or reverse Facebook’s decision to cancel an annual developers conference that last year brought 5,000 visitors to San Francisco.

“A rate cut will not reduce the rate of infection. It won’t fix a broken supply chain. We get that,” Jerome H. Powell, the Fed’s chairman, conceded at a news conference on Tuesday.

The real work falls on the rest of the government. The first step should have been simple: ensuring that testing for the coronavirus was readily available and, better yet, free. But even after weeks of lead time for the virus’s inevitable arrival, access to testing remains woefully inadequate as the domestic death toll rose to nine on Tuesday.

At this point, the crisis also demands unorthodox solutions. To restrict the spread of the coronavirus, the government needs to put limits on commerce. The best way to protect people, and the economy, is to limit economic activity. That is an unfortunate but inescapable truth. Public health officials will need to impose quarantines, businesses will need to cancel meetings. And most of all, the problem now and going forward is making sure that sick workers stay home. That means not forcing employees to choose between penury and working while coughing.

Congress can help by mandating that workers receive paid time off if they fall ill, or if they need to care for an ailing family member. Such a policy is necessary both to impede the spread of the virus and its economic harm. Roughly one-quarter of workers in the private sector — about 32 million people — are not entitled to any paid sick days. Absent legislation, they face a choice between endangering the health of co-workers and customers and calling in sick and losing their wages and perhaps also their jobs.

The current system is practically devised to spread infectious disease. Among the people least likely to have paid sick days, and therefore most likely to work through illness, are low-wage service workers like restaurant employees and home health care aides. (Those workers also are less likely to have health insurance, which compounds the problem.)

Most developed nations require employers to provide some form of paid sick leave, and the United States should do so, too. Some states already mandate sick leave, and a recent study found that the adoption of such laws reduced cases of influenza by 11 percent in their first year. Whatever the course of the coronavirus, mandatory sick leave for American workers would improve the lives of families and insulate the economy against pandemics.

If Congress cannot bring itself to do the right thing, however, it still could help by mandating sick leave specifically for this coronavirus. A 2013 study of workers in Allegheny County, Pa., estimated that allowing them to take up to two paid “flu days” would have reduced workplace transmission of the flu by roughly 39 percent.

Employers sometimes argue that sick leave policies encourage malingering. But studies show that even accounting for workers who play hooky, society still benefits.

The government could defray the cost of emergency sick leave for employers, for example by allowing businesses to claim a one-time tax credit. There is also a good case for providing broader help, particularly to smaller companies that cannot easily weather a loss of revenue.

The Italian government, for example, announced Sunday that it would issue tax credits to businesses that reported declines in revenue of 25 percent or more — in effect shifting the losses from private balance sheets to the government’s balance sheet.

Also seeking to help smaller businesses, the Chinese government has announced that banks can defer the receipt of loan payments from smaller companies that were due during the first half of the year without being required to report such loan payments as overdue. In hard-hit Hubei province, the leniency applies to larger companies, too.

The Trump administration so far has shown little interest in tailored responses. President Trump reacted to the Fed’s announcement by demanding further rate cuts. He has insisted that the United States should have the world’s lowest interest rates; the European Central Bank’s benchmark rate currently sits below zero, at -0.5 percent.

Mr. Trump also has said that Congress should pass a payroll tax cut.

If the federal government fails to contain the spread of the coronavirus, and the economic outlook darkens, such a broad-based stimulus may well become necessary. But targeted policies — like sick days — are likely to remain the most effective form of response.

—————-

* The editorial board is a group of opinion journalists whose views are informed by expertise, research, debate and certain longstanding values. It is separate from the newsroom.

—————–

Annex:

The Trump administration’s ludicrous approach to coronavirus vaccine

By Jeffrey Sachs* – CNN

The recent statements by Health and Human Services Secretary Alex Azar show the distorted mentality of America’s ruling elite. Azar is a typical Trump administration appointment: a drug industry lobbyist and former drug company manager put into a position of responsibility — or perhaps better said, irresponsibility — for public health. Even in the midst of the most serious epidemic of recent times, Azar’s thoughts at his press conference signify he’s comfortable with a system that puts corporate profits over public health.

Here is Azar’s astounding statement regarding the development of a coronavirus vaccine: “Frankly, this has such global attention right now and the private market players, major pharmaceutical players as you’ve heard, are engaged in this, that we think that this is not like our normal kind of bioterrorism procurement processes, where the government might be the unique purchaser, say, of a smallpox therapy. The market here, we believe, will actually sort that out in terms of demand, purchasing, stocking, etc. But we’ll work on that to make sure that we’re able to accelerate vaccine as well as therapeutic research and development.”

What Azar appears to be saying is that a coronavirus vaccine, once it is developed, will be left to the private marketplace rather than to government procurement. Private businesses, “will actually sort out the demand, purchasing, stocking, etc.” In testimony to Congress the following day, Azar was pressed by Illinois Rep. Jan Schakowsky to affirm that a vaccine “would be affordable for anyone who needs it.” He replied: “We would want to ensure that we’d work to make it affordable, but we can’t control that price because we need the private sector to invest.” He is indicating here that the pharmaceutical industry would be setting the price of the vaccine, so the government could not ensure its affordability. This isn’t unusual, but can be disastrous in the context of an epidemic.

This is the wrong approach. If we are lucky enough to get an efficacious vaccine in the near future — and, with research, development and testing that will likely take a year or more at best — the vaccine would almost surely need to be rolled out systematically by governments around the world to cover large populations and vulnerable groups in a concerted manner guided by the epidemiology and transmission patterns of the disease. That, after all, is how epidemics are stopped: through concerted public policy and action.

Azar’s statement is even more pernicious given the fact that the National Institutes of Health will appropriately be funding much or most of the research. The prevailing model, indeed, in plutocratic America is that taxpayers fund the vast majority of research and development (R&D) for pharmaceuticals and then the intellectual know-how is turned over, free of charge, to private industry so that it can market these drugs under 20 years of patent protection and then make a fortune at the cost of the American people.

It’s a racket in full view, one that has been going on for decades, but such are the returns to the astounding lobbying outlays (almost $594 million in 2019) of the health sector.

The right model is a public-health approach. The NIH should indeed lead and substantially fund a massive coronavirus vaccine development effort, as it plans to do. Private companies should then join in under NIH contract or under their own outlays with an advance understanding that they will be paid a royalty by the US government for intellectual property that they contribute to a successful and utilized vaccine.

Almost surely, a successful vaccine will depend heavily or exclusively on the NIH and other public or not-for-profit funding (including private foundations and global cooperation on R&D, for example with China), with some portion of the R&D perhaps coming from private industry.

Once developed, under this public health approach, the vaccine itself would be freely licensed to all manufacturers around the world that offer good manufacturing practices. The funding for the rapid uptake of the vaccine in the world population would be publicly financed in the US and abroad, along with contributions from donor institutions such as the Global Alliance for Vaccines and Immunization.

No, Secretary Azar, it would be ludicrous to leave such operations to private industry. Mr. Secretary, we should not grant patent protection for such a new vaccine produced heavily with public money to fight a global public emergency.

Put the vaccine development in the hands of the extremely able director of the National Institute of Allergy and Infectious Diseases, Dr. Anthony Fauci, and then put the federal government in the lead of vaccine delivery, including the needed financing. Private industry can be a welcome partner but should operate under clear federal leadership and with no monopoly rights to the vaccine.

It is good to recall the inspiring case of the polio vaccine’ development in the middle of the last century. President Franklin Roosevelt, who was diagnosed with polio in 1921, knew that private efforts would never suffice. Even before US public funding for vaccine development was implemented after World War II, FDR invented in 1938 the idea of a not-for-profit institution to lead the effort: the National Foundation for Infantile Paralysis, known as the March of Dimes.

The March of Dimes funded the basic work of the great pioneer of polio vaccines, Dr. Jonas Salk, who announced the first successful polio vaccine in 1953. The vaccine was introduced in large controlled trials in 1954 covering 1.6 million children in the US, Canada and Finland. In 1955, it went into a mass public immunization campaign. The incidence of polio in the United States fell from 13.9 cases per 100,000 population in 1954 to 0.8 cases per 100,000 in 1961.

When asked by CBS anchor Edward R. Murrow, “Who owns the patent on this vaccine?” Salk famously responded, “Well, the people I would say. There is no patent. Could you patent the sun?” That is the public spirit that ended the polio epidemic and it is the public spirit we need to recover in the US to overcome a range of dire challenges, from coronavirus to climate change.

———————

* Jeffrey Sachs is a professor and director of the Center for Sustainable Development at Columbia University. He is supporting Bernie Sanders for president. The opinions expressed in this commentary are those of the author.

site admin